This is by far and away the best topic I have ever come across on SW! I have recently just seen the light as to how debt was ruining my life and have made the necessary changes to be free in five years. Great topic!
Debt/Financial Freedom
- Thread starter Yeti
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D
Diesel99
Member
Why is it they don't teach financial freedom in school, we are trained young to get into debt and stay in debt. Glad too see others here that are doing well with their finances.
This is a excerpt from a 2006 barons article:
• 32.6% of new US mortgages and home equity loans in 2005 were interest only, up from 0.6% in 2000
• 43% of first-time home buyers in 2005 put no money down
• 15.2% of 2005 buyers owe at least 10% more than their home is worth
• 10% of all home owners with mortgages have no equity in their homes
This is a excerpt from a 2006 barons article:
• 32.6% of new US mortgages and home equity loans in 2005 were interest only, up from 0.6% in 2000
• 43% of first-time home buyers in 2005 put no money down
• 15.2% of 2005 buyers owe at least 10% more than their home is worth
• 10% of all home owners with mortgages have no equity in their homes
Eliminating debt is a no brainer. The depreciation of my sleds is what I'm struggling with.
O
Ollie
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Talked to a lady just yesterday.
She was complaining that she just couldn't get ahead and she didn't know why.
I asked her to add up all the interest she pays each month. She figured she was paying between 1600 to 2000 a month in interest.
I talked her into taking out a second morgage on her house to pay off all her credit cards. They were eating her alive. I explained to her how to get ahead and pay off the second in 2 years. That would put her on a solid footing to pay off the rest of her bills in another 3 years after that.
She couldn't believe how easy it was. Now if she can stick to it, that's the real question.
She was complaining that she just couldn't get ahead and she didn't know why.
I asked her to add up all the interest she pays each month. She figured she was paying between 1600 to 2000 a month in interest.
I talked her into taking out a second morgage on her house to pay off all her credit cards. They were eating her alive. I explained to her how to get ahead and pay off the second in 2 years. That would put her on a solid footing to pay off the rest of her bills in another 3 years after that.
She couldn't believe how easy it was. Now if she can stick to it, that's the real question.
Getting and then staying debt free takes a lot of willpower and work as many of you know. Im trying a little of this out myself in order to get a house in the next few years. Dave Ramsey has some good ideas as well.
Borrow till the bank say's no more, hell it's only numbers on paper! Seriously good for you, I only wish I was there.
Great post. Wasn't familiar with Dave. Will definitely look him up.
Our house will be paid for in 7 yrs. . . would like to have it paid off sooner. Other than the house and the RV, we are debt free! We pay cash for our toys, pay off credit card every month with 2% back. But, what we are NOT good at is setting a budget and sticking to it. Umm, a weekend snowmobiling we hadn't planned. . . $300 bucks, . . but great memories. Something we can never get back!
Our house will be paid for in 7 yrs. . . would like to have it paid off sooner. Other than the house and the RV, we are debt free! We pay cash for our toys, pay off credit card every month with 2% back. But, what we are NOT good at is setting a budget and sticking to it. Umm, a weekend snowmobiling we hadn't planned. . . $300 bucks, . . but great memories. Something we can never get back!
of course she wont stick to it. There is a reason her bills and interests rates were so high. Now she has a bunch of credit cards freed up for more spending. In 6 months to a year she will have them maxed out again, be paying on 2 mortgages, and have increased her income less than 4% (american average). then she will be really screwed...
smart money management comes from the ability to say NO and having some self control...
i have the same weakness you all have in that i need a sled. my next sled might be on a loan because i hope to have a house, and with that i dont think i can save up enough to get a new sled by fall... sheesh how could i live without a sled... but then i am paying money to the man, instead of putting it in my pocket... ughhh...
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I think dave ramsy teaches some good things with getting out of debt. But in some areas i disagree because i have seen in my life the advantage to some debt and how it improves ones net worth.
