Stupid Debt

[TexasFreedom]

https://www.usatoday.com/story/mone...ls-car-home-buying-american-dream/3103065002/

I mentioned to my wife "I'm reading an article about student debt", and she asked "stupid what"? Not having heard what I said... but I think she said it much better!

$1.46 trillion nationwide in student debt. Over $1T of it is 18-29 year olds. That should tell you how tuition is going up, and borrowing. No wonder they like Bernie Sanders.

I'm not one for more laws typically... but... You remember how some states passed laws that a woman much watch a video on what happens to the baby during an abortion (I think they got bounced by courts)? How about a law requiring young people AND anyone who cosigns for them for student loans watch a video & get counseling. It can cover what is your planned major, and how will it help you pay back these loans if you graduate and what if you don't graduate. Have hard examples of people who've successfully gotten the degree of choice and how their loan payments have gone, and examples of people who dropped out & how they're paying them off (these can be videos). From people making big bucks to people living in their car. Let's get real.

Thoughts?

 

[Arcticdude]

I think taking on any kind of long term debt is stupid. Especially for college. More people should take on the attitude of pay as you go.
A better option over college are trade schools. Much less cost, less time, and for most it will lead to much better paying jobs.

 

[bigpaul]

any debt is stupid, if you cant afford to pay it back don't take on the debt in the first place.

 

[Maverick]

The thing that pisses me off, this is debt off the tax payers back directly or indirectly, the ### holes that want this debt erased are just as clueless ### the kids that accrued the debt. The feds need to end these loans and grants for Christ's sake but I guess that won't happen given the Feds track record of funding lost causes!

Just imagine, 18-29 year olds are our future leaders... and they want to put me in debt while excusing their own debt... fxxk them

 

[tmttactical]

Stupid Dept is the right way to describe student debt. Some of the old timers will remember that student debt used to be wiped out during a bankruptcy. The government had to change that law because too many students were running up huge debts (like now) and then filing for bankruptcy as soon as they graduated. The only real answer is a pay as you go plan, no more borrowing. That is what our children have done, the other children--? -- adults can do this too.

 

[Brent S]

I personally think all debt is stupid, not just student loans. The only thing I can ever remotely agree with is a house. It’s pretty tough to save up enough to buy your first house. Even then, people should be realistic about the cost of what they can afford. Everyone wants to live in a really nice place, but most can’t really afford what they get.

 

[TexasFreedom]

It gets worse. Friends of ours had a kid go to college. Kid needed a loan & asked dad to co-sign, he was smart & refused. Kid turned to mom & begged mom, mom went against dad's wishes & co-signed. Kid got a useless degree (surprise), isn't making squat. Payments are behind. Guess who the bank is going after to get their money back??? Dad is shaking his head telling her "told you so". At least they're still married...

There was something also about it affecting the mom's credit, I think they were trying to buy a new house & couldn't. Co-signing on a loan is among the stupidest things a person can do financially.

 

[Brent S]

It gets worse. Friends of ours had a kid go to college. Kid needed a loan & asked dad to co-sign, he was smart & refused. Kid turned to mom & begged mom, mom went against dad's wishes & co-signed. Kid got a useless degree (surprise), isn't making squat. Payments are behind. Guess who the bank is going after to get their money back??? Dad is shaking his head telling her "told you so". At least they're still married...

There was something also about it affecting the mom's credit, I think they were trying to buy a new house & couldn't. Co-signing on a loan is among the stupidest things a person can do financially.

Agreed, if your willing to co-sign a loan then I suggest you consider it a gift up front. That way you won’t get upset when it goes south.

 

[DrHenley]

I wish someone would explain that to my wife. She keeps trying to get me to cosign loans for our kids because my credit rating is so good. And I keep steadfastly refusing. And she keeps getting mad because she doesn't understand why I won't do it.

And I keep telling her there is a REASON why my credit rating is so good.

And I don't even have a job...I'm retired.

 

[Maverick]

I will not co-sign for anyone, never have. Too many variables involved here, signer dies, gets sick, loses job, job doesn't pay enough etc... Co-signing is a fools game of chance!

 

[tmttactical]

I have to admit when I was a teenager, my dad did co-sign for my first motorcycle (I was 16) and my first new car (just turned 17 --- they wanted me off the motorcycle, something about my weekly crashes). I would not co-sign a loan, but I would lend my son's money, if they needed it. My son's will never need a loan from me. They are financial secure and make wise financial decisions.

 

[DrHenley]

As of this month, I have paid off the credit card debt I had due to an emergency, and am now 100% debt free.

My credit card limit has gotten so high, I could go buy a brand new top of the line 4WD 4Runner on the credit card, and have monthly payments less than what I have been paying every month to pay the thing off.

SHHHHH!

Don't you DARE tell my wife. Just because I CAN doesn't mean I SHOULD.
I'm going to keep driving my old beat up pickup truck until the wheels fall off .

