<p>Our only debt is a truck payment that will be paid off by the end of the year. Other cars (2 kids in college each have one) are paid for.</p>
<p>Our house that we have lived in for 20 years was paid off last year. Kids both attend in-state public u’s funded by scholarships and savings accts. I stopped working when first kid was born and started back when he was in h.s. I work part-time and don’t make much but the schedule is good for us.<br>
DH and I both grew up in households with tight budgets. We are not big spenders.</p>
<p>There are repeated threads on this topic (being frugal) on CC-- many of us have referenced “The Millionaire next door”- a great book and words to live by. Many of us drive older cars that are paid for (we always buy our cars with cash-- never take out a car loan. We buy new cars for ourselves, but used for the kids). I just looked at my mortgage on line as I opened this thread, and see that we only owe between 6-7% of our estimated house value, and it is our only debt. We could pay it off, but there is only about a year and a half left on the loan and it was a 5 yr loan at about 5%, so is mostly principal and little interest at this point). I am about to do a kitchen/bath remodel that will cost more than what we have left on the mortgage, but fortunately I had squirreled away some $ this year in an on-line bank account that we didnt lose in the stock market. It should cover a good portion of the remodel. I will be scaling back the remodel a bit as I am nervous about the financial situation. We lost a lot of $$ in the stock market (our assets are down about 30%), my dad may need our financial support because of the market, and the decreased value of his home, my husband took an early retirement from a big Fortune 100 job last year and is now working for a very small start-up and I am self employed, which, while it is going well, is always unpredictable. And we just gave our front office manager a big raise in order to keep her from having to look for another job. </p>
<p>So, while we are almost debt free (older son graduated from college this past spring with no debt and younger son has, thank heavens, 2 scholarships that combined cover about 75% of his college expenses), I am still quite uncomfortable in this financial climate. As I mentioned in some thread not too long ago, we had dinner with friends recently (the husband is an accountant and has lots of clients who are drs and attys). He was AMAZED at the number of people who make lots of money but who are still terribly in debt. Why people live above their means is beyond me. That said, my bro in law is one of those who has never managed his money well, is always in debt and looking for someone else to pay his way, and just got laid off 2 weeks ago. I really hope he doesnt again come looking to us for a handout. I will not be a happy camper. I feel like we are the pig in the three little pigs who built his house out of brick. And I plan to hunker down and try to ride out this storm. I hope it blows over quickly and we are all soon on the road to financial recovery.</p>
<p>Forgot to ask-- has anyone else noticed that there are a bunch of commercials running with Charles Schwab himself telling people not to panic and not pull their money out of their accounts but to hold on and ride out the market? Kinda scary that he needs to come on himself and try to reassure everyone. Sorta felt like Nero fiddling while Rome burns…</p>
<p>It seems to me that you really can’t tell how secure folks are financially by what they spend. I’m not a saver, as dh would vigorously attest - but there are certain things I’d only buy (summer home, big-time home renovations, frequent travel) if we had a bundle sitting safely in various no-risk places. Which we don’t. </p>
<p>Acquaintances of ours spend a staggering amount of money - maybe a $100K indoor/outdoor renovation last year, 4-5 family vacations annually to spots like the Gulf Coast, California, Las Vegas, looking to purchase a beach home. I’d have to be a multi-millionaire before I’d even consider that kind of life, much as I’d love to do the traveling. Borrowing to finance living large? NO EFFING WAY.</p>
<p>Re “The Millionaire Next Door” - we actually do live next door to millionaires. They live in one of the smaller homes on our relatively modest street, but they’ve improved the heck out of it. They’d probably never get back what they’ve put into it on the market, because the street address won’t make anyone’s heart beat faster. They’re too smart to move to a better neighborhood just to impress. They’re wonderful neighbors, so it’s nice for us!</p>
