How real is it, the "get out of debt now" mentality?

[Angela Shelley]

There are hundreds if not thousands of financial advisors who sell books, tapes, videos and DVDs with their message of "get out of debt now".

Many talk show hosts have financial advisors as regular guests.

I am curious if there truly is a "get out of debt now" mentality, or is it just "hot air".

My question:

In your opinion, based on what you´ve PERSONALLY heard from friends, family and colleagues, which percentage of all US households are SERIOUSLY working on "getting out of debt now"?

[Xenotime]

1. mostly hot air.

It impossible to survive in today's modern era without credit.

[Wcross]

18. I disagree.

You CAN live in this era without being in debt. You might find it difficult to keep up with the Joneses if you forgo debt but you can live just fine without it.
One of the well known debt guys Dave Ramsey, says the ONLY acceptable debt is a mortgage. That mortgage should be no more than 25% of your take home pay & no longer than a 15 year fixed rate loan. I have heard of some people spending up to 1/2 of their take home pay on a mortgage. They are killing themselves in order to appear wealthier than they really are.

[Orrex]

30. Sure, some people CAN live debt-free, but for others is simply not realistic

Debt-free living presupposes a living wage, which itself largely a fantasy. It also assumes that no emergencies arise (broken furnace, car repair, medical bills, etc.), and it generally requires a preexisting savings account or the like. For many, the amassing of debt has nothing to do with "keeping up with the Joneses" and everything to do with keeping up with their utility bills.

I applaud those who manage to live debt-free or close to it, but reality doesn't permit everyone to live that way.

[Wcross]

44. True. However, going into debt to meet basic living expenses is financial suicide.

If you can't meet your basic living needs on current income, going into debt to meet them will only work for a short period of time. Debt is not the solution to that problem. It can only be solved by cutting expenses or increasing income. Debt only increases your monthly expense & does nothing but hurt your cash flow.

[Angela Shelley]

36. Was Dave Ramsey the one with the radio show?

[Wcross]

42. Yes he is. He is a fundy republican but his plan is workable.

You don't need to buy his books or attend his seminar. It is such a simple plan it can be explained in a short post here.

1) Free up some of your cash flow. You can do this by cutting back on luxuries such as eating out, buying starbucks, going to the movies & everything else that is not necessary.
2) Build up a small emergency fund of 1000.00 with the savings.
3) List your debts smallest to largest EXCEPT FOR YOUR MORTGAGE. DO NOT BE CONCERNED WITH INTEREST RATES.
4) Use the extra cash from step one and throw it all towards the smallest debt. When that debt is retired use the money you used to pay the smallest debt with & apply it towards the next debt on your list.
5) When all your debts are paid (except for the house), build a larger emergency fund of 3-6 months of living expenses.
6) Attack the mortgage with everything you can throw at it.

Imagine what your life would be like with no debt.

[NashVegas]

50. It's That Joneses Thing

That makes so much of it nearly impossible.

But even if it's just mortgages, it's would impossible to find an affordable home to purchase, within a 40 mile radius of where I work, that's not in a completely crime-ridden area. Bit of a problem, that - at least as long as we're talking on one person's income.

I think that's where we went wrong. We (home buyers) made it acceptable for builders to neglect single-income buyers.

[Wcross]

54. Are you in the Nashville area Crisco?

There are still some areas that have affordable homes. If you stay out of Rutherford, Davidson & Williamson counties there are still homes in nice areas for under 100k.

You are correct that homes being built today are based on two earner families & they are trying to stretch that even! I suppose you have noticed, like I have, that the foreclosure pages in the Tennessean have been growing lately. They used to be one page, now it is common to see three to six pages.

[NashVegas]

55. I'm Keeping An Eye Out

For foreclosures. There's an area of Donelson that's within 10 minutes of downtown, fairly affordable. People here aren't being realistic in their selling prices just yet. If I do buy, it won't happen until late summer at the earliest.

Currently, I rent in Belle Meade - for less money than I would pay for anything comparable in East Nashville. When you take crime rates into the mix, *that's* how fucked up the market is.

