YM victory of the day

[haapai]

I was walking by a coworker and the only words that I remember were "credit card debt like everyone else".  I kept walking and I'm pretty sure that I got a decent distance away before muttering "Not everyone else" to myself.  

Interestingly, this coworker is someone who joined my unionized company within a year of when I did and we have been in exactly the same pay class for over two decades.  I had credit card debt when I joined the company, and also thought that it was pretty normal. 

I thank goodness that I found YM at pretty much the same time and had the gonads to figure out that while credit card debt may be pretty normal, it ain't a good habit and life is so much easier when you do not normalize it. 

[swamp]

When I was in private practice, the CSR at the bank kept asking me if I wanted a debt consolidation loan/HELOC/somekind of product to "lower my interest rates."

She really couldn't believe that I didn't have any debt at all. 

I now have a car loan with 1.9% interest, so no debt consolidation will lower that interest rate. 

[soupandstew]

Dec 4, 2023 13:53:42 GMT -5 haapai said:

I was walking by a coworker and the only words that I remember were "credit card debt like everyone else".  I kept walking and I'm pretty sure that I got a decent distance away before muttering "Not everyone else" to myself.  

Interestingly, this coworker is someone who joined my unionized company within a year of when I did and we have been in exactly the same pay class for over two decades.  I had credit card debt when I joined the company, and also thought that it was pretty normal. 

I thank goodness that I found YM at pretty much the same time and had the gonads to figure out that while credit card debt may be pretty normal, it ain't a good habit and life is so much easier when you do not normalize it. 

You deserve a platinum YM card for your wisdom - some folks are just slow learners.  

[minnesotapaintlady]

I was never into the credit card debt thing, but I did have a crap ton of debt in my 20's and early 30's in the form of mortgages (first and second), HELOC, personal loans, loans against CDs, car loans, trailer loans, student loans, loans on riding mowers, loans on computers (0% financing deals)...

It is so easy to get into the monthly payment mentality and that is so destructive to ones ability to build wealth.  After 20 years of detoxing myself of that, just the thought of taking on debt makes me ill.  I've been wringing my hands for a YEAR over having to finance my house siding next summer.  Sure, I could put it all on the HELOC and do interest only payments for 10 years.  Sounds great if the thought of paying an extra 38K on that 50K bill is your cup of tea.  Not to mention what I could do with that $320/month interest payment.  $200/month over 18 years was plenty of money to send my oldest to college with a bunch left over.

[susana1954]

I had my house paid down to less than $20k when I decided to move to this retirement community.  The thought of starting over with even just a $100k mortgage for another 30 years made me sick.  This house was $75k more so I decided just to take the money from my Roth.  Phil might not agree with me, but I am almost 70 years old.  I just couldn't bear the thought of starting over.

Ditto for a car although I will probably have to get a loan for that.  But I try to save $500 a month toward that, and I now have almost $16k.  Meanwhile I keep driving my 17-year-old Toyota that has 170,000 miles on it.

The new house I live in really needed a new kitchen floor to replace the twenty-year old vinyl that was there.  And that led to it needing new countertops.  This time I couldn't bear the thought of taking more money out of savings so I have substituted a lot.  But I did it.  The kitchen floor is in, and they come to measure for the quartz countertops tomorrow.

I just can't do debt any more.  Once you get out of CC hell, you never want to go back.

[steph08]

My DH anf I have the conversation every few months - "How do people afford all this stuff?!" - and we always come up with CC debt and not saving for retirement. We probably make more money but have less "toys" because we don't want to have endless monthly payments. 

We do have a mortgage (at 1.75% so we're never moving) and two car loans, but they're at 0% and 1.9%. I'm working to get rid of the car loans (pay off / trade for older/lower-priced cars) because I'd rather do other things with my money. 

[Opti]

Dec 4, 2023 14:01:57 GMT -5 swamp said:

When I was in private practice, the CSR at the bank kept asking me if I wanted a debt consolidation loan/HELOC/somekind of product to "lower my interest rates."

