Living Debt Free

[melissel]

I am glad that I started this thread, but still don't have an answer except to start adding on to the car payment to get that paid off. We don't have credit card debt and haven't for years. We don't have cable, Netflix, or expensive cell phone/plans. Dd's ballet is an extra, and we could drop that, but it's her main activity with a group of nice girls. We rarely eat out or vacation. We don't spend a lot on clothes. I consolidate errand trips, hang clothes, and cook from scratch. I am sure I can find ways to trim the budget, but we live frugally. I see debt-free living as a goal because getting rid of our two payments (or even one of them) would give us money for travelling and a few extras. In addition, we tithe but would like to give to other organizations. I was expecially interested in the posts by renters. We will be moving next year, so we have the option of renting or buying.

 

Because there is no answer...or the answer is different depending on your life situation. In our current situation, we can't put anything more on our mortgage because we have no idea what 2012 is going to look like (at the moment, it looks pretty scary *sigh*). We're like you--we're frugal already. We're cutting most extras already (where I can without DH going nuts). In that case, the only option is to find a way to bring in a little more income. Can you do something on the side? Can you coupon? Can your DH look for a better-paying job or apply for a promotion?

 

As for renting vs. owning, that's something you have to determine for your area and your taste (how badly do you want to avoid having a landlord, for example). It might be a lot cheaper to rent, or it might not, depending on the space you need, whether you have pets, etc. If you CAN save significant money by renting, then you continue to live the same life you lead now and sock away the extra money. Invest some when you're able--CDs are safe, and you'll make a little passive income that way.

 

Those are the only answers, really. Spend less or make more. Ideally, do both.

[wy_kid_wrangler04]

Don't forget about baby step #3 though--3-6 months' savings. Thank goodness we had that this past year or we'd have been in trouble. It was the first time in my 36 years that I had any savings to speak of :blushing:

 

 

Yes we are going to work on that now that dh finally (F I N A L L Y ) has been promoted. That was a very needed promotion lol

[FairProspects]

My husband is currently finishing up his Masters' degree -- debt free. So it is possible -- depending on the degree and the college you go to.

 

I'm glad it was possible for you. I wish it had been for us as it was definitely a consideration. No state school here offered Dh's degree so he was required to attend a more expensive school (either private or out-of-state tuition) or change careers. He would definitely say it was worth it, and it should pay off big time financially in the long run (probably even this year as his business takes off), but my point remains that it is not just as simple as "if you are willing to work hard you can graduate debt-free". It can be a lot more complicated (and expensive) than that often depending on factors beyond your control (what degrees schools offer, what home state your residency is in, the cost-of-living in your area, etc) and requiring difficult emotional decisions (such as if debt-free is your ultimate goal at all points of your life, some careers may not be possible for you).

 

I guess I just don't believe that "debt-free" trumps all. Career satisfaction carries some weight with me as well. I don't feel that dh should have to be miserable 40, 50, or even 80 hours a week and some student loan debt was the best way for us to accomplish that. I do feel that being debt-free is a worthy goal, just not the only goal in life.

 

(Writing not so much to the PP, as just to make a point in the debt-free discussion :))

[melissel]

Did you buy the home kit or did you go through your church? I really want to do FPU I am having a hard time justifying spending the money for the DVD kit.

 

Plenty of people do the Dave Ramsay thing by just getting the book from the library and gleaning what they can online.

 

http://www.daveramsey.com/home/

 

There was also a set of message boards that was exceptionally supportive and free, but I just went to the link and saw they've been hacked and are currently down :( Here's the link for future reference:

 

http://www.llnoe.com/

 

There are also lots of blogs that follow Dave's principles where you can find inspiration and support. There have been threads about this too, where people shared lots of resources. If you do a search on "ramsey" here, you'll find more info.

