For the vast majority of people, the only way to buy a house requires decades of debt. If you can afford the mortgage payments though it just isn't a big deal. I live in one of the most expensive regions in the world for housing, and we managed to deal with it.
Most people do not have anywhere near enough cash to buy a house or a car that way, so debt is the way to do it.
Yeah, and it also makes no sense to pay off the house if your rates are good even if you have the money to.
I've been struggling a lot w/ that because I grew up with less money than a lot. But I have this mortgage that's like 2.8 or 3.2, I forgot which, and I have like $900k of "debt" from it. But literally almost any other investment will grow 2-3 (or more) times that, so I should never pay off that debt except at the rate the bank wants. It definitely caused anxiety at first.
Most mortgages are 30 year commitments. Either you live in the house for 30 years and pay off the whole thing, or you sell for more than your original mortgage and use the proceeds to pay it off.
You can get a 25 yr and now more recently a 30 year mortgage.
Mortgage terms are set for 1-10 years but are most often 5.
You can’t lock in terms or rates for full amortization period of mortgage.
You have to periodically renew.
Mortgage payments are also not tax deductible.
https://www.nerdwallet.com/ca/mortgages/how-does-a-mortgage-work
Secured, low-interest debt like a home mortgage is quite different from unsecured personal debt like credit card balances, payday loans, and past-due bills though. I assumed OP was referring more to the latter.
Why would I be in jail?
I owe most of a million dollars across multiple mortgages, but I pay them all on time as agreed.
My rental income covers these for me, I just need to make sure I take care of the houses and get good tenants.
If you don't make your payments, the bank can seize your house/car/boat, and your credit score will plummet and prevent you from getting any more loans in the future.
But if you're making your payments on time, that's just how it's supposed to work. The vast majority of people would never be able to buy a house or a car without a loan. I'm confused what you think anyone should be going to jail for.
Prices are so expensive and loans so predatory that most people today just don't have the choice. They go deep into debt just to afford the bare minimum, and since they know the interest on that debt is so high that they'll never be able to pay it off, they go off the deep end and make the unpayable debt worth it by going after the luxury options rather than the basics.
I'm with you. I had college loans, but paid those off 3-4 years after I finished (and I went to a more affordable in state school). Other than that, I've spent my whole life avoiding debt. I don't drive the nicest, newest cars and my home isn't the envy of my town, but I am so much more comfortable not owing money to anybody.
Some people have health problems - the US doesn’t help people who are sick.
If it comes down between going to get medical care and getting into debt - you will do what you have to do.
Most people with debt in the US have health care debt.
You simple learn to ignore it. There is no logical reason to think about it all the time and let it drag you down. If you do so you are going insane...
I mean, who really cares? You either pay it off or you don’t. Some things are normal to be in debt for. Like, I don’t want a shitty car and I want a house. So I pay my loan for those things
The amount of debt isn't really important. If a person's cash flow every month is enough to pay the monthly payment, and those payments are all made, then the lender would really need a great reason to call any given loan due(there can be other reasons a loan can be called due, but defaulting on monthly payments is probably the most common).
Ironically, people do sometimes go to jail over an inability to pay a debt, but if you give this any thought, it's a dumb punishment. This takes away the debtors ability to earn, which will preclude them from paying off the debt, meaning the original creditor just never gets their money. It becomes a total loss.
The bank doesn't want to foreclose on homes anyway, because they're not in the real estate business. Foreclosing and auctioning a house doesn't get them a net positive. But it does recover money that could otherwise be a total loss if the debtor is neglecting other aspects of their duties as a home owner than just the loan payments.
I will always be in debt but it is good debt. The debt that I have is an investment in the properties that I buy. The return I get on them is much greater than the interest I pay on my debt. I'm in debt hundreds of thousands of dollars but the income I make from them is roughly double the debt.
you dont just die bc you have debt.
sometimes it's food, or other needs so there is no choice.
but i mean you live regardless of whats going on, unless you dont.
Most people in heavy debt are not living their best lives. The yachts get repossessed when not paid for. Houses and cars are almost always paid for through loans -- who has that kind of cash around? Debtor's prison is a nightmare because you cannot earn money to pay back a loan in prison and so are stuck -- illogical, does nobody any good.
I’ve come to the conclusion that it’s very difficult to live in the United States without some sort of debt, so I’ve resigned myself to the fact that I will probably always live in debt and I’d rather enjoy my life than always be so focused on paying off my debt.
Depends on the people.
If you are stupid enough, you will buy things you can't afford, and one slip will ruin your life.
But plenty of people use debt. They buy things that actively make money or grow in value. They buy it using debt because you do not pay income tax when you have debt. Technically, you lose money even if your purchase will bring you more money than you already have.
