Everything is basically set up to put you in debt.

I know this is a boring response; however, my thoughts are that freedom and self discipline are intertwined so much that without self discipline you cannot be free.

Our forefathers didn't say freedom was easy, or that it couldn't be squandered by poor decisions. I know I have made many poor decisions when it comes to finances that I couldn't fix until I took personal responsibility for those poor decisions.

We do not have a lot of role models, when it comes to learning to live within our means and saving for large purchases. But you can find it within yourself, it is not necessary for you to follow everyone else down the wage slave debt path.
Perception of other people's place in life is often wrong, keeping up with the people going into debt, will only make your life more difficult and less free.


a reply to: ChesterJohn

a reply to: paraphi

You are 100% correct people need to know the difference between good and bad debt.

A house = good debt as when you pay it off you normally have an asset equal to or greater in value than you paid

A car (classics not included) depreciat in value making them bad debt.

So when making a purchase on credit always ask yourself these few questions,

1. do I need this?
   
2. can I afford the payments?
   
3. is this good or bad debt?
   

If you cannot answer yes to 1 and 2 don't buy it. If you can answer yes to 1 and 2 and also see that it is good debt don't sweat it.

And your just now figuring this out? From the cradle to the grave is how it works. I've been in debt since conception.a reply to: ChesterJohn

a reply to: ChesterJohn
You say you live on a budget every day but do you have a written plan that you consult when a spending issue comes up?
Do you have a written plan to save up a down payment on that dream house?
I promise you that if you don't have a plan, you won't reach the goal.
Paying outrageous interest on credit cards, even for a few weeks is like lighting up dollar bills to see them burn.
Spending money via credit card is easy. Spending cold hard cash isn't so easy. Lots of studies show that people spend up to 30% more money using a credit card than when they are using cash.
If your family wants to live like the rest of the US---hand to mouth---that's what you will do but if you truly want to live a life outside of the debt prison, you can find ways to do it. You'll be called weird, stingy and all sorts of names so get ready for that if you decide to live within your means but in the end you'll have a paid-off home and a lot of peace of mind rather than stress and heartache.
Again, you need a plan. Without a written plan upon which you and your spouse agree---a shared goal, you will still be making the same complaints in 20 years that you're making now.
The advertising agencies have convinced you otherwise, but life doesn't hand you things and while you and your wife may know this on an intellectual level, your kids aren't that mature yet and will be very vocal about the sacrifices you will be asking them to make. They will whine, pout and be disagreeable while they're still immature but believe me, when they're adults, they WILL thank you for teaching them to live within their means.
I'm not here to tell you it's an easy thing. As I said above, just figuring out a monthly and yearly budget for the first time takes a lot of time and research. It won't be perfect the first month but the two of you can make adjustments on a monthly basis. But you must write it out in black and white and you must define your goals and your plans because nobody is going to do it for you. So get busy reading up on financial planning and sit down with your family and get those goals outlined and a plan to reach them. (NOTE: If you seek out a financial planner, DO NOT look for one associated with a bank or credit company. Find one who will teach you to live debt-free in your daily life. As another poster pointed out, a mortgage is debt, but it is debt for an asset which is rising in value rather than declining in value. That is the only debt that makes any sense at all financially.)

originally posted by: crimsongod21
a reply to: paraphi

A house = good debt as when you pay it off you normally have an asset equal to or greater in value than you paid

That could be interpreted as a bold statement, knowing that the financial crisis of the last 10 years or so was basically stared by repackaged real estate debt.

Tom

originally posted by: eletheia

I wish budgeting was on the school curriculum

It used to be but it was fazed out in the early 70's Home economics classes.

diggindirt
Yes I have a written budget. Our day to day living budget connects to our monthly budget, money we save day to day goes toward our savings. This has allowed us to save money over the last few months over $300.

Our next major purchase is a home. We are trying to save towards that. We do need a three bedroom home. I can get older ones for $45-65K but they need lots of work to get them up to snuff. We can buy a new 3 bedroom for 190K. But securing a loan for that is more difficult. Or we could buy the one we are in which is 110k But I will still need to come up with 20k after the loan.

I am looking for other alternatives as to stay out of mortgage debt. I saw a 3 bdrm singlewide for 35K new carpet and vinyl siding.

a reply to: TomFitch

I wouldn't say bold, the housing crisis was an issue of bankers giving loans out that should have never been given in the first place to people that purchased outside of there means. (I say this because when making a purchase on credit one should always assume the variable Rate maximum will be the normal rate) Then when the economy took a down turn and the banks started hemoraging so the banks uped the variable rate on the mortgages causing the payments to balloon. This affected people two fold as they lost disposable income so they couldn't spend money like they were causing businesses to fail and lay people off in money saving efforts. This caused those same people who took the sub prime mortgage to now be jobless and expected to pay a crazy mortgage payment thusly driving them to forclosure. This caused an over abundance of houses on the market causing values to dwindle and return to what is a more "realistic" value.