[melissel]

Yes we are going to work on that now that dh finally (F I N A L L Y ) has been promoted. That was a very needed promotion lol

 

Nice, congrats! :D

[Angie in VA]

We did the class at our church. When you do that, in the kit you get the workbook, Dave Ramseys book and the whole class on CD so you can listen to it whenever and where ever. I highly recommend it. We at that time had to save to afford to go but trust me its worth it! Dh was unemployed at the time. Dh got a "just making ends meat" job during the class and was just promoted last week (about double the pay or alittle better during the busy season of summer ;)) so we are on fire to get this debt outta here!!!!!! :D

 

We did this through our church 2 years ago. The church helped pay for it, so that helped A LOT. It was great for us. I think Dh and I would have ditched the dvd's at home, but that's just us. Actually, I think DH would be too tired to watch them and I'd nag him about. :( So, having to report to the church for the class, got us there and got us watching the videos.

 

Also, we had small discussions during the class (not long). We knew everyone in the class, so sometimes the money talk was awkward (at least for ME). Dh and I gained FAR MORE talking on the rides home after each class than from any group discussions in the class.

 

Love Dave, even though I sometimes tease that he ruins my life. ;)

Edited May 9, 2011 by Angie in VA

[wy_kid_wrangler04]

Nice, congrats! :D

 

 

Thank you :D

[wy_kid_wrangler04]

We did this through our church 2 years ago. The church helped pay for it, so that helped A LOT. It was great for us. I think Dh and I would have ditched the dvd's at home, but that's just us. Actually, I think DH would be too tired to watch them and I'd nag him about. :( So, having to report to the church for the class, got us there and got us watching the videos.

 

Also, we had small discussions during the class (not long). We knew everyone in the class, so sometimes the money talk was awkward (at least for ME). Dh and I gained FAR MORE on the rides home after each class than from any group discussions in the class.

 

Love Dave, even though I sometimes teased that he ruins my life. ;)

 

Our church had scholarships but we found out about them after we paid :001_huh: We listen to the CD's when we have a long car trip (we have about an hour to an hour and a half drive to get reasonably priced groceries) but other than that we don't listen to them. Its nice for long trips though.

[Susan in KY]

It seems like it would make more sense to accept the mortgage and simply pay the highest payment you can each month to pay it down quickly rather than renting some place for the purpose of paying cash for a house. That way, you're not spending all that money on rent but instead all your housing budget is going toward housing.

 

The flip side is that buying means you're stuck in a single location. It's limiting. We wanted to be free agents.... We can do that with our current rental situation, and being able to pay cash for a house (eventually) is something important to me. I have heard my fair share of horror stories about mortgage companies. It seems that whenever similar discussions come up among our friends and I am bold enough to say something about our plans, the most frequent response has been, "What I wouldn't give to be out from under XX mortgage company...."

 

This happens often enough to reinforce the Biblical adage that the borrower is slave to the lender, and I really don't want any part of that sort of life. Other people feel they need to, or they want to, or they will never move from their current location for any reason. We are far too transitory for that to be practical in our case, and I love the freedom of our particular situation. However, I can see that for someone who plans to stay in a single location it would work well to buy and pay it down fast.

[meggie]

I'm sorry, I don't have time to read anyone else's post. But here is our story.

 

My husband graduated from college with about $13K in student loans. We had about $4000 on credit cards. Unfortunately, he graduated in film, which is pretty much useless at getting you a job right out of college. That's just not how the film world works. He was unemployed for about 2 months, then worked for a month doing overnight stocking at Target, was unemployed another month, worked 1 month at a call center and then got an incredible freelance job for 1 month, then got a really good job at a place that designed and built sets.

 

From all those periods of unemployment, we learned, "Save for a rainy day, because it will come." Our student loans came due right as he was in his first unemployment period. And since I'd done really bad at paying bills, the interest rates on our credit card kicked up to like 30% and we couldn't afford to pay that either. It wasn't a very deep whole to be in compared to a lot of people, but it was deep enough for our situation to teach us a thing or two.

 

That job lasted about a year and a half, during which time we paid off $7000 of debt (the credit cards and $3k of the student loan) and we were only earning $25K a year. Plus we had our $1000 in the bank for our baby emergency fund. Details are starting to get fuzzy, but the place he was working went out of business and we spent another year and a half unemployed. It was a tough time financially and emotionally. He did manage to find a part time job, two days a week for $8/hr, but we never would have survived without our savings (we used our tax money) and unemployment. The economy was really bad in this area for the film world, so freelance work was very scarce.

