Crazy money management board

[Bluegoat]

Oh he might approve. He thinks everyone should only buy a house if their payment on a 15 year loan is 25% of net income. And then only after all other debt is paid off.

 

What I don't get about this is that often, in  areas where prices are high, that's reflected in rents as much as it is in mortgages.

[Katy]

Not to mention you're not going to get a good mortgage rate if you don't have a decent history of repaying a variety of loans.  I know we were roughly following Dave's plan when we inquired about  buying our first home.  Even with good credit and a good income, because neither of us had ever had a car loan we couldn't qualify for a good deal.  We were told to take out a year long "credit builder" installment loan and to get a car we paid regularly on for a year and apply again.  Then we got a great deal.  And that was with 20% down in cash as first time homebuyers.

[DawnM]

Oh he might approve. He thinks everyone should only buy a house if their payment on a 15 year loan is 25% of net income. And then only after all other debt is paid off.

 

Actually, we might be able to meet that requirement!  but we are still planning to rent a while.  

[Scarlett]

Not to mention you're not going to get a good mortgage rate if you don't have a decent history of repaying a variety of loans. I know we were roughly following Dave's plan when we inquired about buying our first home. Even with good credit and a good income, because neither of us had ever had a car loan we couldn't qualify for a good deal. We were told to take out a year long "credit builder" installment loan and to get a car we paid regularly on for a year and apply again. Then we got a great deal. And that was with 20% down in cash as first time homebuyers.

Yes I had forgotten about that part....dhs credit has been horrible from before we married. We bought the truck in my name and his to boost his credit. It worked. Then getting the HELOC in both our names pretty much healed his credit.

[Scarlett]

Actually, we might be able to meet that requirement! but we are still planning to rent a while.

Do you mind sharing your reasons?

[Scarlett]

People are nuts. :huh:

 

​I think there are a lot of good ideas in the Dave Ramsey stuff, but also a good bit of craziness.

 

Everyone has different personal comfort levels with debt, etc. Surely, most of us feel less stress when we have less debt. . . And debt does suck on many levels . . .

 

People used to talk about "good debt" (home mortgages and education) and "bad debt" (everything else). Then things went haywire with both home mortgages (0% down, PMI, negative amortization, frequent cash-out refis, being underwater, etc.) and educational debt (ballooning costs, crazy debt for degrees that don't pay well, professional students that take on debt on top of debt, etc) . . . and then I think the Dave Ramsey crowd just responded by promoting the idea that all debt is bad debt . . .

 

IME, dh and I have had tons of good debt over the decades, and it has worked out to be GOOD debt. Massive student loans led to a great career that supports our family well. Massive business loans led to lucrative business ownership . . . Many real estate mortgages, including some that sounded crazy on the Dave Ramsey scale, made us *lots* of profit in real estate . . . There were plenty of downsides to the debt -- stress, risk, required very hard work to pay it off, etc . . . and I definitely hope my kids can avoid as much debt as we had in our 30s (ouch, painful, scary) But . . . if we hadn't had all that debt, we never could have done the great things we've done . . . and would not have the wealth/assets that we now have . . . We could have taken a little less debt here or there, but it would have meant having a lifestyle we didn't want (me working while our kids were young and/or delaying starting a family, no vacations/ etc), so, yah, we took a bit more debt than we *had* to . . . But, it all worked out great in the end.

 

Likewise, we spent plenty of money on vacations and music lessons and me homeschooling instead of working . . . while Ramsey, et al would have surely been advising us to work/work/work/scrimp/scrimp/scrimp given that big mountain of debt we once had . . . But, uh, nope, we juggled and jiggled anddidn't throw away the good life we lived in our 30s to *just* service that debt. Nope, we spread it out a bit longer than we could have, and enjoyed nice family vacations and well educated kids . . . There's no amount of money that would have made it worth it to not be home, raising my kids . . .

 

Nope, sorry, we're fine to work until age 70 instead of 65 in exchange for being able to enjoy our years when our kids are home with us . . . I don't want to live like a pauper while my kids are young just to be rich at 60 instead of rich at 65 or 70. Nope, not worth it. Those years were PRECIOUS and PRICELESS.