She really couldn't believe that I didn't have any debt at all. 

I now have a car loan with 1.9% interest, so no debt consolidation will lower that interest rate. 

It is also because those who sell for a living try to sell you what they think you need. Some marketing campaigns or bosses do not understand not everyone lives like them. They see their path as normal and sometimes everything else as an abberation.

I have to look up when I finally got my BK granted. Even though all my medical debt was swept away and the CC 

But because I do not have a general CC yet, I have made more mistakes with store CC cards whether it is something like Macy's or Kohls. My worklife is unstable even if I try to obtain otherwise. I work at least 6 days a week with working only 5 days a week being the rare exception. Sigh. And the person who left here and managed to do the perfect BK abandonment of debtors, still gets mail here from time to time. And day now I'll wake up and she will have been gone for almost two decades .. and the scammers still search for her here.

Sorry for leveraging of swanos post. Only the first paragraph relates to what she posted. I will probably have to take a 6 year car loan at 7 to 15% to buy a piece of crap car that might be as old as my undriveable BMW (rest his soul) or have the same mileage or worse! 

[azucena]

Dec 5, 2023 14:07:50 GMT -5 steph08 said:

My DH have the conversation every few months - "How do people afford all this stuff?!" - and we always come up with CC debt and not saving for retirement. We probably make more money but have less "toys" because we don't want to have endless monthly payments. 

We do have a mortgage (at 1.75% so we're never moving) and two car loans, but they're at 0% and 1.9%. I'm working to get rid of the car loans (pay off / trade for older/lower-priced cars) because I'd rather do other things with my money. 

I'll add another reason that DH and I think is true for one couple we know that constantly has new, matchy outfits for the parents and 3 kids and each show up to every event with starbucks in their hands...we're convinced that the grandparents are cashflowing them. We know the parents jobs and there is no way that they could pull of the spending, toys, and trips on their own. Even if it's not true, it makes us chuckle because neither of us would want that and we're proud of what we've put together on our own.

[wvugurl26]

My general assumptions are lots of debt and no savings for tomorrow. Money from relatives could be another reason.

I also live in a HCOL area and some people in the private sector are pulling down crazy money. We do very well and beyond my childhoid/teenage wildest dreams. But we live where it's not uncommon for the private school and college bill to run 7 figures and for run of the mill houses to start at that.

I just don't belong and my brain does not compute.

[TheOtherMe]

After some hard lessons, I have learned the goal is to pay off your credit cards each month.  And I do.  I paid cash for my current car and figure it will be my last car.  

I detest paying interest and so I avoid it as much as possible.

My mortgage is at 3.125% so there is no reason to get anxious to pay it off.  House still has a ton of equity in it and I don't plan on moving any time in the foreseeable future.

[Tiny]

Well, technically just using a credit card means you have "debt" until you pay for the charge(s) even if you pay no interest/pay in full.
Depending on the people I'm with who are "miserating" about their debt/expenses... I will commiserate "about having credit card debt" with a "knowing nod and a sigh" as I think about having to pay my cards in full - most likely within a few days of the conversation.


Once, decades ago I paid my night school tuition with my credit card - I didn't have all the $$, but I would have another 2 paychecks and a bonus check coming up and so would be able to easily pay credit card in full (with some money going to savings for the next tuition bill). I'd pay with what I had on hand when the bill came and then be able to pay it in full after carrying some of it for a month. I wasn't charging anything else. I was APPALLED at the amount of interest. I was also appalled at the double billing cycle billing which meant I needed to NOT make any new charges for a full billing cycle to get back to a no interest charged grace period. It took me 5 months to get that shit show of interest being charged to stop. I never did that again. Using a credit card was NOT a good way to finance a short term debt (2 or 3 months) and it certainly isn't a smart way to finance longer term debt.

