How Much Do You Owe?

[RBS]

Aye aye aye. We were almost out of debt but since the economy has crashed, the amount has skyrocketed. We do our best to live within our means. Three years ago, I lost my job due to some underhandedness on management's part, but it was a blessing in disguise. I have a wonderful job now, working with fantastic people, but I make less money. We have a family to raise. Not only that, we have childcare and my job in sales has been hit really badly. And acting work has totally dried up this year! Holy moly! I am not in despair about it, and have found a way to reinforce my real values. Perhaps that's the big lesson here. Anyway, just thought I'd vent a little. We owe a lot. I hope to get it down soon.... We're cutting down on childcare in January and that will help.

[Monte Smith]

Nearly everything you mentioned above is about what you are earning, RBS, and not about what you owe. How much do you owe?

[Pete C]

Nearly everything you mentioned above is about what you are earning, RBS, and not about what you owe. How much do you owe?

I think the real title of this thread should be "Are You Better Off Than RBS."

[Monte Smith]

I was hoping for some romantic tales of loan sharks. Real leg-breaking stuff.

[Tom Storer]

I think the real title of this thread should be "Are You Better Off Than RBS."

No, it should be "Are You Better Off than RBS or Worse Off?"

[tippy]

he owes more than he did when he was almost out of debt and it is a weight on his shoulders. dude.

so how do you cut down on childcare...tell that four year old to "straighten up and fly right?"

just kidding. hang in there, RBS.

[lonely-at-the-top]

Look at the bright side:
U.S. interest rate near the buttocks, ain't this THE time to owe? If not now, when? Question is not how much but whom!
If you still can see a silver lining (job, health, family) and you don't owe to some cutthroat credit card co but to some serious bank () , what the hell.
Good luck

[Tom Storer]

I feel for you, RBS. Don't panic, and plan the future realistically. Wishful thinking is the enemy of good finances.

We have mortgages for two apartments, the one we live in and the smaller one we house our son in, one floor beneath us. And that's it, debt-wise. Another few years and they'll be paid for. I will be relieved when the day comes.

Many years ago I got myself into a fair amount of debt when I was working for myself and didn't know what I was doing, money-wise. Luckily my wife took the financial reins at that point and steered us out of troubled waters. Some people are good at money, some aren't. In such a situation, the money-stupid person in a couple might let his or her ego prevent the money-smart person from taking charge--a grave error. Better to admit that shortcoming and get out of debt than to stand one one's pride and let things get worse. Not that I think that applies to you, Randy, I'm just saying in general.

[Vince Kargatis]

Is a mortgage generally considered "debt"? I mean, they can always reclaim your property if you default. I guess I'd consider the "debt" portion to be the (negative) difference between the mortgage and the current market value of the property.

Assuming the above, we are currently long-term debtless (we do have a sizable mortgage, but the market property value is above water), and I always have been, coming from an upper middle class situation.

[Uli]

Is a mortgage generally considered "debt"? .

"Generally", yes. Collateralized debt, but debt anyway.

[Tom Storer]

Is a mortgage generally considered "debt"?

I would think so--it's money you owe, after all. Whether or not you have enough assets to cover your debt in case you default on a loan is a separate matter.

If the current market value of your property is less than your debt on the property, you still owe the money, just as you would if the property could be sold for more.

Assuming the above, we are currently long-term debtless (we do have a sizable mortgage, but the market property value is above water), and I always have been, coming from an upper middle class situation.

The affluent aren't immune from debt. In fact, they're able to run up much bigger debts than poor folks!

[Monte Smith]

A mortgage is definitely debt. We had two mortgages until two months ago, a big one and a little one on the same property. Paid the little one off, huzzah! We have a car payment. No credit card debt, no home equity line of credit, none of that trouble, thank goodness and a thrifty wife.

[Douglas]

At present nothing, but I've just finished signing (many times) a promesse de vente and already I can hear the mortgage coming my way.

[Monte Smith]

Did you buy a place on that street with a funny name, Douglas? What was it called?

[Douglas]

You mean the beautifully named Square des Écrivains-Combattants-Morts-pour-la-France.

