Debt and the danger of comparisons (page 3)

FreeChick

Thanks for posting this.

One very important thing I do is not nickle and dime my money away everyday...no buying something for the sake of making a purchase. Any raises I get go straight to the ol' 401K...pay off credit card every month...no impulse buying. Then, I get to take great trips every year with all the saved money. A book I really enjoyed on the subject is Start Late, Finish Rich by David Bach. It is an easy read for those just starting out, has great reminders and is written for people at all income levels. Also, hiring a CFP who doesn't sell products has been very helpful with my longterm goals. It's so much more enjoyable to pay cash for something without having to figure out how to pay the credit card later.

One website I use all the time is www.bankrate.com it has great financial calculators and other basic financial information.

FreeChick

sass_my_frass

Hello, meet your choir... we have one credit card that gets paid off every fortnight, and our mortgage is about a third of that of everybody we know. It's a really good feeling to be in the black after many years of buying any stupid crap I wanted without thinking about how many years I'd have to work to pay off the current consumer debt. It's great to have cash on hand for the big surprises. I love budgeting, I'm a spreadsheet nerd. A few weeks ago I did the maths on retirement. In order to earn more as a self-funded retiree than a pensioner, at the current pension rate we'd need to own three rental properties.

Despite the ever-increasing cost of living, however, it remains as popular as it ever was.

Clam

Too true Simon. I'm old enough to have been taught that if I want something I'd be smarter to save up for it rather than take a loan out to get it. It also adds to the whole experience. House mortgage is different of course but I'm into the off set format now, which is pretty good. I hate all these loan adverts bombarding the vulnerable and the short sighted.

DaCheech

I have also 8 years left on my mortgage.... the problem is that I'm always bombarded by people who say "If you pay off the mortgage you have no more tax write off". These people are hard to convince, they are living so much on the edge, that they depend on tax time to get some money back!

I own 2 credit cards, I spend what is needed. It took me 2 years of planning to remodel my bathroom. It took 1 year of hating my old kitchen range to replace it.... I am waiting to save for at least 1/2 the amount before I buy a new or 2 year old car

Dismembered

Greetings Simon,

Good subject!

I totally agree with you that so many are under the "I have to have it right now" spell. And are paying dearly for it. Especially many spoiled Americans who'll do whatever it takes to have it now. I've known many who, the minute they have accrued any "equity' in their real estate purchases, it's, "okay kids we're goin' to Disney". I've seen, and know many who have gone on expensive vacations, (mostly to keep up with the Joneses) who've used their home equity. How crazy and stupid is that.

Dismembered

I've said it many times that basic accounting should be part of elementary school math class.

Dismembered

Simon

I don't know if you have them in the US but over here you can get pre-pay credit cards ...

So, if you spend £750 a month on expenses and pay with a credit card (even if you pay it off in full) you can instead pre-pay £750 onto a card and get paid savings-rate interest on any balance as you spend on it. As it's a normal credit card too it you don't have to be exact on the amounts and can go overdrawn (and then pay interest if you don't pay it off as normal).

You also get 1% cashback at least (upto 10% from some retailers) on everything you spend which boosts the possible savings.

www.egg.com (Egg Money Card)

It's frightening when you listen to people at work with huge mortgages and they are hurting because the interest rates just went up slightly ... are they aware that they are still at unbelievably low levels historically?!? They could easily go back up to the regular rates in a short period ...

Simon

One of the best things to do is dig round to find some gadget you don't use, probably buried in the bottom of a draw.

Now, compare the £5 you will get for it at a car-boot sale or on eBay to the £300 or whatever that you spent on it 5 years ago.

How much would that money be worth now if it had been invested? How much will it be worth in 20 years when you can retire and actually use and enjoy what you can buy with it then!

(just do that in your head when you are in a shop with your hand going for your wallet ... it makes it much easier to say "no" )

Debt and the danger of comparisons

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