building your life debt free? -Christian
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I am 40. I started a company 3 years ago and we sold it a year ago. In my early 20s I had way too much debt. Over the past 6 years or so, my work has all been US based, and esp when the US dollar was strong, my income has been well above average. As it climbed, I used it first to pay off all credit cards, then other debts. When the company sold, we owned our cars ( but they were old, I just refused to replace them ), we had two mortgages but no other debts. Paying the houses off was possible only because of the company sale. So, I think I said below, owning my house was definitely something that puts me in a bracket that a lot of people in general could not hope to be, but, apart from that, living debt free as we did, and living within our means, is something I think most people can achieve.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Having my own debt problems (self inflicted) I look forward to the day I can say the mortgage is the only debt I have. I have been without credit cards for over a year and aside from not buying as many gifts for birthdays/Christmas I am doing okay. On a plan that in three more years I should be out of the hole. :-D
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Having my own debt problems (self inflicted) I look forward to the day I can say the mortgage is the only debt I have. I have been without credit cards for over a year and aside from not buying as many gifts for birthdays/Christmas I am doing okay. On a plan that in three more years I should be out of the hole. :-D
Good for you. That's what we did, we faced up to the error of our ways, and dug our way out, that's the only way to do it, unless you win the lotto. It feels so good when you get there, you will never go back.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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I am 40. I started a company 3 years ago and we sold it a year ago. In my early 20s I had way too much debt. Over the past 6 years or so, my work has all been US based, and esp when the US dollar was strong, my income has been well above average. As it climbed, I used it first to pay off all credit cards, then other debts. When the company sold, we owned our cars ( but they were old, I just refused to replace them ), we had two mortgages but no other debts. Paying the houses off was possible only because of the company sale. So, I think I said below, owning my house was definitely something that puts me in a bracket that a lot of people in general could not hope to be, but, apart from that, living debt free as we did, and living within our means, is something I think most people can achieve.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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But you also choose to live in an area where house prices are well below the average. Not many people can fine the combination of well paid professional work outside of the major centres.
Our house is worth about $450k. Surely I could get a house for that in Melbourne ? The other house, which is paid off, is worth about $300k. I realise that inner Sydney is obscenely priced, but surely there's something to be had in Sydney or Melbourne for $2400 a month ( our combined mortgages minus the rent, when we had them ) ? Like I said, the housing thing, is really down to my good fortune, I wasn't suggesting that anyone can expect to own their house at 40. BUT, we did live within our means prior to that, worked out and paid off our other debt and did not go into any more. That's really my main point, is that living sensibly means working out what you can afford, and doing your best not to stretch past that. Car and home loans cannot be avoided, but easy credit is pushed on people, and the ones who take it the most, are the ones who can least afford it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Our house is worth about $450k. Surely I could get a house for that in Melbourne ? The other house, which is paid off, is worth about $300k. I realise that inner Sydney is obscenely priced, but surely there's something to be had in Sydney or Melbourne for $2400 a month ( our combined mortgages minus the rent, when we had them ) ? Like I said, the housing thing, is really down to my good fortune, I wasn't suggesting that anyone can expect to own their house at 40. BUT, we did live within our means prior to that, worked out and paid off our other debt and did not go into any more. That's really my main point, is that living sensibly means working out what you can afford, and doing your best not to stretch past that. Car and home loans cannot be avoided, but easy credit is pushed on people, and the ones who take it the most, are the ones who can least afford it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Christian Graus wrote:
Our house is worth about $450k. Surely I could get a house for that in Melbourne ?
I believe Melbourne is similar to Sydney. If you want a 4 bedroom house on 250sqm with less than an hour commute either way to the city here its easily $800K plus example[^] If you were to borrow 75% you'd be looking at 3000-4000 a month easy
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Our house is worth about $450k. Surely I could get a house for that in Melbourne ? The other house, which is paid off, is worth about $300k. I realise that inner Sydney is obscenely priced, but surely there's something to be had in Sydney or Melbourne for $2400 a month ( our combined mortgages minus the rent, when we had them ) ? Like I said, the housing thing, is really down to my good fortune, I wasn't suggesting that anyone can expect to own their house at 40. BUT, we did live within our means prior to that, worked out and paid off our other debt and did not go into any more. That's really my main point, is that living sensibly means working out what you can afford, and doing your best not to stretch past that. Car and home loans cannot be avoided, but easy credit is pushed on people, and the ones who take it the most, are the ones who can least afford it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Christian Graus wrote:
Car and home loans cannot be avoided, but easy credit is pushed on people, and the ones who take it the most, are the ones who can least afford it.