In the end the name and a nice aprtment couldn't outweigh the traffic noise. But we're not far away in Ranelagh.

[Chris D]

I owe a little more than I should but not enough to keep me up at night.

Best thoughts to you, RBS. I know how crushing a burden it can be.

[stonemonkts]

Debt is a complicated topic.

For people who are good at managing money, to not carry debt in the current interest rate environment is pissing money away.

But for people who incur high levels of debt because they need the money, low rates only soften the blow.

People who own their homes outright who don't apply for a home equity line of credit, AND who are good at managing money, are missing out. The current rate on a Chase variable home equity line is 2.49%.
Add to that the countless offers for 0% for a year, or in the case of buying something such as a television (or whatever) and you can get no interest for 36 months, etc...well unless you're lousy at money management, these times are ideal for people who don't need to borrow, but who can.

If any or all of that comes off as offensive, my apologies. I know how banks basically drop to their knees for people who don't need money, and screw those who do.

I guess if I had anything to offer as advice to RBS it would be to consolidate all the debt into one, low rate package and pay it off slowly but surely.

[Tom Storer]

For people who are good at managing money, to not carry debt in the current interest rate environment is pissing money away.

See, I don't get this. How you can piss money away by not owing interest on a loan?

I can see how you could lose out if you defer a loan for a necessity such as a home, a car, college for a child, until a later date at which interest rates might have risen. But for non-essentials, even if rates are low you end up paying more if you borrow than if you don't.

An important question is: debt for what? Lots of people are influenced by advertising and easy access to credit to load up with expensive things that are not only not essential, but aren't even the object of anything more than a superficial desire. They borrow money to buy stuff whose absence would not really affect their happiness.

[clinthopson]

It's pretty difficult for someone to go throughout life without debt unless they are in absolute poverty, live with their parents or are independently wealthy.

Whether it's a mortgage or rent almost everyone has a fixed debt. Even if you mortgage is paid off, you still have property taxes or sewer taxes or water taxes.

The worst debt is the credit card where folks run up their balances for usually non-essential items like a bigger tv, fancy vacation or various totchkes and then whine about the bill.

A child's education is something that most of us either have or will have to face and university fees are skyrocketing. The University of California will be charging over $12,000 next year as a basic fee, not including orhter fees, books and living costs. I'm glad I dealt with those costs years ago when the fees weren't so staggering. When I went to Long Beach State, my fees were about $50 a semester, our kids who went through the U.C. system had fees of about $2,500 annually. Community colleges didn't have any fees. Community Colleges have flat fees of about $350 a semester and $30 per unit.

Donna and I are fortunate that our only fixed debt is a very small mortgage and the costs that go with home ownership. Of course we have spent a large portion of our working life to put ourselves in this situation.

[RBS]

Thanks, everyone. Our child care (nanny) will be cutting down her hours because we're putting our youngest into full-time pre-school. That will save us quite a lot each year. The credit cards are at the 0% level, so they're not accumulating any real interest. I just never thought we'd be in debt again!

I owe more than Monte does. And less than some others. But more than I'd like. It could be the amount of some third world country's GDP, but I'm not sure. It's pretty much stabilized as we've cut our expenses. But part of the problem is the unexpected fall-off in my commissions and acting work. I'm looking forward to a better year next year.

To quote Terrence Howard: "You know, it's hard out here for a pimp."

[rollhead]

A child's education is something that most of us either have or will have to face and university fees are skyrocketing. The University of California will be charging over $12,000 next year as a basic fee, not including orhter fees, books and living costs.

http://www.nytimes.com/2009/11/20/ed...r=1&8au&emc=au

[stonemonkts]

See, I don't get this. How you can piss money away by not owing interest on a loan?

I can see how you could lose out if you defer a loan for a necessity such as a home, a car, college for a child, until a later date at which interest rates might have risen. But for non-essentials, even if rates are low you end up paying more if you borrow than if you don't.

An important question is: debt for what? Lots of people are influenced by advertising and easy access to credit to load up with expensive things that are not only not essential, but aren't even the object of anything more than a superficial desire. They borrow money to buy stuff whose absence would not really affect their happiness.