<p>There have been times that it bugs me that my husband makes us live debt free…right now though there is a bit of a sense of peace. I would definately be a spender left to my own demise and he would probably become an old miser…so I guess we make a good fit. We have 1 Visa and 1 American Express that he pays off every paycheck, (which means I am nagged every paycheck) and we own our home and cars and he has saved (at least before the crisis) plenty for the kids. It is a sacriafice- I color my own hair, do my own nails, shop at sales and discount stores- we don’t eat out except on vacation. Though I have never been fond of the B word, living on a Budget has kept everyone accountable. (Okay mostly me accountable) My dad died at 53 and all his savings that he tucked away after living so frugally for years have been fully enjoyed by my moms following 2 husbands!!! So I believe there must be a balance. </p>
<p>I hope that this crisis teaches some, and reminds us all of the fact that who we are is NOT what we have…</p>
<p>I do think the negative political and financial envrionment has had an impact on the “mental” well-being of americans…everyone seems a grouch and on edge…</p>
<p>or is that just me with my two 17 year olds???</p>
<p>Another frugal person here. No credit card debt, few years left on the mortgage, no college loans. </p>
<p>I can almost understand a person on low wage & a family getting into credit card debt out of necessity, but a person with plenty of money living beyond their means? No way that should happen (yet it does.)</p>
<p>Despite the downturn, we are going ahead with a kitchen remodel. Unless the bank fails and takes all our savings with it! :(</p>
<p>I agree with mommusic: I can understand people that are making very little that struggle to provide even food and clothing who incur cc debt. But I just can’t understand people who are making over 200K with massive mortgages, credit card debt, making payments on cars and taking out student loans for their kids as they approach retirement. They must not sleep very well at night. Or maybe they do.</p>
<p>
We make the kids buy their own cars. They are also very frugal.</p>
<p>3bm103,
For the mostpart, the boys have gotten either a “hand me down” car (my older s’s first car belonged to a family member and it had over 350k miles on it!! It would probably still be running today if he hadnt had an accident with it.) Come to think of it, he paid for repairs on the car when he first got it, and paid for insurance.Then he bought himself his own car with money he earned, but it ultimately needed a repair that wasnt worth paying for, and he ended up with my old minivan, which he is about to sell. Younger s. got DH’s old car but paid for his insurance. It got smooshed in an accident (not his fault) so we bought him another used car with the $ from the insurance company.</p>
<p>about 50% debt/value here - moved around in bad markets a lot - so not in position i wish we were at this age.
here is a perfect example of why we’re (this country) in the financial mess we are -
hgtv ran show last night showing first time homebuyers in their 20s buying a $510M house with ZERO down and 2 mortgages. There is NO WAY these people should have been allowed to buy/finance this house. It makes me CRAZY that these are the type of people we may be bailing out!! I’m sure Obama will be glad to bail them out though (and all the folks in Congress who voted for the $700B bailout) What is wrong with you reap what you sow?</p>
<p>^^
“… car belonged to a family member and it had over 350k miles on it!!”</p>
<p>Ah, now you’re making me feel guilty. I just traded in a ten-year-old car with “only” 175,000 miles on it. Think how much money I’d have saved if I’d just kept it another ten years! (I do still have a second car with 180,000 miles on it.)</p>
<p>Astounding how many people here have houses paid off, or close to it.</p>
<p>A different view: we are 5 years into a 30 year fixed rate mortgage, about 25% down on original purchase. We’ve owned our current house for 10 years, and refinanced to lower monthly payments 5 years ago. Our outstanding mortgage balance is less than 1.5x household yearly income, and we purchased near the bottom of the market, so even though we are some time away from paying off the mortgage, it is not a fiscal drag on us (knocks wood).</p>
<p>We opened a HELOC at the same time we refi’d. At the time of the refi, we were asked not if, but how much money we were taking out of the house; it was apparently very unusual at that time not to do so. We have tapped about half of the HELOC over the last couple of years for home improvements, but that was done when another major expense disappeared, so our cash flow didn’t change. The expenses were the type that added to our home’s value, allowed us to legally deduct the interest, and allowed us to keep other funds in non-real estate investments. Total mortgage and HELOC debt are still well below our original purchase price, let alone current value. </p>
