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RWBlue
02-15-2009, 20:33
there is talk in another thread about debt, debt reduction, debt accumulation...I figure we shoudl pull it out into a seperate thread.

marlinfan
02-15-2009, 20:46
I've got a house payment at 5.something% and a car payment. Everything else goes toward raising 4 kids. Those little rugrats are expensive. I had a mountain of CC debt 5 years ago due to some uninsured medical bills, but I paid them off to the tune of $700/month for 3+ years and it feels great.

I don't have much more than a few months of cash in savings but I'm working on it now that the cc debt is gone. I spent a bunch of money over the winter on stuff related to this forum though. :D

Cajunmudman
02-15-2009, 20:53
Since stocks stink, and I think the worst is yet to come, and bond yields stick also. I took out a loan on my 401(k). I will pay myself 6% interest over the next 12 months. I used the money to pay off a credit card that had a balance and was charging me 15%. I still got a lot left in the 401(k) so that if I am wrong and we get a nice move in the market, I will participate some. But still, no matter what, paying yourself 6% is wayyyyy better than paying the bank 15%, even if the market goes up 20%. The oppertunity cost, isnt that high.

ar15_dude
02-15-2009, 21:02
so this is the start of the topic?

Okay, I'll say it, and those of you with debt won't like it one bit.

Debt is evil. It robs the debter, and makes him slave to the lender.

People pay more money in interest than they do for the principle of the house.

It is a two edged sword and leverage: in a growth market, you can make money by borrowing money to flip real estate. In a down market, you can lose whatever principle you have.

Me saying this is a little like closing the barn door after the horse gets out, but owing the bank money when you lose your income can mean you are homeless.

My three ways to maximize the power of your money, regardless of your income:
1. never borrow money for depreciating assets (cars, furniture, mobile homes) cause you pay far more than its worth. Only drive a car you can afford to buy out-right.
2. only justification to borrow is for a house, and only if it can be paid back in 5 years or less. Only buy as much of a house as you can pay it back fast.
3. only spend as much on your credit card as you can pay each month, never pay interest.

Flame away, but I feel much more secure owning what little I have outright.

Cajunmudman
02-15-2009, 21:09
so this is the start of the topic?

Okay, I'll say it, and those of you with debt won't like it one bit.

Debt is evil. It robs the debter, and makes him slave to the lender.

People pay more money in interest than they do for the principle of the house.

It is a two edged sword and leverage: in a growth market, you can make money by borrowing money to flip real estate. In a down market, you can lose whatever principle you have.

Me saying this is a little like closing the barn door after the horse gets out, but owing the bank money when you lose your income can mean you are homeless.

My three ways to maximize the power of your money, regardless of your income:
1. never borrow money for depreciating assets (cars, furniture, mobile homes) cause you pay far more than its worth. Only drive a car you can afford to buy out-right.
2. only justification to borrow is for a house, and only if it can be paid back in 5 years or less. Only buy as much of a house as you can pay it back fast.
3. only spend as much on your credit card as you can pay each month, never pay interest.

Flame away, but I feel much more secure owning what little I have outright.

Spot on bro,

And if you read what all lawmakers, and "advisors" are saying, they want us to go MORE in debt. They are doing everything they can to make debt more readily avaiable. Heck, the news even says that if we all reduce debt, that it will make the economy worse. This is mind boggeling. As the Magambo Guru states: "we are all freakin doomed."

silentpoet
02-15-2009, 21:29
I am working to get debt free. I have set up an emergency fund to make sure I don't get into debt for stupid repairs or other things like that. I have been slowly working on getting caught up on my debts. Now I am trying to get ahead and eliminate them. I am switching jobs to a different company that pays a bit more for the same type of work. In general I have been doing a good job of not adding new debt for over a year now, aside from the house. It is a process of becoming more secure. We prep because we have concerns and wish to remain secure. We have all seen layoffs, either in the news or in our own lives. People with good jobs who lose that income to serve their mountains of debt. When you don't have debt and have savings and other preps, losing your job is probably more like a vacation than anything.

