A debt perspective

[Fat Charlie]

Originally Posted by vskid3

16GB of RAM is plenty for almost anyone.

Huh. I heard it as 640K ought to be enough for anybody. That was a while ago, though.

[Xist]

I took out a lovely lady who said she borrowed all she could while in college, invested it, and turned a profit on someone else's money. She also says she deducted every last cent she could from her taxes, after I said I am not excited about deducting 55¢ per mile from my first client's house to the last client, when I only pay 15% interest.

I am currently paying 6% on my student loans. Where can I find an investment that pays better?

[jcp123]

Some people can leverage themselves up, but it's rare that anyone can actually do that. It's playing with fire, and if you succeed the first time you probably won't be able to do it again.

I got into debt trouble a few years ago. I am still paying for it. It's not a good thing at all. Debt is ok in small measures but really should be kind of a last resort.

[vskid3]

Originally Posted by Fat Charlie

Huh. I heard it as 640K ought to be enough for anybody. That was a while ago, though.

I knew someone was going to say that...

Originally Posted by Xist

I am currently paying 6% on my student loans. Where can I find an investment that pays better?

Stock market averages a little better than that over the years. Starting a retirement fund early can help make up for not being able to put much into it because time is on your side.

Have you ever looked at any of Dave Ramsey's stuff? Some of the later steps in his plan aren't considered the best, but his plan and ideology are a good place to start getting your finances under control.

[jcp123]

In the long run you're better off paying that debt down aggressively, from what I hear, than trying to out-invest your interest rate.

As for tax deductions, mentioned above, that's one of the big perks of being a truck driver. Anything you buy and is used primarily on your truck, can be deducted from your taxes. Clothes, tools, sheets, pillows, cell phone bill, crock pot, essentially anything you take with you except for food. On top of that your pay is probably structured as per diem, which is another massive tax break.

[jamesqf]

Originally Posted by vskid3

16GB of RAM is plenty for almost anyone.

Well, I run 3D geophysical simulations on a machine with 4 GB. And much of the computation is done on a pair of GPUs with IIRC 1 GB each.

It's like having multi-terabyte hard drives, or driving your 200+ mph McLaren around the city.

[redpoint5]

Originally Posted by Xist

Last I checked, the interest on my savings account is one percent...

...of one percent!

That's why reward checking accounts are way better. You'll earn several percent interest, and get ATM fees refunded.

Savings accounts do just that; preserve the funds you deposit over time. They aren't called investment accounts, which have the goal of outperforming inflation and return a profit on the investment.

Originally Posted by Xist

I am not excited about deducting 55¢ per mile from my first client's house to the last client, when I only pay 15% interest.

I am currently paying 6% on my student loans. Where can I find an investment that pays better?

I don't know what you mean by deducting $0.55 per mile and what you are paying 15% interest on, but I sure would like to have $0.55 for every mile I drive.

The best investment you can make is to take most of whatever is in your 0.2% interest savings account and pay down your student loan debt. Paying off debt is like a guaranteed investment at that rate, except you are avoiding that cost instead of gaining that amount.

Try to think of paying your student loan like putting your money in a 6% savings account.

Pay off the highest interest debt first, so that means eliminate credit card debt, unless you have a promotional zero interest card.

[Fat Charlie]

The only downside is that money in your .2% bank account is available for emergencies, and once you cut a check to pay off debt it's gone. All you have to show for it is a piece of paper saying you're a little bit less in the hole. A cushion of available cash is more important than being a smidgen less in debt because it makes it less likely that you'll slip farther into debt.

[wdb]

I've been debt free for a few years now. Kids out of school and on their own, steady income, and a huge desire to be able to pay for a car in cash, were the drivers. Plus I just don't like being in debt. I paid extra on the mortgage from day one, did the same with car loans. Even a few dollars extra on those monthly payments makes a huge difference. It is hands down the easiest and best way to pay down debt.

Even after several years it still feels liberating. I save money now instead of paying it out. I wait until the pot grows big enough for whatever the next purchase will be. Except another house! If/when we go that route we'll downsize and avoid a mortgage that way.

All that having been said, the *national* debt - which I believe was the topic of Old Mech's original post - is a much more complex issue than household debt. There are as many opinions as there are, well, you know.

[Xist]

I signed up for a checking account that was supposed to pay me interest through a credit union in 2007. They also gave me a new credit card with an introductory 0% rate, and we set up a balance transfer.

However, I never received the card, and I needed to activate it to transfer the balance, although I magically cloned my debt, suddenly having $6,000 on two old cards and the same amount on some theoretical card I never saw or used.

I was not able to make the payments in time, so I was hit with late and then over-limit fees.

I could not transfer balances until I paid off those.

With all of that, I lost the special checking account, and ended up with a normal one.

I always wonder how much that cost me.

Whenever i had a little extra money, I made an additional credit card payment. People insisted "You need to listen to me! You need to start saving!"

I tried to explain that I was paying 20 - 30%, while my savings account paid one percent or less, but they just got louder.

People also insisted I needed to pay off my smallest debt first. I said I was paying the one with the highest interest, and they responded "You need to listen to me!"

I am tired of people saying that without listening to me.