 

We were down to our last dollar. We were so poor we couldn't afford to even buy macaroni and cheese (and I do have lots to say about eating processed garbage like that) and we eventually went on food stamps as a last resort. Unemployment had run out and his part time job wouldn't even pay for our rent. Then he got this job for $12.5/hour. He works full time there and gets $500/wk from that and works on Saturdays at the part time job for $80/wk.

 

And how we survive now? We keep our monthly bills down. We have rent, renters and car insurance, cell phones, gas and electric and that *@^% student loan payment. That's it. We've never had a car loan (and we've never been rich either). We would be stupid to buy a house now, because no matter what, if you buy a house with a mortgage, you don't own it, the bank does. And I'm not willing to risk that. Food is our biggest expense and I'm sure I could make the $400 I budget for it go down if I were willing to eat processed foods again, but I'm not, so we are going very simple.

 

I grind my own wheat, bake my own bread. I just placed my first order with Bountiful Baskets, so I'm hoping that turns out ok and will help me keep down the cost for fresh produce (we go through it SOOOO quickly). I make my own laundry detergent. I saved all the clothes from Pigby, so Digby wears his hand me downs. I don't buy clothes for Pigby for more than $3.50 each (for shirts or pants). I buy used from classifieds. We bought our washer and dryer for $150 total over a year and a half ago and they're still running fine. We bought our minivan for $5000 and sold our Xterra for $5000 when Chuck came along. We bought our very, very nice table and chairs for $90. I bought my double stroller for $100 less than the retail price.

 

I am not perfect. I have a list of about 25 more things I need to be doing (making my own pasta, yogurt, kefir, etc) before I will consider myself perfect. Food does go to waste occasionally. But educating myself on the cost of goods and jumping at the chance to save money (only for what we need, not what we want) helps a lot. I don't know how we make it on $2300 a month, but somehow all our needs are met and money is going into the savings account. Slowly but surely we'll get there. It helps because I know this isn't our permanent situation. My husband is working religiously on his business plan to get this movie made and to move into the film world.

 

ETA: after going back and rereading your post (I had read several pages of comments and forgot what the real question was), we're still not totally debt free. We just pay extra on our student loan every month and even though it's not much, it will be paid off quicker than what their schedule was. We've never had debt on a car or a house, so we've never had that problem. To me, rent is a different kind of debt. Yes, you owe it every month and yes you are paying the mortgage and taxes on someone else's property, but you aren't taking on the risk of it. And we live in an area where if we absolutely had to (like when we were on our last dollar and almost had to move in with my mother) we could have easily gotten out of our rent agreement because there are so many other people here who would have taken it.

Edited May 9, 2011 by meggie

[Upward Journey]

Don't forget about baby step #3 though--3-6 months' savings. Thank goodness we had that this past year or we'd have been in trouble. It was the first time in my 36 years that I had any savings to speak of :blushing:

 

No kidding. Hubby is out of work and that savings has been a life saver, literally.

[Renthead Mommy]

We're debt free but we still rent. It would cost us much more to buy a place. This is the first place we've been at for a full 3 years. If we bought, we'd spend way more in things like closing costs, and the cost to fix it up to re list it when we move (painting, landscaping) not to mention it's different when you own. When you own, it's 'yours'. Things like appliances, carpets, walls, landscaping that you don't like, would never have chosen, think were stupid ideas or whatever, you can live with. If you own the house, those things eat at you, you hate them, and then you spend money changing them.

 

For us renting is a better choice. For one thing we don't want to spend our last 6 months in a place painting, cleaning, reseeding the yard, and then having to tell kids don't play in the yard, don't touch the wall, don't make a mess. And of course there's the time issue for showings and such. It's sort of a quality of life issue. We spend more monthly, but I'm sure it's about the same in the end.