Cajunmudman
02-15-2009, 22:01
Plus when you dont have debts, and in a good financial situation, it is a whole heck of a lot easier to tell some one to " GO %$#@ themselves and this job". Which to me, is the single sbest reason to be debt free.

racerford
02-15-2009, 22:02
People believe it is possible to truly own their own home, and thereby be safe, at least from a place to live perspective, in an economic downturn. I am not convinced it is possible to completely own your home. Just try not paying your property taxes.......


In time, you will find the government owns your home.........

At best, you can get to a place where you can rent your home from the government for a relatively small fee. It is a very sad thought.

certifiedfunds
02-15-2009, 22:31
makes him slave to the lender.



Unless you take them in deep enough.

Its the old, "Owe $100,000 to the bank and can't pay, YOU have a problem."

"Owe $100,000,000 and can't pay, you BOTH have a problem"

UneasyRider
02-16-2009, 08:43
I think that most people today need to answer this question as short term and long term debt, I did. Lets say you are a family with a mortgage, a couple of car loans and some credit cards. Right now it's no problem that your monthly debt service is $1,750 but soon it may be a problem for you if you lose your job or something.

This was me, I combined it all into a $650 per month payment on a 15 year mortgage that is only 5 years longer than my present mortgage term. So my debt service is now cut by $1,100 per month and my rate of interest is lower and fixed at 4.625%.

I also get to keep my cash for when stores start to close and really give stuff away cheap.

Most of our money is in IRA, 401K and 403B accounts and a pension that may be ok or may turn out to be worthless in a hyperinflation situation, we try to keep it as safe as we can but who knows what life will bring. Right now I think that the best stock in America is on the shelves of your local grocery store.

RWBlue
02-16-2009, 10:52
Unless you take them in deep enough.

Its the old, "Owe $100,000 to the bank and can't pay, YOU have a problem."

"Owe $100,000,000 and can't pay, you BOTH have a problem"

I have never seen this. Unless someone is committing fraud, this should never happen. Remember all your loans are secured with the property or multiple properties. When you go belly up, they should get your property. In normal times, your properties should cover the owed value of the loans.

I have been told about people who owed a good bit on their house and the bank renegotiated/make half payments until they could get themselves out of trouble.

Jim in MI
02-16-2009, 11:46
I have never seen this. Unless someone is committing fraud, this should never happen. Remember all your loans are secured with the property or multiple properties. When you go belly up, they should get your property. In normal times, your properties should cover the owed value of the loans.

I have been told about people who owed a good bit on their house and the bank renegotiated/make half payments until they could get themselves out of trouble.

It's a corporation thing. A corporation can get big enough and have enough debt that it would be pretty painful to let them fail, and the corp and the bank will go down together.

My business has 3 corporations that we operate under. The business "name" is one corporation xxx, the real estate is a different one xxx properties, and all of the employees work and get paid for a different one xxx resources. This is to spread the risk.

As far as I know I don't have one loan out that is secured with property or other assets.

I pay taxes on income, like you. The business has to balance out every Dec 31st and "saving money" to pay for something we need increases our taxes. Money in the bank is not a good thing come Dec 31st. Taking out a loan makes things a little easier. So....we can pay interest or we can pay taxes.

When I was 18 I couldn't afford to pay cash for my education, so I took out 120K in student loans, and now I make about 30K per month. Without student loan debt, I would be pumping gas or greeting people at Wal Mart.

I hear people talk about no debt (which isn't really that bad) but there are other ways to achieve the same goals, risk and s&p wise, with trusts/LLCs and insurance.

What about MORTGAGE INSURANCE. Don't all of these high risk people have mortgage ins? Why are the foreclosures killing the banks? Shouldn't the banks still be getting paid by the ins. companies. You have to have 20% down to avoid mortgage ins. so what gives?