Just in case anyone missed the best point to take out of this, at least if you're my age, not getting into debt in the first place is your best move. When you can manage it at least education, the car that gets you from point a to point b, the walls and preferably a roof, and anything after that comes out of whatever petty cash remains. Or, if you're real lucky, petty cash gets invested somewhere.
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Christian Graus wrote:
Our house is worth about $450k. Surely I could get a house for that in Melbourne ?
I believe Melbourne is similar to Sydney. If you want a 4 bedroom house on 250sqm with less than an hour commute either way to the city here its easily $800K plus example[^] If you were to borrow 75% you'd be looking at 3000-4000 a month easy
When I lived in Melbourne, I spent an hour on the train each way to get to work in town. Mooroolbark, where we lived, has houses from about $300-$500k ( I just checked ). Box Hill is a half hour away, and another likely hot spot for jobs, I'd have thought. It's not really the point tho. I accept that my example as far as housing is concerned, is uncommon. I'm talking in general about living within one's means, and I have done that, earning a lot less than I do now, so I'm not just sitting on a high income and judging people who have less to spend.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Christian Graus wrote:
Car and home loans cannot be avoided, but easy credit is pushed on people, and the ones who take it the most, are the ones who can least afford it.
Just in case anyone missed the best point to take out of this, at least if you're my age, not getting into debt in the first place is your best move. When you can manage it at least education, the car that gets you from point a to point b, the walls and preferably a roof, and anything after that comes out of whatever petty cash remains. Or, if you're real lucky, petty cash gets invested somewhere.
Yes, I wish I'd followed that advice from the start, instead of spending close to a decade in a hole I dug for myself.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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When I lived in Melbourne, I spent an hour on the train each way to get to work in town. Mooroolbark, where we lived, has houses from about $300-$500k ( I just checked ). Box Hill is a half hour away, and another likely hot spot for jobs, I'd have thought. It's not really the point tho. I accept that my example as far as housing is concerned, is uncommon. I'm talking in general about living within one's means, and I have done that, earning a lot less than I do now, so I'm not just sitting on a high income and judging people who have less to spend.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Yes, that is true. Although, a rise in prices without a corresponding rise in wages means that most Tasmanians are a lot worse off than they used to be, and probably no better off that people in Sydney.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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I am 40. I started a company 3 years ago and we sold it a year ago. In my early 20s I had way too much debt. Over the past 6 years or so, my work has all been US based, and esp when the US dollar was strong, my income has been well above average. As it climbed, I used it first to pay off all credit cards, then other debts. When the company sold, we owned our cars ( but they were old, I just refused to replace them ), we had two mortgages but no other debts. Paying the houses off was possible only because of the company sale. So, I think I said below, owning my house was definitely something that puts me in a bracket that a lot of people in general could not hope to be, but, apart from that, living debt free as we did, and living within our means, is something I think most people can achieve.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Out of interest (pun!) would it not be financially better to keep the mortgage on the rental property as an interest only loan - whereby repayments are tax deductible? There are loads of strategies that people can take to be in exactly your situation ( and more or less mine) - i.e. debt free. The first strategy is to not borrow - and before someone claims this isn't possible - it is if you start early and save. When you're living with your folks, save save save - invest and save. Borrow for investment if you must but not for yourself - save up your money until you can buy what you want. And use an offset account when you get a loan for a home (interest rates permitting) so that every penny is effectively earning you your mortgage rate as long as it is in the account. Pay for everything on credit cards and always pay the card off before interest is payable. Oh - and if you bank introduces fees or charges you don't like - MOVE BANKS (I mean, do the math first if it will cost you to move the account) If more people changed banks when their bank does something like this, rather than just moaning about it, then there would be far fewer fees and charges.. And if you want to own your own home - aim low to start - put up with living somewhere not quite as perfect as you'd like - on average you'll move out of your first house within 3 years - and make sure as far as you can that your house is the worst house in the best street when you buy - clean it up over the time you are there so it is no longer the worst house in the street when you sell. Finally (I do go on, don't I?) living debt free is also MUCH less stressful! I always think worst case scenarios - if I lost my job and was unable to work - if I have debt, I'm in trouble - no debt, no worries. (we're about to sell our holiday unit on the sunshine coast to clear our home loan, and become debt free for the second time - so I KNOW it can be done. Twice!