 

All that debt paid off in the *end* . . . 2 kids in college now on massive (170-200k each, approximately) merit scholarships, which were earned in some part thanks to my homeschooling them . . . We worked hard and planned carefully and paid off our debts over time . . . while *also* having a lifestyle we enjoyed. I wouldn't trade ONE of our vacations with the family over the years to get the money back . . . and it was big money, as every day dh takes off costs us big . . . but, what, is he supposed to work 365 days a year for a decade? How would that be possible? Would he not have just up and died at some point from overwork? You have to have balance . . . and we had balance . . . He took off weeks every year . . . no matter what . . . sorry/notsorry . . . he is a human being, not a machine.

 

As long as you have a plan, think ahead, know how you are going to pay off debts, and feel comfortable with the risks you take, then it's all good, in my book. Be smart, plan carefully, be frugal . . . and make your own decisions.

 

You're a smart and responsible woman. Keep on keeping on, take the good ideas that you find here or there, and ignore those that don't make sense to *you*.

I already struggle with balance and worrying too much about the future. I sure don't need someone telling to do that more.

 

In a twisted way it has been good for me to read over there and see how unreasonable they are and think, hmmm....maybe that is how I seem to Dh!

[Scarlett]

Our 3 week trip ended up costing right around $5,000. I was shooting for less, but at the last minute the family wanted to go do Disneyland for 2 days. Two day tickets are KILLER expensive. We paid $1,200 just for those two days!

 

Thankfully the rest of our trip was reasonable. I think $2,500 was just for hotel bills. $800 for gas. We did stay in places with kitchens, so we ate a lot of our own stuff.....but we probably spent an extra $500 on food that wasn't from our regular food and eating out budget.

 

A lot of what we did was low cost or free (observatory, studio tours, college tours, beach, a couple free museums.)

 

But I don't regret it. Most likely this will be our last big trip as a family. Hopefully not, but possibly. As the boys get more into college and jobs, etc....even if they live close by, we may not have time to vacation.

Our trip was to NYC so I Think 3k was very frugal. It would have cost several thousand more but my boss gifted me miles for 4 free plane tickets.

[DawnM]

Our trip was to NYC so I Think 3k was very frugal. It would have cost several thousand more but my boss gifted me miles for 4 free plane tickets.

 

Well, ours was a 3 week trip to Los Angeles, so yes, we were very frugal!

[DawnM]

I already struggle with balance and worrying too much about the future. I sure don't need someone telling to do that more.

 

In a twisted way it has been good for me to read over there and see how unreasonable they are and think, hmmm....maybe that is how I seem to Dh!

 

 

I worry a lot too.

 

Once I showed DH on paper (well, on computer!  HA!) the difference between my retirement in CA vs. my retirement in NC, he was much more on board with moving back.  It is HUGE.  NC assumes you will get SS in retirement, but in CA I didn't pay in at all, so that doesn't do me a whole lot of good.

 

I need aprox. 12 more years in CA to get full benefits at a lower rate of pay, I need about 15-20 to get full benefits at the higher rate of pay.  I can "buy" some of those years from NC if necessary, but I am hoping not to because it is pricey.

[creekland]

We took a vacation last summer...first one in 5 years. It cost us about $3000. I absolutely do not regret it. Our boys were 15 and 16 at the time and we wanted to do something fun for them for once. The Dave Ramsey boards were not down with that plan.

 

Lol...I don't know why I even post there. Clearly I am not the radical kind.

 

Well... we're seriously contemplating putting a late fall trip to Jordan on credit card... and it wouldn't be paid off until next summer considering we still have youngest in college and our income doesn't go "up" until he's done.

 

We could, of course, wait to go to Jordan without paying any interest if we wait a year... but then our youngest wouldn't be there for us to enjoy the place with him (as he's doing his Study Abroad this fall).  We could pay for him to go again with us, but that would cost a LOT more than interest will since our cards are low interest.  We could not go at all and just add more money later to our retirement fund... but... one only lives once... and none of us have been to that part of the world.

 

Right now we've decided to wait on timing to see what his schedule is like and if he'll have any time to spend with us or not.  Chances are pretty darn good that if he has a free weekend or similar, I'll be making reservations.  It actually is ok sometimes to pay interest.

