Future debt

matchboxfull

Another of my nosey questions, meant in the kindest possible way...:j

When you're out of debt/now that you have paid back all your debt, do you ever see yourself taking on debt again for any reason (barring mortgage)?

If you do, why, and what kind? If you don't, why not?

We became DF last year and I can't see us taking on debt again, although I do worry about how long it will take to save for a new car when the time comes.

Sanctioned_Parts_List

Yes, I would.

The difference would be that I'd not use debt to fund an unsustainable lifestyle because I've pared the lifestyle down to be sustainable. I will have costed it, sought alternatives and prepared a repayment schedule in advance. Whatever it is has to fulfil the basic rule that:

Income + Credit Interest - Expenditure - Debt Interest > 0 is good

I would use it if either it made a profit (e.g. stoozing, or finishing touches to a house before selling), or to cover very short term overruns in the unlikely event my (existing) safety buffer is exhausted before my (hopefully in the future) long term savings are extracted from whatever they're invested in.

But no, no new toys for me.

sourcrates

No, Never again !!


Been "in Hoch" to one financial institution or another since I was 18, never, ever again for me.


Save for everything now, otherwise do without.


I refuse to play the game any longer, simply because I don't trust myself not to rack up Hugh debts again, which is soo easy with credit card companies advertising here, there and everywhere.


"You can be approved in as little as 60 seconds"


.................................no thanks !!!!

matchboxfull

Sanctioned_Parts_List wrote: »

Yes, I would.

The difference would be that I'd not use debt to fund an unsustainable lifestyle because I've pared the lifestyle down to be sustainable. I will have costed it, sought alternatives and prepared a repayment schedule in advance. Whatever it is has to fulfil the basic rule that:

Income + Credit Interest - Expenditure - Debt Interest > 0 is good

I would use it if either it made a profit (e.g. stoozing, or finishing touches to a house before selling), or to cover very short term overruns in the unlikely event my (existing) safety buffer is exhausted before my (hopefully in the future) long term savings are extracted from whatever they're invested in.

But no, no new toys for me.

Can you elaborate on your rule? Does it mean you wouldn't borrow money to buy anything that depreciates (ie. almost everything)?

sourcrates wrote: »

No, Never again !!


Been "in Hoch" to one financial institution or another since I was 18, never, ever again for me.


Save for everything now, otherwise do without.


I refuse to play the game any longer, simply because I don't trust myself not to rack up Hugh debts again, which is soo easy with credit card companies advertising here, there and everywhere.


"You can be approved in as little as 60 seconds"


.................................no thanks !!!!

You're right. Credit is so prevalent. To be honest, we use a CC to pay for monthly expenses and then pay back in full so we are technically still in debt, although we always have enough money to pay it back at any given time. I'm really strict about only spending what we can afford, but one lapse in concentration...

FinallyGettingFree

I'm now out of debt, and I use YNAB religiously! This means it would be pretty much impossible (touch wood!) for me to accidentally get into debt again - YNAB really does stop me from over-spending.

I do have a credit card however - it is a "travel credit card" which means I can take money out and pay for things abroad without incurring additional charges. This only gets used for that reason and paid off in full monthly (so I don't really view it as debt) - again, if you use YNAB properly you can't really rack up credit card debt, because you are spending out of categories and not from available credit or account balances.

I've found it incredibly useful in paying down my debts, and now that I am debt-free in ensuring I stay that way!

To be honest though, I learned so much about frugal living when I was paying off debt, that I am probably now in the best possible position to save cash - I've been used to doing without things and cooking on a budget for years!

HappyMJ

matchboxfull wrote: »

Another of my nosey questions, meant in the kindest possible way...:j

When you're out of debt/now that you have paid back all your debt, do you ever see yourself taking on debt again for any reason (barring mortgage)?

If you do, why, and what kind? If you don't, why not?

We became DF last year and I can't see us taking on debt again, although I do worry about how long it will take to save for a new car when the time comes.

Most probably will get into debt again.

I always use credit card for everything so technically I'm always in debt...but that gets paid back rather quickly.

I would get into debt for large purchases such as a house or a car.

I would get into debt to cover an unforeseen emergency. I think I've got mist emergencies covered but there might be one or two which my savings would not cover such as a house fire totally destroying the property. Even though it's insured with an excess will they pay out enough to cover everything.

sofiar

It's quite a hard question, sometimes you don't see it as debt, if at the time you are well within your means to borrow, but a life event may occur which leaves you in this situation?

rogue999

No - I wouldn't plan too at all. I have £10k left to pay off (paid £5k off in last 12 months), and after this has gone I'm on to Mortgage-Free-Wannabee (12 years and approx £78k to go).

Luckily we love our house and apart from optional bits and bobs it shouldn't need any work for a while, so wouldn't be looking to take another, or add to, our mortgage.

Of course life can change quickly, and if needs must then maybe i'd have to use credit again - but never for the things I used to think were essentials which got me into debt in the first place (holidays and cars!).

I also use YNAB, it's really helped me budget for those unexpected things (ya'know - like Christmas that seems to surprise us on the 25th December every year!) and yearly costs.

byjimini

Never, ever again. I only use my credit card for large purchases (my iPhone, for example) which are paid off the second it goes on the statement, for the extra security. Otherwise I've cut down and really got control of my finances after years of ignoring it and living payday to payday.

andyfromotley

Nope, not a chance. I have an emergency fund, and when i am debt free it will be increased to cover pretty much every scenario i could ever reasonably forsee.

I will never again fall into the trap of borrowing from my future to fund my today. Plus i also have self control issues which given free reign with a CC would rack up huge debts again.

I do use a CC for holiday spending, but i only spend mone that i have saved up and is waiting to pay off the card ASAP. It has been a very long hard slog to cut my expenditure, sell things that i loved and learn to manage my finances like an adult to go down that road again.

Amother avid ynabber here too.