The bottom line is if people were not greedy, stupid or both allot of those issues would have never came to fruition.

When my wife and I were shopping for a house we were approved for over 200k before our down payment, we sat down and talked and budgeted out the minimum we could afford if the worst happen and purchased a house for about 138k before our sizeable down payment. We made sure to get a fixed rate mortgage and researched the banks like crazy to find one that would work with us and also not sell our loan.

a reply to: ChesterJohn
Hey, if you're living on a budget with a plan, you're miles ahead of most of the population.
As far as the house goes, you might look around for a "rent to own" place that would suit your needs. You can find those kinds of deals from time to time when the owner doesn't want to sell outright and have to pay a load of capital gains taxes. But you'll have to seek them out since they aren't usually advertised widely.
Are you contemplating going back to your overseas home? Would selling it give you the capital to purchase a home here or make a giant down payment?
Having been burdened by excess debt and wondering how I would ever get on an even keel again, I can tell you that we would do just about anything to keep from going there again! I can tell you that putting our last two kids through college at the same time that we were paying off our small mortgage wasn't easy but it was worth it to know that once those things were accomplished, things would get easier.
And one further bit of wisdom from Dave Ramsey, "Whatever you do, don't take financial advice from broke people!" You'll have plenty of people who will give you plenty of advice but unless they're debt free and living within their means, they're just talking to make noise.

a reply to: diggindirtWe are thinking of selling it. But for the time being it is home to our homeless family and we wouldn't want to outright put them on the street with no where to go.

a reply to: ChesterJohn

This is all sad but true. The poor hungry Africans are wealthier than the fat Americans who live like they're wealthy but are perpetually in debt. A poor African saves up $5, and would still be wealthier than the average American with negative money. $5 is greater than -$50,000.

a reply to: ChesterJohn
I'm not quite sure what you mean by your "homeless family"---is this family actually your extended family or just a homeless family that you're helping out?
Are they paying rent? maintenance? If not, perhaps you could ask them to pay a bit? You could then add that to your savings to buy yourself another home. I'm not suggesting you put them on the street but if you're giving them a free ride and it is costing your family, perhaps a re-alignment of priorities is in order. Your first obligation is to your nuclear family, spouse and children.
Best of luck. I know those situations can be sticky sometimes.

a reply to: diggindirtFamily that have no property to build a house or live on. I ask them to maintain the house and grounds, I still pay the taxes. In the culture my wife is from the Nuclear family extends to parents and siblings as well.

Western Society is the nuclear family of spouse and children only. In many societies outside the western world households are multigenerational everyone takes care of everyone in these types of social orders. It used to be that way in the US until the 1900's.

a reply to: ChesterJohn
Yes, that I can understand fully. It is still that way in my family as well. Sorry if I implied that you should ignore other family members or had no obligations to them. We provide housing and about 50% of his meals for an 89 year-old family member and will do so as long as he wants to remain independent in his home. Fortunately for us, this situation didn't arise until we were in a good financial place and could afford to do it, not in those years when we were paying college tuition for two kids, helping a third one with an advanced degree and paying off a mortgage.
My grandfather was my inspiration. He raised 13 children working as a sharecropper and carpenter. He was 65 years old when he had finally managed to save up enough money to buy the farm he wanted. I didn't have that kind of patience or his resolve to never be in debt but I still admire his work ethic and patience. He and my grandmother did all that on a 6th grade education. So, at some of darkest times of despair as I was trying to work my back back to solvency, I often thought about them and knew that if they could do it with 13 children, I could do it with only two.
Best of luck!

a reply to: ChesterJohn

I am actually surprised the suicide rate isn't any higher in the US over this rigged economic syatem. Hell, if i had a wife and kids i would be considering it! I want a wife and kids, but with my financial situation it is better for me to be alone. I am 30 and I have at least about 5-7 years before I just have my student loans left. Students loans for a degree I am not even using. Oh well, if need be i can file bankruptcy and just have my student loans left a lot sooner.