 

NOTE:  We could cash out some investment $$ to go interest free, but that comes with its own hassle and fees.  It's not our best choice.  We could also put our emergency fund toward the trip, but... I like the thought of that still being accessible in case we have an emergency.  I'll admit that thought has crossed my mind though - since we'd have the credit card for emergencies.  Our emergency fund won't cover the whole trip though.

[bethben]

No they think we should sell the truck and buy a beater. Right....for my husband with a bad back to commute to work an hour each way. We aren't necessarily opposed to getting rid of the truck, but I would rather just pay it off rapidly.

 

I am not sure what they think we should do with the cash we would get from the house. Say even if we get as low as 80k. If we have so,d the truck per their recommendation...and pay off the 10k HELOC....what do we do with 70k in cash while we pay rent for someone else's investment property.

 

To add to the mix, if any of that 70K in cash is above what you paid for the house, you will be taxed on it.  Example:  if you paid 50K for the house and now have 70K, you will be paying taxes on 20K if you don't buy another house within the year.  

 

Also, Dave Ramsey people are a special breed.  Most of them have had issues with debt and credit cards.  Many of them have gotten into huge amounts of debt (it seems like it's usually student loan debt) and have had to scrape their way out of it.  If you listen to Dave Ramsey, he would probably tell you since you already have the truck and like it, just pay it off as quickly as you can.  He would most likely say to save up for the house repairs, but it's your house and you know what's needed.

Edited August 11, 2017 by bethben

[Scarlett]

To add to the mix, if any of that 70K in cash is above what you paid for the house, you will be taxed on it. Example: if you paid 50K for the house and now have 70K, you will be paying taxes on 20K if you don't buy another house within the year.

 

Also, Dave Ramsey people are a special breed. Most of them have had issues with debt and credit cards. Many of them have gotten into huge amounts of debt (it seems like it's usually student loan debt) and have had to scrape their way out of it. If you listen to Dave Ramsey, he would probably tell you since you already have the truck and like it, just pay it off as quickly as you can. He would most likely say to save up for the house repairs, but it's your house and you know what's needed.

I have a question about the taxes. My understanding was that capital gains would apply if we didn't own for house for at least two years. If we have been here for 5 years we won't have to pay capital gains...but are you saying we have to pay some sort of tax if we dnt put. It into another house with a year?

[bethben]

I have a question about the taxes. My understanding was that capital gains would apply if we didn't own for house for at least two years. If we have been here for 5 years we won't have to pay capital gains...but are you saying we have to pay some sort of tax if we dnt put. It into another house with a year?

 

Ignore the above advice!  Just looked it up - you would have to make a huge profit - 500K.  

[Halftime Hope]

Oooh, a real estate investor could have a LOT of fun provoking that board. 

[mommyoffive]

Well... we're seriously contemplating putting a late fall trip to Jordan on credit card... and it wouldn't be paid off until next summer considering we still have youngest in college and our income doesn't go "up" until he's done.

 

We could, of course, wait to go to Jordan without paying any interest if we wait a year... but then our youngest wouldn't be there for us to enjoy the place with him (as he's doing his Study Abroad this fall).  We could pay for him to go again with us, but that would cost a LOT more than interest will since our cards are low interest.  We could not go at all and just add more money later to our retirement fund... but... one only lives once... and none of us have been to that part of the world.

 

Right now we've decided to wait on timing to see what his schedule is like and if he'll have any time to spend with us or not.  Chances are pretty darn good that if he has a free weekend or similar, I'll be making reservations.  It actually is ok sometimes to pay interest.

 

NOTE:  We could cash out some investment $$ to go interest free, but that comes with its own hassle and fees.  It's not our best choice.  We could also put our emergency fund toward the trip, but... I like the thought of that still being accessible in case we have an emergency.  I'll admit that thought has crossed my mind though - since we'd have the credit card for emergencies.  Our emergency fund won't cover the whole trip though.

 

Have you thought about getting into travel hacking? 

[mommyoffive]

People are nuts.  :huh: 

 

​I think there are a lot of good ideas in the Dave Ramsey stuff, but also a good bit of craziness. 

 

Everyone has different personal comfort levels with debt, etc. Surely, most of us feel less stress when we have less debt. . . And debt does suck on many levels . . .