I agree with this from your point of view of an average working or middle class family. Incurring debt simply because rates are low, then spending it on non-essentials isn't a good thing. But incurring debt at rock bottom rates and knowing what to do with that money, perhaps seeing it in terms of growth capital instead of money to spend on shit, can be a very good thing. I can cite numerous examples and they would all have one thing in common, a financial savvy to and knowledge of how to make money with money. So I'm really not referring to spending it, unless it is on essential things such as housing, or education.

Like I said, it really is complicated.

[claude]

But incurring debt at rock bottom rates and knowing what to do with that money, perhaps seeing it in terms of growth capital instead of money to spend on shit, can be a very good thing. I can cite numerous examples and they would all have one thing in common, a financial savvy to and knowledge of how to make money with money.

Just don't go buying shares on margin based on a tip from your uncle Marty (I guess that would fall under the "savvy" part).

[LennyH]

My wife did a great thing a few years back and took our 30 year mortgage down to 15. We'll have it paid off in 9 years or less. The other cool thing we did was save a bunch of money for my daughter's college, which will start next year. If she goes to Univ of Delaware, which I think she will, we already have 3 years saved.

On the less smart side, we had an expensive pool installed and have not been able to keep the credit cards below the stress level. But we are putting money into savings every month and we refuse to use that money to pay off credit cards.

In 9 years we won't be supporting kids (theoretically) and will hopefully have enough money to move somewhere cheaper and get out of the rat race. Then I'll be starting a "make the case for your city" thread like Cem.

[Gary Sisco]

Thing is, people's financial picture is, no matter who you are, changeable, and it can change for no cause of your own. You want to know about stress? Have a mortgage hanging over you that you can no longer afford *and* you can't sell your place, either. Which is what happened to us in VT. When we realized we the math wasn't working out on our farm and we had to move to a less expensive area, we were still set up ok, moneywise. And then, just about exactly when we put our place up for sale, the bottom fell out of the real estate market and it took two whole calendar years to sell the place, for a hugely reduced price. We came within weeks, literally, of just abandoning the place while we still had any money at all. We came out with enough, thankfully, to pay for our little place here outright -- five figures -- and to pay off the mortgage on the old. That's all. We didn't recover building costs, even.

You want to know about stress? Take a look at homelessness coming right up, with a quadriplegic wife. Then you'll know what stress is. :-0

Consumer debt is different, but debt is debt. I'm out of that game, for good.

And anyone's picture can change any day. Bronwyn was a professional athlete making very good bucks one minute and a quadriplegic the next. Bang. The same can happen to anyone.

Our car's twelve years old. It still gets me where I want to go and back again. So long as it does, that's what I'll drive. When it doesn't, I'll buy a used car I can just pay for.

[Monte Smith]

I'm driving a new car for the first time in my life, Gary, and it's because of the crazy economics that existed when my Taurus gave up the ghost this past spring. Because people were holding on to their used cars rather than selling them for new ones, and because of cheap financing, the new market was as cheap as the used. Weird.

[Gary Sisco]

Monte, yeah it was a strange situation. I've noticed that cars in general are less expensive here than they were up north. That'll be a good thing when it comes time.

[ran]

Who is FICO ?

Even in this economy , they (fico) , who ever they are , don't seem to matter much.

I've seen the cycles of easy and hard credit. But I've never , ever received a letter from the one that I got from Wells Fargo recently. For a credit line that I didn't even know that I had , I got a letter from them , telling me I was no longer wanted ? They were withdrawing a 25-k line on the basis that I was no longer desirable.

What was funny is that if I wanted to dispute it I could call some 800 , number and they would reconsider ????????????????

[Steve Reynolds]

we owe nothing except for a monthly payment within the family - and that is gone in 2 years and I could pay it tomorrow

no house or real estate or anything like that - but no worries about money is a beautiful thing


no debt to anyone else - nothing


from someone who was destitute and in debt more than I want to say


called living right for 5 years - working hard and never spending beyond our means

[Jimmy Cantiello]

we owe nothing except for a monthly payment within the family - and that is gone in 2 years and I could pay it tomorrow

As long as it's not the Genovese family you're in good shape.