Consumer debt is never good but like someone mentioned credit cards can be used to establish a history of credit. Use the thing properly and it will help you.. Abuse it and it will sink you.. The problem this country faces is financial illiteracy. No one understands the 'money game' so it sinks them.. If people will become financially literate they will fin them selves becoming free in their lives because of the wealth they are producing..
There are a lot of other people that i would recommend reading over dave ramsey. I think dave ramsy is great for people who are deep into consumer debt but others teach how to use other debt as a way to build wealth
Pay cash for depreciating assets, and leverage for appreciating assets!! Use your home as a way to build wealth. learn how it can!! There are ways that having a mortgage can benefit you in the long run.. If you understand loans and how to use them to your advantage...
Banks leverage us everyday!! we put our own money in there and they say 'We will pay you 1,2,3 percent to keep your money here.' Then we go and get a loan from them.. and they charge us 6,7,8 percent on our own money. They make 3% and they are loaning us our own money!!! now thats leverage at its finest!! Why cant we learn a thing or two from the banks and leverage borrowed money to produce wealth?
I guess basically in short im obsessed with finances and love it too. haha read many a books on it!!
Consumer debt is never good but like someone mentioned credit cards can be used to establish a history of credit. Use the thing properly and it will help you.. Abuse it and it will sink you.. The problem this country faces is financial illiteracy. No one understands the 'money game' so it sinks them.. If people will become financially literate they will fin them selves becoming free in their lives because of the wealth they are producing..
There are a lot of other people that i would recommend reading over dave ramsey. I think dave ramsy is great for people who are deep into consumer debt but others teach how to use other debt as a way to build wealth
Pay cash for depreciating assets, and leverage for appreciating assets!! Use your home as a way to build wealth. learn how it can!! There are ways that having a mortgage can benefit you in the long run.. If you understand loans and how to use them to your advantage...
Banks leverage us everyday!! we put our own money in there and they say 'We will pay you 1,2,3 percent to keep your money here.' Then we go and get a loan from them.. and they charge us 6,7,8 percent on our own money. They make 3% and they are loaning us our own money!!! now thats leverage at its finest!! Why cant we learn a thing or two from the banks and leverage borrowed money to produce wealth?
I guess basically in short im obsessed with finances and love it too. haha read many a books on it!!
To me the risk of this isn't worth it. That's the key...RISK. I'm not gonna go borrow money at 5% or whatever and HOPE that I can make 10% by investing it. Even if it's a house, houses don't always go up in value (as we are currently learning). Same with stocks and mutual funds. It's one thing if I am debt free and investing my own money, it's quite another to be obligated to pay that money back to a lender. "Borrower is slave to the lender". With debt comes that obligation of getting up and going to work for the man everyday. And the man can decide to lay me off anytime he wants. Add to that the risk that my golden investment may not do as good as I had hoped but yet I am still obligated to pay that money back. I'm not trying to tell anyone how to run their life, if this works for you great, but for me totally debt free is the way. I will still invest of course, but I will do so without carrying debt.
That is great and i wish more people were like that i think our country would be better off if more people just worried about getting out of debt.. There is risk in this and obviously its up to the person to decide what risks they should take.. I guess im not saying its bad to pay off your house. It is a very good feeling to not owe anyone money.
I just feel there are ways to reduce risk.. and find sound investments that can accomplish this.. And also i feel there are better ways to pay off your mortgage than a 30, or 15 year loan and even a bi-weekly payoff.. But thats a whole new animal!! haha
I'm not trying to say i know about finances and you should listen tome.. its just this stuff has made sense to me.. I wish more people out there were concerned at all about learning to manage their finances.. WE would all be much better off!!
Also i agree with the investments you stated.. They are risky.. I would want to make sure my principle was secured if was using home equity! The stock market is not the place to accomlish that. haha
1. My boss has the same problem. He just consolidated 30-40k in debt into his new house payment (we built it so he had equity). The question is, is he smart enough to keep that credit off. Unfortunately I dont think he can. Just too impulsive and wastefull. He lives a little beyond his means and now with the added costs of owning a house....
