'The Good Debt, Bad Debt Game...' poll discussion

Eco_Miser

Vlasko wrote: »

If the interest on the mortgage is higher than a rent, then it is better to rent. People should forget about the nonsense of 'paying landlords mortgage'.

When I bought my house I was planning on paying mortgage for 20 years then living rent and mortgage-free for 40 years, making the effective annual cost only one third of the actual cost for the first 20 years. So provided the cost in that first 20 years was no more than three times the rent, I would still be better off. That's not even considering the capital value of the house (which will only be of interest to my heirs).
In the event, I paid the mortgage off in 12 years, so an even better bargain.

slow_saver

mcdogfood wrote: »

Apparently I got it wrong.

My reasoning is this - if you can find another way to do it for less, then borrowing money is bad.

Cycling to work - 8 miles. Average bike speed - 15 miles an hour. Take 45 mins? Be lovely if he lives in the middle of nowhere! Also, if he's cycling to work, I'm sure he won't be single for long!

It's a statutory requirement to send your kids to school. Certainly when I was at school, if you lived more than 3 miles away, they had to provide you with a free bus pass. Even if there's no public transport, the education authority has a statutory requirement to provide transport to school for free if you live more than 'walking distance' away.

So, don't *need* a car, so bad debt!

The kids are at school 10 miles away from where the guy lives and the job is 8 miles in the opposite direction, how is the guy going to get to work, buy a triple tandem bike, cycle with the kids to school 8 miles then cycle to work 18 miles away? He needs wheels therefore it's good debt as he can pay it off from his wages. :rolleyes:

kittykitten

Just to throw a couple of spanners in the works:

While I understand why the person who suggested cycling to work as an option marked it as bad debt, the children are the issue that may rule that out here. You're right that the local authority are obliged to provide transport of some kind to get children who live more than 3 miles away to school for free (usually either through a free bus pass, or the putting on of a dedicated school bus) this only applies if the children are attending their designated school for the area in which they live. If it's not, and for whatever reason the dad has opted to send the children to a school 10 miles away (maybe they moved, and wanted to stay at thier existing school, or there were issues with the local school, for example) you're not entitled to any help with the cost of transport to school. Therefore the only real way to get the children to school, if there's no decent public transport, is by car.

Also whoever it was that anaylsed the situation and suggested that to buy a car to allow him to take a minimum wage job was the wrong option, that depends on so many other things. Surely, as long as this car debt isn't going to cause him a lot of problems, just about any job is better than no job? In the current job market, experience is what's getting people jobs, so maybe 6 months of slight struggle as he's paying back a car loan out of minimum wage is a worthwhile good debt if this job gives him the experience he needs to start applying for better paid jobs? This may well be the only job he's likely to be offered for a very long time if he doesn't take it! Also, jobseekers allowance can actually be refused to be paid if the jobcentre advisers find out you've turned down a job that you've been offered without a very very good reason not to take it.


Anyone get the impression we're analysing this slightly too much??

shirlgirl2004

mcdogfood wrote: »

Apparently I got it wrong.

My reasoning is this - if you can find another way to do it for less, then borrowing money is bad.

Cycling to work - 8 miles. Average bike speed - 15 miles an hour. Take 45 mins? Be lovely if he lives in the middle of nowhere! Also, if he's cycling to work, I'm sure he won't be single for long!

It's a statutory requirement to send your kids to school. Certainly when I was at school, if you lived more than 3 miles away, they had to provide you with a free bus pass. Even if there's no public transport, the education authority has a statutory requirement to provide transport to school for free if you live more than 'walking distance' away.

So, don't *need* a car, so bad debt!

I'm with you. MY OH cycles 3 miles to the train station then 30 minute train ride and then walks another 15 minutes. I think he'd rather do an 8 mile bike ride. For us it's about being MSE rather than not being able to afford a car. Mind you with the amount of punctures he gets it isn't that cheap!

zygurat789

The children are definitely a red herring because they have to get home from school, presumeably without the aid of their father who will still be at work, therefore the car won't be necessary to them. If the father only earns the minimum wage, £229.20 for 40 hours, he will lose significant benefits, income support and housing benefit as well as being taxed at 70% on some of his earnings. The result is that, sadly, he is better off not working which is the conclusion many others have reached.

kriss_boy

I voted "bad debt" as like many others seem have noticed the guy would have to be crazy to not put a 1500 quid car on one of the many 0% credit cards available.