Anybody here debt free?

[phil5185]

Debt free as of about 2 months ago, sold our last rental house and cleared the loan.  First time in 40 years that we are not landlords.

But debt-free has not been our goal for 40 years. At one point, we paid -down 2 of the houses - and quickly realized that was a mistake, our 'Return on Equity' fell. So I refi'd the houses and moved that house-equity money into stocks. And followed up with several refi/cash-outs on the rental houses over the following 30 years.
For a large part of those 40 years, we had enough money in stocks to pay-off the mortgages and be debt-free. But that would have been an expensive decision, borrowing longterm capital at <6% and investing it at 11% (arbitrage) is a profitable technique.

[Deleted]

Jan 24, 2016 23:09:20 GMT -5 giramomma said:

Jan 24, 2016 21:10:23 GMT -5 @aj said:

We have been since 2012 at the age of 31. DW and I got together in 2009 after each divorcing a financial albatross and went into super saver/strict budget mode for three years to get enough money to sell her former house (she even went on a civilian tour in Afghanistan for 6 months to get the $$$ to bring to the table to sell), pay off our cars and the mortgage of what was previously my house. It helped having a pretty cheap townhome, very modest cars and two professional incomes.

Life is a whole lot easier debt free.

I think it depends..

If we paid off our mortgage tomorrow (which we could do), that would free up $400/month in terms of cash flow.

That's it.

$400/month is not a game changer for us. In order for our life to be a whole lot easier or to have a marked improvement, we'd really need about an extra 1K/month..1500 would be even better.

At 1500, we could buy services to save us some time: house cleaner, outdoor maintenance folks..But, we'd still lose a bunch of time because we would have to be dual professional.

I'm not sure how "easy" it is to have two professionals working full time, deal with three active kids that don't have their drivers license, and also help aging parents. I'm not sure how living debt free helps you when you are in this situation....You can't buy more time..

I know folks that are well off. I'm not privy to their financial situation, but I'm assuming they don't have a lot of foolish consumer debt. They still worry about their finances...

I wasn't intending to speak to yours or anyone else's situation, merely to provide insights from my own road to being debt free and my assessment that in my own situation, being debt free has made life easier and my own personal worry of our finances is probably 1% of what it was 7 years ago.

[alinal]

I've been debt free for the last year, and love it.

Jan 24, 2016 21:43:09 GMT -5 @bamafan1954 said:

I have a mortgage but consider myself debt-free.  Under your terms, you couldn't be under contract to anything including cell phone service, home security, satellite, health club, etc.  

ETA:  In fact, if you have anything but a month-to-month lease on an apartment, you aren't debt-free since you must pay that amount for X number of months.

I hadn't thought about it before, but I actually don't think I'm under contract for any services I use. My preference is to pay in advance what I can (yard service, insurance, sat radio), and do month-to-month for everything else (cell, internet, gym).

[cranberry]

Jan 24, 2016 21:34:57 GMT -5 gregintenn said:

Jan 24, 2016 21:32:34 GMT -5 cranberry said:

I'm debt free now and have been for most of the last 15 years. But in a couple weeks, I will be taking on a mortgage. I've thought it through and even though I would rather not have debt, this is the plan that works best for me right now.

Technically, you ARE debt free.



Technically yes, for now!

I've heard some financial folks call mortgage debt "good debt" and imply that it doesn't really count as debt. I still count it though.

[❤ mollymouser ❤]

Single income military family living in California.
Debt-free.
Do I have to gloat and be smug, or can I just smile and be nice?

<---- flag. Because we're super patriotic

[NastyWoman]

And another debt free poster. Feels good to know that even if I get rif'd tomorrow (no current danger) I can just keep living my life like I do now thanks to my low expenses. Still I want a somewhat bigger buffer so off to work I'll go...

[yogiii]

Jan 24, 2016 21:16:45 GMT -5 SVT said:

There are many considerations for the have debt and invest vs pay off debt debate. I used to be firmly in the take low interest debt and invest the rest but not quite like I used to be.

Liquidity is something to consider but also the risk vs return of what you're doing.  Paying off debt is risk free so it makes sense to consider the fact that you're getting a risk free rate of return equivalent to the interest rate of your debt by paying it off and use that as part of ones bond allocation, among other considerations.

That's what I've started doing. I'm 100% stocks but have started paying down my mortgage some, considering it my "bond" allocation.

[gregintenn]

Wow! There are a bunch of debt free folks on here! Congratulations everybody!!!!!

[Blonde Granny]

Greg, all those here who have earned their YM card have achieved their status due to hard work and good financial decisions. 