I disagree with this post. The problem is that most of you don't take the time to educate yourself on finances, and you're lazy. It's easy to live in debt. It's hard to live without debt because of a lack of self-control. You guys should listen to a guy by the name of Dave Ramsey.

a reply to: jkramer

Dude, I feel your pain. But at least I am using my degree. I still have something like $45,000 left on my loan after paying for over 8 years on a 25 year loan! I make what most people would call good money, but I am still not seeing any light at the end of the tunnel.

originally posted by: Prisoner60863
I keep saying it money is what is holding us back as a species. The mark of the beast. Of course people will come on here and say its really greed or money is a good thing. That person who just cant afford the medicine they need or the family that has to choose between food or paying heat bill.

The poor people who work their whole lives and save up and then the savings just dont seem to make ends meet.

Yes watch the people defend this evil thing.

Just to be clear, so you support a cashless system? Like a bartering system? Or a system where products & services are created to fill the needs of the people and all resources are shared equally, so there's no need to accumulate wealth (money) in order to trade it for goods?

Edie to Add: I'm not saying it's a bad thing. I'm pretty much a socialist & I was just describing that system. Even though people call it socialism now, a form of this "community living" has existed since humans have existed. Many indigenous tribes from all over the world still live like that.

Housing, will usually last you a lifetime.

A car is a basic necessity, why buy new? Cars run to 100k miles even with little to no maintenance today.

Food, you gotta eat.

Washing machines, fridges, etc. pay for themselves because you can store food for long periods and it's cheaper than eating out.

People with a lot of money usually end up over spending at their level so they might be able to enjoy the finer things in life but they suffer for it just the same, by trying to sustain their lavish lifestyles.

Yep--that's why I'm glad I have none. Took a long time of waiting until the time was ripe, but with the full scholarship to school that I'm going to receive (thanks to my pokemon collection--er, I mean thanks to my interpersonal connections) just so long as i do a full semester at another school (paid for by FAFSA--which is a miracle, since a year ago they wouldn't give me anything thanks to my dad's job--but now they will because for some reason they didn't make me put down parental financial information this time) first so that my friend (who's a past supervisor of mine and thinks I'm a perfect fit for that school(where she works in admissions)) can get the private university to give me $, and the fact that I'm still able to live at home--I'm all set for the moment.



I'm either very clever or very lucky--or perhaps a bit of both. Or just devious.



I refuse to do things the normal way. I don't really plan anything--I just do whatever feels like the smartest decision at the time. I'm actually shocked that it's working out.

You see, I had everything back in 2009--but then I got really sick and had to withdraw from my school (I had been going to Loyola) in order to get help for my eating disorder because I was basically dying. Other things happened that made it seem like it would be impossible for me to ever go back to a good school--and at times I thought that things would never turn around--but then they did. I got yelled at so much at home by my parents for being lazy--when in truth I was simply biding my time. And I am glad that I did. I was able to enjoy my youth and be stupid and young for once. But I'm really happy that that time is drawing to a close.

So, I guess, just have faith everybody. There's always hope. Miraculous things happen. Just don't let the world change you.

originally posted by: wtbengineer
a reply to: ChesterJohn

I've known this for a long time now. If you find a way out, let me know. The only way out I see is to become one of the 1% but good luck with that. Sure, there is opportunity here, but it's built like a pyramid scheme. There has to be a multitude on the bottom making peanuts to support the elite few on top. I make at the top end of what you call good money but that's not anywhere near enough. I'm strapped paycheck to paycheck because that's what the system is designed to do to us. The more you make, even if you don't spend extravagantly, the more you must pay.

You know I was thinking about this just the other day, it is all a game and it's carefully rigged, and we're going backwards - then something hit me...

Today just like in the 18th Century, the mill/factory/business owners only want to pay the workers just enough that they can pay for somewhere to stay warm and dry, and feed themselves so that they stay fit and healthy enough to be able to come back into work tomorrow.

They don't want you to have more money than you need because then you have choices, and they don't want that because then you won't come to work and make more money for them.

And we are definitely going backwards - the thing that made me think of this the other day was a news story that families are having to rent single rooms in houses because that's all they can afford.

The landlords are basically splitting the houses up and renting the rooms because they can make more money than renting out the whole house, and this is going back to just how things used to be in the 18th Century.

On top of that more and more people are having to use food banks just to be able to eat.

The thing that hit me is this: In the 18th and for a large part of the 19th Century there was no welfare - employers HAD to pay you enough to keep you alive.

Today there is by comparison an abundance of welfare - so they don't need to bother any more, they can pay you less than you need to survive because they know the state will pay the rest for them.

That's why you have zero-hours contracts, people who receive welfare being forced to go and work for corporations for free, food banks, people sharing houses - so the employers can pay the absolute minimum and thereby inflate their profits.

And the laughable part? The people who actually pay for all of that welfare is the other workers who are getting paid less and less.

The gap between the bottom and top is widening at an alarming rate INMO.