Brent S
Top Poster
A helicopter tour, sex on a remote beach, scuba diving, sailing..... not necessarily in any specific order. All good things to do in Hawaii!
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We've talked about debt here on this site many times, but I don't think the importance of living debt free has really been covered that much.
When it comes to discussing debt, many people leave out mortages on homes and property. They feel that they'll never pay off their home mortgage anyway. Sadly I know people who are older than I am who are still making a mortgage payment, and in some cases a car payment.
Many people, including some in my own family, get close to, or have paid off their home, who have fallen for the Home Equity loan trap. So now they're back in debt again.
As Brent said above, it's much easier to get in to debt than it is to get out. I was brought up in the days where it was common to hear things like "live within your means", debt was bad, save for your future, because no one else will, and if you can't afford it, do without.
My coworker and I were talking about this the other day, how so many people go into debt to go on vacation. I mean, vacations are great and all but but not THAT great.Speaking of blowing money needlessly, my wife decided that we needed a vacation. So she booked a trip to Hawaii...with her sister, brother, bil and their teenage daughters. I've been to Hawaii before and found it the be overrated and expensive. I guess she rented a nice house on the beach in Maui. At least it has a swimming pool. I can just hang out at the pool smoking cigars, drinking Scotch and sleeping until it's time to leave.
There are very few things worth going into debt for. Most people will to buy their first house. Even that can be adjusted by buying a house that is more realistic to your ability to repay it quickly vs one that you really want. I don’t see cars as worth it, but it’s probably the most common form of debt in the US. Sure you need a car to be able to get to work, so buy the cheapest one you can afford. By learning to save money you can ensure you will never have to borrow again. By not learning to save you will guarantee you will borrow again.My coworker and I were talking about this the other day, how so many people go into debt to go on vacation. I mean, vacations are great and all but but not THAT great.
I agree with using cards that give points, as long as it ALWAYS gets paid off each month. I too get points for buying stuff that I was allready buying. I also have not paid a bank any interest in years. It makes sense to use other peoples money as long as you are disciplined enough to make sure you follow the rules in the fine print. I would rather keep the money in my savings account when it’s a 0% loan. There are loans out there though that if you’re late on one payment then all the interest retroactively comes due from the beginning of the loan. It could be an expensive game if a person had some unexpected reason they couldn’t meet the loan obligation like they thought, which is why Dave Ramsey is adamantly against even these free loans. For me though, I have no problem with using the system to my advantage.I have no problem with debt, as long as it's short term and you have a plan, and the money, to pay it off. Long term debt is what I have a problem with. My wife and I use a credit card a lot. We get milage points with it. My wife hasn't bought a plane ticket in several years because she uses the milage points for her tickets. We pay the card off monthly so we aren't charged interest, and we still have close to a million points left.
When I had a home mortgage (15 year) I paid twice a month. That alone cut out several years on the loan. Plus every year I'd make a lump sum payment too.
I bought my JD tractor on a zero interest loan. I had the money to pay cash for it but it was worth it to me at the time to use their money. I paid it off in a couple years.
Debts are like gambling, don't do it if you don't have the money in the bank to pay for it.
That's the "secret" to using debt to your advantage; pay it off before the interest starts to accumulate. My strategy of using other people's money (zero interest) is to ensure that I have the money in the bank to pay it off in case something happens. Being disciplined is the key to proper debt management.I agree with using cards that give points, as long as it ALWAYS gets paid off each month. I too get points for buying stuff that I was allready buying. I also have not paid a bank any interest in years. It makes sense to use other peoples money as long as you are disciplined enough to make sure you follow the rules in the fine print. I would rather keep the money in my savings account when it’s a 0% loan. There are loans out there though that if you’re late on one payment then all the interest retroactively comes due from the beginning of the loan. It could be an expensive game if a person had some unexpected reason they couldn’t meet the loan obligation like they thought, which is why Dave Ramsey is adamantly against even these free loans. For me though, I have no problem with using the system to my advantage.
When you say you pay twice a month, does that mean you made bi weekly payments to equal the full amount in one month?I have no problem with debt, as long as it's short term and you have a plan, and the money, to pay it off. Long term debt is what I have a problem with. My wife and I use a credit card a lot. We get milage points with it. My wife hasn't bought a plane ticket in several years because she uses the milage points for her tickets. We pay the card off monthly so we aren't charged interest, and we still have close to a million points left.
When I had a home mortgage (15 year) I paid twice a month. That alone cut out several years on the loan. Plus every year I'd make a lump sum payment too.
I bought my JD tractor on a zero interest loan. I had the money to pay cash for it but it was worth it to me at the time to use their money. I paid it off in a couple years.
Debts are like gambling, don't do it if you don't have the money in the bank to pay for it.
He was talking about two full payments. Even if you can’t make a whole extra payment paying anything extra, espechially in the early years, will cut a lot off the interest and number of the payments. An extra 50$ makes a huge difference on an average 30yr mortgage. I kind of feel though that if you can’t afford a 15yr mortgage then you should look at a less expensive house though.When you say you pay twice a month, does that mean you made bi weekly payments to equal the full amount in one month?
Or did you make two full mortgage payments in one month?
I have been paying an extra $100 per month for at least 10 years probably closer to 13 years. I know I will pay it off a little early, but I am ready. I am 17 years in and counting.He was talking about two full payments. Even if you can’t make a whole extra payment paying anything extra, espechially in the early years, will cut a lot off the interest and number of the payments. An extra 50$ makes a huge difference on an average 30yr mortgage. I kind of feel though that if you can’t afford a 15yr mortgage then you should look at a less expensive house though.
Most people get some extra money every once in a while, like tax returns, birthday gift, inheritance or the sale of something. If all this is thrown at the debt, along with the extra 100 a month it can cut a quarter of the time to the pay off. I think looking at the statements often and actually see how much interest is paid, what the balance is and a current expected payoff date is a good motivator to help you stay inspired.I have been paying an extra $100 per month for at least 10 years probably closer to 13 years. I know I will pay it off a little early, but I am ready. I am 17 years in and counting.
That’s what the financial businesses are doing to us, so why not?That's the "secret" to using debt to your advantage; pay it off before the interest starts to accumulate. My strategy of using other people's money (zero interest) is to ensure that I have the money in the bank to pay it off in case something happens. Being disciplined is the key to proper debt management.
Actually I was paying biweekly. My total monthly payment was the same, but by paying half 2 weeks early really cut down the total interest. When I had the money then I'd pay two full payments twice a month. I also rounded my payments up. Example, if my monthly payment was $835 I'd pay $850. All these little things really cut the total interest down, and reducing the years on the mortgage or loan.When you say you pay twice a month, does that mean you made bi weekly payments to equal the full amount in one month?
Or did you make two full mortgage payments in one month?
Great! That’s what I am doing as well. I have paid about 3/4 of the total loan already, but I was hoping it would be sooner.Actually I was paying biweekly. My total monthly payment was the same, but by paying half 2 weeks early really cut down the total interest. When I had the money then I'd pay two full payments twice a month. I also rounded my payments up. Example, if my monthly payment was $835 I'd pay $850. All these little things really cut the total interest down, and reducing the years on the mortgage or loan.
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