[Opti]

Dec 5, 2023 16:47:21 GMT -5 wvugurl26 said:

My general assumptions are lots of debt and no savings for tomorrow. Money from relatives could be another reason.

I also live in a HCOL area and some people in the private sector are pulling down crazy money. We do very well and beyond my childhoid/teenage wildest dreams. But we live where it's not uncommon for the private school and college bill to run 7 figures and for run of the mill houses to start at that.

I just don't belong and my brain does not compute.

Its a major culture shock. I know XH and I hung with lots of coworker couples to get a feel for what is "normal" or what a new spending and living normal for us should look like. The first 3 to 5 years post college took a lot of adjusting. Neither of our home areas had expensive houses like NJ did. 

Once we bent our heads around it all, we told ourselves that we could live now in almost anywhere in the world. Of course in super expensive places like Hong Kong we'd be living in what passes for a studio apartment here, but we could do it and we had the financial resources.

[countrygirl2]

Never had any debt, saved and paid cash or didn't buy it till we had the cash.

It's like now, we could pull money out and buy a house in Washington, or use the equity in our house, it's paid for, but no way, we will wait till we sell and do a deal than, don't care if we are 77. We will get it done, in 24 hopefully or early 25, So we are 77, big deal.

We just always lived within our means whatever it was. I don't remember doing without though back than there were a few lean years. That's the way both of us grew up and we never changed it.  Our son is about to die because he has a house loan. He has the cash to pay it off but it's less than 3% so he won't. He has had it 2 years and half is paid off, we helped him in NY and he had a paid off house, but both wanted to move.

[bean29]

Dec 5, 2023 15:58:04 GMT -5 azucena said:

Dec 5, 2023 14:07:50 GMT -5 steph08 said:

My DH have the conversation every few months - "How do people afford all this stuff?!" - and we always come up with CC debt and not saving for retirement. We probably make more money but have less "toys" because we don't want to have endless monthly payments. 

We do have a mortgage (at 1.75% so we're never moving) and two car loans, but they're at 0% and 1.9%. I'm working to get rid of the car loans (pay off / trade for older/lower-priced cars) because I'd rather do other things with my money. 

I'll add another reason that DH and I think is true for one couple we know that constantly has new, matchy outfits for the parents and 3 kids and each show up to every event with starbucks in their hands...we're convinced that the grandparents are cashflowing them. We know the parents jobs and there is no way that they could pull of the spending, toys, and trips on their own. Even if it's not true, it makes us chuckle because neither of us would want that and we're proud of what we've put together on our own.

People do fancy Photo shoots for Engagement, Wedding, Annual Family Photos with the photographer meeting the family at some location- not like if we took family photos we dragged the family to the old Olan Mills Studio or JC Penney's or Sears for inexpensive photos.  We probably didn't take the pictures more than once every five years or so.  Every time I see the beautiful family pictures with multiple shots posted on FB (with the matchy outfits), I wonder how they afford everything.  In my brother's kids case-I think they get some help from their Mom and Dad-at least paying for the annual or bi-annual vacations to Disney.  DB and SIL and two of his kids and 5 of their Grandkids just went on a Disney Cruise and the grandkids and adults had multiple themed Disney Shirts for the trip.  In my DB's case, I think he pays for everything - but it puts pressure on the friends and relatives to try to keep up.  

I agree that people are spending now at the expense of their retirement savings. Sh!ts gonna start hitting the fan in the next 10 years as people who started working in the 80's started working begin to retire and have no pension income.  

[happyhoix]

Dec 5, 2023 16:47:21 GMT -5 wvugurl26 said:

My general assumptions are lots of debt and no savings for tomorrow. Money from relatives could be another reason.

I also live in a HCOL area and some people in the private sector are pulling down crazy money. We do very well and beyond my childhoid/teenage wildest dreams. But we live where it's not uncommon for the private school and college bill to run 7 figures and for run of the mill houses to start at that.

I just don't belong and my brain does not compute.

