Young, fresh, ambitious, in massive debt

[asleepathewheel]

Originally posted by Pekka
And even more, they say 'take loan! It's not that bad, you get a good deal!'. My ass, you don't know if you can get a job or not when you graduate. People just graduate to unemplyoment line right now. So forget about that, play safe, don't get any debt at all and look out for yourself, because no one else is doing that. Fat pigs just like to pleasure themselves so no shame in little selfish thinking here.

Most US student loans are by the government, they give you 6 or 9 months to start paying off. And you can defer beginning payments usually until you have a job. Furthermore, you can consolidate your loans at a lower rate these days. Student loans are a much better deal than others, I would much rather have 5k in sl debt than credit card or car loan debt.

[Kontiki]

I can't believe people think of a mortgage as real debt. Yeah, you have to make payments with interest, but it's fully secured with real property. Unless you're in some insane high-ratio situation, or an extremely volatile real estate market, having a mortgage is one of the smartest things you can do (assuming, of course, that you have enough for a reasonable down payment and can comfortably afford your monthly payments).

[Japher]

I can't believe people think of a mortgage as real debt. Yeah, you have to make payments with interest, but it's fully secured with real property. Unless you're in some insane high-ratio situation, or an extremely volatile real estate market, having a mortgage is one of the smartest things you can do (assuming, of course, that you have enough for a reasonable down payment and can comfortably afford your monthly payments).

I agree

I think the thing that gets ppl however is that they invest in a "home" and not a "house". If one looked their "investment" similar to that as any other investment they wouldn't end up a) purchasing more than they can afford, b) sitting on 10s of thousands of dollars in equity while whinning that they don't have any money, c) not depreciating their house, and d) sitting on it all the way into foreclosure when they should just get the hell out why they can....

People think, home, pay it off, then I'll be set... No, you'll have a free place to live, but still won't be making (not earning) any money.

[Arrian]

Good financial management is more important than salary.

Yep, bingo. Live within your means. Have a plan. Get rid of whatever debt you do have ASAP.

I don't really count a mortgage in the same category as a personal loan or credit card debt. The house has value. You can sell it, and most likely cover the mortgage or at least come close. A mortgaged home is better than renting, where the money is just pissed away. EDIT: Kontiki beat me to it.

I have a good friend with upwards of $10,000 in credit card debt. I don't really know the exact figure, but I bet it's around that much. He drives me NUTS. He could pay that off, and it really wouldn't take him that long.

Instead, what does he do? He takes out a home equity line of credit (4% rate, as opposed to his 9% credit card rate) and uses it for new cabinets in his kitchen, installation of a couple of ceiling fans, and some painting, and at the end will throw ~$5,000 of it at his credit card debt.

Meanwhile, he's going to Amsterdam for a week in August for his 30th b-day ($1300, plus whatever he spends over there), and intends a trip to Southeast Asia next year that will cost several thousand dollars.

In addition, when he had to get rid of his old car (SUV, actually) a year or two ago, did he go out and buy a used economy car? Nope. He goes and buys a new Dodge Durango (another SUV).

It ****ing boggles the mind. Ten thousand plus in credit card debt in and of itself boggles the mind. But then having the ability to pay it off pretty quick and NOT DOING SO?!?!

Some people can be so smart in certain areas and so dumb in others. This includes me, of course.

-Arrian

[Velociryx]

Well, I'm just on the outer edge of that group (soon to be 36), and I did take on debt to get thru school (~12k), bought my first car on my own (another ~18k), paid all of the above off, scraped together a down payment for a house, had a sterling credit rating, and then got corporate downsized out of a job after making my 3rd mortgage payment.

End of the year is a sorry time to get downsized, by the way....most companies have already allocated all their budget money for the year and are just plain not interested in hiring.

Mucked up my sterling credit rating to keep things going and keep the house, so now I'm ~20k in debt with a 110k mortgage on top of it...working again (new year, companies started hiring), and looking for better jobs that'll put me making what I was before, but it can really turn around quickly. I'd hate to think what might have happened if I had been downsized before getting the old (first round) debts paid off....reversals can happen very quickly, and I count myself lucky to have pulled through this one....am taking no chances, that's for sure. Get this debt off my back, pay the house off double quick, and then use the equity to buy investment props. Fingers crossed all the while!