I too am in the no debt group, DH just passed away at age 71, had been retired for 20 years. I just lost $3700/mo income that needed to be replaced, but since I too have my YM card, that situation was worked out and covered a long time ago.  If I would have had a mortgage and car payments hanging over my head I honestly don't know what I would have done except to start taking principle from investments to cover my monthly debt payments.

Stick around this place and you will see how thoughtful and how much knowledge there is in the group. In time you might receive your YM card.

[teen persuasion]

Student loans paid down years ago, and then DH decided on a career change, so went to grad school, more student loans. Those were at a much lower rate, though, and we was working towards a teacher credit, so no rush to pay them off early.  They are also gone now.

Mortgage had an ugly 9.75% rate, so paid that down as fast as possible (not that fast - low income, SAHM, 5 kids, unemployment/grad school, etc).  We were at the point we could pay the mortgage off from savings just before DD1 began college.  At that point we decided to hold onto our liquidity and just ride out the final year of mortgage payments.

Never had car loans, but over the years we did do a few 0% financings for replacing our heating system and buying a tractor.  As long as they offered, I'd leave our money in our accounts as long as possible, but we always had the cash to pay them off.

We use rewards credit cards to earn money, not pay them interest.  Charge whatever we can, pay off every month.

So we use debt, wisely.  We don't let it use us.

[gregintenn]

Jan 25, 2016 7:18:19 GMT -5 Blonde Granny said:

Greg, all those here who have earned their YM card have achieved their status due to hard work and good financial decisions. 

I too am in the no debt group, DH just passed away at age 71, had been retired for 20 years. I just lost $3700/mo income that needed to be replaced, but since I too have my YM card, that situation was worked out and covered a long time ago.  If I would have had a mortgage and car payments hanging over my head I honestly don't know what I would have done except to start taking principle from investments to cover my monthly debt payments.

Stick around this place and you will see how thoughtful and how much knowledge there is in the group. In time you might receive your YM card.

Sorry to hear about your husband. I'm happy to hear you were financially prepared. I don't know how one would be emotionally prepared for such an event.

[mojothehelpermonkey]

I am debt free, but I rent an apartment (month to month lease). Being debt free has made being unemployed for about a year a lot more tolerable. However, back when I was in my 20s, I paid off my low interest student loans early because I didn't realize that it would be a better move financially to invest the money I used to pay them off. I also hope to have a mortgage someday.

[NancysSummerSip]

Debt free here as well. No mortgage for the last fifteen years, no car loans or other payments. I am unemployed at the moment, so it does indeed feel like something of a relief not to owe money, especially when the usual amount of money isn't coming in.

[HoneyBBQ]

Jan 24, 2016 20:43:20 GMT -5 @patstab said:

I think being debt free is something you should be able to brag about.  It's hard to have the discipline to do so.

It does not necessarily take discipline, sometimes it's about the choices you make that actually lead to a smarter and secure future. Debt is a tool, nothing more or less.

I was 'debt free' when I graduated from grad school, had 20k in the bank, and no house and a car from the 80's. My NW was probably 20k also.

15 years later, my NW is >$2 million. I still owe on my house though (but could pay it off if I wanted).

I think I'm in a much better financial situation now "with debt" than without. Just ask Phil..... he's the king pin of debt utilization and I doubt he feels unsuccessful or undisciplined.

In fact, I think you have to be MORE disciplined to use debt effectively and appropriately than to eschew it all together.

[NancysSummerSip]

In fact, I think you have to be MORE disciplined to use debt effectively and appropriately than to eschew it all together.

Good point. You can use debt to a huge advantage, especially when it comes to investing in real estate. Clearly, you worship at the altar of Phil. Not that it's a bad thing.

[murphath]

Yep. We are. But we do use credit cards for all expenses possible and then pay off each month.  The simple and easy trick to this is to not also spend the $$ in the checking account.

I like playing the credit card game and beating them at it.  Just got an offer from Chase for $150 when you spend $500 in 1st three months.  That's pretty easy to do on groceries/gas.  So, I'll spend the $500, get the $150 credit--use it to buy some discounted gift cards from a site I like (ususally grocery store and/or gas cards), then cancel the card.  You would think they'd see how I play them and stop making these offers--but no, they keep coming. In the last year, I've "earned" $1100 off these guys.  They always try to talk me out of cancelling the card--I just tell them I'm going on the Dave Ramsey plan and they give up.  LOL!

Between offers, I use my Citi double cash back card.  That one I'll keep.

[gooddecisions]

I'm not debt-free, but my brokerage accounts are way higher than the mortgages (4 properties) and networth is in the millions.
My sister is debt-free, but she is homeless and gets SSDI, food stamps and a phone paid for by the government.