[Wcross]

57. I'm down near Wartrace (Normandy lake) & people are still greedy.

I paid 2400 an acre for land in 2002, now some people think the land is worth 10-15k an acre. Even the larger acreage tracts have asking prices of 10k an acre. Real estate DOES NOT appreciate at that rate historically & it isn't worth that now. We have a year here in Tennessee before reality slaps these sellers in the face.

You are wise to shy away from east Nashville & STAY AWAY from Antioch too! Even LaVergne is starting to get gang problems (not to mention it is a really crappy & crowded town).

By all means, keep your eyes open & I do think the situation for buyers will improve. Maybe you could pick up one of those condos downtown in one of the towers cheap???? Lots of failed speculators there!

[leeroysphitz]

59. delete

[NashVegas]

48. I Have Credit - I Have Miniscule Debts

I broke down and got my first credit card six months ago - and I'm over the age of 40. What credit is on the card is there solely for the purpose of building a report.

[Angela Shelley]

70. Check out this video!

http://video.google.com/videoplay?docid=-726450075131909113&q=steve+martin+site%3Avideo.google.com&total=351&start=0&num=10&so=0&type=search&plindex=0

[SoFlaJet]

2. we are

and were doing pretty good until Christmas came along and a couple of new grandkids last year-back to it though-you know AFTER we pay Uncle Sam a couple of grand for George Bush's war-which is why it's so critical to get a dem in office-either one, and we'll ALL be so much better off

[LaurenG]

3. We are

but it's so the banking families can stop getting a piece of me. I hate being f'ed without permission.

[Fredda Weinberg]

4. Credit card debt w/usurious rates? You bet ... call now, but call yourself

And re-negotiate any large balance. But mortgages, student loans ... business debt ... that's the American way.

[CountAllVotes]

7. I did that with my cable TV

They are pushing those dishes where I live now. Cost is $29.99 a month for it (you get hundreds of channels but who wants a dish on their roof? Not me!).

I called up the carrier of my cable TV and told them to give ME A BREAK. They are charging over $50.00 a month for basic cable TV and I could have "the dish" for $29.99.

They agreed to lower my bill to $25.00 a month for the next few months so I have saved $75.00 by making one telephone call.

I suggest others do this! :D

As far as all of this "get out of debt" stuff all of a sudden, it is yet another ploy to get every last cent you've got IMO.

:kick:

[Fredda Weinberg]

9. Good for you. You're worth it n/t

[eShirl]

37. you could lower that to $0 per month with another phone call

we did and after the first couple weeks we stopped missing it

[CountAllVotes]

53. If it was up to me I would get rid of it

however, it is not up to me. DRAT!!! :evilgrin:

:kick:

[bluerum]

5. The repukian creed is to spend, create huge debt, die and let someone else

clean up after you.

[Bobbieo]

6. Getting out Of Debt

I never got into debt in the first place - Paid my credit card every month and only bought what I could not do without and saved my money to pay cash for what I could do without.

I got trained early living though the Great Depression.

[Angela Shelley]

38. Good for you, Bobbieo, thanks for the example.

[rubberducky]

8. I finally got out of debt, but believe me it was a long hard road.

Like you, I heard all the gurus tell you that you HAVE to get out of debt. Thay make it sound like a fun kind of challenge. It`s not, it took all my energy and will power, but I did come through it. I never realized how deep that pit was until I escaped. After all ,I already had all the stuff and I kept buying more (got to keep up appearances). I was way,way in debt. Sold some stuff, but mostly had to put in long hard hours at work. It`s well worth it in the end, but it`s not going to happen with wishes.

[Donnachaidh]

10. most are debt junkies, and buy these tapes because of GUILT

It's like the little kid sticking his finger in the dyke, to stave off a flood. In fact, most buy those books, tapes and videos ON CREDIT, and then they sit on a desk gathering dust, while the owners are out shopping for shiny new toys.

