Serious Question About Debt/Budgeting

[lecale]

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[alicia]

We have some debt (SLOC) currently because I was in grad school for the past five years which didn't pull in a lot of money, and because we weren't super smart about it early on. That being said, now that I am gainfully employed I don't see that being the norm and we will aggressively pay that down.

I think people's situations make a huge difference. If you're single making 60k then you have 5k a month (before tax), meaning there should be more disposable income than a couple. If you're a couple making 60k combined, things just got tighter. Throw in a kid or two and it would take some major reworking.

Also, I think there is a general societal shift now for people to be impatient and want things now, now, now! My Mom tells me stories of 30 years ago starting to purchase their mahogany bedroom set piece by piece by putting money in an envelope each pay cheque and then paying in full, with cash (they still have the bedroom set by the way). Now I have multiple friends (late 20's, early 30's) who have a brand new house, every room decked out with new furniture and I know for certain it isn't from their pay cheques.

[vesper]

Well here is a million dollar idea for one of y'all frugal experts... an appealing simple book for those folks who 'don't get it'. Needs a creative title and picture on the cover.

Economic Foreplay!
How to get the most BANG from your BUCK!



Secrets on how to plan and spend a liitle attention to certain details, presented in a way that Tom Dumlop and Mary Lou Huhm can understand and find interesting.

[i_forget]

Isn't Capitalism grand!

I think that a big part of the problem is that money matters are not taught in school.
They are taught at home, and people form their spending behaviours around their personality and what they grow up seeing.

That, and people have been brainwashed by Big Business.

I consider myself lucky.

I had grandparents who had the time to teach me how to be frugal and smart with money.
I have a good sense of quality over quantity, and I spend money on quality.
I do not spoil my kids with toys. They have basic toys and I encourage them to use their imaginations and participate in sports. I want them to live and experience life, appreciate it, not consume and waste it.

[alicia]

I wanted to also add that I think a lot of people have a significant disconnect between the plastic card and money. All we do is tap the chip card and we get the item...

For example, my fiancé used to get annoyed at me because I would spend $30 on a shirt once a month. But he didn't realize all his $2-5 convenience store purchases almost daily added up to way more than that. Once he switched to cash and realized a twenty didn't last very long he started to get it. It adds up!

[i_forget]

I wanted to also add that I think a lot of people have a significant disconnect between the plastic card and money. All we do is tap the chip card and we get the item...

For sample, my fiancé used to get annoyed at me because I would spend $30 on a shirt once a month. But he didn't realize all his $2-5 convenience store purchases almost daily added up to way more than that. Once he switched to cash and realized a twenty didn't last very long he started to get it. It adds up!

totally agree with this.

I've been leaving the house with no wallet recently. I just have money, credit card for emergencies, drivers license and health card. I have to break the credit card for emergencies habit next.

[GoStumpy]

I've been one of those idiots...

it's only a few hundred on the CC, I can pay that off when the bill comes, right now I need my chequing account for bills!


Then the CC bill comes and more bills come, and I need groceries, all of a sudden the CC doesn't get paid.

"How else can I buy a thousand dollar computer? I can't save up that much"

There's the problem in a nutshell. Complete and utter money mismanagement. If someone can't save up $1000, how the heck can they pay off $1000 PLUS interest? But that's not the thinking someone that charges thousands to a CC not intending to pay uses. They (I) used the thinking of I want/need this now, and I don't have the $ for it, so I'll charge and pay it off.

This can apply to a $200 haircut, a $2000 computer, a $5000 car, etc...

When we moved in to our house, first time homeowner, we needed new carpet. We actually were convinced we NEEDED new carpet, couldn't live in the house without it... so we charged it to a zero% interest for 12 month card... we weren't able to pay in time, so got dinged with ALL the interest for the term, and that took us multiple years to pay off.

The thinking at the time of expenditure is not the same as a correct mindset analyzing a situation... I can only understand it because I was there, and I've now come through learning a TON, expensive cost of education!

