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Living DEBT FREE  RSS feed

 
Posts: 1496
Location: Zone 5 Wyoming
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I had a feeling a lot of people on Permies would be debt free. Certainly more than your average. It's pretty interesting!
 
Posts: 51
Location: Near Missoula
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While I understand that using credit cards but paying the balance every month is technically debt free (I wouldn't even call it a grey area as long as you aren't carrying a balance month to month) I struggle to believe it is a good moral or permie choice to make. Credit card companies aren't npo's just looking to give everyone a free vacation for paying their bills on time. They make money from people who fail to pay their bill on time. They may so much money from people carrying over a balance that they are willing to share that with more responsible people for 2 reasons I believe. 1- A very small percentage actually get to use these benefits in any meaningful way, it is really just a marketing gimmick. 2- Even if you are paying your balance monthly, I imagine they are able to gain funding and investments based on total membership and credit allowances. Either way, they are making money off of you, and the"free vacations" are really paid for by someone who probably won't be able to afford a vacation ever. This isn't making the world a better place. It isn't thinking long term. Its just thinking longer term than the person carrying a balance. If every cardholder refused to carry a balance, there would be no perks and no credit card companies. I realize this come across overtly preachy and holier-than-thou, but it isn't meant to pass judgement. This is America, and I'm not your dad. You're free to do what you want. My living certainly isn't above reproach. Hearing (reading) someone talk about how easy it is to win with credit cards just gets me, like stepping on a thorn. It is only easy because it is so very hard for so very many other people. I'll step off my soapbox now...
 
pollinator
Posts: 123
Location: South Central PA
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Mike Jay wrote:

Mike Barkley wrote:Write in the note section of the 13th check "paid toward principle only".

 This is critical when paying extra!  Otherwise they'll happily just apply it to the interest, which is in their best interest  When doing this online, there should be a check box or something to ensure extra payments are going towards principle.

I have to laugh, when I started the monthly overpayments, which I wanted the "extra" to  go to principle only, my bank royally messed it up. (several times) After many phone calls, my account was sorted out, and they did the right thing, and applied the extra payments when they should have been applied, but my solution was on my statement ticket (the bottom portion I sent back every month) I included bright colored (red) arrows and instructions showing the full breakdown of the payment I was sending. I actually wrote out the math equation version of payment + principle only = total enclosed, and annotated each line as such. (I wrote the same on my checks) After about a year of annotating my "ticket" the bank revised their monthly statements, and included lines where you could add in any additional principal or interest that you were sending in each month. I'm not sure if my comical notes were the cause, or just a needed overhaul, but I've never had an issue with them mis-applying our payments since I started that, and now that they have made it clear on their tickets, it's been much easier to add the extra in each month!
 
garden master
Posts: 2190
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Anthony Cooley wrote: I struggle to believe it is a good moral or permie choice to make. Credit card companies aren't npo's just looking to give everyone a free vacation for paying their bills on time. They make money from people who fail to pay their bill on time.



You make some good points here, Sorry, I don't know what a npo is. I have not had a balance on a credit card in more than 15 years. The credit card companies give me the cash back option for doing business with companies that accept their cards, My credit card companies are always contacting me to offer a lower interest rate.  Why since I have no balance?  I just ignore their offers which might not be wise.  I just have others things I prefer to be doing with my time.  Plus, every month I get plenty of credit card companies trying to solicit my business.

Hearing (reading) someone talk about how easy it is to win with credit cards just gets me, like stepping on a thorn. It is only easy because it is so very hard for so very many other people. .



Every time I swipe my card at a business the credit company makes money.  They charge the business.  It may not be a lot but it adds up every time someone uses a machine.

And then there is always the possibility that something might happen and I will not be able to pay the balance and have to start paying interest.  

 
Anthony Cooley
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Anne Miller wrote:
Sorry, I don't know what a npo is.



Non-Profit Organization
 
master pollinator
Posts: 665
Location: mountains of Tennessee
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If every cardholder refused to carry a balance, there would be no perks and no credit card companies.  



In my opinion we would all be a lot better off if that happened. THERE IS NO EASY BUTTON. Unless you're a credit card company.

 
master pollinator
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I have so much to say on this subject, but sadly my wife is a banker so I cannot say much. All I will say is: Credit Card Companies are NOT your friend.
 
pollinator
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Dave Ramsey is great.  Both of my older daughters listen to him on the radio when they are in their cars, and I've taken one of his courses.

