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Old 09-04-2010, 08:13 AM   #136
dvcgirl
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Originally Posted by friskykitten View Post
Trust me when I say I am very envious of those who are debt free. And we are trying to follow their example and get there ourselves. Maybe not completely debt free as we will probably always have a car loan or credit card.....something to keep the credit score alive.

We were one of those who reached out to the Disers over a year ago and got wonderful advice and support.

I do admire those who were debt free even before the economy went south, such as yourself dvcgirl. And we should admire those who have had the guts to come here and ask for advice and been honest about their situations. Whether they were foolish, overly confident or whatever in their financial situation some of the nasty comments made have probably kept others from posting about their own situations.

My previous post just mirrors what many others have been thinking from time to time. All of a sudden everyone seems to have no debt and pay off their cards in full each month. disney4us2002's post said it well and with humor and jodifla hit on it too.

I still get some of my best ideas from this board and the people who share their thoughts and advice. That is when I can find some time away from work and the family.
I hear what you're saying. And I agree with you....that an awful lot of people are jumping on the "debt-free" bandwagon these days. And that's because a lot of people have been caught this time around with a lot of debt and realize that it really does create an incredible amount of risk in their lives. And so even if they didn't experience a job loss in The Great Recession....they probably know someone who did. Or they know someone with a giant mortgage and a house that is now worth less than they owe....or someone with massive student loan debt who can't find a job....or tons of CC debt and nothing to show for it....it goes on and on.

It's become fashionable to be debt-free when just a few years ago, those of us who were living that way were labeled as simplistic or even foolish/stupid for not using OPM (other people's money) to leverage up our lives.

I think that living debt free is sort of like losing weight and sticking to a healthy diet, or quitting smoking and never going back. Sometimes people who are new to the concept come across as sort of "anti-debt evangelists".....if you know what I mean. Still, I think it's great that we are moving in this direction and away from the insanity we've seen in last decade. Sure, we're going to experience much slower GDP growth as a nation as Americans pay down their very high levels of debt, but in the long run, we'll be stronger for it. Hopefully Americans are smart enough to never go back to their old ways.....
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Old 09-04-2010, 08:17 AM   #137
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Originally Posted by dvcgirl View Post
I hear what you're saying. And I agree with you....that an awful lot of people are jumping on the "debt-free" bandwagon these days. And that's because a lot of people have been caught this time around with a lot of debt and realize that it really does create an incredible amount of risk in their lives. And so even if they didn't experience a job loss in The Great Recession....they probably know someone who did. Or they know someone with a giant mortgage and a house that is now worth less than they owe....or someone with massive student loan debt who can't find a job....or tons of CC debt and nothing to show for it....it goes on and on.

It's become fashionable to be debt-free when just a few years ago, those of us who were living that way were labeled as simplistic or even foolish/stupid for not using OPM (other people's money) to leverage up our lives.

I think that living debt free is sort of like losing weight and sticking to a healthy diet, or quitting smoking and never going back. Sometimes people who are new to the concept come across as sort of "anti-debt evangelists".....if you know what I mean. Still, I think it's great that we are moving in this direction and away from the insanity we've seen in last decade. Sure, we're going to experience much slower GDP growth as a nation as Americans pay down their very high levels of debt, but in the long run, we'll be stronger for it. Hopefully Americans are smart enough to never go back to their old ways.....
That is so true.

We have debt. We have a hefty mortgage and one car loan (at 0%). I am not averse to debt. I do believe it has its uses. It is not evil. Credit cards are not evil. However, I have been watching the out of control debt addiction of some people over the past decade and have no desire to do that either. When the bubble blew up, we were hurt financially, but not devastated because we had never leveraged to that extent.
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Old 09-04-2010, 09:51 AM   #138
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I agree with your post 100%. It does amaze me how many disers are completely debt free or pay every rotating debt off in full each month. Especially in this economy where so many have been hit with job losses and houses that are completely underwater in value. There are a whole lot of hurting families out there right now but we tend to only hear from those who have all their finances perfectly worked out. Which is never really perfect, if you think about it, depending on what happens in life.

