Am i too debit adverse or just realistic?

Anonymous · ‎02-19-2020

So for years i've been brought up that debit is awful and you should avoid it at all costs. Only buy things you can afford in cash and if you can't you can't afford it.

Even things like a mortgage i seriously question since it could be a huge burden if something happens and you can kiss the money you put into it goodbye.

Student loans also I think are awful and guaranteed government student loans need to be shut down like yesterday. No sane private lender would give a 18 year old 100K or more with no income and no proof how how they actually plan to pay it back. Yet this happens with student loans without batting an eye.

Credit cards I treat like debit cards in the sense I put money off to the side to pay the full balance each and every month.

Above I think also is cuased by a lack of education in high school. It seems many people in my younger age group have zero idea what APR and compound interest means.

Thoughts?

NimbusIII · ‎02-20-2020

Having credit or a mortgage for that matter doesn't mean you have to have debt. It is the inability to manage debt that leads people into trouble. (Not always to their fault i.e medical bills, victims of fraud) Usually exasperated by the want out weighing the need. If you choose to except debt with an item of equity and manage it well i.e. staying within your means you will do just fine. There are tons of great resources here if you have any question or want more information on specific topics. Your comments suggest your right on track to managing your debt properly.

“The man who says he can, and the man who says he can not… Are both correct.”

Anonymous · ‎02-20-2020

The wonderful world you live in is brought to you by student loans. 75% of students in private colleges have student loans. 66% in public college. The higher education system from which we all benefit. Imagine how much fewer professionals (doctors, engineers etc) there would be if only people who had cash could get a higher education. That is basically what separates the first world you and I live in, from the 3rd world. I have been in places were there is one doctor in town of 2000. The word, suboptimal comes to mind.

Anonymous · ‎02-20-2020

For discretionary goods, I agree, it's best to avoid debt altogether for a lot of things. Treating credit cards like debit cards in that you PIF monthly is ideal, and I think most on the forums follow that method during BAU (barring 0% promotions).

Regarding student loans, I know people > $200k in student debt because they didn't understand what they were signing to get a degree for a job that pays < $50k. If all student loans were private, then impractical degrees at overpriced schools would no longer be pursued and costs would be controlled.

Regarding a mortgage, I'm not sure what alternatives there are. One can either rent (paying money and not building equity) or buy (paying money and building equity). Either one would evict you if you are no longer able to pay, so an emergency fund should be maintained regardless.

The more important factor is total cost of ownership. I've done the calculations for my credit profile, willingness to negotiate, and other preferences; for me, the 10 year TCO for a new car plus interest on a 3-5 year note would be lower than the 10 year TCO for a used car (which may even need to be replaced before the 10 year mark).

Anonymous · ‎02-20-2020

@Anonymous wrote:
The wonderful world you live in is brought to you by student loans. 75% of students in private colleges have student loans. 66% in public college. The higher education system from which we all benefit. Imagine how much fewer professionals (doctors, engineers etc) there would be if only people who had cash could get a higher education. That is basically what separates the first world you and I live in, from the 3rd world. I have been in places were there is one doctor in town of 2000. The word, suboptimal comes to mind.

Student loans aren't a problem. The astronomical cost of higher education is a problem. The ability for an 18 year old to get > $200k in loans for a job that pays < $50k is a problem.

Anonymous · ‎02-20-2020

The managing of your debt/credit is what matters.

We dont get taught much in school about finances.

So that leads us to "need to go to college" for everyone.

Get student loans etc and then be in debt.

But, the thing is, paying tuition (with or without loans) is investing in your future.

So you plan to get a good paying job/career out of the mess.

But no one tells you that you are too dumb, or not smart enough or no talent.

THEY SAY THE OPPOSITE TO EVERYONE

Which in turn means that majority of the students are going to amount to a poor paying job and in DEBT

Some (which are the smart and wise ones) will make it and reach for the goodies. (It will pay off with hard work)

We need to focus on job/career placement. Drive towards assessment of abilities and

placement into what fits perfectly.

Vocational and technical schools can get you into a demanding profession,

and some/most will be FREE!!!

Did someone just say FREE? Yes free schooling.

Dont erase the debt of foolishness, but progress from here on out.

I know someone that COULD have taken her senior year in highschool at votech (career center) for accounting.

FREE.

Instead, went to 1 single class for a whole year during highschool. (what a freaking waste of a year)

Then, after graduating, decided to take college courses at the tune of over $8000 for, you guessed it. Accounting.

Well dropped out ofter 1 semester. Yeah smart move after the other. Now has poor paying job. (part time, ftw!)

Well on the other hand, I have a brother that went to votech for cabinetry (FREE) and still to this day (20 years later)

works in cabinet making, decent money.

My sister went to votech for cosmetology (FREE) and has had her own in home business for the last 25 years.

Making decent money.

Little me quit highschool and have solo household decent income by owning my own business.

My son is currently exploring his options after his first semester in college, and tried that and is now

trying a full time job. experiencing both sides to further commit to either.

Before commiting to college (or any debt for that matter) make sure it will be well worth it,

and make sure it is necessary.