___________________________________________ .\\axxx (That's an 'M')
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Out of interest (pun!) would it not be financially better to keep the mortgage on the rental property as an interest only loan - whereby repayments are tax deductible? There are loads of strategies that people can take to be in exactly your situation ( and more or less mine) - i.e. debt free. The first strategy is to not borrow - and before someone claims this isn't possible - it is if you start early and save. When you're living with your folks, save save save - invest and save. Borrow for investment if you must but not for yourself - save up your money until you can buy what you want. And use an offset account when you get a loan for a home (interest rates permitting) so that every penny is effectively earning you your mortgage rate as long as it is in the account. Pay for everything on credit cards and always pay the card off before interest is payable. Oh - and if you bank introduces fees or charges you don't like - MOVE BANKS (I mean, do the math first if it will cost you to move the account) If more people changed banks when their bank does something like this, rather than just moaning about it, then there would be far fewer fees and charges.. And if you want to own your own home - aim low to start - put up with living somewhere not quite as perfect as you'd like - on average you'll move out of your first house within 3 years - and make sure as far as you can that your house is the worst house in the best street when you buy - clean it up over the time you are there so it is no longer the worst house in the street when you sell. Finally (I do go on, don't I?) living debt free is also MUCH less stressful! I always think worst case scenarios - if I lost my job and was unable to work - if I have debt, I'm in trouble - no debt, no worries. (we're about to sell our holiday unit on the sunshine coast to clear our home loan, and become debt free for the second time - so I KNOW it can be done. Twice!
___________________________________________ .\\axxx (That's an 'M')
_Maxxx_ wrote:
Out of interest (pun!) would it not be financially better to keep the mortgage on the rental property as an interest only loan - whereby repayments are tax deductible?
In theory it would be wiser to keep a loan, perhaps. But, the tax deduction I get, is on interest I pay. In other words, I get a tax cut BECAUSE I am losing money. I just decided to pay them both off and be done with it, my strategy as far as investment is concerned has been a bit conservative, b/c I don't need to take any risks at this point.
_Maxxx_ wrote:
The first strategy is to not borrow - and before someone claims this isn't possible - it is if you start early and save.
With the sole exception of buying a house, I agree with this.
_Maxxx_ wrote:
And use an offset account when you get a loan for a home (interest rates permitting) so that every penny is effectively earning you your mortgage rate as long as it is in the account. Pay for everything on credit cards and always pay the card off before interest is payable.
I never did that. At the end of the day, the most you can offset your house by is a months salary. I just paid extra on our mortgages, always, without any intention of taking it back out. I agree, an offset loan is probably a good thing, too, so long as you have the cashflow to make it work for you.
_Maxxx_ wrote:
And if you want to own your own home - aim low to start
Yes, I agree with that. We bought a cheap dive, and did it up, and then we sold it and doubled our money.
_Maxxx_ wrote:
Finally (I do go on, don't I?) living debt free is also MUCH less stressful!
Yes, and debt is the worst sort of cancer on a relationship, too.
_Maxxx_ wrote:
I always think worst case scenarios - if I lost my job and was unable to work - if I have debt, I'm in trouble - no debt, no worries.
Exactly. We live in a nicer than average home, to be sure, but with my job today, I could live in a huge house, in an exclusive part of town. But I'd be screwed if I lost my job, b/c I'd have to finance it, and it would cost more than the average home loan to do so. I'd rather be happy where I am, and know I am safe whatever happens.