-=Vel=-

[Kontiki]

Originally posted by Japher


I agree

I think the thing that gets ppl however is that they invest in a "home" and not a "house". If one looked their "investment" similar to that as any other investment they wouldn't end up a) purchasing more than they can afford, b) sitting on 10s of thousands of dollars in equity while whinning that they don't have any money, c) not depreciating their house, and d) sitting on it all the way into foreclosure when they should just get the hell out why they can....

People think, home, pay it off, then I'll be set... No, you'll have a free place to live, but still won't be making (not earning) any money.

Spot on. IMO, you have to keep the mindset that if need be, you dump the place and pull your money out. In the meantime, you at least have something to show for your monthy housing costs in the form of built up equity. Rent is just flushing money down the drain.

[Japher]

I still rent, and it drives me nuts. Yet, homes around here start at about 450k... Ain't got enough yet. Sucks Much Suck.

I also have a friend like Arrian's, I haven't seen him since he got married (about 6 months ago), but I could really care less because I was getting sick of "I am broke, I owe so much!" then turning around and bying a $4,000 TV, and $6,000 stereo system to boot... Shudd up alread!.

It's fewls like this that would agree with that article and take pitty in themselves instead of attempting to change their life style.

When I got married my wife had $4,000 in credit card debt. To me, that was way to much. I told her she could carry $1,000 on her card and no more, really it should be paid off. After a year of watching her with this it was up to $6,000! I told her if she was gonna pissss the money away like that she might as well "pay herself first"... I made her give me $500/month (we keep our accounts separate, and have one joint savings account in a money market). After about 2 months she got the picture. She hadn't aquired anything new, and wasn't needing anything, but was still broke. I gave her back the 1k that had accumilated to put to her card, which she matched, and 6 months later she was at 0 debt. She felt good about it, and has been doing good at not spending recently. Yet, it took a hard reality check for her to get that spending doesn't get you what you want.

I don't think I want handle her money, or for us to combine accounts, as my friend I mentioned above did with his wife. I want my wife to be fiscally responsible for herself. When her company cancled her 401k I took her down to Schwab and showed her how to perform a roll-over. Since, she has done nothing with that money that is just sitting there. I like rubbing my IRA growth in her face... Maybe one day she'll take the initative to learn a little something about money.

[dainbramage20]

I have over 150,000$ in consolidated debt. But I bring in plenty to pay it off. I also have a Debt Insurance policy

[Kontiki]

Originally posted by dainbramage20
I have over 150,000$ in consolidated debt. But I bring in plenty to pay it off. I also have a Debt Insurance policy

Including mortgage(s)? Because that's a pretty high unsecured debt load...

[dainbramage20]

Of course including mortage. But my debt is covered by my income.

[Kontiki]

Yeah, but as I say, I wouldn't really count a mortgage as real debt. I mean, I wouldn't say I'm in very much debt, if at all. But if you are counting mortgages, then I'm neary $300k in debt. But I'd be very much in a positive position if I sold my place.

[Kidlicious]

Re: Young, fresh, ambitious, in massive debt

Originally posted by GePap

http://www.villagevoice.com/issues/0411/fkoerner.php

A minor summary for the lazy: Young people in the US leave college with an average debt of 20k, and are likely never to be out of debt again once they get low paying beginning jobs, a mortage, health care costs and so forth.

Just another reason why the economic growth of the last 3 decades or so is unsustainable.

[chequita guevara]

I want a student loan amnesty program.

[DinoDoc]

Why? They borrowed the money and should pay it back.

[GePap]

I left my 4 year private university with 20k in loans. I consolidated and have a pretty good payment plan going. I have no other debt, as I have no credit cards, so I can't actually owe anyone. My parents covered large sections of my tuition, but I covered my living expensens throught work-study. Right now I make 21k a year-regularly in NYC that is impossible to live on- but since i live at home, I am able to slowly build up savings.