pay debt or save for trip?

[Texas Crude]

I didn't vote, simply because "live within my means until all the debt is paid off" wasn't an option.

 

[Colleen27]

I wonder what is DR's position on aquiring student loans to begin with? Sure it's great for attending medical school where you can be pretty confident it will someday feel like a a car payment compared to the avg college grad entry level salary but does he say everyone should do it? (Am I rambling here? What I mean is a $200k loan is outrageous if you graduate & earn $50/yr. Not so awful if you earn $400k/yr)

I paid for my own college with my little PT job working 20-25 hrs/week. Back then (1985) it was $2k/yr for a nearby state school (Rutgers) and living at home. I grossed $100/week, took home $80 after taxes and $50 of it went to tuition. I never would have dreamed of racking up a huge tab to go somewhere where I needed to pay for a dorm/rent & out of state tuition rates.
Why do people feel like they have to rack up a huge college tab to begin with? I survived without the whole "onsite experience" to coin a phrase. Doesn't anyone just say "no thanks, I/my parents can't afford that school?" Is this another case of "not all debt is created equal"?

That's a really complicated question and I have no idea where DR stands because I've only read him referencing saving so your kids won't need loans, never discussing taking them yourself.

I think the short answer is that people take the loans because they've been convinced they need the degree to earn any sort of living. The mountain of debt is seen as the lesser evil compared to a lifetime of insecure McJobs. But the practical reality is that many of those people aren't making a sound decision by doing so, especially those for whom there aren't good economical options like commuting from home available.

 

[agavegirl1]

Quick Note: Original Poster...you may PM me for specific, confidential advice if you so choose.

 

[Texas Crude]

I take a different view. I don't think there is a such thing as inherently "good" or "bad" debt and that the big picture matters more than the details of each account. A huge mortgage because you want a brand new house or a car payment because someone convinced you that it made more sense to buy new than to repair the car you have isn't "better" debt than a HELOC used to make a less expensive house workable or a credit card bill from a repair that kept an older car running for a few more car-note-free years.

I do think debt is a fact of life at the ages when most people are starting a family (mid 20s to early 30s). Those are years when you have student loans hanging over your head, are striving to buy a home, need dependable transportation you likely don't have the resources to pay cash for, and sometimes charge an unexpected expense. And very few of the DR crew limit their scope to credit card debt - the mantra is not to vacation until ALL non-mortgage debt is paid. For the average American family that is not something that happens quickly; it takes years of building a career and watching the pennies, and can easily mean not traveling at all while the children are young.

And that's why the average American struggles financially. Wise advice I was given as I graduated college: Live your first 10 years as few men will, then live your last 50 like few men can.

 

[ruadisneyfan2]

That's a really complicated question and I have no idea where DR stands because I've only read him referencing saving so your kids won't need loans, never discussing taking them yourself.

I think the short answer is that people take the loans because they've been convinced they need the degree to earn any sort of living. The mountain of debt is seen as the lesser evil compared to a lifetime of insecure McJobs. But the practical reality is that many of those people aren't making a sound decision by doing so, especially those for whom there aren't good economical options like commuting from home available.

Good point; not everyone can commute daily. I'm not saying don't go to college & just find an unskilled job, I just think there's a happy medium in this aspect also. Some believe these are "precious" years where living onsite and having the whole college experience is so important. Is this how they justify that huge expense? I could've commuted to Princeton U. also but I don't even want to know what their tuition costs.

I don't know. It sort of reminds me of the spoiled girl from Willy Wonka who says, "Oh Daddy, I want a goose that lays golden eggs and I want it NOW!"

Just because it's college, it shouldn't mean the sky's the limit.

 

[sherilaine]

The OP posted a poll and most, if not all replies came from people who could not respond to the choices in the poll. The poll may be the reason we have not heard from the OP.

Yes, I notice that none of the options suggested simply not going - which is of course what most people are telling them.

 

[Granny square]

Quick Note: Original Poster...you may PM me for specific, confidential advice if you so choose.

? Lol, because yours is better than everyone else's?

 

[EagleScout]

Or getting a second job - which DR also supports (and Eagle) - forgetting my own extreme examples, how about babysitting? 10/hour (near us is 15-20, but I recognize probably lower elsewhere) for 6 hours/week (very conservative estimate) could pay for value hotel room in a couple months

 

[ilovemk76]

It's just money. It's the means to an end. And sometimes, you are in a position where you are going to need more money than you have. So yeah, you spend some money on interest because sometimes doing it NOW is important.

My father became very ill shortly after we moved across the country. So that meant many multiple trips back to see him. It meant helping him move to assisted living, and fronting the money. I guess I could have made the "tough choices" to have him out on the street or in a low-rent nursing home and never see him again, but that isn't how we treat our families. I guess I could have gone all Soup Nazi on my 3-year-old and said, "No more Disney vacations for you! Too bad about the childhood!"

I'm not remotely interested in that kind of life. Why bother?

A Disney vacation IS NOT a Need for a happy childhood

Visiting a sick relative would be a need from an emotional point of view but one should still cut out other wants to fund as much as possible.