Usingmyrights
02-16-2009, 12:07
I'm hoping to be debt free by summer and still have a little bit in the bank. By the end of the year I'm hoping to have 5 digits in the bank and still be debt free. I doubt that will happen though, because I'm thinking about getting a new (to me) vechicle and there's a few toys I'd like to buy.

ETA: Just looked at my accounts and decided to go ahead and pay a little more on my CC and signature loan. Other than those two, all I have is the tires for my truck which is no payments/interest for 12 months. I'm going to pay off all of the accounts with interest first, then knock out that one in a month or two.

Usingmyrights
02-16-2009, 12:11
2. only justification to borrow is for a house, and only if it can be paid back in 5 years or less. Only buy as much of a house as you can pay it back fast.

Flame away, but I feel much more secure owning what little I have outright.

While I agree people often buy more house than they can afford, paying it off in 5 years would be extremely hard to do unless you make decent money. For you're average income its not going to happen.

certifiedfunds
02-16-2009, 12:33
I have never seen this. Unless someone is committing fraud, this should never happen. Remember all your loans are secured with the property or multiple properties. When you go belly up, they should get your property. In normal times, your properties should cover the owed value of the loans.

I have been told about people who owed a good bit on their house and the bank renegotiated/make half payments until they could get themselves out of trouble.

Trump.

I ain't trump obviously. Jus sayin.

cnutco
02-16-2009, 12:44
I am in debt... but only my house.

2 cars = PAID FOR
1 motorcycle = PAID FOR
guns and other toys = PAID FOR

Big Bird
02-16-2009, 12:47
The danger in debt is two fold...

First--it requires regular payments. Most debt is monthly. Some is more frequent but some is less frequent. Regardless it requires service. Servicing debt requires cash flow--income--source of funds. The risk comes when the unforseen happens and your cash flow is interrupted. Then your ability to service your debt is diminished. Now the lender has power--the power to collect, the power to take, the power to destroy.

Second, debt is easy to incur--difficult to pay off. Take a look someday at your personal balance sheet. Add up all the stuff your own, add up your total debt. What's your net worth? Is it positive or negative?

Compare how much you make each year to how much you pay in interest each year. Who are you working for? Yourself or your lenders?

Unfortunately people don't look at it like this. They think because they can afford the payments they can afford the item. With the exception of a home very few things appreciate in value over time. That means your struggle to increase your net worth not only is battling the interest you pay to your lenders but also the depreciation on the stuff you bought.

A business will incur debt as a source of capital--to put the money to use to make more money. This is has many of the same risks that it does at a personal level but the difference is when its done on a personal level its not generally geared towards making money but buying stuff that has nothing to do with making money. BIG difference. The business is making a cost of capital decision... At a personal level you are involved in buying crap.

RWBlue
02-16-2009, 13:51
Jim in MI, you are right. I am assuming personal debts, morgages....

As far as your question about morgage insurance, and failing banks, I think I understand what hapened, but it would take a long time to explain.


Trump.

I ain't trump obviously. Jus sayin.

As I understand it Trump as multiple corps setup. He was never close to going belly up. He was protecting himself from his x-wife.

RWBlue
02-16-2009, 14:27
Corp debt is different than personal debt. This is just for personal finance.

IMHO,
Good debt: Good debt is any debt that pays for it’s self. You bought that new stereo on the credit card because you had to have it “NOW”. You are going to pay it off over the next year. This is bad debt. That stereo is going to cost you three times as much because you had to have it now.

Good debt: Good debt is when your debt is working for you. Let’s say you own rental property, which is renting for a little more than the mortgage payment. This is good debt as long as the properties remain rented and you have good renters. The properties continue to appreciate and someone else is earning you money.

Then there is everything in the middle.
Credit cards are not a problem as long as you pay them off every month, EVERY MONTH WITH THE MONEY YOU ALREADY HAVE IN THE BANK.

