Debt and quality of life.

[superdog]

I love this thread.

[Etschell]

i have no debt luckily.

leverage is can be good for businesses. in my opinion other than credit cards paid off in full monthly it is terrible for individuals.

that $500k 30 year mortgage at today's rate costs you $1,200,000. whoever invented the 30 year mortgage product is a genius.

[CNY]

My partner and I have roughly the same income, and decided to just live off one person’s salary and save the other half, with exceptions for vacation.

Our only debt is a mortgage at 2.8%, but either of us could afford it solo. We see the mortgage as more of an inflation rent mitigation thing- especially in New York. We do wish we had bought bigger at times, but the peace of mind is worth not having a spare bedroom- especially when we already decided no kids. And, it lets us take turns taking on more risk in our careers.

Lately, we seem to be the only couple in our friend groups that aren’t shitting a brick over the possibility of loosing one income source with the current layoffs - for what that’s worth.

Edit: and last thing - we only count bonds, mutual funds, ETFs as saving. Stock picks / Crypto Etc. are like going to Vegas, with slightly better (these days worse) odds.

[Lawman77]

No one on this forum has any debt, other than an occasional mortgage

[Krash]

Originally Posted by Bstewart

I know tons of guys in their 60s who lived their whole lives frugally to save up millions. Now even after all of that, they have grown used to that lifestyle and still don't spend. What's the point in that? You can't take it with you.

It’s best when you can spend millions and enjoy it while still saving millions at the same time too.



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[MDMH]

Originally Posted by Lawman77

No one on this forum has any debt, other than an occasional mortgage

Exactly

I guess the ones that scrimped and saved and dropped dead before they could enjoy it don’t have logins…

I don’t think people heavily in debt are gonna post about it even though society encourages it as normal and acceptable behaviour.

Heavy concentration of 1%er’s here I guess

[AzPaul]

Originally Posted by MDMH

I don’t think people heavily in debt are gonna post about it even though society encourages it as normal and acceptable behaviour.

Like being in a discussion about gambling. Let of players but never any losers

[Star Ferry]

Originally Posted by AzPaul

Like being in a discussion about gambling. Let of players but never any losers

Happy to share my foolproof high limit slots strategy e-book for $89.99

[keithmax]

My father taught me interest is to be earned, not paid. I had a mortgage in my 30’s and paid it off by 39. Living debt free allowed me to save the money I would have paid on servicing my debt.

Knowing I can walk away from my job any time and retire comfortably is a great feeling. I live with in my means and learned awhile ago is you are envious of others you can never be happy. There will always be some richer, better looking etc. I am happy for my life, having seen extreme poverty in my travels I am thankful for my life.

I see my long time friends who followed plan B and borrowed to finance a better lifestyle than I had in my younger years are now trapped, having to keep working and now I have am more luxurious lifestyle and now worries about my future.

[bobernet]

“Comparison is the thief of joy.” - T. Roosevelt

[1st amg]

Originally Posted by Star Ferry

My dad is like this — so cheap that it’s sad. He refused to replace a broken fridge, despite having many millions in the bank, and then got food poisoning from spoiled chicken wings. I kid you not.

LOL....now that's funny

[BroncoOne]

Originally Posted by Krash

When it comes to a mortgage, I think it’s better to be somewhat in between. I personally would never pay it down to zero. Especially if you have a very low interest rate. Quite simply, you can generate more wealth with that money if you know what you’re doing.

At the same time, you don’t want your payoff amount to be anywhere close to the market value of your home. You could end up owing more than what your home is worth.

I think 25% to 50% is the sweet spot. (i.e., payoff amount is about 25% to 50% of the market value of your home).


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It definitely depends on the mortgage interest rate. Over the last several years it’s likely you are at a 3% mortgage or even less. It wouldn’t make sense to pay that off with cash on hand. You can buy US Treasuries of varying maturities right now that PAY more than that, plus there is no state tax on the interest income.

Also factor in any tax deductions that you get on your mortgage interest (if you itemize and qualify).

That’s just the most conservative play. If you want the risk exposure to equities, you can certainly make more of a return (especially if there are dividends in play) but, again, your principal is at risk. Time horizon matters. Long term, equities have rewarded patience with investments in good companies. It depends on your personal goals and circumstances, but just the numbers on the interest and tax play tell you to at least pursue the conservative route with the cash and not pay off the mortgage if those are in fact your numbers.

[JParm]

Originally Posted by Star Ferry

Happy to share my foolproof high limit slots strategy e-book for $89.99

[Gaijin]

When I was mid career back in the States and raking in the cash working tons of overtime.

I buy a loft in a trendy neighborhood.

I walk into the Harley dealership and buy a new Softail Nighttrain.

I walk into the Benz dealership and buy a C 240.

It was fun. And I had debt. All paid off now.

And I don’t want to ever do it again.

[brandrea]

Originally Posted by superdog

I love this thread.

I agree, it’s great to see the different opinions of the subject.

[Easy E]

I went all in on the debt elimination game a few years ago. We are completely debt free - house, cars, whole thing. In fact, we paid cash for our last house. I know exactly what I gave up to take that route and I'm quite good with it. Since then I have increased my investment positions and working on growing that. I am completely content and peaceful with my decisions. No debt, a good wad of cash, good and growing investment positions - hard to beat.

[GB-man]

There are very strong arguments for using leverage on appreciating assets, particularly the last 15 years. That said I choose not to because it makes me feel good. Peace of mind is invaluable.

[Calatrava r]

I cannot or won’t pay cash for my home and cars. Buy what you can afford and enjoy life. With the historically low interest rates it made sense to me to take on responsible debts easily fitting into my budget. This allows me to fund retirement savings which is critical in today’s world. Paid in full cars and houses don’t pay bills and buy food.