GVO treats mortgage and car payments differently. She does not push for a paid off house in 3 years. She presents percentages that are based on your income and then you get to do as you want with the percentages. You might want to check her out. She will help you see that a life with CC debt is not a life.

 

[Colleen27]

A Disney vacation IS NOT a Need for a happy childhood

Visiting a sick relative would be a need from an emotional point of view but one should still cut out other wants to fund as much as possible.

GVO treats mortgage and car payments differently. She does not push for a paid off house in 3 years. She presents percentages that are based on your income and then you get to do as you want with the percentages. You might want to check her out. She will help you see that a life with CC debt is not a life.

But why? Why do people "need" to see this if, as seems to be the case for the OP, they are able and content to pay down their debts more slowly in order to continue to enjoy the present?

Look, I'm as anti-debt as anyone when it comes to my own life. We have no debt at all, not even a mortgage on our home, and only recently conceded defeat to our credit-based culture and opened a CC account to keep our score high enough for non-lending purposes like car insurance and pre-employment credit checks. But I still don't understand the bolded. It is preached with all the fervor of a religious belief, seemingly with little substance behind it. Why is choosing to pay some interest (again, assuming we're not talking an extreme of struggling to make minimum payments and never chipping away at principle at all) in order to have a life in the present anything more significant than any other spending choice? Why the moral judgment and absolutes associated with this particular element of personal finance?

 

[Granny square]

Interesting question. . I think people preach it because they are tired of paying the penalties for so many defaulting. It has affected lives and it contributes to the view that our government has no responsibility for its debt. Partially. Second fold they are happy not to have any themselves.

Just an idea regarding colleens question and not an indictment of anyone here. I must admit to boredom while waiting for an appointment.

 

[pixie921]

then Dave would say one or both of you need second jobs to generate more income so you can get those debts paid. Sell that new car and get an older reliable car that has no payment attached to it.

I know he would. Thing is, dh already has two jobs and the car was bought used for a reasonable price. There is still no pile of extra money that would allow us to pay off our debt in 18 months.

Of course, Dave would've told us to "cash flow" dh's degree and not take loans in the first place. In fact, back when dh lost his job many years back, we were stringently following Dave's plan and I was participating in an online community of really avid followers of his. When I posted about dh needing to finish his degree while being out of work and the fact that we'd have to take loans to pay for it, I was told point-blank "If it was really that important, you'd find a way to cash-flow it."

That was when I realized those people were living in a completely different reality than me. Dh was working FOUR irregular part-time jobs (I was working full-time) and there was NO money to "cash-flow" anything but our daily needs.

Trust me, I'm perfectly fine with the small amount of debt we have and why we have it, and I'm not worried about what Dave or his disciples think about our choices. My point in posting was that it's not always possible to get out of debt super-fast if you don't have the flexibility in your income, that's all.

 

[disykat]

I'll answer Colleen's question. Because something about spending money that isn't yours feels like stealing. There, I said it.

I understand the need for credit. I've certainly had mortgages, car payments, etc. I even carried a credit card balance once for a brief time when I felt like it was more important for me to have cash available than pay the whole balance. But, to me, credit card debt for the purpose of fulfilling "wants" just feels wrong so it's always been a goal to avoid that.

Although there are times debt is a "necessary evil" so to speak, that shouldn't mean people should consider it absolutely normal to put everything on credit while paying a minimal % of it and forget they are spending money they don't have.

 

[Granny square]

Well said.

I know it seems to me that people lack the ability to postpone gratification.

 

[DLgal]

A Disney vacation IS NOT a Need for a happy childhood

Sometimes, it is. There, I said it. And I stick by it.

You never know what people's kid's lives are like. Many children live VERY difficult and stressful lives for a variety of reasons. For some of these, vacations are extremely important, in order to take a mental break and recharge.

We take a vacation, sometimes two, every year. No matter what. We did not do this before we had kids...we lived quite frugally, both working hard and paying all our debts. We started our marriage with about $15k in CC debt, a combined $30K in student loans, and with two new cars, totaling another $30k. In three years, we had paid off everything but the cars and then started our family. I became a SAHM but we were still able to pay off both cars 2 years early. Now, our kids are older, and they have a lot of issues that make life tough. The one thing that makes them happy beyond belief is Disney, so we go there, we do the cruises, the parks, the hotels. All of it. Because for a week at a time, we get to see our kids having FUN instead of being anxiety stricken and stressed out. And, frankly, I don't care that we STILL have credit card debt. So what? We can afford the payments. I hardly pay interest. I constantly shift around my balances and have them at 0% interest most of the time. We do pay them off from time to time, and then we charge another vacation, and so it goes.

Vacation are pretty much the ONLY thing we charge. Since we have no car payments, and no other debts, we simply work the monthly payment into our budget. We never get in over our head, we use our credit responsibly, and we have reaped big credit card rewards over the years. Our credit scores are 798 and 789, so we are doing okay in the eyes of the lenders.

