Is This The Final Nail In The Coffin For...
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Starting 2008 in debt
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How many people are going to be starting 2008 in debt because of overspending at Christmas?
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Debt is a dirty word for some of the more ignorant people in society. The debt indutry is fuelling the UK economy - we don't manufacture anything any more so the vast majority of our wealth is in housing stock. Latest research shows that 85% of property is owned with a mortgage - so this dirty word debt is in a large way fuelling an otherwise empty economy.
I for one have a large amount of debt, but I can manage it sensibly. I have a mortgage to provide a roof over the head of my family and I. I have credit card debt at 0% - if they aren't charging me for it then I might as well have it. I also have a large amount of assets to offset this debt against.
I for one have a large amount of debt, but I can manage it sensibly. I have a mortgage to provide a roof over the head of my family and I. I have credit card debt at 0% - if they aren't charging me for it then I might as well have it. I also have a large amount of assets to offset this debt against.
Personally I don't see the point in having debt if you don't have to. Why do you want to pay over the odds for things?
I actually saved up and bought my house for cash and I'm no high-flyer! It effectively cost less than the sale price when you take all the interest I recieved into account and in the 12 years since I bought it,I've quandrupled my money. If I'd had a mortgage I'd have paid out at least �50k more over 25 years - sounds like common sense to me.
This has also enabled me to save and recieve lots more free money in the process(tax relief,interest,share growth) and am well on the way to early retirement.
A financial adviser will always tell you to pay off your debts first - especially the personal loans,etc as they usually have the highest interest rate,and then start to save. After all what's the point paying (for example) 10% on your borrrowings and only recieving 6% on your savings. It doesn't make financial sense.
What's important is what something costs in total,not just what you can afford each month.
I actually saved up and bought my house for cash and I'm no high-flyer! It effectively cost less than the sale price when you take all the interest I recieved into account and in the 12 years since I bought it,I've quandrupled my money. If I'd had a mortgage I'd have paid out at least �50k more over 25 years - sounds like common sense to me.
This has also enabled me to save and recieve lots more free money in the process(tax relief,interest,share growth) and am well on the way to early retirement.
A financial adviser will always tell you to pay off your debts first - especially the personal loans,etc as they usually have the highest interest rate,and then start to save. After all what's the point paying (for example) 10% on your borrrowings and only recieving 6% on your savings. It doesn't make financial sense.
What's important is what something costs in total,not just what you can afford each month.
Not all assets accumuate interest at a lower rate than debts.
dasherman - If you had waited another 12 years to save up for your property then you would have paid 4 times more than you actually did. Not everyomne can afford to pay cash for lots of things - especially property.
If you invest in a more "risky" investment then you could pay 6% on your borrowings and receive in excess of 10% on your investments.
If financial advice were this simple for everyone then we wouldn't need financial advisers. They are professonals that are paid to give individual advice for the individual needs of their clients.
I don't see the need to pay for things up front when a credit card company will shoulder the debt for me for 12 months or even longer for a 0% interest rate.
dasherman - If you had waited another 12 years to save up for your property then you would have paid 4 times more than you actually did. Not everyomne can afford to pay cash for lots of things - especially property.
If you invest in a more "risky" investment then you could pay 6% on your borrowings and receive in excess of 10% on your investments.
If financial advice were this simple for everyone then we wouldn't need financial advisers. They are professonals that are paid to give individual advice for the individual needs of their clients.
I don't see the need to pay for things up front when a credit card company will shoulder the debt for me for 12 months or even longer for a 0% interest rate.
I know I'm in a minority in saving up for my house,but it does show what can be done with a little forward thinking and a good savings habit.
Although if I had waited 12 years to buy my house I wouldn't have benefitted from the property boom and I'd still be putting my money into the house instead of my long term future.
EverClean - You are right about more risky investments,I have money in all sorts places in the hope that they'll provide much better returns.But it really depends how much you have in borrowings and how much is invested.
This is probably quite simplistic but If you have 50k invested and �100k in borrowings then the percentage rate on the investment really needs to be double that of the borrowings for you to break even!
I take your point about the credit companies shouldering the cost for 12 months+ at 0%,but you've got to pay for it sooner or later and my view is pay for one thing and then move onto the next.
I suppose it's a case of each to their own really - although I think my way is still best!
Although if I had waited 12 years to buy my house I wouldn't have benefitted from the property boom and I'd still be putting my money into the house instead of my long term future.
EverClean - You are right about more risky investments,I have money in all sorts places in the hope that they'll provide much better returns.But it really depends how much you have in borrowings and how much is invested.
This is probably quite simplistic but If you have 50k invested and �100k in borrowings then the percentage rate on the investment really needs to be double that of the borrowings for you to break even!
I take your point about the credit companies shouldering the cost for 12 months+ at 0%,but you've got to pay for it sooner or later and my view is pay for one thing and then move onto the next.
I suppose it's a case of each to their own really - although I think my way is still best!
dasherman-
"Although if I had waited 12 years to buy my house I wouldn't have benefitted from the property boom and I'd still be putting my money into the house instead of my long term future."
We're making the same point here but for different purposes. If someone else bought your property with a mortgage when you did then they would have also benefitted from the property boom. If they waited to save then they would have missed out and would now face paying mch, much more.
I just don't like the debt=problems equation that people spout all the time (especially on AB) as it's simply not true.
Whoever - sorry to hijack our thread. To answer your original question - I'm starting 2008 in loads of debt but not really because of overspending at Christmas.
Have a Good 2008!
"Although if I had waited 12 years to buy my house I wouldn't have benefitted from the property boom and I'd still be putting my money into the house instead of my long term future."
We're making the same point here but for different purposes. If someone else bought your property with a mortgage when you did then they would have also benefitted from the property boom. If they waited to save then they would have missed out and would now face paying mch, much more.
I just don't like the debt=problems equation that people spout all the time (especially on AB) as it's simply not true.
Whoever - sorry to hijack our thread. To answer your original question - I'm starting 2008 in loads of debt but not really because of overspending at Christmas.
Have a Good 2008!
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