 

As for the rest of the debt free, we planned. We waited to have a baby till we could afford it. We paid off student loans first. We live rather frugally. We bought two brand new cars when we came back stateside and paid them both off in less than a year. But we keep our cars for years. We pay our credit cards off monthly. We buy what we need. We don't shop as a hobby. We don't buy for the sake of buying and we try to instill that in our son. We only eat out a few times a week. We don't take extravagant vacations, but we take nice ones like a cruise. (Except last week we went to Puerto Rico, but it was for my husband's professional conference so most of that is refunded.) When my son and I travel, we usually do it by car and stay at simple hotels like Comforts and Quality's.

 

We live below our means, but we make that fit our lifestyle.

[Melissa in Australia]

We have achieved debt free by only getting things as we could afford them, much the way people use to live in times past.

My dh bought a block of land ( 5 acres) before we were married, he had a small loan on it. we quickly saved up and payed the loan off, while living in an old pop up caravan. It was so small that we both couldn't stand up at the same time. We started building our own house, just a very small cottage. We lived without electricity for 2 years while we saved up for it. We have only ever had furniture from op-shops, and have only had a lounge suite (secondhand) in the last 2 years. Before that we had a few odd chairs and the children sat on the floor.

 

We have added to our house and property over the years, we now live in a palace and own another 5 acre block.

 

I think one of the problems with society today is people want to start out with everything. They don't realise that past generations took years to achieve that.

 

The joy of doing without, saving up for a while and finally buying something is much greater than just going out and getting it on credit.

[2squared]

Dh is an obsessive saver with accounts set up specifically for vacation, household repairs, auto repairs/replacement, orthodontics, etc. He pays bills first, then pays savings as if it were a bill.

 

:lol: I didn't know these things were obsessive. I thought they were normal.

[FloridaLisa]

You might find this series of blog posts interesting. This blogger and her husband were determined to save 100% down for a home. They lived through very lean times while he was in undergraduate and then law school and she was raising children at home, trying to make some money on the side.

 

www.moneysavingmom.com

 

Lisa

[Mejane]

I am glad that I started this thread, but still don't have an answer except to start adding on to the car payment to get that paid off.

 

There are really only two ways to accumulate extra money to pay down debt or save: spend less in other areas or earn more.

[meggie]

There are really only two ways to accumulate extra money to pay down debt or save: spend less in other areas or earn more.

 

This is true. But it's kinda like losing weight. Everyone knows that to lose weight you either need to bring in fewer calories or burn more (or maybe both). But like losing weight, becoming debt free is more about behavior than actual knowledge about what to do.

 

To the OP: I would recommend reading some kind of finance book by Dave Ramsey or Suze Orman or Larry Burkett (I think that's the right guy). Because, like with losing weight, you probably won't be doing much in terms of paying down debt until you are both really motivated to, so some of these books are good at getting you motivated.

[abacus2]

This is the first time I have ever seen anyone suggest that rent counts as debt.

[Jenny in GA]

We attended a church where debt free meant no mortgage/no rent and no car payment. For those of you who have achieved this, how did you do it?

 

 

I am kind of in a bad mood, and I just have to respond this way: For people with ongoing, incurable health problems, this is almost impossible.

 

Last year we spent over $7,000 on medical bills and did not even have any "serious problems." (The year we did, we had over $14,000 in medical bills.)

 

And that's not counting the $12,000/year we spend on health insurance.

[Night Elf]

Plenty of people do the Dave Ramsay thing by just getting the book from the library and gleaning what they can online.

 

This is exactly what we did and it was tremendously helpful. We just needed the basic information to make some changes in our finances and lifestyle.

[melissel]

This is the first time I have ever seen anyone suggest that rent counts as debt.

 

I was thinking about it too. Maybe they're looking at it as being under an obligation to pay someone for something you could provide yourself if you saved enough. For example, I couldn't provide my own gas/electricity/water no matter how hard I tried, but if I saved hard enough, I could buy my own domicile on my own. Maybe? It sounds like this is the kind of crowd that would tending toward a self-sufficiency/off-the-grid mindset.

[Blessedchaos]

We are completely debt free. We paid off our house (purchase price $177K in 2001) two years ago and we have a 2009 Toyota Sienna and a 2009 Toyota Prius that are also paid off. We owe nothing to anyone and it feels great.