Renting a house vs. buying a house.
I am going to argue against ar15_dude “only if it can be paid back in 5 years or less”. I don’t know anyone who can afford to pay a decent house off in 5 years. Yes, you can buy something in a crime ridden neighborhood, that is falling down, but that is not a good investment. Neither is staying in an apartment for an extra 10-15 years until you can afford to buy that nicer house, because you are paying off someone else’s good debt and that nice house has now appreciated to a point that you cannot afford it.

Now I am not suggesting that you go out and buy the largest mansion you can get a loan for either. You think I am kidding here, but some realtors actually suggest this saying that your house is an asset and will appreciate. You still have to pay for it. You cannot recover the money from your asset without taking out another loan or selling your house. This is bad debt.

What I am suggesting is buy the minimal house that you will need and only after you have a slush fund. I have heard people say have payments set at 30% of you salary. This sounds like a good idea. I have heard people say get a 30 year loan and make double payments. I am against that. I would suggest getting a 30 year loan and if you want to make double payments, make them to yourself. When you have enough money to pay off your house, you have the option of paying it off. What you don’t want to do is be close to paying it off and run out of money. The bank will follow their proceedure whether you own $10 or $100K on your house.

silentpoet
02-16-2009, 15:42
This is not so much a debt idea, but it does relate to spending money. When you are going to make a purchase you have to ask yourself if it will be a quality item? Will it last and be usuable for a significant time? Also is it a good price, can I get it cheaper? Does this item fill a need or is it a want? Also look at ongoing costs. For example car insurance or fuel mileage. Or for a gun ammo price. Basically when you pour the money out you must make wise decisions. This impacts debt because wise spending reduces the times you incur debt. Wise purchasing is an important part of debt reduction.

jdavionic
02-16-2009, 17:50
I don't have much unusual debt, but I was thinking about getting rid of it all. I've got enough in my 401k to sell, pay the taxes, and pay off all debt. Probably not a good idea...but it just sounds so good to have zero debt...no car payment, no house payment, no credit card...nodda.

Calhoun123
02-16-2009, 18:02
I have never seen this. Unless someone is committing fraud, this should never happen. Remember all your loans are secured with the property or multiple properties. When you go belly up, they should get your property. In normal times, your properties should cover the owed value of the loans.

I have been told about people who owed a good bit on their house and the bank renegotiated/make half payments until they could get themselves out of trouble.

Think Donald Trump!!!!

Oops, people beat me to it. He has repeatedly been bankrupt (in reality) but the banks were on the hook for so much they had to keep loaning.

RWBlue
02-16-2009, 18:29
Think Donald Trump!!!!

Oops, people beat me to it. He has repeatedly been bankrupt (in reality) but the banks were on the hook for so much they had to keep loaning.

If you look at the companies he controlled and look at the what was going on in his personal life....=..not really bankrupt.

RWBlue
02-16-2009, 18:31
I don't have much unusual debt, but I was thinking about getting rid of it all. I've got enough in my 401k to sell, pay the taxes, and pay off all debt. Probably not a good idea...but it just sounds so good to have zero debt...no car payment, no house payment, no credit card...nodda.

I wouldn't do it.
If you can structure your 401K to take a lone from yourself....maybe.

Jim in MI
02-16-2009, 19:41
I don't have much unusual debt, but I was thinking about getting rid of it all. I've got enough in my 401k to sell, pay the taxes, and pay off all debt. Probably not a good idea...but it just sounds so good to have zero debt...no car payment, no house payment, no credit card...nodda.

It's the "pay the taxes" part that would keep me from doing it. You're giving your money away.

betyourlife
02-16-2009, 22:10
That and the fact that you are loosing out on the concept of compound interest over time. You wouldn't just be loosing the money that is in there now, but all the future compoun earnings as well.

UneasyRider
02-17-2009, 08:14
I don't have much unusual debt, but I was thinking about getting rid of it all. I've got enough in my 401k to sell, pay the taxes, and pay off all debt. Probably not a good idea...but it just sounds so good to have zero debt...no car payment, no house payment, no credit card...nodda.