2. "smart money management comes from the ability to say NO and having some self control..." Bingo. Right On!
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Supplicate
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BTT, stuff is getting paid off and its good to be getting back into the lesser debt 
BTT, stuff is getting paid off and its good to be getting back into the lesser debt
LMAO at this thread! good stuff in here...
Sound financial principles today include: Screwing your neighbors and taking their wages through welfare. Sitting around drinking all day and expecting to be paid to do so. Putting your house into foreclosure so you can buy something cheaper and get more equity later, leaving your neighbors to foot the extra tax money needed by the community, and paying for your neighbors midnight run to the ER to treat his cold. did i miss any?
I learned the hard way.
my goal now is to pay off everything and retire early.
my goal now is to pay off everything and retire early.
???? A little more please..
Living within your means is the only way to get a good nights sleep. My wife and I own everything. The only payments we have are utilities every month. 
Bought a run down house in my early twenties and remodeled the whole thing - paying as I went. 10 years later and it's paid for.
I don't feel the need to compete with the Jones's since the bank owns most of their stuff. Use your credit cards wisely and pay them off each month. Don't buy something you can't afford.............. Sounds like common sense to me!!!
Bought a run down house in my early twenties and remodeled the whole thing - paying as I went. 10 years later and it's paid for.I don't feel the need to compete with the Jones's since the bank owns most of their stuff. Use your credit cards wisely and pay them off each month. Don't buy something you can't afford.............. Sounds like common sense to me!!!
I missed this thread the first time around as well. From the people who have posted on this thread back when it started last year, are you still working on becoming debt free? If so, great for you! What has been the hardest part for you and the family? If not, what would you do differently to stay on track?
I've been working on this Dave Ramsey plan since Oct 2008. I still have 2 years to go before I'm debt free besides my house. I've always been a very impulsive buyer and I think that's been the hardest part for me. I've bought/sold roughly 15-20 sleds in 18 years of riding and about 15 cars since I got my drivers license. In the past, I've rotated my car and toy inventory every year without skipping a heartbeat. Since I paid off my sled, I plan on keeping it for a long time. It's sickening to think how much money I wasted on taxes/licensing for all the past vehicles I purchased.
Another thing that was helpful for me was giving every dollar a name, as Dave R. would call it (budget). That was a very eye opening exercise for me. I am using the envelope system that Dave talks about and it seems to work out great for things that are a necessity - gas, food, hair cuts, truck repairs, gifts, etc.
With that said, it feels good to be moving in the right direction and seeing progress. Reading some of these posts just gives me more motivation to keep plugging away. I'm thinking about getting a 2nd job delivering pizza's at night and on the weekends to speed up the process.
I've been working on this Dave Ramsey plan since Oct 2008. I still have 2 years to go before I'm debt free besides my house. I've always been a very impulsive buyer and I think that's been the hardest part for me. I've bought/sold roughly 15-20 sleds in 18 years of riding and about 15 cars since I got my drivers license. In the past, I've rotated my car and toy inventory every year without skipping a heartbeat. Since I paid off my sled, I plan on keeping it for a long time. It's sickening to think how much money I wasted on taxes/licensing for all the past vehicles I purchased.
Another thing that was helpful for me was giving every dollar a name, as Dave R. would call it (budget). That was a very eye opening exercise for me. I am using the envelope system that Dave talks about and it seems to work out great for things that are a necessity - gas, food, hair cuts, truck repairs, gifts, etc.
With that said, it feels good to be moving in the right direction and seeing progress. Reading some of these posts just gives me more motivation to keep plugging away. I'm thinking about getting a 2nd job delivering pizza's at night and on the weekends to speed up the process.
I run completely debt free, i had 14k to pay off(1st truck I had ever bought with out cash) luckily I never got in the credit card mess. makes tough times much more relaxing, now i am on the mission of trying to make so the ranch dosen't have to use an operating loan. thats going to take awhile especially how the markets have been and are looking.
Some people pay interest and others earn it. I want to be in the latter.
Some people pay interest and others earn it. I want to be in the latter.