 

We both worked very hard to get to this place. We didn't start out with much; I brought about $11K to our marriage (saved from living and working in South Korea) and my dh brought nothing. We had no help from family and I had paid all of my college expenses myself. Most of what we earned was spent paying off debt. I had a small college loan to pay off (I worked during college and went PSEO in high school, then community college and on to an inexpensive state university) and then I paid off my car. Everything else I saved. Granted, our early married life was not glamorous. We did not travel, we rarely ate out, and we were very frugal. We rented for a year before we purchased our first home, and a year later we had our oldest child. We both worked full time throughout this time and then my dh, who was still in night school for a computer programming diploma, quit his low paying factory job to stay home with the baby. I wanted nothing more than to be a stay at home mom, but for a while we couldn't do it. When our oldest was 10 months, we got very lucky and he got a job offer with just the bare minimum we'd need for me to quit and stay home. We took the leap of faith and actually we have never had to struggle, thankfully. We moved to our current house in 2001 and at that time had a $122K mortgage. In 2003 (and two more children later) we refinanced to a 15 year mortgage at a 4.25 percent interest rate and then we just put all extra money we had into our principal with the goal of paying off the mortgage. We did have an emergency savings fund and we contributed to his 401K, but everything else went toward our mortgage. My dh makes a comfortable, but not grand salary (well under six figures). It took 7 years to pay it off. It was a combination of luck, hard work, and frugality.

 

We are not religious people; we just don't like debt and we don't want to owe anything to anyone. Without the mortgage, we were able to pay off both car loans very quickly. It's a great place to be and well worth adjusting your lifestyle to achieve it.

 

Jen

[Carpe]

For example, I couldn't provide my own gas/electricity/water no matter how hard I tried, but if I saved hard enough, I could buy my own domicile on my own.

 

If you had land with running water, or a high water table and a well, you wouldn't have a water bill.

If you had solar panels, or a wind turbine, or a hydroelectirc generator on your above mentioned creek ;) you wouldn't have an electric bill.

If you recycled used cooking oil into biodiesel, or had an electric vehicle, you wouldn't have a gas bill.

 

I think if you're going to start that craziness (no offense to OP's DH) you need to keep going. Or we could just say rent isn't debt. :tongue_smilie:

 

I could see how maybe he means a lease is a form of debt. A lease would obligate you to continue paying regardless of circumstances, or to be at the whims of the other party if you try to break the contract. But that is the same for a cell phone contract or a gym membership (etc.) and I'm not sure anyone considers these things to be debts.

[FairProspects]

I am kind of in a bad mood, and I just have to respond this way: For people with ongoing, incurable health problems, this is almost impossible.

 

Last year we spent over $7,000 on medical bills and did not even have any "serious problems." (The year we did, we had over $14,000 in medical bills.)

 

And that's not counting the $12,000/year we spend on health insurance.

 

:iagree:and this is what I have been saying ALL. DAY. both here and on the "Retirement" thread. But according to other posters all my problems are because I don't have the right saving "mindset".

[Shellers]

We are trying to live debt free but are far from it. I'm in the process of refinancing our house into a 15 year fixed. I have 3 or 4 more payments on our Suburban and travel trailer. Little by little we will get there, I just hope we aren't too old to enjoy being debt free. ;)

[In2why]

I guess paying no rent and no mortgage leaves you with only the option of buying your home for cash. If you can do that, then I think you might be my hero.

 

I have to ask, though: How does your church play into this?

 

 

And some people choose not to pay their mortgage off even when they can because the interest rates are so low and are a tax deduction, and thier investments pay a higer return then is lost in loan interest. When deciding to pay off your mortgage you can't just look at money spent, but also opportunity lost to grow wealth. But I am sure that the church has a spiritual belief behind this and not financial. :001_smile:

 

As for other debt, I agree that there is very little "good debt", and paying cash is better. Perhaps student loans, but even then that can be out of control. People are graduating with Masters and a ton of debt, and not finding jobs. Very few careers care where you got the degree and knowledge and I think in many cases higher education is overpriced and harmful to young adults just starting out.

[In2why]

You don't need a credit history if your goal is to live debt free.

 

And a house is suppose to appreciate. That would make it 'good debt'. A car is not in that same category.