One could have three years of expenses set aside in an emergency fund but the reality is that if that person ends up out of work for four years then you could still say they were not prepared. And that could happen to anyone. Even those with no debt and an emergency fund. If you lose your source of income, go through your entire savings, then still have no income coming in once your savings are exhausted you are going to be in the same situation as someone else who happened to go through their savings faster than you did.

On the other hand, those who have no debt and ample savings are going to be "richer" with the money they have not spent on interest payments. They are probably a lot less stressed than those who worry about debt in their life.

The best you can do is be as prepared as you can possibly be for your own family. And realize that there will always be judgments made about what you decide. No matter what you do someone will agree with you and someone will condem you. Such is human nature. What one may think is affordable in a good economy may not be the same thing if the economy stinks. If the OP had asked this same question several years ago there would probably be completely different answers than what we are posting today.
They are still in better position financially than someone with just one year's expense saved up, or even worse just 3 months' expense.
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Old 09-04-2010, 10:15 AM   #139
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I would love to be debt free, but not willing to make the sacrafice. My kids are 6 and 8 If I were to eat "rice and Beans" like dave likes to say for the next 10 years to pay off my mortgage. I may have a great retirement but my kids would have a really crappy childhood. Not to mention I woud miss out on some great vacation memories with my kids. Definetly not worth it. You gotta enjoy life just not go to overboard.
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Old 09-04-2010, 10:35 AM   #140
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First of all, I only read the first two or three posts in this thread so I have no clue about any subsequent discussion.

We have a direct deposit set up into a vacation savings account. We deposit what amounts to about 4% of our monthly income into that account. On top of that, I take advantage of whatever rewards programs I can to earn vacation money. We have the Disney Visa, American Express Blue Sky and Discover credit cards (all paid off monthly, in full; only the AMEX has an annual fee of $35) and I also participate in online programs like Sunshine Rewards and MyPoints.

When, and only when, we have enough funds between the rewards and savings, then we will take a vacation. I plan our vacations at least a year in advance. I put together an estimated budget (usually a little high) and I am fairly accurate at predicting if we will have enough to do what we want to do when we want to do it.

In April, we went to WDW over Easter. We drove down and our total trip was 9 nights. I needed less than $800 from our vacation savings account since everything else was covered by rewards program earnings.

Our next vacation is planned for April 2011. We are going to HHI for 5 nights (with 2 more on the road). My projected budget is $1600. As of today, I have accumulated $926 in rewards alone. Based on my projections, we should have enough "money" in rewards to cover the entire trip and the vacation savings account can go untouched.

When I mentioned this to my mom, she made a comment about how it "must be nice to have all that money". In reality, there is only about $350 that could be converted to cash. Everything else is in the form of specific credits or gift cards. This makes it very easy to justify and "afford" a vacation. I can't spend the "money" on anything else so it goes towards a trip.
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Old 09-04-2010, 11:07 AM   #141
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Didn't you know here at the Dis, EVERYONE pays their cc off monthly. NOONE carries a balance, lol.

Afford to me means we bring in more than we spend each month. I do not insist on having cash for a vacation that may cost $5K or more. If it takes me several months or even a year to pay it off, so what? We have stable jobs, plenty of savings for retirement, an emergency savings acct of 3 months' income. How I choose to pay for my vacations doesn't impact anybody but me (my family) so why does it matter?
This made me laugh about everyone paying off their cc each month. If that were so I dont think the economy would be what it is now.
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Old 09-04-2010, 12:37 PM   #142
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I would love to be debt free, but not willing to make the sacrafice. My kids are 6 and 8 If I were to eat "rice and Beans" like dave likes to say for the next 10 years to pay off my mortgage. I may have a great retirement but my kids would have a really crappy childhood. Not to mention I woud miss out on some great vacation memories with my kids. Definetly not worth it. You gotta enjoy life just not go to overboard.

Exactly! ITA!

And it's a fallacy that's its all one or the other. Either saving to the point of having no life, or spending like a drunken sailor. Plenty of us manage to strike a balance.