That's a good idea if you can get the money out without quitting. No debt would be great and you have no idea what will happen to your 401K money in a fund, it would be safer in your debt. As for the 10% tax penalty next year that may look like a bargain if tax rates go up.

shotgunred
02-17-2009, 10:31
debt on a house is a good thing as long as you have the resources to pay the loan payment every month.

the interest comes off the top of your taxes.
the value of property normally goes up.
Inflation work for you.
Hyperinflation is staring us in the face. you will be able to pay off your loan with Hyper inflated money in a few years.

ar15_dude
02-17-2009, 20:49
What makes mortgage debt particularly evil is that equity builds VERY slowly. So essentially making payments is for the longest time just renting from the real owner, the bank. And your downpayment is being held hostage to keep you making payments. In many cases, renting would be preferred: both require monthly payments, but rent doesn't require the at-risk downpayment. If one is likely to have to walk away or move, being a renter is better.

Let's say you borrow $150k for 30 yrs, at 4.5%. After 10 years, how much do you still owe? A: $120k. How much interest will you pay over 30 years? A: $123k. So you have paid nearly twice as much for the house as it was worth. Tax benefits and inflation don't make up for this burdensome interest.

The only ways to beat the system that I know of are:
1) buy the lowest price house you can stand
2) borrow as little $ for as short of time as possible
3) stay in one house / avoid moving: people always buy more expensive houses.

A guy told me today that the Q'uoran (Koran, whatever) forbids paying or collecting interest. He said an Islamic bank will lend money with no interest. For a $100k house, they would lend $80k for 5 years. All payments go to principle. If you default, they make $20k so they only make $ if you screw up.

ithaca_deerslayer
02-18-2009, 09:47
Wife and I have used debt. And we paid off $20,000. And then we used debt again. And then we paid off $20,000 again.

It's hard to go from nothing to having college education, land, cars, horses, tack, a house, guns, etc. You know, all that stuff everyone wants. Debt helps you get there. Or, debt can be a weight around your neck, choking you.

Now, the wife and I only have our house mortgage. And it is a relatively inexpensive fixed rate, that we pay extra on each month, so that it will be gone all the sooner. No other debt, not even for cars.

It is easy now to look back and tell others not to go into debt. Don't do it. Pay cash up front. Well, it's not always realistic to wait until you have all the cash to buy all the stuff you want. A good idea, but not always realistic. But if you can do it, sure go debt free. :)

RWBlue
04-30-2012, 19:58
good bump to old thread

cowboy1964
04-30-2012, 20:32
On my taxes this year for the first time my itemized deduction came in at less than my standard deduction. All the more reason to accelerate getting my mortgage paid off.

bdcochran
04-30-2012, 21:55
I think that Easyrider has a good approach to evaluate debt.

1. I think that the people in this forum are unusual because their focus is on being or becoming self reliant (a different concept than being self sufficient) and not trusting that "things will work out".
2. I believe that the people in this forum are capable of making rational decisions about debt.
3. The decision to go into debt is not lightly taken by most people here.

It took only a couple of times of having money stolen from me before I adopted the practice of not carrying much cash and using the credit card to pay for groceries, gasoline, and car repairs. Before that, I would pay cash as a discipline.

I use on credit card for Costco because it accepts only American Express and a Mastercard for all other transactions. The debt is paid not just monthly, but I send in a payment be electronic mail when I incur a large bill.

The house was recently refinanced only to obtain a lower interest rate; the savings will be on the order of $15,000 present discounted value, so the action was logical.

I am down from three cars to one as my lifestyle is changed.

certifiedfunds
04-30-2012, 23:48
As I understand it Trump as multiple corps setup. He was never close to going belly up. He was protecting himself from his x-wife.