People are programmed from birth to BUY. They are told their lives will be better, their genitalia bigger, their kids smarter -- if they just BUY that pill, or that book, or that article of clothing they will wear once. They've been suckled at the breast of the snake oil salesmen. And they are either too lazy or too weak to take some control over their lives.

The only ones getting out of debt are the authors of the schemes. :shrug:

[Earth_First]

11. We were; and now we are...

The only debt that we own is the four walls and roof over our heads.

[Wcross]

12. I will be debt free within the next three months. (house & all)

I will be able to save 1/2 of my income when I achieve this goal I have been working on for the past four years. I have no intention of ever becoming a debt slave again.

The problem we have in America is the entitlement mentality. We are Americans so it entitles us to a home we can't afford & an SUV that costs as much as we earn in one year. We are entitled to eat out 5 nights a week & we can do it because we don't pay with "real money", we pay with a credit card. When the credit card balance gets too large we "pay it off" by getting a home equity loan. Wash, rinse & repeat.

It is now the day of reckoning for a lot of fools who have lived this lifestyle. They are no longer able to tap their home equity. They are going to have to start paying for their past lifestyle.

[Fresh_Start]

15. Early Congratulations....

I'll be paying the mortgages (my home and home we bought for my mom) for a long time

[Wcross]

17. I've even gone to the extreme of "freezing" my credit report.

It makes it impossible to open a credit account unless you call all three reporting agencies & have them unfreeze it using a "pin number". One reason I did it was to prevent identity theft but I also did it to make it difficult for ME to obtain any new credit.

[Fresh_Start]

19. we'd been focusing on building savings

for a pretty long time (instead of retiring debt)
We're saving about 25% of net (after deductions)
the non-house debt is trivial and low interest rate
but between the two houses we've got about $750K mortgage
which is a big nut every month plus taxes and insurance periodically

[Wcross]

20. When I bought it was a small house on 15 acres. (54,000 usd)

I had to put a lot of work into the house but I paid as I went, it will be a little under five years from the date of purchase to payoff. I suppose it might have been wiser for me to work on my savings first but I am single and am terrified of being homeless. I figured if I could pay off the house I could live on a McDonalds job if need be. I never want to be thrown out on the curb.

[elehhhhna]

23. Damn! YOU should write an advice book.

Congratulations!

[Wcross]

26. One sentence is all I would need.

It doesn't matter what other people think of you.

[elehhhhna]

29. So true! We've lived beneath our means, for the most part, and it's been

a samrt strategy -- esp. when a frikin Bush gets into the WH & crashes the economy.

[sarcasmo]

31. Crashed the economy on purpose. IMHO of course.

[Angela Shelley]

68. Thanks Wcross for the "wisdom"!

Most consumer purchases are made to show "identity", which means that we´re spending more money on keeping other people happy or envious.

[Fresh_Start]

24. our first couple of homes were modest

I had built a nestegg as a single (I called it my FU money in case work ever got horrible I knew I could walk out the door)
Of course that was the down payment on our first house (and I felt trapped because I didn't have FU money)
We bought 1989 before the downturn on the east coast
A craftsman in a good neighborhood but the house was a DISASTER.
When we walked into the house, the owner was rebuilding an engine in the living room will give you an idea how well they treated the house.
Lots of sweat equity put in. Don't think we made minimum wage on the time we put into restoring the house.
I learned to plaster walls, we refinished every piece of wood in the house by hand.
I even refinished the wood floors myself

But our family was growing and we outgrew the house.

[dansolo]

45. That I don't understand

Do you really expect to spontaneously open up a credit account? That strikes me as the same argument that people use for not having any credit cards. I have two credit cards, which I pay off in full every month. It is much more convenient that having to carry around wads of cash all the time. If you are committed to pay for everything in cash, then it is just as easy to just pay off your bills in full every month. The real problem isn't the availability of credit, but the mentality of feeling like you need to buy things that you really don't need.