 

Exactly and a new car is never "needed" or good debt. As soon as you drive it off the lot you are in an upside down loan. (But I appreciate the people who buy new cars every couple of years, I buy their like new cars with cash, and drive them until it doesn't make financial sense to make more repairs)

[Scarlett]

Exactly and a new car is never "needed" or good debt. As soon as you drive it off the lot you are in an upside down loan. (But I appreciate the people who buy new cars every couple of years, I buy their like new cars with cash, and drive them until it doesn't make financial sense to make more repairs)

 

Yes. I bought one new car....paid $10k for a Honda Civic in 1991 and drove the wheels off it for 11 years. Got $2500 out of it when I sold it. I still miss that car. XH made me sell it.....:glare:

 

Oh, wait I now have a 2--7 Rendezvoud that I LOVE! Also paid for...with divorce settlement. I tell everyone it has to last me the rest of my life. Hee hee.

[Scarlett]

And some people choose not to pay their mortgage off even when they can because the interest rates are so low and are a tax deduction, and thier investments pay a higer return then is lost in loan interest. When deciding to pay off your mortgage you can't just look at money spent, but also opportunity lost to grow wealth. But I am sure that the church has a spiritual belief behind this and not financial. :001_smile:

 

The thing is that is still a gamble. Your mortgage interest (and payment) are certain if you have a loan. Your investment returns are not.

[melissel]

The thing is that is still a gamble. Your mortgage interest (and payment) are certain if you have a loan. Your investment returns are not.

 

I agree. This didn't work out so well for my dad a few years ago :( Now he still has the same mortgage payment and his investments are down by more than half.

[lisamarie]

Your home is worth the same or more than you paid for it, or at the very least is worth more than what you paid for it minus what renting a similar home would have cost. So you would essentially break even on that transaction. Arguably. It's not true in my area currently and has not been for the last decade at least.

 

 

This is just not true in today's market. My house has lost $40K in value since we bought it 4 years ago. I almost wish we had decided to rent for a while so we didn't lose all that money. We put down $75K when we bought the house, but now we really only have $35K in equity in the house. Thankfully we plan to die in this house, so there is hope of making some of that money back, but who knows.

 

I am glad that I started this thread, but still don't have an answer except to start adding on to the car payment to get that paid off. We don't have credit card debt and haven't for years. We don't have cable, Netflix, or expensive cell phone/plans. Dd's ballet is an extra, and we could drop that, but it's her main activity with a group of nice girls. We rarely eat out or vacation. We don't spend a lot on clothes. I consolidate errand trips, hang clothes, and cook from scratch. I am sure I can find ways to trim the budget, but we live frugally. I see debt-free living as a goal because getting rid of our two payments (or even one of them) would give us money for travelling and a few extras. In addition, we tithe but would like to give to other organizations. I was expecially interested in the posts by renters. We will be moving next year, so we have the option of renting or buying.

 

The rule of thumb I've always heard is that if you are going to live in your house less than 3 years, rent. If you are going to be there longer than that, buy. But that was a long time ago and who knows with today's markets. I would probably rent unless you are darn sure you are going to stay there for a very long time.

 

And the answer to your question--if you are already living very frugally, if you aren't wasting money on eating out, fancy clothes, vacations, cable, cell phones, etc, then your only option is to increase your income. There is no way we could pay off our house without my getting a job. One day I do plan to go back to work, but for now I am okay with making my monthly house payment. When DH gets the big raise he's been promised, we will start paying off the house faster, but until then, we just can't afford it. Short of cutting the internet and land line, there's just not anything else that we "splurge" on.

[LibraryLover]

I can't even imagine the most ardent church pastors here preaching that their people buy a tiny city home for 260k cash. lol There would be nothing left to tithe. ;) This has got to be a regional sermon. ;)

 

Maybe a preacher could emplore their entire congregation move to a cheaper area (Jamestown, Guyana? Kidding... I am playing the rhetoric card lol )...but then to whom would they preach?