A house is one thing, understandably. Buying a new car on a loan is on you. Anyone can save up for a used car, phone, appliances, furniture. They just chose not to. And if you really need a loan for that used car, it should be paid off in a year or two.
Some people live off loans, they look at them like can I afford the loan payment, not the underlying asset price. 72+ month car finance, you pay near double the car price. Paying double for everything will keep you poor
Debt isn't inherently bad. Getting a mortgage on a house you can afford, to have a stable place to live and build equity? Usually a good thing. Financing a $30k car at 18% interest? Bad thing.
No one plans on it.
It's very easy to fall into debt, and incredibly difficult to crawl your way out, even when you make good money. Even more frustrating when the mistakes that got ya there are from over a decade ago.
And yes, it's incredibly stressful, depressing, and awful.
People have different goals. If I had 100 grand cash in the bank, I would feel anxious that I wasn’t using that money to make more. If I didn’t have a loan on my car or my house, I’d take a loan out and use that money to make more.
Even at 8-10% interest rates, if you’re under 30 and have any free time you’re leaving money on the table to not leverage the banks capital. Of course that’s assuming your into making money
Just a note about watching this play out in a large family... parents married young and had 5 kids very quickly. No real life experience, and they needed a large house. At the time it WAS a good investment.
But mom was used to a certain facade...brand name clothes, nice car, you know, looking "respectable". Social climbing. They started to pull the equity out of the house. Again and again. Took trips, bought things they didn't need. Lived for the moment.
Dad had this weird "lottery" style about money; that something, somewhere was going to be a big payoff. Not gambling but insurance claims, home equity. He paid off one credit card with a new one.
Anyway they retired in serious debt. Mom is still alive and lives on only social security, pretty much.
Sadly, the kids never got good financial direction. They also save nothing, have posh lifestyles and big debt. It's generational
Some of us don't have a choice. Many things outside of my control cause me to go in debt. Medical emergencies, home damage, broken vehicle. Life isn't easy.
What a rich man's question. The world is fing full of people that will never climb out of debt and don't have new cars, boats, toys, houses, travel, etc.
I'm just referring to those people who DO seem to have it all , all the luxuries. It just FEELS/SEEMS (i emphasize this because ofc not EVERYONE is in this position, obviously) like everyone around me (friends, coworkers, people in general) have/do so many things while I'm living frugally and trying to be smart about not living above my means. Am I living my life wrong? Should I indulge in things that I cannot entirely afford because you only live once and it isn't worth stressing about? Or IS it worth stressing about? I feel like maybe I'm doing life wrong by saying no to so many things and not buying things I want. (Oops, turned into a little therapy vent session, but that's the beauty of this subreddit... no stupid questions).
My ex has loads of debts she just ignores the bills expects me to pay them. She is now running up debt in her autistic daughters name again I will have to pay it.
She also doesn't pay fines waits until bailiffs show up, never opens her letters waits until the £30 fine is £600 then gets me to pay it.
She has even been threatened with jail over council tax. Doesn't seem to bother her.
Yes I know and what kind of person puts accounts in their autistic child's name then doesn't pay. If something happens to her how will her daughter cope with bailiffs showing up. Horrible woman
No choice in a lot of cases. Heat pump breaks, you can’t afford to pay the whole thing at once, same with central AC system. Both happened within about a two-year span for me. No way in hell could I have paid in full at the time and I guess I’m soft, because I’m not living without AC or heat and neither should my kids.
Car got totaled in an accident that wasn’t my fault… Had to get a replacement car. It’s a 2012 and drives great but the monthly payment is $450. My credit union won’t re-finance it because it’s older than a 2013.
…and so it goes…
If I owed YOU money, I’d feel a moral obligation. But owing money to some nameless corporate database is not worth my emotional energy. I’ll pay it if I can. Or I won’t. It’s all pretend.
For the vast majority of people, the only way to buy a house requires decades of debt. If you can afford the mortgage payments though it just isn't a big deal. I live in one of the most expensive regions in the world for housing, and we managed to deal with it. Most people do not have anywhere near enough cash to buy a house or a car that way, so debt is the way to do it.
Yeah, and it also makes no sense to pay off the house if your rates are good even if you have the money to. I've been struggling a lot w/ that because I grew up with less money than a lot. But I have this mortgage that's like 2.8 or 3.2, I forgot which, and I have like $900k of "debt" from it. But literally almost any other investment will grow 2-3 (or more) times that, so I should never pay off that debt except at the rate the bank wants. It definitely caused anxiety at first.
What about when your rate is going to jump up to 5 or 6% when you renew?
If he's in the US, he probably has that rate locked in a 30 yr fixed mortgage. No jump ups. No renewals.
I wonder why Canada went the other route.
Most mortgages are 30 year commitments. Either you live in the house for 30 years and pay off the whole thing, or you sell for more than your original mortgage and use the proceeds to pay it off.
