#1
Debt is bad. It's even becoming popular in the Evangelical Christian world to take this message to the spiritual level. But does anyone else think that this concept of "living debt free" is a little unrealistic, and even potentially harmful?

Like everything else, a proper balance is appropriate when it comes to borrowing, I'd say.

What does UG think about borrowing, and of course paying it back.
"Virtually no one who is taught Relativity continues to read the Bible."

#4
I have no problem with borrowing for a need.

For example, this February, my car pretty much feel apart. I didn't have enough saved to purchase a replacement, so I had to borrow.

The problem is when people see things like an overdraft as free money.
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#5
I know someone who went to uni and spent all the loan money on a laptop, some books and weed. He dropped out, got a job for a few weeks and decided he never wants to work. He's now trying to go back to uni to rinse and repeat.
#6
Condo = 350 000$
BMW - 47 500$
Audi = 36 800$


I'm pretty much in debt yeah. But we earn enough money. So. And I always pay my credit cars completely each month if I have used them.
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#7
There is nothing harmful about being debt free. It can be realistic, if you're successful in your job and pay off your mortgage and don't take out any other loans, keep up to date on bills.

I'm currently racking up a nice pot of student debt, currently at over £8000 and this will at least triple by the time I finish uni.
Handily, student loans are very reasonable when it comes to paying them back. You don't have to start paying until you're earning over £15000pa and there's a load of other things which mean your student loan can be written off too.
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#8
I am planning to study in the USA; that will probably give me a $80 000 debt. On the other hand, I will never be allowed to get a car or a driver's license, so it won't be that bad. Furthermore, I plan to get a well paid job of said study.
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Last edited by sfaune92 at Aug 13, 2010,
#9
Apparantly, every child in the UK is born with debt. I can't remember why though. Probably cause you don't pay taxes until later on to pay for your own birth.

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#10
Many of the above posts demonstrate my point(s) very well, though not intentionally...

The Right, for lack of a better word, is telling people that "if you buy a car/house/education on credit, then you're a Zombie and you're going to Hell!!"

The Federal Government is going to be feeding my family for the next four years. Why? I've decided to go into a health-care profession that requires, thanks to higher-than-ever standards of care and safety, a hefty investment of capital upfront.

If there was no borrowing, then only the very rich could become Doctors.

We'd all be living in rental housing, and if the A/C breaks in August we'd have to live in 107 degree heat for two weeks until the damn thing gets fixed.

Part of the reason the standard of living is what we have come to expect, and the Middle Class is able to enter professions like Medicine, for example, is that we have a robust system of lending. Now there are many, many problems with that system, but as I see it there is one in particular that is the granddaddy of them all...

A lack of regulation.

I have been given a generous loan of hundreds of thousands because I have proven myself worthy of it. If people can walk in off the streets with dilated pupils and bloodshot eyes and get similar loans to go buy crack with, then there is a major problem.

There's a problem with the system.
"Virtually no one who is taught Relativity continues to read the Bible."

#11
Quote by metacarpi
I have no problem with borrowing for a need.

For example, this February, my car pretty much feel apart. I didn't have enough saved to purchase a replacement, so I had to borrow.

The problem is when people see things like an overdraft as free money.

^This. Borrowing for a NEED like a home or a vehicle to get around is a necessary evil. Its not like the majority of people will have $100,000 cash to buy a house, or $25,000 cash to buy a car, or pay for school. Its when people get into the habit of seeing things that aren't required and say to themselves "I can just pay for it later." that it becomes a problem.

DoomdEdit: @Bubonic Chronic: The problem isn't entirely with regulation, its also with people never wanting to own up and pay for what they have. Yes, some of it is stupid lending practices like giving people mortgages that eat 75%+ of their monthly income, but there is just as much fault in the people who signed the mortgage, knowing it would eat that much of their income.
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#12
I've never been in debt.. But I've never actually needed anything requiring a loan.

I guess right now I have more net worth than my parents...

O,o
#13
Net worth isn't everything.

Let's say I finish dental school and have all this debt, but 2012 is a little late and 2014 is the end of civilization as we know it.

My net worth is zero, but I've got a valuable skill. I'll be the kind of guy people want around in the post-apocalyptic wasteland.

"Virtually no one who is taught Relativity continues to read the Bible."

#14
I think...that I don't want to be in debt. ever. I'd be the person who couldn't pay off her student loans and is now having her wages attached.
#15
Quote by metacarpi
I have no problem with borrowing for a need.

For example, this February, my car pretty much feel apart. I didn't have enough saved to purchase a replacement, so I had to borrow.

The problem is when people see things like an overdraft as free money.

This.
I use a credit card, but only online, and pay it off every month.
I'd borrow to buy a home, or for a car. If necessary for white goods for the home.
But not for a holiday, or for a guitar, or a big-ass TV.