Edited May 12, 2011 by LibraryLover

[TravelingChris]

If the church claims to be a Christian one, I am not sure why they add the legalistic rule that you have to be debt free. I can see where people may want to do this and I am fine with that. I can see where people decide that a mortgage or some loan is manageable and handle it well and I am fine with that. What I don't see is why one is more Godly than the other.

 

OUr personal circumstances is that we have been renting (and yes, it usually is a debt if you have a lease and even without, you have an obligation to pay somewhere between one month and two months rent if you leave), and we will probably soon be buying. We know dh has a three year assignment at the place and he hopes to retire there. We will have a mortgage. I will look into a 15 year mortgage depending on which house we will buy. But we have no issues buying the house as long as we can still afford it if he retires and doesn't get a job.

[vonfirmath]

I didn't hear anything about the church saying you had to be debt-free; just urging it as a life practice to attain to. Most churches still have liars, thieves, and idolators as well, yet urges their people to stop doing these things.

 

I can easily see a church urging debt-free-ness for the Well-fare of their body.

 

Many ministry will not take on missionaries, etc with debt for example --so being debt free enables you to be free for Christ in a different way

[Rosie_0801]

It seems like it would make more sense to accept the mortgage and simply pay the highest payment you can each month to pay it down quickly rather than renting some place for the purpose of paying cash for a house. That way, you're not spending all that money on rent but instead all your housing budget is going toward housing.

 

We have to rent until we've saved enough for a house deposit, otherwise we'd be doing exactly what you outline here. Financially it would have been more sensible to put off having kids until we were 40, but we didn't want to :)

 

The only chap I knew who was able to buy a house outright lived with his parents until he was able to buy. He had done a course at our equivalent of a community college, so no college debt, but a reasonable wage for a single bloke and he only had two hobbies. One was very cheap and the other was a part time job! I don't know anyone else who had the sort of situation with their parents that they could live adult lives under their parents' roof.

 

The only debts we have are rent and student loans, but under our student loan scheme, we only have to make repayments when we are earning over the minimum threshold. So dh pays his with his tax, and I'm not paying anything.

 

Rosie

[GypsieFamily]

We are not debt free. We have a mortgage, but we live in our caravan and travel while we are renting the house out and the rent contributes to paying the mortgage.

 

It was a really long process to being able to afford it and working to it. I blogged about it here if anyone is interested. Basically, it was just long term planning.

[LibraryLover]

I agree. This didn't work out so well for my dad a few years ago :( Now he still has the same mortgage payment and his investments are down by more than half.

 

 

His investments are probably up, even if his real estate investment isn't. (Real estate is long term, and 4 years isn't long term. )

 

:) Your dad may be better off (depending on his investments) than you think.

 

Your dad may be/is? older than I, but there is still time. Could go south...could gain. Depends on how much he put in, where he put it, how old he is, how long he can wait. That's why investments are called...investments... ;)

Edited May 10, 2011 by LibraryLover

[GypsieFamily]

Student loans, but under our student loan scheme, we only have to make repayments when we are earning over the minimum threshold. So dh pays his with his tax, and I'm not paying anything.

 

Rosie

 

I don't think I'll ever pay back my HECS. I don't really see it as a debt, more as tax.

[LibraryLover]

nm

Edited May 10, 2011 by LibraryLover

[1inheaven]

We are on road to debt-free also. Long one...finally my husbnad is on board. have old cars (love mine...14 years...don't know what will get next for cheap and reliable). refi'd house to 15 yr note a year ago. saved over $100,000 doing that...whew! Now I have job to supplement which will help. no college fund unfortunately. we have seasonal income so all our savings was used to live in winter (lawn service business). With my new job..from home...answer to prayer...we are now on the road to having savings AFTER winter :-) We live frugally also...children are completely in hand-me-downs and still have more than needed. God will provide. What is the verse...if even the lillies are clothed...why should we worry..." don't have it in front of me.

Anyway, just thot would chime in. It's very freeing to get out of debt. The bible certainly speaks to not borrowing..need to look it up so I quote it correctly.

Trust God :-) He will provide. Maybe not what we wanted, but He will provide. Blessings, Sarah in TX

[coffeefreak]

I hope my children have a goal to be debt-free, but I also am not against taking a mortgage in order to have a place to live. Rent tends to be a money pit; I'd rather own a tiny house than rent a nice townhome.

