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Originally Posted by Dan02
I would disagree with him being absolutely right, yes most consumer debt is unneccessary, however, there are plenty of reasons to have debt and i would suggest if you weren't born into money and have never carried debt in your life then you've probably lived a pretty drab risk free life. I wouldn't call him a dick, more narrow minded then anything.
Sometimes you need to borrow money to make money.
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I assure you I did not come from money. My parents were hard working and underpaid. They raised us and made sure we had a roof over our heads, food on the table and essentially anything we wanted/needed, but they never had the money to put us through college. That was done on the back my academic efforts and working fulltime from grade 9-12. Yes I saved a huge chunk of money to pay for my education....call me a nerd if you like but I call it the education my parents gave me on how to be better off than they were/are.
I also assure you that I have not led a drab existence but a rather fulfilling and exciting adult life. Because of the decisions we have made in the past we can continue to lead that life despite having more mouths to feed. That is something most people we know can't say because they tied themselves up into debt early on and are struggling to get out from underneath it.
We aren't talking about borrowing money to make money. We're talking about racking up debt on credit cards, car loans etc. None of that spending has anything to do with borrowing money to make money. They are money losing propositions from the get go.
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Originally Posted by dobbles
i find thats a pretty unrealistic scenario for most people. i myself have very little debt. something like $100 bucks on a discover card and about $5k in student loans still. but i still understand where credit cards can still be useful for responsible people. often times credit cards can be a good way to deal with an emergency. if for instance your furnace breaks in the middle of winter, its not realistic to wait a few months until you can save the money to purchase a new one outright.
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Credit cards are good for an emergency because you often can't liquidate fast enough or get enough cash right away to fix a problem. However, your scenario is covered by the savings you have. You may need to put it on a credit card to get the fix done right away but you have the money to cover it when the bill comes due because of your past savings. You save with those things in mind. You earmark money for house improvements, car purchase, unforeseen circumstances etc.
Believe me we use the hell out of our credit card (we get a percentage cash back...we actually make quite a bit of money off the card company!), but it always gets paid off. Always. Once you let it slip once, it's easier to let it slip a second time and then you are on a downward spiral.
I know that 90% of the world doesn't live that way and they are absolutely correct they don't. Perhaps they should. Perhaps if they did the mortgage crisis in the states never would have happened. There is a very small percentage of people that "need" to go into debt. There is a large percentage of people who simply don't give it a second thought and these are the people that lose their houses, cars etc when something bad happens. Our goals that i think we'll meet is to have the house paid off in another 2 or 3 years...or 8 years into home ownership (we didn't make much money on our first house and only came out ahead because the company paid the real estate expenses). At that point the only payments we will have are insurance and taxes. Some people think we're stupid because we have a reasonable mortgage rate and could be doing something else with that money. We believe that at that time if something happens we have a home and will not lose it. We will have cars and not lose them. We can continue to live our lives (a bit more frugally of course) until the next job comes around etc. There will be minimal impact on our lives unless the situation is dire and very long lasting.