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

eyeopener2

Quite a simple answer. Invest your money in an index linked stock market based fund ISA and let it build for the future.

Or

Open a Self Invested personal pension and bang it in there, 20% increase in your fund immediately and again, it's building a stash for your future.

Or you could sit on here and moan.

R_P_W

OP - so you think that being in debt and paying interest on that debt, having no savings is a better position to be in than have no debt, having some savings, getting some interest on said savings and have some security? If you lost your job you could at least pay your bills for a few months until you find new employment?

If your not happy with your savings interest, move your money. If you are never going to be happy with the level of interest maybe invest it. If none of the above why dont you just blow the lot and make yourself feel better? Relieve yourself of this terrible burden you find yourself with.

UsernameAlreadyExists

eyeopener2 wrote: »

Quite a simple answer. Invest your money in an index linked stock market based fund ISA and let it build for the future.

Or

Open a Self Invested personal pension and bang it in there, 20% increase in your fund immediately and again, it's building a stash for your future.

Or you could sit on here and moan.

1) Invest = Risk. I've already said this had you bothered to read my previous posts.

2) I have a pension, I've already said this too.

With regard to "sitting here moaning", I've asked for other people's experiences, and so far all I've had is "advice" which I didn't actually ask for, and a load of abuse. I've clearly put this in completely the wrong forum and I'd love it to be moved
somewhere more appropriate.

If people can't comprehend that there are associated stresses with not owing a pile of money to someone else, but instead fact suffering wasteage on your own pile, then fair enough.

Clearly I am the only person in the entire world that's received an inheritance and still isn't financially "secure" looking to the future.

UsernameAlreadyExists

bt1 wrote: »

I don't get it - how do you lose money by having savings?! Someone please explain.... Simply!

Inflation and low rate of interest.
The spending "power" erodes over time. The amount may well go "up", but the cost of everything else is going up faster.

mildredalien

UsernameAlreadyExists wrote: »

If people can't comprehend that there are associated stresses with not owing a pile of money to someone else, but instead fact suffering wasteage on your own pile, then fair enough.

Clearly I am the only person in the entire world that's received an inheritance and still isn't financially "secure" looking to the future.

You're not alone, but it is quite insensitive when your gripe on the DFW board is 'oh no I have too much money that is slowly decreasing in value, why won't my money get bigger?!'. It is definitely annoying that savings can lose value due to the rate of inflation but it's a bit of a stretch to say it's 'stressful'.

Personally I'd rather have 5k in savings with 0% interest than 5k of debt, however I do agree that debt isn't necessarily a bad thing. For bigger purchases such as cars, houses even furniture, some moderate debt (particularly if you can get 0% interest deals) is fine if you can manage it. I begrudge paying a single % of interest to banks these days though!

Time_to_face_the_music

UsernameAlreadyExists wrote: »

I've clearly put this in completely the wrong forum and I'd love it to be moved
somewhere more appropriate.

I think a lot of people will agree with this statement. Ask a mod to move it, I am sure they will be happy to.

walesrob

foxgloves wrote: »

Interesting thread......

Thank you for the most sensible post in this thread.:)

I'm also lucky in that I am now debt free, and now my thoughts can turn to saving money for things like dentist bills, car MOT's and even holidays. Whereas for many years, I would put it on the credit card and hope I can pay it back, but now I'm learning to save the money first. I have about 2K in savings, and I know I'm earning a pathetic amount of interest on it, but what matters is that for the first time in many years I now have that bit of security knowing a) If I lose my job, I have a few months worth of saving to tide me over b) Any big bills will be paid for without worrying how to pay for it.

Soubrette

If you want the value of your cash to erode then just try spending it - a new car loses 30% of its value just by driving it off the forecourt. Clothes and other items of furniture sold second hand for a few pounds on ebay.