 

:iagree:

 

Because there is no answer...or the answer is different depending on your life situation. In our current situation, we can't put anything more on our mortgage because we have no idea what 2012 is going to look like (at the moment, it looks pretty scary *sigh*). We're like you--we're frugal already. We're cutting most extras already (where I can without DH going nuts). In that case, the only option is to find a way to bring in a little more income. Can you do something on the side? Can you coupon? Can your DH look for a better-paying job or apply for a promotion?

 

As for renting vs. owning, that's something you have to determine for your area and your taste (how badly do you want to avoid having a landlord, for example). It might be a lot cheaper to rent, or it might not, depending on the space you need, whether you have pets, etc. If you CAN save significant money by renting, then you continue to live the same life you lead now and sock away the extra money. Invest some when you're able--CDs are safe, and you'll make a little passive income that way.

 

Those are the only answers, really. Spend less or make more. Ideally, do both.

 

:iagree:

[MindyD]

Hmmm, I guess after our experience, I'd say owning a home can be a money and time pit. There's a lot of extra expenses that go with a house besides the mortgage payment. I know I won't convince anyone here, but renting really is a great option if you're not sure you're going to stay somewhere for a long time.

[MindyD]

Hmmm, I guess after our experience, I'd say owning a home can be a money and time pit. There's a lot of extra expenses that go with a house besides the mortgage payment. I know I won't convince anyone here, but renting really is a great option if you're not sure you're going to stay somewhere for a long time.

[MindyD]

Hmmm, I guess after our experience, I'd say owning a home can be a money and time pit. There's a lot of extra expenses that go with a house besides the mortgage payment. I know I won't convince anyone here, but renting really is a great option if you're not sure you're going to stay somewhere for a long time.

[Peela]

We do not focus on not being in debt, but we live sensibly and well within our means. We do not owe money on anything except our 2 country investment properties which bring in almost enough income from rent to pay the mortgages on them.

We focus on living the type of lives we want to live, now, recognising our abundance, being grateful for what we have, and teaching the kids to appreciate what they have and recognise their ability to create abundance for themselves. I think focusing too much on money and debt, sacrificing for the future etc can create a feeling of lack which then can rub off on kids..but of course it is necessary to make a big change if a debt mentality has been developed. And I know it can be hard for many people. I have lived poor, but I never felt poor.

All of us live abundant lives compared to a few generations ago. We have electricity, running water, food- its too easy to forget that.

[coffeefreak]

Here's a cool calculator that compares renting to buying:

 

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[coffeefreak]

Here's a cool calculator that compares renting to buying:

 

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[coffeefreak]

Here's a cool calculator that compares renting to buying:

 

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[DawnM]

I WISH we had started debt free living a LONG time ago. Instead we started in 2008. If we had started before buying this house, we would not have bought this house.

 

We are debt free other than mortgage and we did refi to a 15 year loan. So, we are taking big steps, but we still have 13 years left on the mortgage.

 

As for my kids, we are using Crown Financial homeschool materials with them to show them how to be in far better shape at our age than we are. We have told them that provided they do what they are supposed to do (go to school and work, not sit around, etc...), they are welcome to live in our home as long as is necessary. We have also told them that we will provide full tuition to any of the local public colleges and living at home. If they choose something else, they will need to cover the difference, but at this time, they all have said they plan to do exactly that.....live at home and attend a local school.

 

Sorry for the long ramble.....we have learned a lot in the last 4 years and wish we had had those tools before hand. We could have a house paid for right now.

 

Dawn

[Mama Geek]

The real problem IMO is that jobs are requiring higher and higher levels of expensive education. Just two generations ago, my grandfather worked for a Wall Street bank without a college degree. Dh's grandmother was a Deputy County Treasurer without a single college class. You wouldn't even be able to get an interview without a degree today. But that is a societal problem that I don't think will change anytime soon.

 

While this is true, I think it is a result of the quality of education getting worse. There are lots of people that have a high school diploma who couldn't give out change unless they had a computer in front of them.