 

People used to talk about "good debt" (home mortgages and education) and "bad debt" (everything else). Then things went haywire with both home mortgages (0% down, PMI, negative amortization, frequent cash-out refis, being underwater, etc.) and educational debt (ballooning costs, crazy debt for degrees that don't pay well, professional students that take on debt on top of debt, etc) . . . and then I think the Dave Ramsey crowd just responded by promoting the idea that all debt is bad debt . . .

 

IME, dh and I have had tons of good debt over the decades, and it has worked out to be GOOD debt. Massive student loans led to a great career that supports our family well. Massive business loans led to lucrative business ownership . . . Many real estate mortgages, including some that sounded crazy on the Dave Ramsey scale, made us *lots* of profit in real estate . . . There were plenty of downsides to the debt -- stress, risk, required very hard work to pay it off, etc . . . and I definitely hope my kids can avoid as much debt as we had in our 30s (ouch, painful, scary) But . . . if we hadn't had all that debt, we never could have done the great things we've done . . .  and would not have the wealth/assets that we now have . . . We could have taken a little less debt here or there, but it would have meant having a lifestyle we didn't want (me working while our kids were young and/or delaying starting a family, no vacations/ etc), so, yah, we took a bit more debt than we *had* to . . . But, it all worked out great in the end.

 

Likewise, we spent plenty of money on vacations and music lessons and me homeschooling instead of working . . . while Ramsey, et al would have surely been advising us to work/work/work/scrimp/scrimp/scrimp given that big mountain of debt we once had . . . But, uh, nope, we juggled and jiggled and didn't throw away the good life we lived in our 30s to *just* service that debt. Nope, we spread it out a bit longer than we could have, and enjoyed nice family vacations and well educated kids . . . There's no amount of money that would have made it worth it to not be home, raising my kids . . .

 

Nope, sorry,  we're fine to work until age 70 instead of 65 in exchange for being able to enjoy our years when our kids are home with us . . . I don't want to live like a pauper while my kids are young just to be rich at 60 instead of rich at 65 or 70. Nope, not worth it. Those years were PRECIOUS and PRICELESS. 

 

All that debt paid off in the *end* . . . 2 kids in college now on massive (170-200k each, approximately) merit scholarships, which were earned in some part thanks to my homeschooling them . . . We worked hard and planned carefully and paid off our debts over time . . . while *also* having a lifestyle we enjoyed. I wouldn't trade ONE of our vacations with the family over the years to get the money back . . . and it was big money, as every day dh takes off costs us big . . . but, what, is he supposed to work 365 days a year for a decade? How would that be possible? Would he not have just up and died at some point from overwork? You have to have balance . . . and we had balance . . . He took off weeks every year . . . no matter what . . . sorry/notsorry . . . he is a human being, not a machine. 

 

As long as you have a plan, think ahead, know how you are going to pay off debts, and feel comfortable with the risks you take, then it's all good, in my book. Be smart, plan carefully, be frugal . . . and make your own decisions.

 

You're a smart and responsible woman. Keep on keeping on, take the good ideas that you find here or there, and ignore those that don't make sense to *you*. 

 

I love this.  

I of course wish I could start over and do some things differently to have a bigger pile of cash saved before I stayed home.  But hindsight is 20/20 right? 

[mommyoffive]

Our 3 week trip ended up costing  right around $5,000.  I was shooting for less, but at the last minute the family wanted to go do Disneyland for 2 days.  Two day tickets are KILLER expensive.  We paid $1,200 just for those two days!  

 

Thankfully the rest of our trip was reasonable.  I think $2,500 was just for hotel bills.  $800 for gas.  We did stay in places with kitchens, so we ate a lot of our own stuff.....but we probably spent an extra $500 on food that wasn't from our regular food and eating out budget.

 

A lot of what we did was low cost or free (observatory, studio tours, college tours, beach, a couple free museums.)

 

But I don't regret it.  Most likely this will be our last big trip as a family.  Hopefully not, but possibly.  As the boys get more into college and jobs, etc....even if they live close by, we may not have time to vacation.

 

I am glad you had fun and you don't regret it.  Experiences are worth the $ .