EDIT: I have no problem with borrowing per se, in some cases it IS unavoidable, and even beneficial. I guess my attitude is that, if I can live without it, I won't borrow to get it.
Last edited by MightyAl at Aug 13, 2010,
#16
My wife and I have never owed a penny on anything. Both put ourselves through university...bought houses...cars....etc.

Never 'needed' debt. Just get a bit ahead of yourself in life and it sure makes life less stressful.

We banked our student loans...made interest on them. Worked 'up north' on summer jobs together and then worked together in remote areas for a year after graduating. Took our bundle and built a house.

We have always been 'well off' since... but I still always buy 'used' guitars (have about 30 of them). I get a kick out of all the young folks who spend their money on 'new' equipment...starry-eyed and caught up in the latest hype. They are paying interest of a credit card, student loan or whatever but go into a guitar store and plunk $1000 for an axe.....pay all the mark up, taxes, etc. for what?....the same guitar I'll get for $300 from them or someone else a year later.
Last edited by Raptorfingers at Aug 13, 2010,
#17
Quote by Raptorfingers
We banked our student loans...made interest on them.

Too bad the average Savings account now yields about 0.025% interest.

I spent my loan buying used textbooks, then re-sold them for a profit. Did better than the bank would have done for me.



Quote by doomded
The problem isn't entirely with regulation, its also with people never wanting to own up and pay for what they have. Yes, some of it is stupid lending practices like giving people mortgages that eat 75%+ of their monthly income, but there is just as much fault in the people who signed the mortgage, knowing it would eat that much of their income.

Exactly right, responsibility falls on the lender as well as the borrower.

How does a society facilitate a fair and responsible lender/borrower relationship when the lender is at an obvious advantage?

The same way we handle cigarettes or Pharmaceuticals or anything else: by paying people who are well-educated to oversee and regulate the industry and also educate the public as to what they are actually getting involved with.

Why not a warning label on a credit card application? Big, 24-point, bold type that says, "Warning, this is a really bad idea!!"



I have a right to go out and apply for credit just like I can buy a pack of smokes, but RJ Reynolds is no longer allowed to put ads on TV portraying smokers as cool, sophisticated people, nor are they allowed to tell me that smoking is good for me.

Ads for credit cards are like ads for anti-herpes cream! By the time the ad's over, there's a very small part of you that thinks getting herpes looks like a whole lot of fun!
"Virtually no one who is taught Relativity continues to read the Bible."

Last edited by Bubonic Chronic at Aug 13, 2010,
#18
Quote by boreamor
Apparantly, every child in the UK is born with debt. I can't remember why though. Probably cause you don't pay taxes until later on to pay for your own birth.

No, the adults who pay tax when you're being born pay for your birth (presuming it's on the NHS); and when you become an adult, the taxes you pay go towards paying for the current births.
#19
Quote by blue_strat
No, the adults who pay tax when you're being born pay for your birth (presuming it's on the NHS); and when you become an adult, the taxes you pay go towards paying for the current births.

Those bastards!!

Where's Sarah Palin when you need her?
"Virtually no one who is taught Relativity continues to read the Bible."

#20
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#21
Quote by Bubonic Chronic
Those bastards!!

Where's Sarah Palin when you need her?

Wat?
#22
Sarcasm. It's the latest thing with these crazy kids!

Next they'll be burning the flag and dancing naked to rock 'n roll music.
"Virtually no one who is taught Relativity continues to read the Bible."

#24
Quote by Bubonic Chronic
Debt is bad. It's even becoming popular in the Evangelical Christian world to take this message to the spiritual level. But does anyone else think that this concept of "living debt free" is a little unrealistic, and even potentially harmful?

Like everything else, a proper balance is appropriate when it comes to borrowing, I'd say.

What does UG think about borrowing, and of course paying it back.


The Bible is clearly against lending money in order to make a profit off the interest. And of course we Christians are supposed to be good stewards of our money. I'd say, if you borrow for a virtuous purpose, with the clear intention of paying back, God is cool with that.
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#25
Quote by Jamin2112
I'd say if you borrow for a virtuous purpose, with the clear intention of paying back, God is cool with that.

Sometimes the true value of an item, say a tool or a piece of furniture, is greater than the monetary value. I would argue that utilitarian purposes are noble or "virtuous."

Say, for instance, a journeyman Carpenter needs a professional-grade hammer and toolbelt before beginning his apprenticeship?

Borrow! You're getting into a great and noble trade, and you'll have it paid off in no time.

Can't just show up to the job site with the Blue Light Special.
"Virtually no one who is taught Relativity continues to read the Bible."

#26
Debt is fine so long as it's manageable.

