Money Matters - Debt

[rdonovan1]

And who invented "interest"? That is definitely a consumer killer!

- Ceicei

I'm pretty sure it was a rich suit that invented that. Those guys are almost as bad as those who tax you without representation.

 

[rdonovan1]

This is exactly why I'm in debt, Ping...a MS followed by a PhD means 8 years of living on about $14,000 a year (from a grad student teaching stipend), which is very, very difficult. Stuff happens, your dog gets sick or your car breaks or your rent goes up, and before you know it you have to take out a student loan just to eat. And now that I've graduated, there are too few science jobs for too many applicants, especially in California...all I can say is, thank god I can train dogs because that may prove to be my fallback career.

I don't have the degree at all, but I certainly know what it is like to be so far in debt that when you go to McDonald's for a cheeseburger they start to look at you funny before they run your credit report so that you can finance the cheeseburger.

They tend to laugh at me though when I apply for a cheeseburger loan.

 

[Makalakumu]

And who invented "interest"?

A few hundred years ago, the charging of interest or usury, was a crime in most countries...a capital offense in a few!

The thing about money is that it's just a game that humans made up. Learn the rules and you'll play well. Don't take the game so seriously and play to win.

 

[rdonovan1]

And who invented "interest"? That is definitely a consumer killer!

- Ceicei

Probably a rich suit.

 

[Clint Franklin]

Hey all, thank you for all the thoughtful responses!

I'm not saying all debt is bad... most people will need to owe someone something at some point in life, whether you need to buy a home, a car, pay medical bills... that's just life. Also, credit-building is essential for today's life. What has me scratching my head though is why people feel they have to live "high on the hog", buying things they really don't need in large quantities, until they have painted themselves into a corner.

I know I like to buy nice things and splurge from time to time, no doubt. But I also have moments (a lot of them) where I have to say "hold yer hosses, pard" and either save my money or do without. I have to justify those things in my head, and sometimes I end up not getting something I really want (but thankfully, I usually get over not having it fairly quickly).

It is a disappointment when I can't have something I want, but the alternative just seems to be unnecessarily stressful.

 

[Flea]

What has me scratching my head though is why people feel they have to live "high on the hog", buying things they really don't need in large quantities, until they have painted themselves into a corner.

Fear of death, that's my theory. We try to distract ourselves from the inevitable with lots of pretty baubles, and fiddle as Rome burns. %-}

 

[Stuey]

Good and bad credit is definitely the way to think about it. Build up good credit by using a credit card for gas or something and always pay off in full every month. If you pay the minimum you will be paying for 30+ years even for a little amount! If you need a car or something VERY important which requires finance, get the best deal around. Learn how interest works. APR, Flat rate, etc. all work differently. If in doubt ask the total repayment after the term. You will be shocked at the differences. Another great myth is to have loans and credit card bills whilst also having saving! You may want a comforter for a rainy day, but surely the available debt you pay off with savings could cover that?
I take measured risks. I recently got out a £22000 loan for a caravan, which will cost me £28000 after the term. I dont mind this because I am buying into something which will pay me back. I also have a flat which I bought from the council at a £38000 discount. I now rent that having moved into a different place! Debt can be necessary, I know I have been lucky. Or have I? Is it because I have been savvy? I cant entirely believe either way, but I am more for it being because I am savvy with money.
There is a 'scheme' here, (for want of a better word). Its called stoodging, (spelling?). It is where you get a corner credit card which will allow free transfers, then you get another cred card with 0% for X months and put the balance into the corner card. The positive balance from that goes into your own account for saving. Since you pay 0% and earn whatever savings interest its free money. Just change the card at the end of the 0% term. It has been reported that one person managed to earn £5000 a year from this technique! Get money smart people!