Yeah DH and I together had a higher than average annual income in a low COL area, but we live in a modest 3 bedroom and both our cars have over 100,000 miles on them (but run fine). Then we see a TV show with a school teacher and hair dresser shopping for a 300 -400 thousand second home at a beach community and can’t figure out how they managed that. I figure they inherited money, or maybe their first home is a single wide trailer behind Mom’s house? Or maybe they are just genius at making their money grow - DH and I are not.

[soupandstew]

I feel there are a couple of pitfalls in delaying home ownership until one can pay cash.  The first pitfall is that there may be a period of years where the individual misses out on the tax benefits of home ownership, thereby having a higher tax bill.  The second pitfall is that diversion of income to savings for a house may mean the person doesn't have enough cash flow to fully fund an IRA or other tax-sheltered investment, or to qualify for the maximum available employer match.  Again, more ordinary income is taxed and future retirement income is possibly reduced.

A third problem can arise when a person puts a large portion of their assets into something with fluctuating liquidity - a house.  For those in their working years, market conditions including interest rate fluctuations can make it difficult to relocate for career advancement or to be near family members needing assistance.  For retirees, market conditions can make it hard for them to get their cash out when needed for lifestyle changes such as moving near loved ones or accessing care in a facility.  

Of course, these considerations will come into play more for lower-income earners more than those with higher income and net worth.  

[Opti]

Dec 6, 2023 10:12:44 GMT -5 happyhoix said:

Dec 5, 2023 16:47:21 GMT -5 wvugurl26 said:

My general assumptions are lots of debt and no savings for tomorrow. Money from relatives could be another reason.

I also live in a HCOL area and some people in the private sector are pulling down crazy money. We do very well and beyond my childhoid/teenage wildest dreams. But we live where it's not uncommon for the private school and college bill to run 7 figures and for run of the mill houses to start at that.

I just don't belong and my brain does not compute.

Yeah DH and I together had a higher than average annual income in a low COL area, but we live in a modest 3 bedroom and both our cars have over 100,000 miles on them (but run fine). Then we see a TV show with a school teacher and hair dresser shopping for a 300 -400 thousand second home at a beach community and can’t figure out how they managed that. I figure they inherited money, or maybe their first home is a single wide trailer behind Mom’s house? Or maybe they are just genius at making their money grow - DH and I are not.

Don't get stuck on job titles. Hair dresser's can own their own shop hiring other hair dressers to work for them. Principals are school teachers. As are adminstrators or whatever they call the top spot here in the NJ school system. These are political positions, pften OK's or appointed by the mayor of whatever town or school district. You are making the mistake for one, assuming this is just a hair dresser working a chair and a simple school teacher early in her career.

And sometimes, people here in NJ buy the beach house first. Plus, some people actually live year around in these communities. Crazy eh?

[azucena]

Dec 6, 2023 10:15:28 GMT -5 soupandstew said:

I feel there are a couple of pitfalls in delaying home ownership until one can pay cash.  The first pitfall is that there may be a period of years where the individual misses out on the tax benefits of home ownership, thereby having a higher tax bill.  The second pitfall is that diversion of income to savings for a house may mean the person doesn't have enough cash flow to fully fund an IRA or other tax-sheltered investment, or to qualify for the maximum available employer match.  Again, more ordinary income is taxed and future retirement income is possibly reduced.

A third problem can arise when a person puts a large portion of their assets into something with fluctuating liquidity - a house.  For those in their working years, market conditions including interest rate fluctuations can make it difficult to relocate for career advancement or to be near family members needing assistance.  For retirees, market conditions can make it hard for them to get their cash out when needed for lifestyle changes such as moving near loved ones or accessing care in a facility.  

Of course, these considerations will come into play more for lower-income earners more than those with higher income and net worth.  

Not picking on you, but I struggle with the bolded. With the rise in property taxes, I'm not sure mortgage tax deductions are net favorable. Our property tax in StL suburbs just rose 30% to $5500/yr on a house that we purchased in 2017 for above market value at $340,000 in bidding war (list price was $325,000). Redfin has it up to $470,000 which is probably too high but there have been comps $425k+ sold this year.

