How much are you in debt?

[Rainey]

Re: How much are you in debt?

Well, we just bought the wife a new car, but it was only $18,500 ( Colbalt Lt2 )
and we do a good job of keeping our CCard debt low and try to buy as much as possible w/ cash. Our biggest problem is $130,000 in student loans for my wife ( I had a baseball Sship so I owe $0 ) She had to go to LSU/ U. Of Missou/ Kansas State and Iowa State...plus Culinary School in Germany. Just her student loan a month is $872. We are only leasing a town home right now until we decide to buy......

We would be good if it wasn't for that damn Student loan, as we will be paying on that for the next 30 years.

Atleast she had fun in school.

[DickDalewood]

Re: How much are you in debt?

With school loans, about $60,000...

[bluengold34_OS]

Re: How much are you in debt?

Atleast she had fun in school.

Oh yeah...fun was not the problem. I did get season tickets to Iowa St/ LSU/ K St football, so that part was cool and i watched a lot of the basketball games in person there, when we lived in each area. I'm not sure if it was worth $130,00, but fun none the less.

[Jistic]

Re: How much are you in debt?

Well, unfortunately it's pretty much unavoidable since most people NEED but cannot AFFORD things like school, a car, and a place to live, without credit.

School is the only debt I have, but I will need a car and eventually a place to live, so I won't be debt free for a while. It's something I can't really control.

People need a car sure. But can they get by on a beater? Or do they finance a $35000 car that ends up costing them over $40K by the end of the loan, and is only worth 15 at the end?

That's the problem. People think in terms of monthly payments, but not total outflows. Most Millionaires drive cars that are worth less than the middle class. Cuz they understand how money works.

[Chief Illinimac]

Re: How much are you in debt?

People need a car sure. But can they get by on a beater? Or do they finance a $35000 car that ends up costing them over $40K by the end of the loan, and is only worth 15 at the end?

That's the problem. People think in terms of monthly payments, but not total outflows. Most Millionaires drive cars that are worth less than the middle class. Cuz they understand how money works.

Can't argue with you there. But depending on the person's ability to invest well, those low monthly payments can allow more cash to be invested and ultimately make the person more money than buying a car outright with cash. If you can invest your excess cash and earn a higher return than your interest rate, well you can still bling it up when you are retired. It's not terribly difficult to beat a 7% car loan. Hell, my checking account gets 6%.

Basically I'm saying if you are smart about it, debt isn't bad. But you are right, most people aren't, and get screwed.

[mjb2124]

Re: How much are you in debt?

That's ridiculous to take money out of your 401k unless you plan on dying young or working the rest of your life.

What looks like $1000 to him actually cost him maybe something like 30,000 in the long run. Just to get that PS3 and awesome surround system!

I know. He knows how dumb it is now too. Wasn't a PS3 or surround system though... He spent it on a BMW X3.

[Jistic]

Re: How much are you in debt?

Buy the beater, invest the rest every month in any top performing mutual fund. Have it setup to auto every month from your bank account. By the end of what would've been the 5 year loan you'll be in 1000% better shape even if you're dipping into that fund to pay for the maintenance/repair of an older car. Insurance will be less too.

A funny saying I once heard categorized people as "The Have’s, the Have-Not’s, and the Have-Not-Paid-For-What-You-Have’s.”

[caseyd]

Re: How much are you in debt?

Buy the beater, invest the rest every month in any top performing mutual fund. Have it setup to auto every month from your bank account. By the end of what would've been the 5 year loan you'll be in 1000% better shape even if you're dipping into that fund to pay for the maintenance/repair of an older car. Insurance will be less too.

A funny saying I once heard categorized people as "The Have’s, the Have-Not’s, and the Have-Not-Paid-For-What-You-Have’s.”

Which is exactly why I kept my 1992 Toyota Corolla until this year. I refuse to ever have more than one car payment at a time. I also refuse to pay any more than 2.9% interest which is why we bought a 2007 instead of 2008 Honda. Most of the time I try to get 0% on vehicles, but nobody was offering that on any vehicles we were interested in. The car guy said that we had one of the best credit ratings he had ever seen.

That being said, we have just have the car and house. We refinanced the house on a 15 year loan and only have 11 years left. As soon as it is paid off, the payment will be going straight into my 457 at work. I'm socking away as much money as I can for retirement. The rep that comes in to help people with their accounts at work said that I am WAY ahead of everyone else, which made me feel good, especially with the way the market is now. I try not to look at it too much. We use 2 of our credit cards a ton (one MC and one Amex) but pay them off each month. We do that because we actually get an average of $30 a month back from MC and about $20 a month from Costco for using the cards. Obviously, if things changed financially we wouldn't do that. Absolutely nothing wrong with using CCs as long as you do it responsibly and pay them off each month. That actually helps your credit rating.

Sorry for the life story. I just like to encourage people to be smart with their finances as much as possible. We don't live outside of our means at all, give a ton to church and other charities, can still have fun, and are hopefully on our way to a decent retirement. I make a good living but we're not rich by any means. You don't have to be as long as you make wise choices.

\soapbox

[Jistic]

Re: How much are you in debt?

Which is exactly why I kept my 1992 Toyota Corolla until this year. I refuse to ever have more than one car payment at a time. I also refuse to pay any more than 2.9% interest which is why we bought a 2007 instead of 2008 Honda. Most of the time I try to get 0% on vehicles, but nobody was offering that on any vehicles we were interested in. The car guy said that we had one of the best credit ratings he had ever seen.