[BroncoOne]

Originally Posted by Calatrava r

Paid in full cars and houses don’t pay bills and buy food.

True, but neither does crypto and a lot of people (not me) spend money on it. 😆

[Krash]

Years ago, I bought my wife a Subaru Outback. I sold about $35,000 worth of stock and paid cash for it. Unfortunately, that stock ended up being worth about $200,000 a couple years later. MOST EXPENSIVE SUBARU OUTBACK EVER! In that case, buying it with cash instead of financing it was a dumb decision.

So having no debt is nice, but sometimes it’s a catastrophically stupid financial decision.


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[shaunylw]

Originally Posted by minute_man

I used to have a credit card up until debit cards began to be widely accepted, the world over. Ditched it ever since as I no longer have a need or use for one.

You use a debit card for all of your purchases? That’s very odd. Zero purchase protection, zero benefit for your spending. If someone gets your debit card number, they are going to tear through your cash. Then your bank takes their sweet time getting you back your money. With a credit card, it’s their money. Points are whatever, some people are into them some are not. But it seems like a simple $0 yearly free visa credit card is a no brainer? Or even an Amex green card for $70 a year and you pay it off monthly as it’s a charge card.

You are not alone, so i totally get where you’re coming from. I just had this conversation with my brother in law and constantly have to tell my wife to stop using the debit card. His thought process might have been similar, he just wanted to pay cash for everything. To my point, using a charge card and paying off weekly, bi weekly or monthly is the same thing as paying cash. You just get the upside of points and protection.


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[DocHorton]

Originally Posted by Krash

Years ago, I bought my wife a Subaru Outback. I sold about $35,000 worth of stock and paid cash for it. Unfortunately, that stock ended up being worth about $200,000 a couple years later. MOST EXPENSIVE SUBARU OUTBACK EVER! In that case, buying it with cash instead of financing it was a dumb decision.

So having no debt is nice, but sometimes it’s a catastrophically stupid financial decision.

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Well, look at the bright side, you probably saved $4k in interest over 5 years.

[Krash]

Originally Posted by shaunylw

You use a debit card for all of your purchases? That’s very odd. Zero purchase protection, zero benefit for your spending. If someone gets your debit card number, they are going to tear through your cash. Then your bank takes their sweet time getting you back your money. With a credit card, it’s their money. Points are whatever, some people are into them some are not. But it seems like a simple $0 yearly free visa credit card is a no brainer? Or even an Amex green card for $70 a year and you pay it off monthly as it’s a charge card.

You are not alone, so i totally get where you’re coming from. I just had this conversation with my brother in law and constantly have to tell my wife to stop using the debit card. His thought process might have been similar, he just wanted to pay cash for everything. To my point, using a charge card and paying off weekly, bi weekly or monthly is the same thing as paying cash. You just get the upside of points and protection.


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Yeah, using a debit card instead of a credit card is lame. Just pay it off every month and take advantage of the points. It’s literally free money. We just bought a new 65” TV with our points. It’s hanging up on the wall in our back lanai.



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[Mclark202]

I’ve worked since I was 13 years old. I’m now 42 and can retire with a government pension. My only debt is my house of which I have half of it paid for and owe about $208k. My car is paid for. My house and car are both under 5 years old so I’m in a good spot. I buy one nice watch a year when my side hustle pays off.

[joeychitwood]

Originally Posted by Bstewart

I know tons of guys in their 60s who lived their whole lives frugally to save up millions. Now even after all of that, they have grown used to that lifestyle and still don't spend. What's the point in that? You can't take it with you.

I’ve lived frugally out of necessity. I’ve spent fairly lavishly with an income to justify it. And I’ve lived frugally with money in the bank and in real estate. My happiness has never varied based on my lifestyle or bank balance.

[PatekSF]

The entire goal is to write on the back of checks, not the front of them.

[zengineer]

I understand on an intellectual level that sometimes borrowing money to invest, renting instead of buying a home or leasing a vehicle can make sense...but it's just not me.

Cars, trucks and motorcycles are bought with cash unless real, no strings low/zero interest financing or some other incentive is available. The house and other property are paid for and the credit cards are just for convenience and points/cash back.

Again, I get that debt isn't always evil and the importa t thing is to live within your means, but I just prefer to be debt free. I had mortgages on all my houses over the years but this last/current one was paid off in about 12 years. I did lease and even finance a few cars, rented apartments and even rented furniture when first married but that was 35 years ago and ended after a few years (the renting, not the marriage).

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[Calatrava r]

Originally Posted by Lawman77

No one on this forum has any debt, other than an occasional mortgage

And seems like everyone brings cash to the AD also.

[wantonebad]

Living within ones means is the path to freedom and peace of mind. Its a hard thing to fathom when you see and compare yourself to others perhaps but ultimately its the only way to be free, everything else is a pipe dream. JMHO

[wantonebad]

Originally Posted by Star Ferry

My dad is like this — so cheap that it’s sad. He refused to replace a broken fridge, despite having many millions in the bank, and then got food poisoning from spoiled chicken wings. I kid you not.

Honestly the first thing that comes to mind is you can't turn that kind of discipline off easily. Yes, it seems silly, but it is an ends to a means. and it got him to his goal tummy ache and all...

Originally Posted by Krash

Years ago, I bought my wife a Subaru Outback. I sold about $35,000 worth of stock and paid cash for it. Unfortunately, that stock ended up being worth about $200,000 a couple years later. MOST EXPENSIVE SUBARU OUTBACK EVER! In that case, buying it with cash instead of financing it was a dumb decision.

So having no debt is nice, but sometimes it’s a catastrophically stupid financial decision.


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I feel your pain, however that wasn't a strategy flaw, simply a negative stock trade, they happen!!!