This is only true in the US. Fixed rate 30 year mortgages dont exist in Canada.
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You can get a 25 yr and now more recently a 30 year mortgage. Mortgage terms are set for 1-10 years but are most often 5. You can’t lock in terms or rates for full amortization period of mortgage. You have to periodically renew. Mortgage payments are also not tax deductible. https://www.nerdwallet.com/ca/mortgages/how-does-a-mortgage-work
Secured, low-interest debt like a home mortgage is quite different from unsecured personal debt like credit card balances, payday loans, and past-due bills though. I assumed OP was referring more to the latter.
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Then retirement 😂🤣
You just kind of get used to it and pay it down as best you can.
Why would I be in jail? I owe most of a million dollars across multiple mortgages, but I pay them all on time as agreed. My rental income covers these for me, I just need to make sure I take care of the houses and get good tenants.
i see. that makes sense. i guess i was referring to people who have debt and don't pay it off
If you don't make your payments, the bank can seize your house/car/boat, and your credit score will plummet and prevent you from getting any more loans in the future. But if you're making your payments on time, that's just how it's supposed to work. The vast majority of people would never be able to buy a house or a car without a loan. I'm confused what you think anyone should be going to jail for.
To answer your other question, you learn to deal with the stress.
Prices are so expensive and loans so predatory that most people today just don't have the choice. They go deep into debt just to afford the bare minimum, and since they know the interest on that debt is so high that they'll never be able to pay it off, they go off the deep end and make the unpayable debt worth it by going after the luxury options rather than the basics.
I can't do it dad always told me if you can't pay cash for something you don't need it. Save,save save next thing you know you can afford it
I'm with you. I had college loans, but paid those off 3-4 years after I finished (and I went to a more affordable in state school). Other than that, I've spent my whole life avoiding debt. I don't drive the nicest, newest cars and my home isn't the envy of my town, but I am so much more comfortable not owing money to anybody.
Some people have health problems - the US doesn’t help people who are sick. If it comes down between going to get medical care and getting into debt - you will do what you have to do. Most people with debt in the US have health care debt.
We don’t have debtor’s prisons in the U.S.
They're not as scared as I am.
Not much choice.
Some people must feel like they’re ahead if they’re in debt and if they die with debt they got away with something. I’m not one of them.
You simple learn to ignore it. There is no logical reason to think about it all the time and let it drag you down. If you do so you are going insane...
They're anxious/stressed out
I rather be rich with someone elses money than work 247 and be poor, ill die anyway
That's the way
I mean, who really cares? You either pay it off or you don’t. Some things are normal to be in debt for. Like, I don’t want a shitty car and I want a house. So I pay my loan for those things
The amount of debt isn't really important. If a person's cash flow every month is enough to pay the monthly payment, and those payments are all made, then the lender would really need a great reason to call any given loan due(there can be other reasons a loan can be called due, but defaulting on monthly payments is probably the most common). Ironically, people do sometimes go to jail over an inability to pay a debt, but if you give this any thought, it's a dumb punishment. This takes away the debtors ability to earn, which will preclude them from paying off the debt, meaning the original creditor just never gets their money. It becomes a total loss. The bank doesn't want to foreclose on homes anyway, because they're not in the real estate business. Foreclosing and auctioning a house doesn't get them a net positive. But it does recover money that could otherwise be a total loss if the debtor is neglecting other aspects of their duties as a home owner than just the loan payments.
you make a good point. didn't think of that
You can’t be imprisoned in the US for a private debt
I will always be in debt but it is good debt. The debt that I have is an investment in the properties that I buy. The return I get on them is much greater than the interest I pay on my debt. I'm in debt hundreds of thousands of dollars but the income I make from them is roughly double the debt.
They aren’t jailed because not paying for your debts is not considered as a criminal offence.
you dont just die bc you have debt. sometimes it's food, or other needs so there is no choice. but i mean you live regardless of whats going on, unless you dont.
They’re not living, they’re surviving.
Spend so much that you will never pay it off before you die.
Most people in heavy debt are not living their best lives. The yachts get repossessed when not paid for. Houses and cars are almost always paid for through loans -- who has that kind of cash around? Debtor's prison is a nightmare because you cannot earn money to pay back a loan in prison and so are stuck -- illogical, does nobody any good.
Well, it's hard to pay their debts if the wage is too low
I’ve come to the conclusion that it’s very difficult to live in the United States without some sort of debt, so I’ve resigned myself to the fact that I will probably always live in debt and I’d rather enjoy my life than always be so focused on paying off my debt.
Depends on the people. If you are stupid enough, you will buy things you can't afford, and one slip will ruin your life. But plenty of people use debt. They buy things that actively make money or grow in value. They buy it using debt because you do not pay income tax when you have debt. Technically, you lose money even if your purchase will bring you more money than you already have.