(paraphrasing Trump) "When you owe the bank 1 million dollars, you have a problem. When you owe the bank 100 million dollars, you both have a problem"

Devans0
05-01-2012, 00:18
I work at a blue collar job and am financially independent. I followed the DIY advice of buying an affordable fixer-upper. I paid it off in six years, fixed it up myself, and invested the money that was no longer being spent on mortgage payments. "The Millionaire Next Door" philosophy was my credo.

Once you get to debt-free point, you will have to learn to invest. Watch out for brokers. They are aptly named. I found a mutual fund company that had a legal fiduciary duty to their clients, and low fees! I asset allocate and index trade with Vanguard. It works for me. Asset allocation uses investments that are by their nature required to be "average" and gets well above average returns.

Big Bird
05-01-2012, 06:50
I will point put that those of you who believe we are headed for hyperinflation and then end of our currency should borrow every penny they can get their hands on to be consistent. After all, once the currency hyper-inflates you can easily pay off your old debts with wortheless money! Just sayin...if you want to be consistent.

DoctaGlockta
05-01-2012, 07:52
I will point put that those of you who believe we are headed for hyperinflation and then end of our currency should borrow every penny they can get their hands on to be consistent. After all, once the currency hyper-inflates you can easily pay off your old debts with wortheless money! Just sayin...if you want to be consistent.

BB I hear this all the time. Problem is (as I'm sure you know) the banks would never let this happen or they would have the Feds adjust the loans to make up the difference.

I never quite understood the rational of taking out a 30 year mortgage on a property and paying the bank month after month for interest. It may have made sense 30 years ago when real estate values were much lower. No one ever talks about how much one really 'Paid' for their home. And then when they sell it how much they really 'Profited' from it.

I happen to be a no debt guy. Way I was brought up. Not right or wrong just the way I am. I don't like the idea of being a debt slave. I'm already a Federal Gov't/IRS slave.

pugman
05-01-2012, 08:33
Very little debt here....

Our mortgage at 3.75%...I have 6 payments sitting as an emergency fund in an account.

One car payment on a none to fancy vehicle (Honda CR-V) which we have 8 payments sitting in a bank as a emergency fund...the rate is 0.9%. I have a repair fund for my car which hasn't needed to be touched in 4 years and just add to it like I'm making a car payment. When my car finally gives up the ghost I should be able to pay half or better in cash for any future vehicle.....cash in full if I buy used.

Credit cards: we charge everything we can and max out card rewards and I know who is running what deal which month. American Express Blue, Discover or the one gas card I use. We use credit cards like debit cards...charge something it gets entered in the check book. At the end of the month I just check off the payments and make the payments. Its like being paid to charge, in my mind its safer as I don't have to carry cash, its risk free on line shopping. etc.

We "own" our home but I can honestly say after moving my FIL into his new place I'm seriously reconsidering it. He is living in a very nice 2 bedroom side by side duplex the landlord said would sell to him for $150K....his rent is $850 with taxes in the $3000 range.

Run the numbers and you see with a 30 year note at say 4% with no money down his property tax bills (which for the sake of arguement stay fixed...yeah right) will cost 90K...total payout on the house will top $395K...rent costs for the 30 years will be about $306k (again fixed).

Lots of variables at least make you think if if buying is a deal anymore? Repairs to the home..the fact we all know property taxes won't stay fixed..anticipated sale value at the end of 30 years, income tax implications, etc. Besides the "pride of ownership" crap realtors seem to be say every other minute...you can't say owning a home anymore is a clear winner.

RED64CJ5
05-03-2012, 20:14
I will point put that those of you who believe we are headed for hyperinflation and then end of our currency should borrow every penny they can get their hands on to be consistent. After all, once the currency hyper-inflates you can easily pay off your old debts with wortheless money! Just sayin...if you want to be consistent.

I completely agree! :wavey:

bdcochran
05-03-2012, 20:31
Theoretically, Bigbird, you are correct.