We do sometimes finance luxuries....one at a time. That's worked for us.
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Old 09-04-2010, 01:18 PM   #143
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I would love to be debt free, but not willing to make the sacrafice. My kids are 6 and 8 If I were to eat "rice and Beans" like dave likes to say for the next 10 years to pay off my mortgage. I may have a great retirement but my kids would have a really crappy childhood. Not to mention I woud miss out on some great vacation memories with my kids. Definetly not worth it. You gotta enjoy life just not go to overboard.
Well, I don't think Dave Ramsey says that you need to be eating "rice and beans" until you pay the house off. He says that you need to do that until you pay off consumer debt and student loans. Once you have a fully funded emergency fund (baby step 3), then people complete baby steps 4 (retirement), 5 (college) and 6 (house) at the same time while also enjoying life a bit more. He claims that most people who follow his plan pay off the house with a 30 year mortgage in about 7 years.

I will say that sometimes a caller will outline their debts and have six figures or more of student loan debt and he still tells them to keep that in baby step two....which is when you're still supposed to be on "beans and rice". I understand his point and think that's a fine plan if that caller is a physician and can pay off the debt in a few years. But some kids today are coming out of private schools with six figure debt and a liberal arts degree. There's no way that person is having a life at all for at least ten years following DR's plan.
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Old 09-04-2010, 03:57 PM   #144
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The problem with the budget board is you don't get the broad range of answers here for a question like yours. People here are very focused on the "never any debt" angle. The average American just doesn't live like this...most people use credit at least some of the time.

For us, we make make sure we have substantial retirement savings, college savings, an emergency fund of about 8 months. We drive our cars 10 years or more. Our current cars have 14 and 15 years on them; we are just in the process of buying a newer car to replace one of them.

But we don't dip into savings to pay cash for cars, for example. We get good financing and simple interest loans. Our last car loan was at 2.9 percent. Yes, it's costing us a bit in interest, but we got a great deal on the car, and we'd rather have the liquid cash on hand.

We did pay cash for our boats. And today, we pay cash for most of our trips, using frequent flier miles and credit card rewards for our airplane tickets and free baggage.

But if we had a great opportunity, but didn't have the cash saved up -- we'd use credit for the trip. We believe in living life now. You don't really know if you have tomorrow.

I did rack up some debt a few years ago with very frequent trips to see my dying father. There was no putting off those trips -- it was now or never. It took awhile to pay them off, but I wouldn't change a thing.

To me, moderation is the key...and you don't find a lot of moderation on the budget board.

You have stated what I couldn't put into words. Thank you. Sometimes is gets old how many people here act as if they are doing things btter by living the "rice and beans" lifestyle if others choose not to. By no means so I think anyway should go out and rack up thousands of dollars worth of CC debt but if something is charged with a plan to pay it off the world will not end.
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Old 09-04-2010, 04:28 PM   #145
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Well, I don't think Dave Ramsey says that you need to be eating "rice and beans" until you pay the house off. He says that you need to do that until you pay off consumer debt and student loans. Once you have a fully funded emergency fund (baby step 3), then people complete baby steps 4 (retirement), 5 (college) and 6 (house) at the same time while also enjoying life a bit more. He claims that most people who follow his plan pay off the house with a 30 year mortgage in about 7 years.

I will say that sometimes a caller will outline their debts and have six figures or more of student loan debt and he still tells them to keep that in baby step two....which is when you're still supposed to be on "beans and rice". I understand his point and think that's a fine plan if that caller is a physician and can pay off the debt in a few years. But some kids today are coming out of private schools with six figure debt and a liberal arts degree. There's no way that person is having a life at all for at least ten years following DR's plan.
Steps 1-5 no problem already there but to pay off my house in 7 years. I'd be eating rice and beans from the dollar store three times a day.
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Old 09-04-2010, 04:38 PM   #146
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Well, I don't think Dave Ramsey says that you need to be eating "rice and beans" until you pay the house off. He says that you need to do that until you pay off consumer debt and student loans. Once you have a fully funded emergency fund (baby step 3), then people complete baby steps 4 (retirement), 5 (college) and 6 (house) at the same time while also enjoying life a bit more. He claims that most people who follow his plan pay off the house with a 30 year mortgage in about 7 years.