Also the rate of inflation is an overall inflation rate, do you know if the same rate applies to you? I think my personal inflation is higher than the headline rate given in the newspapers because of lot of my expense goes on basics. Doesn't really do me much good if inflation falls because electronics have gone down. These increases in technology more than negate the effects of inflation.

Further the inflationary rate of things is not as simple as saying that money decreases in value by say 5% pa, eg food as a proportion of income has reduced in price compared to say the 1950s so we actually get more for our money than we used to. Computers are another thing where holding off your purchase works in your favour as more powerful devices come onto the market at the same prices or cheaper than those before.

Inflation is a bit of a bummer as a saver but in the general scheme of things it's unavoidable, there are a few instances where, if you get a bit lucky, you can avoid it, but pretty rarely. Its certainly not worth paying a higher rate of interest on debt to try to avoid it. It might be worth maxing out your 0% credit cards and/or overdraft but as they can pulled at any time I'd recommend keeping a similar amount in savings

eyeopener2

UsernameAlreadyExists wrote: »

1) Invest = Risk. I've already said this had you bothered to read my previous posts.

2) I have a pension, I've already said this too.

With regard to "sitting here moaning", I've asked for other people's experiences, and so far all I've had is "advice" which I didn't actually ask for, and a load of abuse. I've clearly put this in completely the wrong forum and I'd love it to be moved
somewhere more appropriate.

If people can't comprehend that there are associated stresses with not owing a pile of money to someone else, but instead fact suffering wasteage on your own pile, then fair enough.

Clearly I am the only person in the entire world that's received an inheritance and still isn't financially "secure" looking to the future.

If you already have a pension is it a SIPP? If it isn't get it sorted so you have control over your investment. You need substantial funds to retire so it is worth putting away every single penny you can. Unless you are in the public sector, even then I would still invest as much as possible.

Investment has a risk but over the long term the gain a can be significant, yes it could all go belly up but it may not. No risk, no return so carry in moaning about low interest or so something positive.

Financial security comes from long tern investment growth. This is something I will be doing when the debt is gone.

If you don't want a discussion in a discussion forum, don't post in the first place. Sorry if stating the obvious has so clearly offended you,as you are clearly sorted financially and need no advice.

MrsCautious

Yes, being debt free is all it's cracked up to be. Simply because you are dealing with your own money not having to chuck loads of it at interest to pay someone else off, IMHO.
Why choose to live beyond our means for the sake of a load more expensive stuff? No thanks.
You are not alone in worrying about the dire interest rates on savings. The savings and investments forum has included several threads/posts where a point of view that it's currently not worthwhile saving is expressed. I don't agree, for some of the reasons already expressed here, I think a most recent thread was along the lines of 'savings accounts, why bother?' you may want to see what people said, sorry I can't search/get a link on the phone I'm on.

There are savings accounts still available through building societies that pay up to five per cent but often they must be opened in branch which may be far too far to travel and they only go up to allowing several hundred to be deposited each month - but why not pay in interest from another account monthly, drip feeding to squeeze as much as you can out of your money. The Santander 123 account has already been mentioned which also gets cashback on bills and can get you around £50 just for opening it through top cashback/quid something. Lloyds Vantage also pays 3 per cent up from 3 to 5 k.

My own view is that people fighting a daily battle to become debt free with all the discipline and commitment and hardship that can bring could, once that fight is over, may well relish the challenge of finding the best savings deal, and even at 2 per cent interest, the weight of the burden of debt is lifted as this is your money you are planning on building, not someone else's. Also all the frugal ways found in fighting the debt can be used to build savings much more than someone who hasn't had that experience -- so while you may only get 2 per cent on what you do save, chances are you are saving more thanks to said discipline and commitment.

I appreciate some may see this as a simplistic vieIw but I'm not sure the people on the DFW board give themselves enough credit (see what I did there ) for how positive and in many cases, inspirational, their journeys are. They could teach wannabe savers a lot about finding the money to put away in the first place.