That being said, we have just have the car and house. We refinanced the house on a 15 year loan and only have 11 years left. As soon as it is paid off, the payment will be going straight into my 457 at work. I'm socking away as much money as I can for retirement. The rep that comes in to help people with their accounts at work said that I am WAY ahead of everyone else, which made me feel good, especially with the way the market is now. I try not to look at it too much. We use 2 of our credit cards a ton (one MC and one Amex) but pay them off each month. We do that because we actually get an average of $30 a month back from MC and about $20 a month from Costco for using the cards. Obviously, if things changed financially we wouldn't do that. Absolutely nothing wrong with using CCs as long as you do it responsibly and pay them off each month. That actually helps your credit rating.

Sorry for the life story. I just like to encourage people to be smart with their finances as much as possible. We don't live outside of our means at all, give a ton to church and other charities, can still have fun, and are hopefully on our way to a decent retirement. I make a good living but we're not rich by any means. You don't have to be as long as you make wise choices.

\soapbox

Well done.

[Altimus]

Re: How much are you in debt?

One thing I did recently was take out a 25K loan. Transferred that balance over to a 0% CC. Took that 25K and put it at a +7% account for a year. If you have the credit, not a bad way to make some side money.

[bkrich83]

Re: How much are you in debt?

People need a car sure. But can they get by on a beater? Or do they finance a $35000 car that ends up costing them over $40K by the end of the loan, and is only worth 15 at the end?

That's the problem. People think in terms of monthly payments, but not total outflows. Most Millionaires drive cars that are worth less than the middle class. Cuz they understand how money works.

I don't know where you got the millionaires drive beaters from. Both my parents are millionaire's and I work for and have worked for several over the past 13 or 14 years. I can assure that none of them are driving Honda's or Hyundai's or anything like that.

[fishepa]

Re: How much are you in debt?

What's wrong with a Honda!!!!

[Jistic]

Re: How much are you in debt?

I don't know where you got the millionaires drive beaters from. Both my parents are millionaire's and I work for and have worked for several over the past 13 or 14 years. I can assure that none of them are driving Honda's or Hyundai's or anything like that.

From "The Millionaire Next Door
The Surprising Secrets of America's Wealthy
By Thomas J. Stanley, Ph. D. and William D. Danko, Ph. D."

Our friend also drives a current-model imported luxury car. Most millionaires are not driving this year's model. Only a minority drive a foreign motor vehicle. An even smaller minority drive foreign luxury cars. Our trust officer leases, while only a minority of millionaires ever lease their motor vehicles.

These millionaires "live well below their means. They wear inexpensive suits and drive American-made cars. Only a minority of them drives the current-model-year automobile. Only a minority ever leases their motor vehicles." Very interesting. The next time you see that hotshot driving a brand new Mercedes SL500, just remember that he may not own the car and may be living in debt. Big hat, no cattle, as they say in Texas.

http://www.askmen.com/money/successful/53_success.html

From the Millionaire Mind a study by Thomas J Stanley

''The average millionaire was likely to live in an upper middle class home, and drive a Ford F-150 pickup truck or Lexus ES 300 they bought used. They wear watches that cost less than $150 and they spend less than $300 per suit; if they have to wear one at all. These people had an average net worth of $9.2 million and earned $749,000 a year.

sk most people to name the quintessential American millionaire, and a regular guy like 41-year-old Paul Kieffer wouldn't even be in the running. Self-effacing and unremarkable in appearance, Kieffer lives in tiny St. Charles, Minn. (pop. 3,000), spends about $38,000 a year to support his wife and two kids, drives a used 1995 Camaro, refuses to sign up for $30-a-month cable TV and works six days a week at the local Red Wing shoe store.

How do we know all this? To learn what America's millionaires have in common and how they accumulated their wealth, Stanley and Danko sent out 3,000 questionnaires to affluent Americans and then conducted 100 or so in-person, focus-group interviews. They learned, for instance, that three out of four millionaires drive cars that are more than a year old (Fords are the most popular) and half have never spent more than $29,000 for an auto. They prefer Bud to Bordeaux, 50% haven't owned a wristwatch costing more than $235, and half the men have never spent more than $399 on a suit.

By contrast, Stanley and Danko found that many of the people who flaunt the trappings of success--like the prototypical Manhattan or Los Angeles yuppie who squanders a six-figure income on a $5,000-a-month apartment, a leased $75,000 Mercedes and lavish vacations--often have little wealth. When they studied people who live in affluent communities like Greenwich, Conn. and Shaker Heights, Ohio, where homes can sell for $1 million or so, they found that while 20% of the residents had a net worth of more than $1 million, 80% had relatively little set aside in investments. "I interviewed one woman," recalls Stanley, "who had 287 pairs of shoes in her closet but almost no savings." Texans have a term for a person who lives a flashy lifestyle but has no real wealth: big hat, no cattle.

http://money.cnn.com/magazines/moneymag/moneymag_archive/1997/06/01/227224/index.htm

Some of this info is 10 years old, but illustrates a point. Not all drive beaters, but most aren't driving $80,000 cars.

[bkrich83]

Re: How much are you in debt?

/moneymag_archive/1997/06/01/227224/index.htm

Some of this info is 10 years old, but illustrates a point. Not all drive beaters, but most aren't driving $80,000 cars.

I question the validitiy of that. Maybe it's because I am in So. Cal, where cars are a bigger deal. But of the 2 dozen or so people I know or have dealt with who are millionaire's I don't know a single one that drives what I would consider an "everyman's" car. $80,000 cars would actually be on the low end of the spectrum from the folks I deal with. Although the Audi A8 which is around 80 grand seems to be the flavor of the month these days.

I also don't get the negative reaction to leasing a car. I love leasing. I put low miles on my cars, I love getting a new car every two or three years, mainenence is usually included and it's always under warranty.

[bkrich83]

Re: How much are you in debt?

What's wrong with a Honda!!!!

Nothing. If you like front wheel drive cars.