[Scarlett]

There are a few defending me over there and pointing out the nuttiness .

[Mimm]

A lot of DR following take something good and make it super weird by taking it waaay too far and not being willing to modify the principles for individual situations. I've tried looking into DR a few times and am always turned off by the weird of it all.

[Pawz4me]

It's all about balance, which from what I can tell is badly lacking among DR and most of his devotees.

 

Being mortgage free means little to nothing if the house is falling down around you. With the exception of the recent recession housing is almost always a pretty good investment, and sometimes you have to spend money to maintain or improve that investment (not to mention the intangible value of enhancing your enjoyment of your home).

 

Paying cash for a beater is going to hurt more than help if you fail to make it to work several times because the car died and you lose your job. Or you spend more money on towing and repair fees per month than a payment on a better vehicle would have cost you.

 

Traveling is also about balance. DH recently received what may turn out to be a devastating diagnosis (we're not sure yet). But at this point I am SO glad we didn't laser focus over the years on saving and being debt free and that we did spend some money making memories.

[Scarlett]

(((( hugs)))) so sorry

[creekland]

Oooh, a real estate investor could have a LOT of fun provoking that board. 

 

It's many of those (types of) folks that we earn our retirement income from.  I wouldn't want too many to "see the light" of how leveraged debt can work.  Let them make their choices...

 

For fellow Boardies though, do your homework to see if renting or buying makes more sense.  There is no "one" correct answer for all situations from a financial point of view.

 

Have you thought about getting into travel hacking? 

 

Honestly?  Never heard of it.  I'll have to google... and at the moment, I don't have a lot of time at my disposal.  I'm just on while eating a late lunch, then have to move on to laundry and freezing tomatoes.  I'd rather search, but... (sigh)

 

It's all about balance, which from what I can tell is badly lacking among DR and most of his devotees.

 

Being mortgage free means little to nothing if the house is falling down around you. With the exception of the recent recession housing is almost always a pretty good investment, and sometimes you have to spend money to maintain or improve that investment (not to mention the intangible value of enhancing your enjoyment of your home).

 

Paying cash for a beater is going to hurt more than help if you fail to make it to work several times because the car died and you lose your job. Or you spend more money on towing and repair fees per month than a payment on a better vehicle would have cost you.

 

Traveling is also about balance. DH recently received what may turn out to be a devastating diagnosis (we're not sure yet). But at this point I am SO glad we didn't laser focus over the years on saving and being debt free and that we did spend some money making memories.

 

I liked your post because I agree with it all.  It's the main reason we've made sure we've enjoyed the journey because one never knows just how long one has, though one DOES know kids grow up.  However, my "like" doesn't include your current situation.  For that, you have my  :grouphug: and prayers that all works out ok.

[creekland]

Have you thought about getting into travel hacking? 

 

Ok... I had to look it up anyway - travel addiction issues and all.

 

We've never found flight reward credit cards to be worth their cost.  Our credit cards give rewards for places we shop instead, and cost us nothing annually while we reap rewards for free college textbooks, Christmas/birthday presents, or other assorted purchases.  We simply opt to use our freebies on different things and pay for air flights when we need/want them (besides, often we like road trips).

 

We do belong to frequent flier clubs for favored airlines (like Southwest) and get free flights from them.

 

I also know how to shop for airfare, hotels, condos, car rentals, etc, having had tons of experience.  It's rare that there's a cheaper price than what I get.  One of my most recent annoyances came from youngest's study abroad "Travel Expert" who "found" my son a horrible (timing) flight to/from Jordan for under his $1500 travel allowance or a second choice for a mere $250 extra.  I had a terrific one for $1240 and could have picked from about 4-5 more that would have been better than hers while remaining in budget.  I'm not sure what kind of expert she is, but it 'taint travel.   :cursing:   Unfortunately, he committed to using her so now he has 10 hour layovers (both directions) and barely makes it home for Christmas with a 6:15am departure that arrives later than my 10:45 departure would have.   :banghead:

 

Thanks for the thought though.  ;)

[mommyoffive]

Travel hacking is using credit cards to get free flights and hotel stays.   I have wanted to do it for years but I was nervous that it was a scam.  Or that I would mess it up some how.  But it is so easy and worth it.   