I don't know how anybody could not owe anyone a penny unless you're like my sister. I have bills due every month- electric, gas, water, sometimes medical, etc. I even put groceries on a credit card that gets paid off each month. Unless you're able to pay for services in advance, everybody owes somebody.

[tallguy]

Clearly, you worship at the altar of Phil. Not that it's a bad thing.

I've never really thought of it as a good thing....

Individual advice is just that...individual. Some things that are perfectly appropriate for some people will not be so for others. My disagreement is not only that it is presented as a "one size fits all" strategy but that it is ALWAYS presented as a virtual guarantee. "IF you do this then this will happen." It's not like that. Now I will grant that historically in this country that strategy would have worked well most of the time. But not always. And even more importantly is that it is not the same thing to utilize debt the way Phil does with rental properties as with your personal residence. 

I said it works well most of the time here, but it is almost an accident of luck and timing as to how well you do. If you choose to refinance and take a large sum of money to invest, and are unlucky enough to a lot of money in at a market top right before a large, long-term decline, you could easily end up losing your house. Again, that has not happened here in this country. But consider Japan. The Nikkei closed the '80's at nearly 39,000. It eventually dropped to around 7-8000 if I remember correctly. It is still less than half of its level from 1989.  They not only had a lost decade, they have had more than one of them.  How well would it have worked there? 

The best decision for Phil may or may not be the best decision for anyone else.  And as always, past performance does not guarantee future results.  As long as one is doing what is best for them, and is able to sleep at night, they're probably doing fine.  Debt or not.

  

[gregintenn]

Jan 25, 2016 12:03:10 GMT -5 gooddecisions said:

I'm not debt-free, but my brokerage accounts are way higher than the mortgages (4 properties) and networth is in the millions.
My sister is debt-free, but she is homeless and gets SSDI, food stamps and a phone paid for by the government.

I don't know how anybody could not owe anyone a penny unless you're like my sister. I have bills due every month- electric, gas, water, sometimes medical, etc. I even put groceries on a credit card that gets paid off each month. Unless you're able to pay for services in advance, everybody owes somebody.

I wouldn't consider monthly bills debt, unless you are paying interest on them. If a guy mows your lawn, and you pay him when he's done, I don't see that putting you in debt in the sense I'm referring to. The same could be said for eating a meal at a restaurant and paying as you leave.

[tallguy]

Jan 25, 2016 12:42:29 GMT -5 gregintenn said:

Jan 25, 2016 12:03:10 GMT -5 gooddecisions said:

I'm not debt-free, but my brokerage accounts are way higher than the mortgages (4 properties) and networth is in the millions.
My sister is debt-free, but she is homeless and gets SSDI, food stamps and a phone paid for by the government.

I don't know how anybody could not owe anyone a penny unless you're like my sister. I have bills due every month- electric, gas, water, sometimes medical, etc. I even put groceries on a credit card that gets paid off each month. Unless you're able to pay for services in advance, everybody owes somebody.

I wouldn't consider monthly bills debt, unless you are paying interest on them. If a guy mows your lawn, and you pay him when he's done, I don't see that putting you in debt in the sense I'm referring to. The same could be said for eating a meal at a restaurant and paying as you leave.

And charging all of your expenses to gain credit card rewards and then paying your card in full every month is the same way.  It is not "debt" in the real sense of the term.  It is in fact "pay-as-you-go" with a longer term.  The card companies are offering you both convenience and rewards to entice you into a strategy that will allow them to make money (card fees) from the merchants.  It is silly not to take advantage of it.  But it is still paying your bills when due, and "pay-as-you-go" cannot be considered "debt."  As with other monthly bills, it is for convenience' sake more than anything else that you are billed that way.

[gregintenn]

Jan 25, 2016 12:57:01 GMT -5 tallguy said:

Jan 25, 2016 12:42:29 GMT -5 gregintenn said:

I wouldn't consider monthly bills debt, unless you are paying interest on them. If a guy mows your lawn, and you pay him when he's done, I don't see that putting you in debt in the sense I'm referring to. The same could be said for eating a meal at a restaurant and paying as you leave.

And charging all of your expenses to gain credit card rewards and then paying your card in full every month is the same way.  It is not "debt" in the real sense of the term.  It is in fact "pay-as-you-go" with a longer term.  The card companies are offering you both convenience and rewards to entice you into a strategy that will allow them to make money (card fees) from the merchants.  It is silly not to take advantage of it.  But it is still paying your bills when due, and "pay-as-you-go" cannot be considered "debt."  As with other monthly bills, it is for convenience' sake more than anything else that you are billed that way.

