0.00% Debt, Anyone? (Page 3)

This thread convinced me not to buy the house I looked at yesterday but to wait a few more months.....    thanks, guys.

You are forgetting that you would still need somewhere to live...which in most states, at basic 2 bedroom apartment rent, would easly be $7500, OR MORE.  And that would be all sunk cost.  So it's not like you are making the bank richer to get a tax deduction...you'd be paying MOST of that money anyway but by owning the house you get more of it back.

I actually factor all of this into a spreadsheet I made to calculate what I have to sell my house for to "break even".  In other words, I take the original cost of the house, add "sunk cost" (things like interest payments, landscaping, etc.) and subtract "credits" like a guesstimate of what I would have paid in rent.  The net result is what I have to sell my house for to have neither gained or lost money in the process. 

I consider a house "good debt".  I won't own a house for longer than 2-5 years anytime in the near future since I move so much.  But what I can do is keep taking the equity from each house and putting it towards the next house which theoretically means I own more and more of each house I buy.  Yes, the goal is to someday flat out own the house, but really that is just not a practical goal for anyone under the age of 45 unless you either have a really awesome job or win the lottery.

I also recently acquired a truck loan.  My other car was totally paid off and I knew it would be forever before I could save enough to buy a car outright so I just went with the truck loan.  Hoping to have it paid off a year early (so, totally paid off 3 years after getting it).  Then I will be back to just the mortgage payment...which as I already mentioned is not really "debt" in my opinion.  It's like paying rent that pays you back.

I agree with many posters on this board that you can play some money games and end up with "good debt".  For example, I had the money to buy my big screen TV....but the store offered 0% interest for a year.  I left the money in a savings account and made $200 from interest before I had to pay for the TV.  I'm usually not a fan of just opening credit cards to "launder" money...I like to keep my credit report as short as possible.  But, it can definitely work short term.  I think the key is to have a plan to pay for what you buy without getting screwed.  It's the people who buy and buy and buy and keep putting it on the credit card with no intent to pay it off anytime soon that get themselves into trouble.

Double post.  Nothing to see here.

Awesome!!!!

I'm down to law school loans, nothing else.  More than half of the principal is paid off.  But that's only because my parents forgave a large amount of debt I had to them when my house finally sold last October.

BEFORE law school I was debt free. 

Let this be a lesson to those of you considering law school.

Been there for a couple years now.  No mortgage, since I rent.  No car payment for the last 3 years.  And no credit card debt -- I always make sure I pay off any balance within a couple months.

HOWEVER, I'm sick of driving my manual transmission Honda Civic (which I've had since 2001) in LA traffic, where my foot cramps up anytime I get stuck in a jam, which is frequent enough to be very irritating.  And since I have this newfound addiction to fitness, I'd like to get a vehicle that can comfortably (and securely) haul around 2+ bikes, plus lots of other gear.  So this weekend, I'm actually planning to pull the trigger on a new Nissan Xterra.  Having monthly car payments again will suck, but I'm aware of the cost.

Very interesting discussion.

The one thing that the borrowers in the group forget is RISK.  First of all you should never borrow money to buy something that decreases in value; cars, bikes, gas, food, entertainment, etc. 

As far as the house goes, I know its hard but you must assume a rainy day will come - do those of you that have mortgage loans have at least 6 months worth of cash in an emergency fund?  Have you taken out more than a 15 year mortgage?  Have you put less than 20% down?   If you don't meet these three things you can't afford a house.  Then if you have, you should pay the mortage off as soon as possible.

Owning a home is expensive.  In the last year, I had to replace my room (insurance helped) and just last week replaced a 3-ton AC unit (had to pay for our of my pocket - $6K gone).  Neither of these were budgeted...they were surprises. 

Again, goes back to risk, I don't think most of us consider it when we make financial decisions.  

So sell yours, add a few grand and buy an automatic that you can pay cash for. 

At the very least (and I am not recommending this, but it sounds like you have your mind up) buy something 2-4 years old so that someone else takes the hit on the depreciation. 

How about just throwing out a hundred dollar bill from your window a few times a week to get what it feels like to throw away so much money.

Drive Free, Retire Rich
http://www.daveramsey.com/etc/lms/drive_free/

Don't get hung up on the numbers because I know some will not agree but even if he is half wrong, the point is very stong and compelling.

I am hoping to be debt free other than a car in the next 9 months.  I posted this a while back and didn't get much of a response so here goes again:

I'm not sure if anyone will advocate doing this but I have a question about paying quarterly taxes.  I am recently self employed and have been paying my quarterly taxes on time and in full.  I am considering delaying the next payment by a quarter to pay off high interest debt instead.  I have around $20,000 in consumer debt with an average APR of 20%!!!  My math may be wrong but if I use the money that I would normally use to pay quarterly taxes to pay off the debt instead I can save money.  I know I will be charged a penalty for not paying my taxes on time (8% or so) but I know without a doubt I will be able to make the payment by the end of the year.  So, does it make sense to take the penalty on taxes at 8% and payoff the debt at 20%?

So you are saying the way to becoming wealthy is to give the banks interest rather than yourself and be stuck in payments?

Look at the US today.  Most live paycheck to paycheck and US consumers have record debt.  I don't see those using debt getting ahead. 

What I do know is that without payments, I can build wealth.

csharp

While the numbers may work in your favor, the IRS is not an entity you want to make mistakes with. 

Keep in mind, that personal finance is much more about changing behavior than it is about the numbers and interest.  So if you are attacking the debt and it will be paid off soon, then the interest does not make much of a difference.

I would work on getting some of those balances transfered to low interest cards.  My remaining debt is about 17k and I moved all of it to 0% cards until Jan/Feb 09  but I will have all of that paid by then.