<p>We have a car loan on a vehicle purchased new two years ago. Like others here, we keep our cars for a long, long time, so purchasing a new car when we will drive it for 17+ years is a reasonable form of debt. </p>
<p>Everything that can goes on a credit card to get points, but the cards get paid off each month. </p>
<p>miltonmom, my understanding of the bailout of homeowners is that the plan would only apply to homeowners who could manage to pay the loans at lower interest rates. The couple you mentioned sound like they’d be unlikely to afford even that, so they’d be ineligible.</p>
<p>Our only debt is our home mortgage. We charge everything we can to one credit card and S2 has a credit card at college, but those are paid off each month. We have 3 cars, 1996, 2002 & 2006. Paid cash for all of them except the last. We only financed it because it was 3-year 0-interest.</p>
<p>No one is fessing up to living high on the hog. </p>
<p>And speaking of cars: We’ve got a 1997 minivan (known around town as the DogMobile) with 145,000 miles; a 1999 Mercedes, purchased used, with 63,000 miles; and a 2000 Accord, bought new, with 125,000 miles. If one of these gems dies, I don’t know where the money will come for a new one. Even a new used one. I do believe that the best deal around is purchasing a certified preowned car from a dealer. The cost is low, the warranty is great, and they’re often only a year or two old.</p>
<p>Less than 5-10%. We’ve been preparing for early retirement in the last 10 years, so we never want to take on a lot of debt. We could also pay off the debt if we want to but not sure if we are in the inflation or deflation scenario.
I’m married to a child of parents who grew up in the Depression Era, so he is all into not loosing money. I’ve often laughed at his investment idea, but I have to admit I’ve been thanking him in the last few months for not loosing his shirt. While I’m down on my 401K, I know I won’t have to rely on cat food in my retirement.</p>
<p>In contrast to this thread, checkout the thread on the student graduating from NYU with 88K in loans. There are posters on the thread who feel that NYU is at fault…
Hmm…is this the same mentality to has us in the bailout plan?
What the heck, let’s add all the students who took out WAYYY too much in student loans to the bailout…we’re already at 700M, what’s a few 100M more?</p>
<p>The house would be paid off, except that a couple of years ago, we took out a home equity loan to build a pool. Otherwise, no debt (before I read this thread, I thought Husband’s 1994 minivan was old!)</p>
<p>Our house is paid off and we have no car or other loans. We pay off the one credit card every month.</p>
<p>However, we bought the house we intend to move to before we could sell the first (which is also dependent on finding work in the new area.) On that, we put half down last year, so still owe about half. As soon as we make the move, we’ll use the payment for the first house to pay off the mortgage on the second one.</p>
<p>Our aim is to be where we want to live, bill-free as much as humanly possible, working only enough to cover what we can’t shed entirely (property taxes, which are half down there what they are where we are now, and healthcare, being the big two necessities.) Then, we will work at what we really want to do, which is not guaranteed to pay at all.</p>
<p>I bought my house with a 30% down payment 6 years ago with one of those “dreaded” interest-only loans. Refinanced 2 years ago into another interest-only loan. This means that no principal has been paid off. However, home prices have gone up and are now stable in my small town, so I now have about 50% equity in the house. I realize that this is the best case scenario and that many others who took out interest-only loans haven’t fared as well.</p>
<p>I charge everything because I get a 2% rebate on credit card purchases and because it’s easy to download my statement to Quicken so I can track where the money went. I pay all credit cards off every month. I’ve never taken out a car loan. No other debt.</p>
<p>In general I don’t see mortgage debt and the corresponding leverage that it brings as a problem as long as the payments can be comfortably made from current income and the terms are completely understood.</p>
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