 

[Brent S]

I just read the average mortgage is 350,000 now. Ouch, I don’t even want to know how much that is in a monthly payment. For 30yrs.....

 

[Arcticdude]

I just read the average mortgage is 350,000 now. Ouch, I don’t even want to know how much that is in a monthly payment. For 30yrs.....

That's probably around $2000-$2500 per month. A lot of people find out how much house they can "afford" from a mortgage company and then buy up to the max limit. To me that's foolish and irresponsible and doesn't leave enough left over for emergencies.
Most people that are just starting out now days want a big fancy house to impress their friends with. They never learned any smart financial strategies from their parents. Their parents were probably in debt up to their ears too.

 

[Maverick]

Homes in the next county over are going between 500k-800k and up on a 100x100 foot lot, I've seen some going for 350k on a 100x50 foot lot. I'm looking at one for 795k, tax a year are $7100, that same home sold for 230k in 2004. Washington is ridiculously expensive, the wife's house near town, the property tax per year is $8200.

 

[bigpaul]

i'm retired so I couldn't get a mortgage even if I wanted one.
houses are very expensive in this county and the wages are low, most young people have to move away to the big cities to find work that's why rural areas are full of oldies.

 

[Brent S]

I like what Dave Ramsey says about a home. It can be a blessing or a curse. If your maxed out on a payment then what ya gonna do when something breaks? And trust me, things break, usually at the worst possible time. My first place was a crappy old camper. Each time I moved I got a better place. Over the course of a lifetime I have a pretty nice house that’s paid for. It is insane for a young couple to max out both of their paychecks to meet their dream home mortgage. Thirty years of paying a bank seems like a prison sentence to me.

 

[Maverick]

More directed at the young... Food for Thought
Trouble is, when young folks buy a house they look at the now and not the distant future. Being young and energetic thinking the money will always be their don't give the future second thought, age, health, retirement, cost of living, taxes etc... A lot of young folks perhaps don't realize property taxes are included into the monthly mortgage payment (PITI) say the house is paid off when one hits 62 and then say 'hay, my mortgage is paid off, I'm just going to take an early retirement at 62' so, keep in mind ones retirement has been cut by 30% since one retired early. The good news, house has been reappraised by the tax assessor, the house has gain value by 125k in the current market, BUT, the property tax has gone up by $1800, it's now $3800. Trouble is, one took a early retirement (62) making roughly $1300 a month, now one has no health insurance (not until one turns 65) utilities have gone up, food, transportation cost.

So, if one makes $1300 a month and property taxes are $3800, that's $317 a month one has to save out of $1300 = $983, now when one turns 65 in 3 years, SSA going to take out medicare/medicaid, that's another $130 -/+ making your monthly cash of $853 to cover utilities, groceries, transportation and health co-pay. Now lets say ones state government raised property tax another $1200 a year without increasing the value of the home (like they recently did in Washington) that's another $100 a month out of the $853 reducing it to $753 to cover utilities, groceries, transportation and health co-pay. The average cost of electricity in Southwest Washington is $130 a month, water, sewer and garbage roughly $140 a month, minimum auto liability insurance is $45~55.00 a month, fuel price for gasoline is $3.00 a gallon, roughly $365 more a month leaving $388 a month for food and no money for auto/property repairs and medical co-pay unless one doesn't eat, using today's standard.

My point is, don't buy big, don't buy in a high cost state, a long term mortgage has to be really thought out, retirement really has to be thought through! Where ever the home is ask one's self the question, is the state retirement friendly such as tax relief, does the state tax ones retirement? etc.. Of course, all this assumes one want's to keep the house when one retires.

 

[tmttactical]

One of my step-daughters just bought a house with her / significant other (boy friend in my day). The house is in Seattle Washington. They just paid 1.3 Million. They put 40% down. Now on the other side of the coin, my oldest son, bought his house in San Diego, during the last housing down turn (2008 Bust). He has about 300K in equity. In two years he plans to sell. Move and pay cash for his next home. He just retired from the US Nave (20 year) and is attending college for obtain a degree in Criminal Justice. He is currently enrolled in the PACE program (a police training program). He will have his degree and the program completed within the next two years. His G.I. Bill is paying for the school. His retirement is close to $5500 per month and He will be debt free. So yes some can make good financial decision and then you have the folks going 100K to 200K in debt for student loans to earn a degree in Liberal Arts, paying $30K per year.

 

[Brent S]

Finances are just like any other thing in life, it’s not rocket science, but needs to be thought out to be managed effectively. Money with out a plan tends to disappear, and it amazes me how many so called adults don’t have a plan, (budget, saving and goals). I’ve told many in my lifetime that I’m smart enough to know that money dosent make you happy. I’ve also said that it can make you a lot more comfortable though. It’s nice to be able to turn on the AC during a hot summer and not have to worry about paying other bills too. Things like your car breaking down, and it will, are a lot less worrisome when you have money put away to pay for the repairs.