 

It has been insanely worth it for us. 

 

We signed up for one card and it was enough to get our family of 7 to Banff.   Cost $0

 

This year we signed up for 2 cards and it was enough to get our family of 7 to Europe.  With lots of points leftover.     Cost $0

 

So we are jumping in further this year and next.  We pay our bill in full so no %.   We are banking more points for more international travel.  We have the money to pay for it, but why when we can do this?  Hoping to get more into the hotel hacking too. 

 

 

[creekland]

Travel hacking is using credit cards to get free flights and hotel stays.   I have wanted to do it for years but I was nervous that it was a scam.  Or that I would mess it up some how.  But it is so easy and worth it.   

 

It has been insanely worth it for us. 

 

We signed up for one card and it was enough to get our family of 7 to Banff.   Cost $0

 

This year we signed up for 2 cards and it was enough to get our family of 7 to Europe.  With lots of points leftover.     Cost $0

 

So we are jumping in further this year and next.  We pay our bill in full so no %.   We are banking more points for more international travel.  We have the money to pay for it, but why when we can do this?  Hoping to get more into the hotel hacking too. 

 

We were typing at the same time... ;)

[mommyoffive]

Ok... I had to look it up anyway - travel addiction issues and all.

 

We've never found flight reward credit cards to be worth their cost.  Our credit cards give rewards for places we shop instead, and cost us nothing annually while we reap rewards for free college textbooks, Christmas/birthday presents, or other assorted purchases.  We simply opt to use our freebies on different things and pay for air flights when we need/want them (besides, often we like road trips).

 

We do belong to frequent flier clubs for favored airlines (like Southwest) and get free flights from them.

 

I also know how to shop for airfare, hotels, condos, car rentals, etc, having had tons of experience.  It's rare that there's a cheaper price than what I get.  One of my most recent annoyances came from youngest's study abroad "Travel Expert" who "found" my son a horrible (timing) flight to/from Jordan for under his $1500 travel allowance or a second choice for a mere $250 extra.  I had a terrific one for $1240 and could have picked from about 4-5 more that would have been better than hers while remaining in budget.  I'm not sure what kind of expert she is, but it 'taint travel.   :cursing:   Unfortunately, he committed to using her so now he has 10 hour layovers (both directions) and barely makes it home for Christmas with a 6:15am departure that arrives later than my 10:45 departure would have.   :banghead:

 

Thanks for the thought though.   ;)

 

Whatever works for you. 

 

I know how to shop for travel stuff too, but $0 always is less than the great deals I find.  

It just makes our travel budget last longer, which equals lots more travel. 

[creekland]

Whatever works for you. 

 

I know how to shop for travel stuff too, but $0 always is less than the great deals I find.  

It just makes our travel budget last longer, which equals lots more travel. 

 

I understand what you're saying, but remember, we're getting free "stuff" instead of free travel.  It all balances out and is the same idea.  One only gets to choose among limited choices with credit cards and there's only so much we spend on them (all we can except at mom and pop places because we don't want them to have to pay cc fees, but we're not spending extra just to get more in rewards - that defeats the purpose).

 

With airline specific cards, I don't like the annual fee they charge once past the first year either.  They have nice "draw you in" bonuses, but afterward - no thanks.

[mommyoffive]

I understand what you're saying, but remember, we're getting free "stuff" instead of free travel.  It all balances out and is the same idea.  One only gets to choose among limited choices with credit cards and there's only so much we spend on them (all we can except at mom and pop places because we don't want them to have to pay cc fees, but we're not spending extra just to get more in rewards - that defeats the purpose).

 

With airline specific cards, I don't like the annual fee they charge once past the first year either.  They have nice "draw you in" bonuses, but afterward - no thanks.

 

I agree with you.  IT all goes into the same bucket so if you are getting things that is great.  We don't spend extra at all.  Just our normal spends.  I know some get into the MS, but I haven't crossed that bridge yet. 

 

Some cards do not have an AF.

 

Some cards do have an AF but you don't pay it the first year and you can call and get it waived extra years too. 

 

some people cancel the card before the AF is due. 

 

Sometimes the AF is worth paying since you get tons more benefits than that AF.   You have to look at it.  Even high level cards that have AF of $450 a year or more are worth it.   You just have to do the math. 