[coupon girl]

well interesting -i am so glad i married someone who thinks like me a saver -save for a rainy day causae you never know what is around the corner-no credit card debt here even if its a 1.00 or a 1,000 its paid in full-paid our morgage off on our first house and now our second house rolled it over to our line of credit -and trying to pay that down each year-we also helped our 2 kids thru collage and university not at the time but after ( some may put me down for this but have always put my kids before us) and we live within our means -my car just broke a cable part and hubby will see about fixing -in the mean time down to one car for awhile -so we can save some more money- a few sacrifices in life you can make to -but cpning does help in the bigger picture- like my hubby always says saving money is just common sence

[xox2010]

It depends on the person... Most people I know are paying their own way through college/university so they have debt from that. But I know people who would certainly be debt free if they cut back on drinking, shopping but choose not to. I think, like alicia said, people want everything NOW! No one can wait any more. If you don't own 5 flat screens, a brand new and a big house, there's something wrong with you. But, I find that a lot of people don't do it on their own - their family (parents etc) or their credit card is paying for it.

[beckie.c]

Really thought provoking.... At a young age of 23, I guess I'd say that I reside on the fence about "Debt". I think when managed well, certain debts can be really helpful in life (student loans, mortgages), like everything though, if mismanaged and abused it can be a tool for destruction. Credit card debt is dangerous and unnessasary but credit cards are useful. I pay for large purchases with my credit card for a couple of reasons, 1. extended warranty on items purchased (I have used this a few times and it is a valuable service) and 2. points that I can redeem, but I never carry a balance. We currently have my student loan, our car loan and our mortgage.

DH and I commuted together to work an hour each way for a few years. We financed a new car (on a 0% financing promo) because we needed a reliable vehicle and at this time we could purchase a "new car" for roughly the same price as the "used car" and we recieved the warranty. Financing the car gave us the opportunity to keep our large savings account (and at 0%, whether or not we paid for it that day made no real large difference in price). Fast forward to November 2012, and DH and I made the decision to move to the city that we work in. We mortgaged our first home with a 5% downpayment, I know people cringe and think only having a 5% downpayment is terrible, but the biweekly mortgage and insurance payments easy fit into our budget and the overall benefits of moving for us, outweighed waiting until we could put down 20%. We also chose to use hand-me-down furniture in our new home and live simply not lavishly. In return, we got back 2 hours of our day, a healther lifestyle (better eating because we are now home to make meals, etc.), we don't have to leave our fur babies for long hours all day anymore and our parents no longer worry about us driving on icy sk highways 6 months of the year (not to mention the gas and wear and tear on the car). The other benefit is that we have found we no longer need to have two vehicles, so I believe our vehicle debt will be gone very very soon as we plan to sell one.

At this point in our lives, I feel like it is more important for us to build up a large emergency fund (3-6 months worth of income) than it is to pay off everything super quickly. Some people would probably disagree and say to pay off all our debt first. For me, if it takes me the full five years to pay back my student debt (at 5% interest rate) and 20 years to pay our mortgage, so be it. I want to make sure that if DH or I was unable to work or we had a huge emergency or if I got pregnant that we could ride out the storm or "blessing" (pregnancy is always considered a blessing) without taking out credit card debt or a line of credit.

So overall, my thought Debt = a useful tool, if and only if it can be used with respect.

[Sunshyne1]

I can speak on my own debt dilema

It started when my ex kept losing jobs and wasn't contributing anything to the household. I couldn't afford to pay for everything, he wasn't bringing in money (my heart was speaking more than my head was at that point) so to make ends meet I got a personal loan...and believed him when he said that as soon as he got a new job he would help me pay it off.

Well lets just say that never happened...he got comfortable with sitting around having me pay for everything going further and further into debt. Till I smartened up and threw him out.
I couldn't rely on him and figured that paying off the debt on my own was better than staying with him.

thats how i got extended beyond my means...not from buying expensive toys or trips...but by trying to make ends meet and keep on top of all the expenses.

[vesper]

Till I smartened up and threw him out..

Sorry that happened to you!

Glad you threw him out! Yahoo!!

[vesper]

well interesting -i am so glad i married someone who thinks like me a saver

I think that is important to and glad you are married to someone like that. high on my list of thing I like people who have value for money.... as important as having teeth!

[lecale]

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[coupon girl]

I think that is important to and glad you are married to someone like that. high on my list of thing I like people who have value for money.... as important as having teeth!

yep we have pretty nice teeth too-lolll