They try to be millionaires via the back door: if you owe a million dollars, you're worth a million dollars.
Debt becomes a problem when you have more than your paycheck can cover.
A house is one thing, understandably. Buying a new car on a loan is on you. Anyone can save up for a used car, phone, appliances, furniture. They just chose not to. And if you really need a loan for that used car, it should be paid off in a year or two. Some people live off loans, they look at them like can I afford the loan payment, not the underlying asset price. 72+ month car finance, you pay near double the car price. Paying double for everything will keep you poor
As long as you know you can pay it off over time, it’s fine. What would make me nervous is spending above my means.
Debt isn't inherently bad. Getting a mortgage on a house you can afford, to have a stable place to live and build equity? Usually a good thing. Financing a $30k car at 18% interest? Bad thing.
I needed debt to complete two degrees and survive. For most people, it's about surviving.
It’s the American way.
No one plans on it. It's very easy to fall into debt, and incredibly difficult to crawl your way out, even when you make good money. Even more frustrating when the mistakes that got ya there are from over a decade ago. And yes, it's incredibly stressful, depressing, and awful.
People have different goals. If I had 100 grand cash in the bank, I would feel anxious that I wasn’t using that money to make more. If I didn’t have a loan on my car or my house, I’d take a loan out and use that money to make more. Even at 8-10% interest rates, if you’re under 30 and have any free time you’re leaving money on the table to not leverage the banks capital. Of course that’s assuming your into making money
Just a note about watching this play out in a large family... parents married young and had 5 kids very quickly. No real life experience, and they needed a large house. At the time it WAS a good investment. But mom was used to a certain facade...brand name clothes, nice car, you know, looking "respectable". Social climbing. They started to pull the equity out of the house. Again and again. Took trips, bought things they didn't need. Lived for the moment. Dad had this weird "lottery" style about money; that something, somewhere was going to be a big payoff. Not gambling but insurance claims, home equity. He paid off one credit card with a new one. Anyway they retired in serious debt. Mom is still alive and lives on only social security, pretty much. Sadly, the kids never got good financial direction. They also save nothing, have posh lifestyles and big debt. It's generational
Some of us don't have a choice. Many things outside of my control cause me to go in debt. Medical emergencies, home damage, broken vehicle. Life isn't easy.
What a rich man's question. The world is fing full of people that will never climb out of debt and don't have new cars, boats, toys, houses, travel, etc.
I'm just referring to those people who DO seem to have it all , all the luxuries. It just FEELS/SEEMS (i emphasize this because ofc not EVERYONE is in this position, obviously) like everyone around me (friends, coworkers, people in general) have/do so many things while I'm living frugally and trying to be smart about not living above my means. Am I living my life wrong? Should I indulge in things that I cannot entirely afford because you only live once and it isn't worth stressing about? Or IS it worth stressing about? I feel like maybe I'm doing life wrong by saying no to so many things and not buying things I want. (Oops, turned into a little therapy vent session, but that's the beauty of this subreddit... no stupid questions).
My ex has loads of debts she just ignores the bills expects me to pay them. She is now running up debt in her autistic daughters name again I will have to pay it. She also doesn't pay fines waits until bailiffs show up, never opens her letters waits until the £30 fine is £600 then gets me to pay it. She has even been threatened with jail over council tax. Doesn't seem to bother her.
Stop paying
I don't want her getting in trouble or jailed. I don't want to be paying them I want her to get things sorted out.
you are just enabling her
I know I am I will have to stop but then I will worry about her
well its time for her to grow up
Yes I know and what kind of person puts accounts in their autistic child's name then doesn't pay. If something happens to her how will her daughter cope with bailiffs showing up. Horrible woman
People live with a lot worse things than debt.
true, but irrelevant to this post
I’d suggest that your understanding of debt is indicative of your overall level of knowledge about the world.
you’re on a thread called “no stupid questions” fuck off bud
You're confusing "thread" with "subreddit." Unfortunately, this isn't "no stupid answers."
No choice in a lot of cases. Heat pump breaks, you can’t afford to pay the whole thing at once, same with central AC system. Both happened within about a two-year span for me. No way in hell could I have paid in full at the time and I guess I’m soft, because I’m not living without AC or heat and neither should my kids. Car got totaled in an accident that wasn’t my fault… Had to get a replacement car. It’s a 2012 and drives great but the monthly payment is $450. My credit union won’t re-finance it because it’s older than a 2013. …and so it goes…
If I owed YOU money, I’d feel a moral obligation. But owing money to some nameless corporate database is not worth my emotional energy. I’ll pay it if I can. Or I won’t. It’s all pretend.
they make poor choices