I am debt-free and have no mortgage.  I've never had a huge income, and have often lived well below the poverty level.  Refusing to go into debt is part of the reason that we've come through the low-income stretches as well as we have, though it's often been difficult.  I have no credit cards, and my name has only ever been on one credit card my whole life (as a young wife with a toddler and a new baby, we moved into a house that didn't have a refrigerator -- we got a Sears card and used it to buy a frig.  Over the years, my (now ex) husband used the Sears card once in a while for something like tools, but I never used it again.  I have always hated debt).  

That's not to say I've been financially wise, though.  I've never been very good at saving money, and have made some unwise purchases, but at least I didn't go into debt to do it!  I've had car payments a few times, but got them paid off as quickly as possible.  Need to save up money for my next vehicle now, because I'm driving a 21 year old pickup; it's only got about 160,000 miles on it, but eventually it will need to be replaced.  

My last house was bought on an owner contract, and I paid it off in four years.  Money from that place plus money inherited from my grandmother enabled me to pay cash for this place, though it wasn't very expensive (under $50,000, and needs a ton of work).  I had a pretty good emergency fund before we moved here, but have used most of it getting essential things (like the plumbing) fixed; building that back up is high on my priority list.

Anyone can be debt-free.  It helps to have a nice income, but it isn't necessary.  What IS necessary is the willingness to live well below your income level, save as much as you can, purchase as little as you can (and purchase wisely), and work up.  After my twenty-eight-year marriage broke up, my mentally handicapped youngest daughter and I were homeless for over a year (most of that time we stayed with a friend, but part of it we lived in a small pickup truck with a box on the back).  Then we lived with my grandmother for eight years -- beneficial to both of us, because she was 89 when we moved in with her, and our being there enabled her to stay in her own home to the end of her life.  There was a gap between when Grandma died, and when we started receiving payments on her house, so we lived in an old 5th wheel at my mother's place for about nine months -- electricity in the 5th wheel, but no water; I used a sawdust toilet and emptied it into the septic tank.  Then I bought an old double-wide on an acre and a half of land from a friend -- that's the place before this one, that I was able to pay off early, in only four years.  Now we are in a small, old farmhouse on a little over 2 1/2 acres and it's paid for (and has low property taxes, under $500/year).  My old truck has been paid for for about seven years and hopefully still has a few more years left on it.  The climate is better for growing things than the high desert where we were before.  I really don't want to move again ever, but if we do need to sell this place eventually, it should bring quite a bit more than I paid for it (once everything is fixed), and we *should* be able to make another step up.  

Like I said, anyone can do it as long as you really want it and work at it.  

Kathleen
 
Posts: 44
Location: New Hampshire, USA zone 5/6
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Stacy Witscher wrote:Mike - While I generally agree with you, consumer debt is only stressful if you let it be. Most of the time, the only consequence of not repaying credit card or other unsecured debt is a lower credit score. If you don't care about that, why worry? One of the things that I find so freeing about not having debt and not using credit, is that I don't have to care about my credit score. So if I feel like a bill is unreasonable, and I don't need to continue doing business with a certain company, I just don't pay it. It's such a relief. I never understand people who feel like paying an unreasonable bill is a moral duty, so bizarre.

As far as education, I encourage young people to look around. If you are open to different options, you can often get through college, undergraduate and graduate, without going into debt, and without joining the military. I think a lifetime of PTSD is a very high price to pay for a college education. There are better ways.



Stacy,  I agree that for anything stress is a matter of your state of mind. I remember hearing a quote once, something to the effect of “if stress is real than please show me by filling a cup with it.” I’m sure I didn’t get that quite right, but you get the idea.

I am a bit concerned about your statement of not paying a bill if you feel it’s unreasonable. All bills are something you take on voluntarily. Perhaps your choices are limited such as in the case of a medical emergency, but it is your choice to undergo treatment at that facility. Bills are a commitment you chose to agree to at the time of purchase. So to change your mind and decide not to pay, after committing, just seems a bit unethical to me. As much as I may be mad about a bill, its really my past self I have to be mad at, not the company I owe.

I appreciate hearing everyone’s stories of how they have achieved financial freedom. My husband and I only have a mortgage and student loans and have our plans to paying them off. We too are debt averse.