You can always train, go to school, get an internship, etc whenever you may want or NEED to in the future.

HOWEVER, you cannot simply erase $50-100k or more of school loan debt after the occurance, just because.

Anonymous · ‎02-20-2020

Mortgages I can understand because at least you can gain some equity into the home you're purchasing. I am in my 30s and haven't yet purchased a home. I think of all these years i've been paying rent and how much money I've thrown away. (This is my goal this year though!)

Student loans.... ugh. The biggest regret of my life is going to school. I have a depressing amount of student loan debt for a worthless degree. Unfortunately my younger self was very dumb and didn't know anything about finances, credit, APR, etc. I was the type to accept a 21% APR on a used car ("Oh you mean I'm approved? Awesome!") I think it's a combination of multiple things... my own parents didn't know much about finances either, I didn't learn any of it in school, plus my own fault for basically not caring about anything and not trying to learn.

I agree with paying credit card balances in full every month. Unless I am on a promo APR I don't want to carry any balances. Unfortunately I only learned this after going through a bk. Like I said I was very uneducated when it comes to these types of things.

Anonymous · ‎02-20-2020

@Anonymous wrote:
The managing of your debt/credit is what matters.
We dont get taught much in school about finances.

So that leads us to "need to go to college" for everyone.
Get student loans etc and then be in debt.

But, the thing is, paying tuition (with or without loans) is investing in your future.
So you plan to get a good paying job/career out of the mess.

But no one tells you that you are too dumb, or not smart enough or no talent.
THEY SAY THE OPPOSITE TO EVERYONE
Which in turn means that majority of the students are going to amount to a poor paying job and in DEBT
Some (which are the smart and wise ones) will make it and reach for the goodies. (It will pay off with hard work)

We need to focus on job/career placement. Drive towards assessment of abilities and
placement into what fits perfectly.

Vocational and technical schools can get you into a demanding profession,
and some/most will be FREE!!!

Did someone just say FREE? Yes free schooling.
Dont erase the debt of foolishness, but progress from here on out.

I know someone that COULD have taken her senior year in highschool at votech (career center) for accounting.
FREE.
Instead, went to 1 single class for a whole year during highschool. (what a freaking waste of a year)
Then, after graduating, decided to take college courses at the tune of over $8000 for, you guessed it. Accounting.
Well dropped out ofter 1 semester. Yeah smart move after the other. Now has poor paying job. (part time, ftw!)

Well on the other hand, I have a brother that went to votech for cabinetry (FREE) and still to this day (20 years later)
works in cabinet making, decent money.
My sister went to votech for cosmetology (FREE) and has had her own in home business for the last 25 years.
Making decent money.
Little me quit highschool and have solo household decent income by owning my own business.

My son is currently exploring his options after his first semester in college, and tried that and is now
trying a full time job. experiencing both sides to further commit to either.

Before commiting to college (or any debt for that matter) make sure it will be well worth it,
and make sure it is necessary.
You can always train, go to school, get an internship, etc whenever you may want or NEED to in the future.
HOWEVER, you cannot simply erase $50-100k or more of school loan debt after the occurance, just because.

My nephew skipped college, works two full time blue collar jobs, and will basically have his first house paid off before he is 30. He is progressing into management at one job, and will eventually ditch the 2nd. Wants to get a few more houses and rent them out and will probably end up doing better than me in the long run!

tacpoly · ‎02-20-2020

@Anonymous wrote:
The wonderful world you live in is brought to you by student loans. 75% of students in private colleges have student loans. 66% in public college. The higher education system from which we all benefit. Imagine how much fewer professionals (doctors, engineers etc) there would be if only people who had cash could get a higher education. That is basically what separates the first world you and I live in, from the 3rd world. I have been in places were there is one doctor in town of 2000. The word, suboptimal comes to mind.

There are plenty of first-world countries where higher education is free, therefore no student loans.

If you're amazed at a town of 2000 having 'only' one doctor, there are rural parts of the US without any. (I know of one specialist who covers 3 states!). It's why doctor salaries are higher (very often much much higher) in the middle of the country than the coasts.

Anonymous · ‎02-20-2020

I do think that a lot of people are sucked into that "American Dream" mentality too early, whre they feel they have to go directly to College right after High School. Then buy a house shortly thereafter. IMO, considering how old the avergae Human lives. It's way too early to think that way at 18-22. I think, if they can manage it, a person should travel explore things in life while young. And take that time to really decide what's right for them.

When I was 20ish, I had crazy idea of getting married/family and buying a house. After a few break ups and other life happens by 30's, I felt I have no need for all that. A decade later and I'm thinking of buying a house again, only becaue rent keep going going up up. And really it is an investment more than any other major purchase. Owning land is very rarely a bad idea, it's one thing that they're not making more of.

If I was more of a risk taker I'd have bought several lots near me dirt cheap, because now they're going for 3-4 times that!

I think it's good idea/plan to be debt adverse, but like other have said only for non essential expenses. Buying stuff you don't actually need just to have or to impress friends, and paying on it year after year with high interest. No.

At your age you have plenty of time to figure it out, and possibly change your mind along the way.