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I just returned to debt free status. I needed a car 5 years ago, and the auto company had a 0% interest loan program. I made my last payment in March, and it feels GREAT to be out from under it. I'm fervently hoping that my car runs well for the next 5 years while I save for the next one!
I'm averse to debt by my upbringing, so challenges were pretty minimal. Probably the most difficult thing is to stick with a completely boring job because of the reliable income and health care protection.
I'm averse to debt by my upbringing, so challenges were pretty minimal. Probably the most difficult thing is to stick with a completely boring job because of the reliable income and health care protection.
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What was your biggest challenge while working to become debt free?
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The difficulty WAS the boring job! Other than that, having people all around telling us we didn't know how the economy all "works", and that they "knew real estate". I'm very grateful we didn't listen!
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Clark Howard always says to set up of 30 month plan to become debt free, however, he doesn't include mortgages in that statement.
Other than that, I'm debt-full not debt-free, so I'll let you know in 30 months!
Other than that, I'm debt-full not debt-free, so I'll let you know in 30 months!
I was about $20K in debt coming out college, it took me about 6 years to pay that down to zero..which I did just recently. It could have been done quicker if I didn't travel or had better paying jobs, unfortunately coming out of college I was never able to get a job in my field.
20k for college is cheap. Do you wish that you had paid cash for college?
Good job! A lot of people get stuck under the college loans for much longer!
20K was just the loan, there was a lot of my own money plus I worked throughout my years in college.. Do I wish I paid cash? it just wasn't an option, if anything I wish I didn't go at all and waited a few years.
The first time I became debt free, I suppose it only took one day. My husband and I sold a car, got online, and paid the credit card off. Now I'm working on becoming debt free for the 2nd time.
The hardest challenge I face now is realizing that there is no such thing as good debt and bad debt. To me it seemed okay to get into debt for school. Now I realize that you should go to college expecting to learn. The knowledge you gain from college may or may not land you a better job, so it's best not to go into debt for it. That way if you don't get that job you had hoped for, you don't have to spend years and years paying off debt
Take my brother-in-law for example. He had a double major (I can't remember in what) and a couple associates degrees and for 3 years after college he worked at Pizza Hut. He had/has $100,000 worth of student loans. Clearly those degrees did not do him as good as he thought they would.
When people take out a loan, they often take out more than they need. It's very easy to do. The other problem with college loans is that sometimes it takes people longer to get their degree than they had planned, or they switch majors, or something happens that won't allow them to finish college. There are so many unexpected variables when you look at getting a degree. It would be difficult to plan for them all.
The hardest challenge I face now is realizing that there is no such thing as good debt and bad debt. To me it seemed okay to get into debt for school. Now I realize that you should go to college expecting to learn. The knowledge you gain from college may or may not land you a better job, so it's best not to go into debt for it. That way if you don't get that job you had hoped for, you don't have to spend years and years paying off debt
Take my brother-in-law for example. He had a double major (I can't remember in what) and a couple associates degrees and for 3 years after college he worked at Pizza Hut. He had/has $100,000 worth of student loans. Clearly those degrees did not do him as good as he thought they would.
When people take out a loan, they often take out more than they need. It's very easy to do. The other problem with college loans is that sometimes it takes people longer to get their degree than they had planned, or they switch majors, or something happens that won't allow them to finish college. There are so many unexpected variables when you look at getting a degree. It would be difficult to plan for them all.
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Personal opinion.
Personal opinion.
There is no good debt. Bank of America announced it will increase its interest rates for individuals with a certain credit card balance. This means a person with a 7.9% credit card could see interest rates exceeding 13%.
BoA has 70 million clients and expects 10 percent of these clients will have a balance and start making higher payments due to increase interest rates. These people are in a jam, money sink hole, a middle class trap.
Suppose you have 8k on your cc and pay 200 dollars a month in payments. If the rate doubles then the monthly payment would need to increase. Suppose the payment increases 100 dollars. The increase cost may not be within the individuals earning capacity. Fees start accumulating and the person is forced into default. The end result of default is destroy credit for the individual, garnishment of wages, and bankruptcy plan forcing a payment plan. There is not escape.
Why do banks raise the rate? To offset the cost of default. The risk is transferred to the client. When bank income exceeds the risk of default loss then profit is realized. Not all clients will default with the higher interest rates; they will endure paying more money in interest; banks will enjoy the increase in cash flow.
BoA has 70 million clients and expects 10 percent of these clients will have a balance and start making higher payments due to increase interest rates. These people are in a jam, money sink hole, a middle class trap.
Suppose you have 8k on your cc and pay 200 dollars a month in payments. If the rate doubles then the monthly payment would need to increase. Suppose the payment increases 100 dollars. The increase cost may not be within the individuals earning capacity. Fees start accumulating and the person is forced into default. The end result of default is destroy credit for the individual, garnishment of wages, and bankruptcy plan forcing a payment plan. There is not escape.
Why do banks raise the rate? To offset the cost of default. The risk is transferred to the client. When bank income exceeds the risk of default loss then profit is realized. Not all clients will default with the higher interest rates; they will endure paying more money in interest; banks will enjoy the increase in cash flow.
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