However, it is hard to take advantage of hyperinflation when:

1. you can't borrow (the problem that the typical unemployed German had during the German hyperinflation);
2. commercial rents and other obligations are tied to LIBOR or COLA provisions. (If you don't know those acronyms, simply understand that your obligation goes up with the inflation rate).

Yes, I see that hyperinflation is coming. However, credit standards have tightened drastically. Yes, I refinanced (having owned the same house for close to 30 years and wanted only a lower interest rate on the remaining principal) and it still took 5 months to do it.

arclight610
05-03-2012, 22:08
Theoretically, Bigbird, you are correct.

However, it is hard to take advantage of hyperinflation when:

1. you can't borrow (the problem that the typical unemployed German had during the German hyperinflation);
2. commercial rents and other obligations are tied to LIBOR or COLA provisions. (If you don't know those acronyms, simply understand that your obligation goes up with the inflation rate).

Yes, I see that hyperinflation is coming. However, credit standards have tightened drastically. Yes, I refinanced (having owned the same house for close to 30 years and wanted only a lower interest rate on the remaining principal) and it still took 5 months to do it.

I think what he means is that you take on debt prior to the point of hyperinflation, if it can be predicted that is.

Debt isn't always evil, it just depends on your circumstances. For instance, I'm a full-time student right now. I'm on the GI Bill, so I do not have to take out any loans or work. However, suppose I took out the maximum amount of subsidized student loans I could each semester and it totaled $20,000 at the time of my graduation. Suppose I took that money, and stuck it into a 3 year CD.

Suppose I finally graduate in 3 years + 6 month deferment period. I'm technically "in debt", but since the interest rate is 0% on subsidized loans I still only owe $20,000. I am now able to pay that $20,000 with the $20,000+interest+inflation. In that way, debt was not evil but actually benefited me.

pugman
05-04-2012, 06:48
Debt isn't always evil, it just depends on your circumstances. For instance, I'm a full-time student right now. I'm on the GI Bill, so I do not have to take out any loans or work. However, suppose I took out the maximum amount of subsidized student loans I could each semester and it totaled $20,000 at the time of my graduation. Suppose I took that money, and stuck it into a 3 year CD.

Suppose I finally graduate in 3 years + 6 month deferment period. I'm technically "in debt", but since the interest rate is 0% on subsidized loans I still only owe $20,000. I am now able to pay that $20,000 with the $20,000+interest+inflation. In that way, debt was not evil but actually benefited me.

Quoted for truth.

Debt is in fact never evil - its just people are ignorant in how they use it. If I get bored today at work I will edit this with a true case in point...my MIL: three bankruptcies and a very possible 4th being filed soon...

Take my car for example: 2000 Mazda Protege, 200K+ on the motor, paid in full since 2004 (which was on a 0% loan). It has a few dings you would expect from a 12 year old car but the interior looks new when I give it a good cleaning. Besides for maintenance like tires, brakes, oil changes, etc I've had two repairs: a thermostat and an oil pan seal.

Friends tell me the car is ugly and they hate to drive in it when we go out to lunch once in a while. My last tank of gas was 39 mpg. They all have $350/month plus car payments and mostly drive mid-large size SUVs in the city getting in the low 20's - some of their car payments exceed $420.

Why do they have these nice cars? One coworker lives less than 5 miles from work and brags he only put 8000 miles on his truck over the last year - thinks he is saving money by using a low mileage truck because it will last longer? Financially he would be way ahead with a combination of walking/a bicycle/moped-used motorcycle and a nice 3-5 year old used car. No - he had to have that Lexus.

Debt, just like my car, is a tool. As previously mentioned by me, credit cards used properly are a fantastic cash management tool credit card companies pay you to use.

My father refuses to ever use 0% financing because its "debt." He has the fortitude to put money aside and not touch it - why not earn that pathetic 0.9-1% interest as it sits in the bank?

It amazes me how many times people will go into debt and throw hordes of money at a problem rather than letting it go, never letting it get there in the first place through simple maintenance or occassional review, or to keep up with the neighbors.