One last point I want to make: just imagine how much we could change the world if all of us were putting the money we spend on interest, even just the interest from our mortgages, into doing good I our own communities. When we pay rent there is a chance that the money is going to someone in our own community rather than to a big bank. That alone is worth the years it takes to save to buy a house in cash. The banks don’t need anymore of our money, our community does.
 
pollinator
Posts: 457
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Jackie - In my experience, not all bills are voluntary. For example, around here if an ambulance is used to transport you, you are legally reasonable for the bill regardless of whether or not you chose to take it. But that aside, I find things way more complicated than you, and rarely attach morality or ethics to payments to corporations. It's extremely freeing.
 
elle sagenev
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We've had a horrible run of luck lately. We found out our daughter has congenital cataracts that will require surgery. Then the next day our son broke his arm. So we are looking into the face of thousands of dollars of medical bills. The laser for her surgery isn't covered by insurance and will cost us 1800. The doctor is telling us this with worry on his face. I imagine a lot of people freak out. We did not freak out. We save. We save for this very reason. So, while no one wants to spend thousands, we have it and our kids will get fixed. I'm so thankful we are debt free!
 
Kathleen Sanderson
pollinator
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Stacy Witscher wrote:Jackie - In my experience, not all bills are voluntary. For example, around here if an ambulance is used to transport you, you are legally reasonable for the bill regardless of whether or not you chose to take it. But that aside, I find things way more complicated than you, and rarely attach morality or ethics to payments to corporations. It's extremely freeing.



While I'm not big on corporations (although many are actually small businesses that had to incorporate), incurring a bill -- a debt -- and then refusing to pay it is actually stealing.  And even the big corporations have many people working for them who need their paychecks, and they sell a product which can see the price go up to other buyers if too many people refuse to pay their bills/debts.  So there is more to the morality question than perhaps you are considering.

Kathleen
 
elle sagenev
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Kathleen Sanderson wrote:

Stacy Witscher wrote:Jackie - In my experience, not all bills are voluntary. For example, around here if an ambulance is used to transport you, you are legally reasonable for the bill regardless of whether or not you chose to take it. But that aside, I find things way more complicated than you, and rarely attach morality or ethics to payments to corporations. It's extremely freeing.



While I'm not big on corporations (although many are actually small businesses that had to incorporate), incurring a bill -- a debt -- and then refusing to pay it is actually stealing.  And even the big corporations have many people working for them who need their paychecks, and they sell a product which can see the price go up to other buyers if too many people refuse to pay their bills/debts.  So there is more to the morality question than perhaps you are considering.

Kathleen



Never mind that if they get it into their head to actually pursue the debt it's really easy to get a judgment and start taking stuff either paychecks, bank accounts or stuff.
 
Travis Johnson
master pollinator
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Tyler Ludens wrote:Travis, I am very glad for you that you have the ability to be flexible and change plans based on circumstance.  I think that is one of the qualities which enable some of us to become debt-free.  Cancer is going to make that even more of a challenge, as it is one of the health conditions which regularly bankrupt families.  Another is Alzheimer's.  My family has both (plus mental illness), so it will be quite a challenge for me to manage our finances to avoid plummeting into debt, especially in these uncertain times (political)!



Tyler: I am so sorry I did not see this earlier for some reason, and I do apologize for not replying. Over the years of being on permies I have got a sense of who you are, and while I do not pretend to know you, I do have a deep respect and appreciation for you. I am sorry you are dealing with these issues. I know from first hand experience that it is very difficult.

My friend who is a Sheriff in this county, got me started on a newly formed committee addressing drug addiction and mental illness specific to this area. We do not have the answers; I do not have the answers, but we are collectively trying as a committee to form new policy and help a hurting community.

The drug addiction problems in Maine alone are daunting: 6th worst in the nation based on a per capita basis, yet THE worst when it comes to the number of recovery centers. 418 drug overdose deaths last year alone, 72,000 over dose deaths last year in the United States in all. Grim statistics that is for sure. One was my brother-in-law and another my best friend. We are also addressing mental health, and trying to get certain people true help instead of circulating through the criminal system.

What do I have to offer? Not much; but I do care. It is a start. (Hugs from miles away) :-)
 
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living in parents basement

it helps!
 
pollinator
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I was debt free for eight years from when I paid off my student loans until I married and my wife had student loans. We paid those off the next year but then I borrowed some money for a business venture (a two year contract). I plan to pay off that loan soon when the contract is done.

I am also starting a second degree that will allow me to teach school which is a less rarified profession than my current one which is mainly seasonal botany work. The second degree may also incur debt or it could. There is funding through a grant my advisor got, but it requires teaching at a high needs school for ~4 years. Otherwise it becomes debt.

However, we paid off student loans before, with largely seasonal income, and we can do it again if for some reason I don't end up teaching at a high needs school for the requisite four years.

