How do you feel about debt?


$100 site donor 2023
Feb 19, 2013
Phoenix, AZ
Might be a silly question, as none of us really "want" debt, but I think many of us have a different feeling about it.

Some people are personally comfortable with carrying balances on credit cards, financing a washing machine, having 2-3 car loans, mortgage, RV loan, etc. and they are doing ok. Maybe if you get a low enough interest rate, why not kind of thing?

Others will only pay cash for anything and balance their checkbook to a T.

I was lucky enough to graduate college without debt, and owe nothing except my current credit card statements. I charge everything on a credit card for the points, and pay them off every month. I've never paid credit card interest before. So I guess I'm not real comfortable with debt. I had most of the Tesla financed, it was by far my biggest ever purchase. But with the massive fuel savings, I didn't see it as being all that bad, the car just didn't work out. I guess I'm proud of being debt free, but I don't have my own house yet. Waiting for the market to hopefully crash before I make that leap. Not holding my breath for that either.
I hate debt. Unfortunately, most people including myself are routinely forced to use debt to leverage our resources. And the ecosystem requires "some" debt to establish credit for bigger debt later. So having some small debts that you pay timely in full creates this helpful credit score that we generally need to leverage ourselves for bigger things. It's just the reality of the world.

I have learned to be much smarter using debt to my advantage, rather than just frivolously taking on debt. The only debts I have are CC, paid monthly in full and used for cash back rewards that saves me many hundreds of dollars per year; student loans; and soon another mortgage.
I hate it. It took 20 years to recover from being stupid with credit cards in my younger years. Some debt is necessary to be successful, just analyze wants and needs correctly, and finance them accordingly. It took considerable disclipine to get to the 834 credit score and enough cash in the bank to pay off the house if needed. There are times I look at the new vehicles around the lot at work and long for something new, but living several years now with no car payments brings it into perspective quickly. I never pull out the debit card anymore. I use a Visa Rewards card for everything and pay it off in full monthly. I get about $1500 in rewards cash per year automatically with no extra involvement. I will also occasionally use same as cash financing promotions, but only if they are offered by creditors I already have accounts with.

Keep saving towards that house. The market will experience a correction. I'm looking at Arizona and New Mexico now, and everything I see has a 25-35% increase over 2019 actuals. I just don't see it as sustainable. I bought my current place in 2012, about as low as it could get. We likely won't get back there, but we seem to be on the verge of a decline.
So I guess I'm not real comfortable with debt. I had most of the Tesla financed, it was by far my biggest ever purchase. But with the massive fuel savings, I didn't see it as being all that bad, the car just didn't work out.
So you basically sold the car because you weren't comfortable with the debt? Or was there a problem with the car itself?

Either way, I have no problems with unloading a car that fancy.
I sure wouldn't go crazy over saving fuel money, just to put it towards the monthly payment on a depreciating asset like a Tesla.
I graduated from university debt free because of summer jobs, scholarships and my wife working. We bought a new car on time (requiring only 8 or 10 payments) just as I was finishing university - to establish a credit rating. We then built our first house (as general contractor) and took out a mortgage. But it was a house we could afford and we were able to pay off that mortgage over the first 5 years. Since then we have moved several times because of work, bought a nicer house each time and have always paid the difference in cash.

We now have a credit card on which we charge most things and pay it off every month so there are no interest charges.

I believe in having money working for me. And that's what I think of debt.
Dave Ramsey is famous for hating debt and one of his quotes that is my favorite is that NOBODY wakes up in the morning and says "Gee, I wish I had more debt". But that is an overly simplistic view. There are some things like college educations/graduate school, houses, the family hauling cars capable of transporting 6 foot tall teenagers, or maybe even something like a roof, that if you wait until you can pay cash for them, its too late to get the benefit from them. The need is gone.

To me the most important attitudes toward debt is (1) always spend less than you make, (2) remember that debt is a promise of a larger amount of your future income to get something that you need/want today, (3) never ever confuse adding to debt as a substitute for "income", and (4) less is always better.
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Debt, when managed and used properly is not by itself a bad thing. The catch is there better be a plan to use it and pay it off.

I've carried debt (and still do) to own my home. I've taken out primary mortgages to purchase two different properties (sold one when we moved to another), had a second mortgage as part of the second purchase, and refinanced loans twice on the current property. We are on track to have it paid off and off the books within 10 years. All within our means and way less than the realtor and mortgage companies were willing to give us...

I've carried debt to purchase cars - when the timing was unexpected and we did not have funds on hand for the full purchase due to an acceleration of timing or as part of a long term plan. Never more than 5 years, never more than about 1/2 the cost, and always paid off in about 1/2 the loan term. 0% or sub 2% loan rates max.

Never carry credit card debt. Always pay the cards off every month and reap the rewards.
I see it as a tool, with a risk, and depends on what you use it for whether it gets you a reward that justify it or not.

Example: buying an overpriced SUV is a bad reward whether you finance it with debt or not.

Example: saving enough money to buy something later at a higher price, may not be a good deal vs buying it now with a loan. It all depends on the alternative (walking 2 hours a day or finance a cheap Corolla so you can drive the same trip with only 20 mins a day, and use the remaining 1 hr 40 mins to work longer hours or study for a better grade, get into a better school, graduate with a better degree, make more money).