I will say that sometimes a caller will outline their debts and have six figures or more of student loan debt and he still tells them to keep that in baby step two....which is when you're still supposed to be on "beans and rice". I understand his point and think that's a fine plan if that caller is a physician and can pay off the debt in a few years. But some kids today are coming out of private schools with six figure debt and a liberal arts degree. There's no way that person is having a life at all for at least ten years following DR's plan.
We have had great success with DR's plan, but we are breaking rank when it comes to student loans. We have paid off the cc debt prior to starting the plan, and gotten rid of car loans. Now we have some home repairs to catch up on then we are funding our EF. THEN we will move on to 4,5,6 while enjoying life too.

Paying off the student loans would take 2.5 years more with rice and beans and we have been doing DR for about 1.5 years now and our gazelle is getting tired. Once the EF is set we will be ready to take vacations again (maybe even buy a SMALL dvc contract) and be funding our retirement, some college and paying off the house. I know Dave wouldn't agree 100% and I'm okay with that. We had a lot of medical expense come up through our journey and it definately lengthened the process and wore us down.
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Old 09-04-2010, 04:57 PM   #147
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prolly gonna get flamed, BUT...

I consider my WDW vacation an essential! It is for my mental well being! I won't go without food, or paying bills, and I don't even own a CC, but Disney is a priority and is treated as a bill each month. No, I don't have all the wonderful savings/retirement accounts you all seem to have (and kudos to you!) and I don't even own a home. So sure, I should (says who? idk..just thats what you're supposed to do ) save my money for emergency savings, etc.. but I need my WDW trips.

Don't flame too bad
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Old 09-04-2010, 05:10 PM   #148
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prolly gonna get flamed, BUT...

I consider my WDW vacation an essential! It is for my mental well being! I won't go without food, or paying bills, and I don't even own a CC, but Disney is a priority and is treated as a bill each month. No, I don't have all the wonderful savings/retirement accounts you all seem to have (and kudos to you!) and I don't even own a home. So sure, I should (says who? idk..just thats what you're supposed to do ) save my money for emergency savings, etc.. but I need my WDW trips.

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Old 09-04-2010, 05:18 PM   #149
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I love reading this board for great ideas on how to save. And like many posters said my family vacations were down at the jersey shore. We went to Disney twice. Here is where my conflict lies, a Disney vacation for me is thousands of dollars. I live in PA so I am not close. Inorder for me to do this type of vacation, I need to have budgeted the thousands of dollars. When did Disney become an annual or frequent place for everyone? If you live by there, that is a completely different story. For me it is like Avalon(down the jersey shore) I live close, can drive there, and have a place to stay. Now if you were coming from Florida, you would need to find a place to stay, get there etc... I don't know, if you have the money great, go for it! But if you don't save until you can and enjoy the places around where you live!!
are you kidding me?? I am right by you in bucks county pa! have you priced a week at the shore lately? even a day down in ocean city nj is ridiculously expensive..try staying the week! for what I would pay for a week in OCNJ, I could do a week in WDW including the gas money to get there and back!
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Old 09-04-2010, 05:18 PM   #150
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Steps 1-5 no problem already there but to pay off my house in 7 years. I'd be eating rice and beans from the dollar store three times a day.
I hear ya. And I agree with you....if you're doing steps 1-5, or even 1-4 successfully, then just pay off the house in time if you're comfortable doing that. With some of these rates today, as long as the house payment isn't a huge portion of your net income...then why not. Full disclosure...we're debt free, but we didn't sacrifice to pay off the house, we got a lump sum from some stock options my DH held with his company years ago.

Sure, we have remained debt free since then, but it's not like we ate beans and rice for a number of years to get there. We have been pretty smart about living well beneath our means since becoming debt free years ago, but we earn a lot compared to most Americans (but we're average in our area).
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