In comparison, for my 15 yr mortgage at 2.75% interest, I've only paid $5,700 in interest this yr. As mathy as I am, I avoid tax calculations, so I'm not sure exactly how much I can deduct, but it's gotta be close to a wash in this case.

FWIW, we and many others in our area contested the tax increase with data. Almost everyone lost those appeals.

[minnesotapaintlady]

Dec 6, 2023 13:02:37 GMT -5 azucena said:

Dec 6, 2023 10:15:28 GMT -5 soupandstew said:

I feel there are a couple of pitfalls in delaying home ownership until one can pay cash.  The first pitfall is that there may be a period of years where the individual misses out on the tax benefits of home ownership, thereby having a higher tax bill.  The second pitfall is that diversion of income to savings for a house may mean the person doesn't have enough cash flow to fully fund an IRA or other tax-sheltered investment, or to qualify for the maximum available employer match.  Again, more ordinary income is taxed and future retirement income is possibly reduced.

A third problem can arise when a person puts a large portion of their assets into something with fluctuating liquidity - a house.  For those in their working years, market conditions including interest rate fluctuations can make it difficult to relocate for career advancement or to be near family members needing assistance.  For retirees, market conditions can make it hard for them to get their cash out when needed for lifestyle changes such as moving near loved ones or accessing care in a facility.  

Of course, these considerations will come into play more for lower-income earners more than those with higher income and net worth.  

Not picking on you, but I struggle with the bolded. With the rise in property taxes, I'm not sure mortgage tax deductions are net favorable. Our property tax in StL suburbs just rose 30% to $5500/yr on a house that we purchased in 2017 for above market value at $340,000 in bidding war (list price was $325,000). Redfin has it up to $470,000 which is probably too high but there have been comps $425k+ sold this year.

In comparison, for my 15 yr mortgage at 2.75% interest, I've only paid $5,700 in interest this yr. As mathy as I am, I avoid tax calculations, so I'm not sure exactly how much I can deduct, but it's gotta be close to a wash in this case.

FWIW, we and many others in our area contested the tax increase with data. Almost everyone lost those appeals.

And 70% of tax filers don't itemize anyhow.  I've been a homeowner for over 30 years and have been able to itemize maybe 5 of those years...and that was due to paying a crap ton of interest.  I'd rather NOT have paid all that interest! 

[jerseygirl]

Got Covid and flu vaccines a t pharmacy of grocery store I use. Pharmacy gives 10% coupons for groceries with each vaccine
Saved $17 yesterday on groceries using a coupon

[haapai]

I have never itemized either, not even in the year that I bought the house and paid far more of percentage of the house's value on closing costs than most people think is possible. 

On the other hand, the way that my state handles property tax (capping the annual increase to the lower of the rate of inflation or the growth in value of other homes) tends to lead to a difference between a home's assessed and taxable value.  In short, it is usually better to buy earlier instead of later. 

I wish that I had known more about the taxation of long-term capital gains for folks in the 10% and the next federal bracket (12-15%) when I was younger.  If I had understood how Roth-like those accounts are for folks like me, I probably would have done things a bit differently. 

[soupandstew]

Expansion of the standard deduction and some limits on mortgage interest deduction have certainly reduced the potential tax benefit of a mortgage.  

As in all things financial, one's individual situation plays a big role in decision making and we can never know how future changes in taxation might impact us.  I do think there is a role for responsible credit use in overall financial planning.  

Another challenge for those committed to a cash only home purchase is that in a rising real estate market, they may find themselves endless chasing the rising cost of a desirable property, especially in a HCOLA.   

[TheOtherMe]

With the tax law changes, I no longer itemize, so property taxes and mortgage interest do not play in to my thinking.

If I had waited to pay cash for a home, I would probably never have been a homeowner.

