Is "Debt Free" all it's cracked up to be?

beth3735

I can see your point of view, but i wouldn't get myself back into debt through annoyance of lack of paid interest from savings.

I should be debt free around 4-10 months max and then im hoping to save. Inflation isn't just killing savings though. Inflation is still rising, but i haven't had a pay rise in over 18 months! See thats what makes me sick! They wonder why people live in poverty, get into debt and so on when wages aren't rising with inflation!

Try and find a better interest savings account and then enjoy the little bit of interst YOU will gain, NOT the bank!

Robin_TBW

This is one of the stupidest original posts I've read on here and shows why people are crap with finances.

I'd much rather have £5,000 earning me 2% than a £5,000 loan where I owe 9% (for example). It's an 11% difference on top of the £10,000 difference between the original values!

Yes, rates aren't great but you can only amount debt for so long before you truly !!!! yourself over. The buying a house "above your means" idea is also ridiculous and you'll be on this debt-free board for a long, long time with your current mindframe.

tallyhoh

All ISA's drop their interest rate at the end of the year or fixed rate period, thats how they catch you out. You need to shop round in March & transfer your ISA into a better one. Make sure you transfer & not take you money out first!

UsernameAlreadyExists

Robin_TBW wrote: »

I'd much rather have £5,000 earning me 2% than a £5,000 loan where I owe 9% (for example). It's an 11% difference on top of the £10,000 difference between the original values!

Well ... this is it. Are you debt free and do you have money spare? For the last few months I've been in that position and I've realised that for me, having savings isn't working.

If I had £5000 in a pile of cash on the table what's it doing for me? The mice are eating away it ... and it's value is decreasing all the time. The longer I leave it, the less it's worth ... so it's slowly burning away, on nothing.
All the while I had an offset mortgage (which I still have) ... savings are actually "working" for me by reducing my debt. Now they're doing nothing.


I could, however, be sitting on a new sofa, watching a new TV, drinking coffee from a fancy coffee maker etc and ALL THE WHILE I have income, be paying a relatively small amount out but be enjoying the £5000 worth of nice things in the mean time.

I am going back into debt because I am moving house. I plan to downsize in the future and release the equity then to survive on (along with my pensions) in my retirement. I'll be living in nicer surroundings in a better area for the next 20+ years.

I don't like being debt free right now.

OneLife_OneShot

UsernameAlreadyExists wrote: »

If I had £5000 in a pile of cash on the table what's it doing for me? The mice are eating away it ... and it's value is decreasing all the time. The longer I leave it, the less it's worth ... so it's slowly burning away, on nothing.

I'd be glad to even have £500 savings at the moment, yeah its not making much in interest, it i hardly burning away, use it as an emergency fund for your home/car etc, stop being so !!!!ing stupid and realize what you have got.

guesswho2000

But! If you're debt free, you can use the money you would have spent servicing the debt to increase your quality of life anyway?!

I can almost see where you're coming from, however if I had the choice I definitely wouldn't choose to have a mortgage to pay, rather it's something I have to do in order to live in my house.

If I could, it'd be paid off entirely tomorrow, as it stands I overpay it substantially each month to save a fortune in interest over the term. Yeah I could be using that cash to fund a lifestyle of frivolity and coffee makers, but in the grand scheme of things I'd lose way more money in the long term.

As for losing money? My regular savings account pays more in interest than my mortgage costs; what I'll do when that runs out I don't know, but I doubt I'll draw out all the cash and spend it just for the sake of it!

UsernameAlreadyExists

conisme wrote: »

I'd be glad to even have £500 savings at the moment, yeah its not making much in interest, it i hardly burning away, use it as an emergency fund for your home/car etc, stop being so !!!!ing stupid and realize what you have got.

What I have got is a hole in a bank account that's leaking money. It's called inflation and poor interest rates. This can only be combatted with "risk"/"investment".

I've been in "debt" for my entire working life ever since I took out my first mortgage in fact.

OneLife_OneShot

Yeah but you are getting on like its the worst thing in the world having £5k of savings when most people on here would love that.

ChopinonaBudget

UsernameAlreadyExists wrote: »

If I had £5000 in a pile of cash on the table what's it doing for me? The mice are eating away it ...


I could, however, be sitting on a new sofa, watching a new TV, drinking coffee from a fancy coffee maker etc and ALL THE WHILE I have income, be paying a relatively small amount out but be enjoying the £5000 worth of nice things in the mean time.

Or you just spend the £5000.
Job done.
No debt, no savings.

tiger_eyes

I think it's a mistake to assess savings only in terms of what you gain in interest. Savings represent security. If my business collapsed overnight, I could survive for 4-6 months before I ran out of money. I sleep better at night knowing that I'm prepared for what's to come. You can also save money by having savings - for example, I don't pay for contents insurance because if my flat burned down tomorrow, I could replace everything I own from scratch. Savings essentially function as interest-free credit in situations where you would otherwise have had to borrow money. There are a lot of hidden benefits.