I personally think that people who subscribe to the "no debt" philosophy have no self control. It's like any other addiction. Some people simply overspend and get themselves into trouble. However, using credit moderately, and to your advantage, isn't a bad thing at all. Just like drinking. 1 glass of wine a day is okay. 5 glasses of wine a day is a problem.

 

[DVC-Don]

Pay off the debt first, then save for the WDW trip.

 

[mrsklamc]

Sometimes, it is. There, I said it. And I stick by it.

You never know what people's kid's lives are like. Many children live VERY difficult and stressful lives for a variety of reasons. For some of these, vacations are extremely important, in order to take a mental break and recharge.


I personally think that people who subscribe to the "no debt" philosophy have no self control.

A Disney vacation is NEVER a need. There are ways to take breaks without spending that much money. Plus setting a child up with Disney as their only coping mechanism is putting them in a horrible position should they ever not be able to afford it themselves.

If people who subscribe to the "no debt" philosophy had no self control, they wouldn't be able to do it.

 

[mrsklamc]

That was when I realized those people were living in a completely different reality than me. Dh was working FOUR irregular part-time jobs (I was working full-time) and there was NO money to "cash-flow" anything but our daily needs.

Trust me, I'm perfectly fine with the small amount of debt we have and why we have it, and I'm not worried about what Dave or his disciples think about our choices. My point in posting was that it's not always possible to get out of debt super-fast if you don't have the flexibility in your income, that's all.

First, let me say that if you are fine with the debt you have, I'm not criticizing that at all. I don't want this to be confused with me arguing with you about your personal circumstance because I wasn't there and I don't know.

When I personally have spoken with people who say Dave Ramsey's method 'doesn't work,' what has always been the case is that they did not want to make the sacrifices he suggests. They can't really afford to be a homeowner, but selling the house is not an option they want to consider. They don't want to drive a less than new car, or cut out massages or manicures or eating out.

Everyone has to decide what an acceptable level of sacrifice is for them. I can think of ONE time when Dave Ramsey told a couple on the radio he couldn't help them, and zero times when I have seen it real life.

 

[Granny square]

Sometimes, it is. There, I said it. And I stick by it.

You never know what people's kid's lives are like. Many children live VERY difficult and stressful lives for a variety of reasons. For some of these, vacations are extremely important, in order to take a mental break and recharge.

We take a vacation, sometimes two, every year. No matter what. We did not do this before we had kids...we lived quite frugally, both working hard and paying all our debts. We started our marriage with about $15k in CC debt, a combined $30K in student loans, and with two new cars, totaling another $30k. In three years, we had paid off everything but the cars and then started our family. I became a SAHM but we were still able to pay off both cars 2 years early. Now, our kids are older, and they have a lot of issues that make life tough. The one thing that makes them happy beyond belief is Disney, so we go there, we do the cruises, the parks, the hotels. All of it. Because for a week at a time, we get to see our kids having FUN instead of being anxiety stricken and stressed out. And, frankly, I don't care that we STILL have credit card debt. So what? We can afford the payments. I hardly pay interest. I constantly shift around my balances and have them at 0% interest most of the time. We do pay them off from time to time, and then we charge another vacation, and so it goes.

Vacation are pretty much the ONLY thing we charge. Since we have no car payments, and no other debts, we simply work the monthly payment into our budget. We never get in over our head, we use our credit responsibly, and we have reaped big credit card rewards over the years. Our credit scores are 798 and 789, so we are doing okay in the eyes of the lenders.

I personally think that people who subscribe to the "no debt" philosophy have no self control. It's like any other addiction. Some people simply overspend and get themselves into trouble. However, using credit moderately, and to your advantage, isn't a bad thing at all. Just like drinking. 1 glass of wine a day is okay. 5 glasses of wine a day is a problem.

I'm sorry your kids lives are so stressed. I hope they/you find a way irl to be happy. :/

 

[crisi]

I personally think that people who subscribe to the "no debt" philosophy have no self control. It's like any other addiction. Some people simply overspend and get themselves into trouble. However, using credit moderately, and to your advantage, isn't a bad thing at all. Just like drinking. 1 glass of wine a day is okay. 5 glasses of wine a day is a problem.

That's a wide brush.

I think people who subscribe to a no debt philosophy and preach it do so because its had such a positive impact on their lives. It's put more money in their pockets, it's reduced financial uncertainty, it's improved their cash flow. And they want to share.

I'm not rabidly anti debt, although I don't think most people can afford credit card debt. If you can afford it and its how you choose to spend your money, that's fine, me, I'd rather make interest than pay it, and I'd rather use my money for shoes and vacations than interest, especially credit card interests (in the interest of disclosure, I maintain a mortgage because I make more on the market than I pay in interest, it's hard to find investments that are going to pay more than a credit card interest rate). And honestly, I don't get why people would choose to pay interest instead of having stuff. If your credit card debt is stable, it really wouldn't take much to pay it down, you are living within your means, just a little ahead of yourself. If its increasing, that isn't sustainable.