[soupandstew]

Dec 6, 2023 14:47:57 GMT -5 TheOtherMe said:

With the tax law changes, I no longer itemize, so property taxes and mortgage interest do not play in to my thinking.

If I had waited to pay cash for a home, I would probably never have been a homeowner.

We probably would not have been either.  I say this with no disrespect to those who chose another path, but since we were relatively low-income folks, homeownership would not have been possible without assuming a mortgage.  Again, without disrespect to other perspectives, continuing to pay rent without acquiring equity was not a financially viable and realistic option for us.  

[TheOtherMe]

I wanted to be a homeowner and I never made the kind of money to pay cash for a house.  Not to mention, I am single and a house or an apartment are not less expensive because it's one person.

I have never wanted a big huge house because of the upkeep.  I am still shocked that the house I lived in for ten years is assessed at over $1 million.  I paid $83, 000 for it in 1986.  The reason it's special is because of the unobstructed view of the Flatirons.  I was promised that in 1986 and it's still true.  

I would not be living there now because I couldn't afford the insurance and property taxes plus flood insurance.

[nidena]

If it wasn't for VA home loans, I wouldn't have been able to buy any of my houses.  That $0 down is a very nice feature.  As for debt, it's not always about learning so much as it is transitioning to a debt-free existence.

16 years ago, my debts were:
--NINE kinds of credit cards (most of them for stores and not Visa/MC)
--a line of financing for art (yes, art <facepalm> )
--a line of financing for a treadmill (now, I just pay $30/mo to the gym and actually go)
--a vehicle
--mortgage
--and a HEL. 

Now, my debt is
--one (sometimes, two) kinds of credit cards for every day spending
--a BT CC
--a PL for a fence that surrounds the property
--a mortgage
--a vehicle
--and a HELOC for an HVAC.

I USED to itemize.  Back when the standard deduction was half what it is now and my interest rate on my house was twice what it is now but there's no point any longer.

And while I strive to pay down my debt as much as possible, I'm not stressing "retirement savings".  I might if there's ever any noise about Congress eliminating military retirement and VA disability but they seem to be going in the other direction and I'm good with that.

[Opti]

Dec 6, 2023 21:05:57 GMT -5 TheOtherMe said:

I wanted to be a homeowner and I never made the kind of money to pay cash for a house.  Not to mention, I am single and a house or an apartment are not less expensive because it's one person.

I have never wanted a big huge house because of the upkeep.  I am still shocked that the house I lived in for ten years is assessed at over $1 million.  I paid $83, 000 for it in 1986.  The reason it's special is because of the unobstructed view of the Flatirons.  I was promised that in 1986 and it's still true.  

I would not be living there now because I couldn't afford the insurance and property taxes plus flood insurance.

Flatirons? Colorado?

[azucena]

Hit a mortgage milestone yesterday. Owe right at $200,000 on a house we paid $340,000 for in 2017 before $70,000 down payment. 11 yrs left of 15 yr term at 2.75%. Feeling mighty proud.

[raeoflyte]

I've always felt that owning a home is one of the easiest paths to building generational wealth. It's disheartening with how expensive house prices are now, but rent isn't affordable either. Locking in a payment is still a better option in most cases in my opinion when at all possible. Still have to deal with taxes and insurance but there's a little control you can exert over insurance and still better than across the board rent increases year after year.

[azucena]

Dec 7, 2023 8:18:25 GMT -5 raeoflyte said:

I've always felt that owning a home is one of the easiest paths to building generational wealth. It's disheartening with how expensive house prices are now, but rent isn't affordable either. Locking in a payment is still a better option in most cases in my opinion when at all possible. Still have to deal with taxes and insurance but there's a little control you can exert over insurance and still better than across the board rent increases year after year.

My girls are already jokingly bickering about who gets this house when DH and I are 'mega old'. Right now, we're just old. DD15 even asked when the mortgage would be paid off. I told her 2035 which she said works for her.

Enjoying this part of this stage of parenting.