[creekland]

I agree with you.  IT all goes into the same bucket so if you are getting things that is great.  We don't spend extra at all.  Just our normal spends.  I know some get into the MS, but I haven't crossed that bridge yet. 

 

Some cards do not have an AF.

 

Some cards do have an AF but you don't pay it the first year and you can call and get it waived extra years too. 

 

some people cancel the card before the AF is due. 

 

Sometimes the AF is worth paying since you get tons more benefits than that AF.   You have to look at it.  Even high level cards that have AF of $450 a year or more are worth it.   You just have to do the math. 

 

That, as always, is the key - with any sort of fees, debt, or whatever.  For us, the math does not work out better to switch to airline (or travel) cards.

 

I have ethical issues with signing up for things just for the freebies knowing I'm going to cancel later.  It's not illegal - just my personal convictions.  We get plenty of freebies with no ethical issues at all when we apply our rewards to our natural shopping habits.  The money we save there (and elsewhere) goes toward our travel.

[kitten18]

I agree with you. IT all goes into the same bucket so if you are getting things that is great. We don't spend extra at all. Just our normal spends. I know some get into the MS, but I haven't crossed that bridge yet.

 

Some cards do not have an AF.

 

Some cards do have an AF but you don't pay it the first year and you can call and get it waived extra years too.

 

some people cancel the card before the AF is due.

 

Sometimes the AF is worth paying since you get tons more benefits than that AF. You have to look at it. Even high level cards that have AF of $450 a year or more are worth it. You just have to do the math.

I'm intrigued, can you point me to some more info about this?

[mommyoffive]

I'm intrigued, can you point me to some more info about this?

 

Sure

 

These are the blogs that I have learned from

 

thepointsguy.com

 

millionmilesecrets.com

 

And

 

mommypoints.boardingarea.com

[Catwoman]

It's all about balance, which from what I can tell is badly lacking among DR and most of his devotees.

 

Being mortgage free means little to nothing if the house is falling down around you. With the exception of the recent recession housing is almost always a pretty good investment, and sometimes you have to spend money to maintain or improve that investment (not to mention the intangible value of enhancing your enjoyment of your home).

 

Paying cash for a beater is going to hurt more than help if you fail to make it to work several times because the car died and you lose your job. Or you spend more money on towing and repair fees per month than a payment on a better vehicle would have cost you.

 

Traveling is also about balance. DH recently received what may turn out to be a devastating diagnosis (we're not sure yet). But at this point I am SO glad we didn't laser focus over the years on saving and being debt free and that we did spend some money making memories.

I'm so sorry about your dh. I hope the diagnosis turns out to be a lot more hopeful than you're afraid it will be. Waiting for information is so scary. :grouphug:

[StephanieZ]

To add to the mix, if any of that 70K in cash is above what you paid for the house, you will be taxed on it.  Example:  if you paid 50K for the house and now have 70K, you will be paying taxes on 20K if you don't buy another house within the year.  

 

 

 

Nope. In the US, the first 500k in profit from a primary residence, for a couple, is tax-free. (250k for a single person.) There are very few limitations, mainly needing to have it be your home for 2 of the last 5 years, IIRC.

[kathkath]

Meh. DR sells a product. A method that can most help the masses, who have trouble managing their money and are prone to debt. If this is not your problem then a HELOC makes great sense. No mortgage? Awesome!! Smart ppl use tools. That is a tool. And yes we are DR people, but have found sometimes the cost of a loan is worth it. The cost is your HELOC rate. I view it like a service fee. A haircut is a service. Do you not get your hair cut bc you don't want to pay for the service? We chose car loans this time around even though we had the money. We opted to keep that money liquid as we have moved to a substantially higher COL area. We feel more secure knowing we can better manage our cash flow this way. We found car loan rates to be the cheapest we could find except mortgage, so that was the tool we chose.

Edited August 12, 2017 by kathkath

[Murphy101]

Every time I think about money or anything that needs money I feel like throwing up, so if you don't feel like puking over your finances, then I'm calling it good enough and minding my business regardless anyways.

 

I have no love at all for how everyone seems to think they could do better with other people's money and circumstances than those people can.