I agree. I suppose technically these things could be construed as debt, but for the purpose of this thread, I'm saying if you aren't paying interest, you aren't in debt.

[swamp]

Jan 24, 2016 20:43:20 GMT -5 @patstab said:

I think being debt free is something you should be able to brag about.  It's hard to have the discipline to do so.

DH and I would not make the living we do without incurring significant student loan debt. Nor would we have the waterfront house we do if we weren't able to take a mortgage.

Debt isn't bad. It depends on how much you take and for what purpose.  

[gregintenn]

Jan 25, 2016 13:03:09 GMT -5 swamp said:

Jan 24, 2016 20:43:20 GMT -5 @patstab said:

I think being debt free is something you should be able to brag about.  It's hard to have the discipline to do so.

DH and I would not make the living we do without incurring significant student loan debt. Nor would we have the waterfront house we do if we weren't able to take a mortgage.

Debt isn't bad. It depends on how much you take and for what purpose.  

That's great. I started this thread to let debt free people toot their own horn a bit, and perhaps to be an inspiration to others who are working to that end and have not yet reached it.

Just as I imagined, there are some on here who just won't stand for that. No one here is belittling your financial decisions. You certainly don't owe us any explanation for them.

[ArchietheDragon]

Jan 25, 2016 13:17:09 GMT -5 gregintenn said:

Jan 25, 2016 13:03:09 GMT -5 swamp said:

DH and I would not make the living we do without incurring significant student loan debt. Nor would we have the waterfront house we do if we weren't able to take a mortgage.

Debt isn't bad. It depends on how much you take and for what purpose.  

That's great. I started this thread to let debt free people toot their own horn a bit, and perhaps to be an inspiration to others who are working to that end and have not yet reached it.

Just as I imagined, there are some on here who just won't stand for that. No one here is belittling your financial decisions. You certainly don't owe us any explanation for them.

You could start a post in the Women in Red forum.   They are much more supportive than YM.  

[gregintenn]

Jan 25, 2016 13:18:27 GMT -5 ArchietheDragon said:

Jan 25, 2016 13:17:09 GMT -5 gregintenn said:

That's great. I started this thread to let debt free people toot their own horn a bit, and perhaps to be an inspiration to others who are working to that end and have not yet reached it.

Just as I imagined, there are some on here who just won't stand for that. No one here is belittling your financial decisions. You certainly don't owe us any explanation for them.

You could start a post in the Women in Red forum.   They are much more supportive than YM.  

I never felt comfortable going there; not unlike a bathroom labeled "Women".

[ArchietheDragon]

Jan 25, 2016 13:19:26 GMT -5 gregintenn said:

Jan 25, 2016 13:18:27 GMT -5 ArchietheDragon said:

You could start a post in the Women in Red forum.   They are much more supportive than YM.  

I never felt comfortable going there; not unlike a bathroom labeled "Women".

Today is a new day.   If you feel like a women in red,  you can post in women in red. 

[gregintenn]

Jan 25, 2016 13:20:07 GMT -5 ArchietheDragon said:

Jan 25, 2016 13:19:26 GMT -5 gregintenn said:

I never felt comfortable going there; not unlike a bathroom labeled "Women".

Today is a new day.   If you feel like a women in red,  you can post in women in red. 

That's what I hear. So far, I'm just not feeling it.

[Green Eyed Lady]

Oh, great! The unisex bathroom debate will start again.  

[swamp]

Jan 25, 2016 13:17:09 GMT -5 gregintenn said:

Jan 25, 2016 13:03:09 GMT -5 swamp said:

DH and I would not make the living we do without incurring significant student loan debt. Nor would we have the waterfront house we do if we weren't able to take a mortgage.

Debt isn't bad. It depends on how much you take and for what purpose.  

That's great. I started this thread to let debt free people toot their own horn a bit, and perhaps to be an inspiration to others who are working to that end and have not yet reached it.

Just as I imagined, there are some on here who just won't stand for that. No one here is belittling your financial decisions. You certainly don't owe us any explanation for them.

I don't care who does what with their money.  It's a finance discussion board.  Just giving my opinion that debt can be a good thing if used correctly.   Congrats to the debt free people.

[gooddecisions]

Jan 24, 2016 20:12:28 GMT -5 gregintenn said:

Jan 24, 2016 20:10:44 GMT -5 oped said:

Debt free? Or positive net worth?

DEBT FREE. Don't owe anybody in the world a penny.

I was just pointing it out because back on page one, you defined debt free as not owing anybody in the world a penny. My homeless sister is the only person I know like that and I wouldn't choose her lifestyle. Sorry for being a technical Tina or annoying Annie.