Ideally, debt should be merely a by-product of buying something now, which you could have saved up for over time. It's merely a shift in funds. Rather than waiting 6 months while you save up the money for something, you go into debt now, and spend the 6 months paying off the debt.

Of course, whether or not this is worth it depends entirely on how easily you can pay off this debt (taking into account interest), as well as how much you really need what you're going into debt for RIGHT NOW. Something like a house for example, would be completely ridiculous to spend 10-20 years saving up money to buy for all at once, so instead you agree to pay a premium (the interest) for the ability to have access to the house now, while still, in essence, being able to save up for the purchase over time, except you don't actually save the portion of your budget that would've have been put towards your house-fund, but rather use it immediately to pay down the debt.
#27
The only debt Im in is with student loans that I dont have to pay back until I start earning over £15 000 a year. I also have a £1700 overdraft that I am reducing by £100 a month because I have a job that can pay that off. So long as the debt is managable it is fine. I will never ever get a credit card though. A lot of my friends have one and they owe so much on it. Why would I use a credit card to purchase goods such as a loaf of bread and a 6 pack of beers then pay 18% interest when I have to pay it back? Its absurd. I know there are circumstances where one might be needed, but generally, I dont see why you would need one other than in an emergency.
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#28
It's a good idea to have one credit card for this reason:

It's an immediate, pre-approved loan for however much your credit score allows - mine is well over 10G's, that I don't use.

I have, though, avoided getting into financial trouble by charging something I needed immediately despite the fact that I wasn't going to get paid for another 7 days. Funds get tight at the end of the month.

I had to buy books for my education, and the cheaper, USED books were available before I had my financing. I bought books at 30% of the new cost and then paid it off within two weeks' time, thus saving money by properly managing my borrowing.

If you pay the balance of a card before the end of the month it's interest free.

I also got out of a minor car crash this way. I told her to go to the body shop and send me the bill. I charged it.

That's legit. No insurance claims were made, there's nothing on my "permanent record" and I saved myself the additional cost of increased premiums - after all, insurance is designed for catastrophic collisions that are potentially bankrupting, not minor dings that might cost you $100 to patch up.

All but one of my cards has a zero balance, though, and the one that doesn't is, effectively, my car payment. There's no difference, financially, between borrowing from a dealer and a credit card. The card had lower interest.
"Virtually no one who is taught Relativity continues to read the Bible."

#29
I work 2 part time jobs and have gone through 2 years of uni and I owe the banks nothing. I have a credit card but I pay it off each month. If I don't have enough money, I don't spend it - simple as.

Of course, it helps that I still live at home. But I have no reason to leave if I'm going to school in the same city. Coming out of uni debt free is something I'm looking forward to.
#30
I remember hearing about a family that didn't ever have any debt, so they had no credit score and couldn't get a loan on a house. I'll see if I can find it.
#31
Quote by hippiebass
I remember hearing about a family that didn't ever have any debt, so they had no credit score and couldn't get a loan on a house. I'll see if I can find it.

I was denied my first debit card from Nationwide because I had no credit history. I went to Lloyds TSB and I got one straight away.

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#32
It doesn't hurt to build credit, assuming you are not allowing yourself to be taken advantage of.

What if you decided to start a business?

Practically no one can afford to start a business without borrowing.
"Virtually no one who is taught Relativity continues to read the Bible."

#33
Quote by Bubonic Chronic
It's a good idea to have one credit card for this reason:

It's an immediate, pre-approved loan for however much your credit score allows - mine is well over 10G's, that I don't use.

I have, though, avoided getting into financial trouble by charging something I needed immediately despite the fact that I wasn't going to get paid for another 7 days. Funds get tight at the end of the month.

I had to buy books for my education, and the cheaper, USED books were available before I had my financing. I bought books at 30% of the new cost and then paid it off within two weeks' time, thus saving money by properly managing my borrowing.

If you pay the balance of a card before the end of the month it's interest free.

I also got out of a minor car crash this way. I told her to go to the body shop and send me the bill. I charged it.

That's legit. No insurance claims were made, there's nothing on my "permanent record" and I saved myself the additional cost of increased premiums - after all, insurance is designed for catastrophic collisions that are potentially bankrupting, not minor dings that might cost you $100 to patch up.

All but one of my cards has a zero balance, though, and the one that doesn't is, effectively, my car payment. There's no difference, financially, between borrowing from a dealer and a credit card. The card had lower interest.


+1

I use my credit card for online purchases, and for gas (because it's just quicker to pay at the pump). I just make sure to pay it off within a month or so (made very easy because the credit card is through my bank, where my student line of credit and my debit account are, and all of these can be managed online all together).

Having a credit card with a low limit early on (mine is only 500$) is a good way to help build up your credit score, if you just use it as if it were your debit card (meaning you don't buy things with it that you couldn't otherwise afford) and then pay it off right away.