Better to be mortgage-free or have "good" debt when young?

Eco_Miser

jdw2000 wrote: »

"High interest saving accounts" don't really exist... it's peanuts.

Accounts designated as 'saving' are fairly low to total rubbish, but I don't call 20 times BOE rate peanuts.

That said, I wouldn't take on a new mortgage in the OP's situation.

californiagirl

bigfreddiel wrote: »

You youngsters have it so easy these days, us oldies didn't have the luxury of these low interest rates, try 17% for starters, low pay, recessions, three day week, powers cuts, fuel rationing(luckily never happened, but there was a 50mph speed limit) virtually zero tax free allowance. Need I go on.

It was harder then than now to get on the ladder.

So youngsters, fill your boots while you can, pension and ISA - it's easy just do it

fj

Yes, 17% does sound like a killer, but then my parents-in-law bought their first home for £5k in the 1970s and did incredibly well under rapid inflation, so I don't feel too much sympathy! 😆

californiagirl

Eco_Miser wrote: »

Accounts designated as 'saving' are fairly low to total rubbish, but I don't call 20 times BOE rate peanuts.

That said, I wouldn't take on a new mortgage in the OP's situation.

Thanks, Eco Miser. So you'd recommend we try to invest our income instead? What about if we know we want to move house at some point - better to do it now whilst interest rates are rock bottom or not? Thanks.

bigadaj

bigfreddiel wrote: »

You youngsters have it so easy these days, us oldies didn't have the luxury of these low interest rates, try 17% for starters, low pay, recessions, three day week, powers cuts, fuel rationing(luckily never happened, but there was a 50mph speed limit) virtually zero tax free allowance. Need I go on.

It was harder then than now to get on the ladder.

So youngsters, fill your boots while you can, pension and ISA - it's easy just do it

fj

Yes, the memory does get increasingly hazy with age.

Primrose

Every generation probably faces different financial challenges. In your case there is probably no right or wrong answer. Whatever option enables you to live a comfortable domestic life within affordable boundaries should suit you. You may of course, wonder how things would have gone had you chosen the other option but life generally is like that with most of the decisions we have to take. Trying to second guess your decisions in retrospect can be rather unproductive.

steampowered

Debt is a good thing - provided that you use it to invest, rather than frittering it away on current spending. Most businesses use debt to invest and households can do the same.

For example, if you are paying 2% interest on your mortgage but you can make 4% elsewhere, you should invest in the 4% and pocket the difference.

Personally, I have a lot of excess income every month after paying my mortgage. Instead of overpaying my mortgage, I invest into a balanced portfolio of stocks and shares. Mostly through an ISA to avoid tax, and then a bit in an ordinary stocks and shares allowance once my ISA allowance is full.

The FTSE 100 is yielding around 4% at the moment. So if you invested in a FTSE 100 tracker fund you would get income of about 4% of the amount invested each year. You would also get capital growth over time. For me it is a no brainer.

bigfreddiel

californiagirl wrote: »

Yes, 17% does sound like a killer, but then my parents-in-law bought their first home for £5k in the 1970s and did incredibly well under rapid inflation, so I don't feel too much sympathy! 😆

I bought my first tiny house in the 70's two up one down terrace, for £7,000.. I was only paid £50/week as a graduate engineer.

The mortgage took most of my salary, along with council tax, car tax, car loan etc. Result no money left at the end of each month.

It was harder then than now. fj

bigfreddiel

bigadaj wrote: »

Yes, the memory does get increasingly hazy with age.

Your dead right, it was actually a lot worse then than now than I described

latecomer

bigfreddiel wrote: »

I bought my first tiny house in the 70's two up one down terrace, for £7,000.. I was only paid £50/week as a graduate engineer.

The mortgage took most of my salary, along with council tax, car tax, car loan etc. Result no money left at the end of each month.

It was harder then than now. fj

So you bought your first house for ~2.7 times your annual salary. Hard times indeed.....

eskbanker

I can see where this thread is going!

GC: House? You were lucky to have a HOUSE! We used to live in one room, all hundred and twenty-six of us, no furniture. Half the floor was missing; we were all huddled together in one corner for fear of FALLING!
TJ: You were lucky to have a ROOM! *We* used to have to live in a corridor!
MP: Ohhhh we used to DREAM of livin' in a corridor! Woulda' been a palace to us. We used to live in an old water tank on a rubbish tip. We got woken up every morning by having a load of rotting fish dumped all over us! House!? Hmph.
EI: Well when I say 'house' it was only a hole in the ground covered by a piece of tarpolin, but it was a house to US.
GC: We were evicted from *our* hole in the ground; we had to go and live in a lake!
TJ: You were lucky to have a LAKE! There were a hundred and sixty of us living in a small shoebox in the middle of the road.
MP: Cardboard box?
TJ: Aye.
MP: You were lucky. We lived for three months in a brown paper bag in a septic tank. We used to have to get up at six o'clock in the morning, clean the bag, eat a crust of stale bread, go to work down mill for fourteen hours a day week in-week out. When we got home, our Dad would thrash us to sleep with his belt!
GC: Luxury. We used to have to get out of the lake at three o'clock in the morning, clean the lake, eat a handful of hot gravel, go to work at the mill every day for tuppence a month, come home, and Dad would beat us around the head and neck with a broken bottle, if we were LUCKY!
TJ: Well we had it tough. We used to have to get up out of the shoebox at twelve o'clock at night, and LICK the road clean with our tongues. We had half a handful of freezing cold gravel, worked twenty-four hours a day at the mill for fourpence every six years, and when we got home, our Dad would slice us in two with a bread knife.
EI: Right. I had to get up in the morning at ten o'clock at night, half an hour before I went to bed, (pause for laughter), drink a cup of sulphuric acid, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad and our mother would kill us, and dance about on our graves singing 'Hallelujah.'
MP: But you try and tell the young people today that... and they won't believe ya'.
ALL: Nope, nope..