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Out of interest (pun!) would it not be financially better to keep the mortgage on the rental property as an interest only loan - whereby repayments are tax deductible? There are loads of strategies that people can take to be in exactly your situation ( and more or less mine) - i.e. debt free. The first strategy is to not borrow - and before someone claims this isn't possible - it is if you start early and save. When you're living with your folks, save save save - invest and save. Borrow for investment if you must but not for yourself - save up your money until you can buy what you want. And use an offset account when you get a loan for a home (interest rates permitting) so that every penny is effectively earning you your mortgage rate as long as it is in the account. Pay for everything on credit cards and always pay the card off before interest is payable. Oh - and if you bank introduces fees or charges you don't like - MOVE BANKS (I mean, do the math first if it will cost you to move the account) If more people changed banks when their bank does something like this, rather than just moaning about it, then there would be far fewer fees and charges.. And if you want to own your own home - aim low to start - put up with living somewhere not quite as perfect as you'd like - on average you'll move out of your first house within 3 years - and make sure as far as you can that your house is the worst house in the best street when you buy - clean it up over the time you are there so it is no longer the worst house in the street when you sell. Finally (I do go on, don't I?) living debt free is also MUCH less stressful! I always think worst case scenarios - if I lost my job and was unable to work - if I have debt, I'm in trouble - no debt, no worries. (we're about to sell our holiday unit on the sunshine coast to clear our home loan, and become debt free for the second time - so I KNOW it can be done. Twice!
___________________________________________ .\\axxx (That's an 'M')
A mate of mine went on a interest free credit card balance transfer bonanza. He racked up over $100,000.00 in interest free cc loans for six months and stuck it all in his mortgage offset. Lots of paper work and moving money back and forth initially but it seems to be working for him
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A mate of mine went on a interest free credit card balance transfer bonanza. He racked up over $100,000.00 in interest free cc loans for six months and stuck it all in his mortgage offset. Lots of paper work and moving money back and forth initially but it seems to be working for him
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_Maxxx_ wrote:
Out of interest (pun!) would it not be financially better to keep the mortgage on the rental property as an interest only loan - whereby repayments are tax deductible?
In theory it would be wiser to keep a loan, perhaps. But, the tax deduction I get, is on interest I pay. In other words, I get a tax cut BECAUSE I am losing money. I just decided to pay them both off and be done with it, my strategy as far as investment is concerned has been a bit conservative, b/c I don't need to take any risks at this point.
_Maxxx_ wrote:
The first strategy is to not borrow - and before someone claims this isn't possible - it is if you start early and save.
With the sole exception of buying a house, I agree with this.
_Maxxx_ wrote:
And use an offset account when you get a loan for a home (interest rates permitting) so that every penny is effectively earning you your mortgage rate as long as it is in the account. Pay for everything on credit cards and always pay the card off before interest is payable.
I never did that. At the end of the day, the most you can offset your house by is a months salary. I just paid extra on our mortgages, always, without any intention of taking it back out. I agree, an offset loan is probably a good thing, too, so long as you have the cashflow to make it work for you.
_Maxxx_ wrote:
And if you want to own your own home - aim low to start
Yes, I agree with that. We bought a cheap dive, and did it up, and then we sold it and doubled our money.
_Maxxx_ wrote:
Finally (I do go on, don't I?) living debt free is also MUCH less stressful!
Yes, and debt is the worst sort of cancer on a relationship, too.
_Maxxx_ wrote:
I always think worst case scenarios - if I lost my job and was unable to work - if I have debt, I'm in trouble - no debt, no worries.
Exactly. We live in a nicer than average home, to be sure, but with my job today, I could live in a huge house, in an exclusive part of town. But I'd be screwed if I lost my job, b/c I'd have to finance it, and it would cost more than the average home loan to do so. I'd rather be happy where I am, and know I am safe whatever happens.
Christian Graus wrote:
At the end of the day, the most you can offset your house by is a months salary
yep - too true - but when you average it out, every month you effectively reduce the interest by a little by keeping the money in there - and you can access it if you need to. Takes discipline though! Paying extra off a traditional mortgage is good - but a lot of people won't risk it as they know it's pretty much locked in. My sister-in-Law is the direct opposite - emigrated to oz with loads of (hubby's) money, bought a house for cash, a pair of identical cars (well, why not, eh?) big TV etc. etc. Then they were a little short on cash - so borrowed $80k against the house. Paid off the credit cards, then lost all sense of reason and started spending the rest like it was a gift. of course, it ran out, so they borrowed more. And spent it. Then had to both get full time jobs (they'd been studying & working part time) to cover the payments. now they're not only back to square one debt-wise, but they also have the worse hose on the best street - and it's so bad that she told me the other day that she won't get it valued by a real estate agent because she's too embarrassed by the state of the place! we're actually tempted to buy it from them as an investment, tart it up and make a bundle...