On the bright side I own outright an eight acre lot, with 3.25 acres of it gardenable (arable). Where I garden. We recently bought a small travel trailer (paid for) for work trips. So now we have the means and ability to hang out at the garden land on the weekends. If I can get a nearby summer job next summer it should be fun.
 
Posts: 221
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elle sagenev wrote:I had a feeling a lot of people on Permies would be debt free. Certainly more than your average. It's pretty interesting!



Yes... very interesting and way more than average.

I've lived debt free all my life because that's what my Dad taught me by his example. Never had a student loan because I went into business instead of going to college. I pay cash for everything from apples to new vehicles to land and homes.

Even though he's preaching to the choir, I still love listening to Dave Ramsey and hearing those happy debt free screams.
 
pollinator
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I also don't really view mortgage debt automatically as a bad thing.

I have a mortgage on my land. If I didn't have my land, I wouldn't have been able to build my home (which I built with cash/sweat equity). If I didn't have that mortgage, I'd probably still be renting and throwing money away every month.

While I do agree that it is important to do everything you can to pay off a mortgage asap, sometimes taking on a mortgage is the only way to get out of the renting trap. I'd much rather be paying monthly for a mortgage than monthly rent. Now having said that, it is my intent to use my land as a way to give my kids a way to have a home w/o a mortgage, but I think sometimes leveraging a mortgage is probably the quickest path to actually being debt free.

If I hadn't been able to build my house with cash, I would still be renting and probably would still have consumer debt. Having built my home with cash has allowed me to pay off all my consumer debt... but I had to get that mortgage on the land to get to that point.
 
Kathleen Sanderson
pollinator
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Bethany Dutch wrote:I also don't really view mortgage debt automatically as a bad thing.

I have a mortgage on my land. If I didn't have my land, I wouldn't have been able to build my home (which I built with cash/sweat equity). If I didn't have that mortgage, I'd probably still be renting and throwing money away every month.

While I do agree that it is important to do everything you can to pay off a mortgage asap, sometimes taking on a mortgage is the only way to get out of the renting trap. I'd much rather be paying monthly for a mortgage than monthly rent. Now having said that, it is my intent to use my land as a way to give my kids a way to have a home w/o a mortgage, but I think sometimes leveraging a mortgage is probably the quickest path to actually being debt free.

If I hadn't been able to build my house with cash, I would still be renting and probably would still have consumer debt. Having built my home with cash has allowed me to pay off all my consumer debt... but I had to get that mortgage on the land to get to that point.



There is a time and place for a mortgage.  If I hadn't taken on a mortgage when I bought the last house we lived in, we would have had to live in that old 5th wheel travel trailer with no plumbing inside it for another three years, by my calculations.  (I had bought a couple of cheap lots near my mother's place, where we were living, but they needed a well and a septic system before I could even start building.)  All things considered, the mortgage was a good decision, but I'm really glad that I was able to pay it off quickly.

I think my main advice is that most people will need to seriously down-scale their expectations of the kind of house they can afford, and need to have in order to be comfortable, in order to pay a mortgage off quickly.  Often cheap houses need a lot of work, so a combination of skills, some money for materials, and time are needed.  But there's an element of keeping up with the Jones's in most of us that makes us unwilling to live in anything we -- or others -- might consider 'substandard.'  It helps to be able to lose that notion.

Kathleen
 
Greg Mamishian
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Bethany Dutch wrote:If I hadn't been able to build my house with cash, I would still be renting and probably would still have consumer debt. Having built my home with cash has allowed me to pay off all my consumer debt... but I had to get that mortgage on the land to get to that point.





I did it backwards.

I was a renter until I was 50 and because I had no consumer debt,
I was able to buy land for cash and build our house for cash.
 
pollinator
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Greg Mamishian wrote:

Bethany Dutch wrote:If I hadn't been able to build my house with cash, I would still be renting and probably would still have consumer debt. Having built my home with cash has allowed me to pay off all my consumer debt... but I had to get that mortgage on the land to get to that point.





I did it backwards.

I was a renter until I was 50 and because I had no consumer debt,
I was able to buy land for cash and build our house for cash.


Me too! Since I took on the family homestead, I won't need to buy land but I still need to put a long-term house on it so that's where I'm funneling my money now.  Well, that and permaculture improvements. :)
 
Uh oh, we're definitely being carded. Here, show him this tiny ad:
Food Forest Card Game - Game Forum
https://permies.com/t/61704/Food-Forest-Card-Game-Game
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