Example: you are alone in the world with no children, no family, no spouse, no girl friend, you have stage 4 cancer. It is probably a good deal for you to finance all the expense and see if the Ferrari get repo after you die, your girl friend made off 150k of your social security after 3 months of intense romance, and your adopted perfect son get your house's equity after giving you the best family you could ever hope for.

The biggest question is as always, are you buying junk with it, and are you paying it the best way you can (risk and reward included).
Debt is nothing more than a financial obligation. It's a very useful financial tool but it must be managed properly and under the strictest discipline. Some people have no problems managing their monthly obligations and others will overspend and get themselves into trouble.

I have gone through life debt-free and now I ask myself if I did things correctly. I did without the nice house and fancy car but I did travel quite a bit. Looking back, all of my friends that spent their future income are still living nice and comfortably while I can never regain the years that have passed. Did I do it right or was I the fool? I suppose that's best answered based on the individual's personality.

The few years of our life pass by very quickly. Get out and enjoy yourself while you can. Harm nobody, ie: never default on a loan, and spread peace and love. That's all.
One can have a perfectly fulfilling and financially stable life with or without debt. Keeping a tight hold on the budget and assessing financial risk is key with either.

I find the scorched earth al la Dave Ramsey approach is good for those who lose sleep over debt. Or those who are in a deep hole and need a way out. However despite what Uncle Dave says debt can be used intelligently and without negative impact. I prefer the Money Guy Podcast approach to debt which is more balanced. It leans towards paying yourself first and foremost (ie, investing and saving) vs paying off debt faster. They have rules for taking on debt which guide assessing the financial risk. It’s like the lines on the highway helping keep you out of the ditch. Super reasonable and very helpful.

My wife and I could’ve paid cash for our Toyota, but we opted for the note w/20% down and GAP insurance. Similar situation with the AC unit we replaced. Could’ve wrote a check but took the 0% financing and kept the cash. We prefer to keep the cash on hand and to budget the payment. We would be budgeting replenishing saving anyways, so the payment has little impact.

Debt is like a gun or knife. Useful, but it can harm you if not respected.
No credit card debt. Can't stand it.
Car loans - I hate but when interest rates are under 2 percent it's free money so seems silly to not take advantage of it
Mortgages - Same as above with car loans. It's free money. I just don't like the idea of refinancing if you're not the type of person who will pay it down in chunks.
Like everyone else is saying, it depends on the debt. Mortgage debt might not be the worst thing you can have. Especially when the value of the house may rise quicker than you can save to avoid having debt. To me that’s “good debt”, but I’d still rather not have it. But I do.

Currently I don’t have car loans, but I do have some credit card debt, but for the most part I have zero percent interest. But still I do have debt, and I’d rather not. But I’m in a point in my life where I’m spending A LOT. in college, the other heading there next year. Writing a $30,000 dollar check every other year eats at your income. You can either stop living life or get some debt. I’ll take the debt at my age right now rather than live like a shut in. Because when the kids graduate, and hopefully go on to provide for themselves, we should technically have more available cash. Pay of debt and invest more. Then again, man plans and god laughs. Balance. Perspective and knowing you can choke to death on your New Years Chinese spare ribs.
I got lucky in that while I racked up debt while younger the debt somehow got paid off. I think I am a bit odd—well, no surprise since I hang out here—my standard of living was above what I could afford back then, yet really has never gone up since then. I still like buying a new car, but am ok with it being a base model even today, that sort of thing.

I know on my first house I looked at it from a cost perspective of, it only cost a bit more than rent. How could I go wrong? [well I completely ignored the risk of being tied to an area in case of job loss.]

Not sure what to think of my college degree. Reading about how others pulled it off here makes me wish I had done the military in order to have Uncle Sam foot the bill; I suspect I was one of the last ones whose college bill was actually affordable. [All the same my first thing after getting a job was to buy a new car!]

I overbought on my current home but since my entire stay has overlapped with covid I’ve never once thought “huh I hate all this open space while I’m stuck at home” so there’s that.

Debt’s a tool like all others. Set up a goal for life, including short and long term goals. Then make a plan. Then make a budget. Then determine the risks of various decisions. Then decide if debt is the tool to use. Or not.
All depends on how one uses it is my opinion. We did the Ramsey thing years ago and got rid of our bad debt. Mortgages are not bad thing depending on the amount in correlation to your income. Same thing with auto loans, some people drive more than others and don't have the resources to keep old clunkers going. We have no debt and hate to say it's making me lazy, thinking about buying another place just to have a reason I should keep going to work lol.
I paid my house off early but it was an emotional decision and a fairly poor financial one. I could have put that money in VOO and come out way ahead.

I know money's cheap to the captive carmaker financial groups but have a hard time believing zero percent interest couldn't have otherwise been a slightly cheaper cash price. I financed both my new cars at a blah rate (4-6%) to get the $500 spiff for using Toyota Financial then paid the notes off within a month or two.

The answer to these stupid real estate prices is higher interest rates, higher mortgage rates. The investors (speculators) will see that they'll have to sell for lower cash prices, cash out and run, and dump a bunch of property on the market at the same time. While buyers will have roughly the same payments they'll have more properties to choose from and the possibility of refinancing later if rates drop again. I bought at "the right time" at 7.125% then refi'd a couple times-- there isn't really wiggle room when rates are in the twos.

They're talking about rates going up... don't talk... do.