___________________________________________ .\\axxx (That's an 'M')
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:omg: tell me how to do that! surely you can't take money out on a credit card without paying interest? you have to buy goods or services? Or am I missing out here!
___________________________________________ .\\axxx (That's an 'M')
Many lenders offer balance transfers at 0% for six months on new credit cards. see here[^] Take your existing cc with say 10k limit, take a cash advance for the full amount, stick it on your mortgage. Go to city bank for example, get a new cc from them, transfer the balance from your existing cc at 0% for six months. In six months take the 10K from your mortgage and pay off the new cc. Get your wife to do the same, your parents, your inlaws etc. If you can find a cc with 0% balance transfer, no annual fee and no exit free it's essentially free money.
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A mate of mine went on a interest free credit card balance transfer bonanza. He racked up over $100,000.00 in interest free cc loans for six months and stuck it all in his mortgage offset. Lots of paper work and moving money back and forth initially but it seems to be working for him
Well, if you can get those sort of credit card offers, then I say go for it, for sure :-)
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Christian Graus wrote:
At the end of the day, the most you can offset your house by is a months salary
yep - too true - but when you average it out, every month you effectively reduce the interest by a little by keeping the money in there - and you can access it if you need to. Takes discipline though! Paying extra off a traditional mortgage is good - but a lot of people won't risk it as they know it's pretty much locked in. My sister-in-Law is the direct opposite - emigrated to oz with loads of (hubby's) money, bought a house for cash, a pair of identical cars (well, why not, eh?) big TV etc. etc. Then they were a little short on cash - so borrowed $80k against the house. Paid off the credit cards, then lost all sense of reason and started spending the rest like it was a gift. of course, it ran out, so they borrowed more. And spent it. Then had to both get full time jobs (they'd been studying & working part time) to cover the payments. now they're not only back to square one debt-wise, but they also have the worse hose on the best street - and it's so bad that she told me the other day that she won't get it valued by a real estate agent because she's too embarrassed by the state of the place! we're actually tempted to buy it from them as an investment, tart it up and make a bundle...
___________________________________________ .\\axxx (That's an 'M')
_Maxxx_ wrote:
Then they were a little short on cash - so borrowed $80k against the house. Paid off the credit cards, then lost all sense of reason and started spending the rest like it was a gift.
Yes, I've seen people who do that. It's a mess.
_Maxxx_ wrote:
we're actually tempted to buy it from them as an investment, tart it up and make a bundle...
LOL - that would show them !!!!
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Many lenders offer balance transfers at 0% for six months on new credit cards. see here[^] Take your existing cc with say 10k limit, take a cash advance for the full amount, stick it on your mortgage. Go to city bank for example, get a new cc from them, transfer the balance from your existing cc at 0% for six months. In six months take the 10K from your mortgage and pay off the new cc. Get your wife to do the same, your parents, your inlaws etc. If you can find a cc with 0% balance transfer, no annual fee and no exit free it's essentially free money.
Even if you don't have a stupid of CC debt to slosh around the fee on convenience checks will likely work out to be less than your mortgage rate. OTOH if the type of loan you're discussing is what I think it is[^], it's apparently a very uncommon product in the US.
3x12=36 2x12=24 1x12=12 0x12=18
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Even if you don't have a stupid of CC debt to slosh around the fee on convenience checks will likely work out to be less than your mortgage rate. OTOH if the type of loan you're discussing is what I think it is[^], it's apparently a very uncommon product in the US.
3x12=36 2x12=24 1x12=12 0x12=18
Dan Neely wrote:
Even if you don't have a stupid of CC debt to slosh around the fee on convenience checks will likely work out to be less than your mortgage rate.
Not sure what you mean by convenience checks. Checks (Cheques) are not very common here these days.
Dan Neely wrote:
TOH if the type of loan you're discussing is what I think it is[^], it's apparently a very uncommon product in the US.
Many mortgage providers here offer what they call an offset account which is very similar to what your link describes.