[Wcross]

46. It was mostly to protect me from identity theft for credit purposes.

I had a scare a month ago when someone got into my online bank account & looked at everything. They also changed my password. I looked into that company "life lock" but they want 9.95 a month for life to "lock" your identity. I was able to do it for a one time fee of 22.50 through the three agencies.

In regards to my own urge to obtain credit, it works for me. I would have to think long and hard about opening a new account if I had to go through the hassle of unlocking my report. Just another self imposed speed bump I want to have in case of temporary insanity.:)

[Lorien]

51. I have piles of debt, but it's mostly from medical costs that my insurance

company refused to cover ($32,000.00) plus six months of unemployment (another $11,000).Now I'm in need of more vascular surgery and I don't know what to do; risk dying of deep vein thrombosis or pile another ten grand onto my debt load?

[Wcross]

56. No question, your life is more important.

Did you have a lawyer look at the denied claim? Have you gotten different quotes on the vein surgery? I hate to hear of that you have had so much difficulty but I would never give up on it.

[Lorien]

65. After the medical costs wiped me out I couldn't afford a lawyer

I had my health insurance through NASE (the National Association for the Self Employed). I learned years later through this episode of NOW: http://www.consumerwatchdog.org/healthcare/NOW/ that my experience was hardly unusual for NASE insurance carriers. They refused to pay for many life saving surgeries, driving hundreds of policy holders deeply into debt. What's more, many politicians are now touting insurance coverage like the type NASE offers as the cure for the health care crisis. I don't bother getting checkups anymore, and I know that my vascular system is a mess, but I'm so tired of ten years of battles over debt that I'm willing to just take whatever comes at this point. Luckily I don't have any family or loved ones, so I don't have to worry about dependents if health troubles get me in the end. There are more people like me out there than anyone in our political system would care to admit. It's easier to blame America's debt woes on greed for flat screen TVs and iPods than for a total failure to provide affordable basic health care for Middle and working class citizens.

[Fresh_Start]

13. we are and I know several friends who are

except mortgage deb

[originalpckelly]

14. My old lady is out of debt, and I've never had any debt...

having learned my lesson from her problems. It's not a bad way to live, instead of using credit cards, I use these little prepaid cash card things. They work on the net just as well, and even though you have to pay a fee to use them, it's a lot less than a % of interest on most things.

[Wcross]

16. Debit cards work the same way & are free with a checking account.

If it is a Visa/MasterCard branded debit card they work just like a credit card. You can even rent cars & pay for hotel rooms with them.

[Rosemary2205]

21. You likely do not have ANY consumer protections with your debit Visa.

If you find unauthorized charges on your bank statement via the debit card you are probably screwed. Oh, your bank's policy may SAY they will investigate, but overall the track record is NOT good, and most states, nor the feds require the bank to do a whole lot to get your money back for you. They have no incentive since the loss of your money means nothing to them.

With an actual credit card, you withhold payment while you dispute the charges. That gives you leverage and forces the card issuer to pursue unauthorized charges.

[Wcross]

25. Visa has a zero liability policy.

It is just as effective as a credit card. I have had unauthorized charges removed on mine with no liability.

[pitohui]

61. i have the same (positive) experience w visa

i think in early days of debit card there were fewer protections but now the companies realize that if they want people to keep using them, they have to give us some protection -- there are just too many identity thieves running around and unauthorized charges do happen that need to be removed in a timely manner

[elehhhhna]

22. Paid all but the mortgage off by 1/1/08. Someone asked last week what the hardest part

of getting debt free was --

honest answer: to stop using the card(s).

edit to add: he semmed deflated by the answer, then left w/ his wife for a 1 week Carribean cruise, lol

actually, paying them off was kinda fun.

[Wcross]

27. LOL- "deflated" !

I bet he was expecting some complicated scheme that didn't involve any lifestyle changes!

[pitohui]

63. a caribbean cruise probably only cost a few hundred dollars

this is why they are so popular with older people on a fixed income, i guess it's the old economies of scale type thing

[MissB]

28. Americans get mixed messages.

On one hand, we're consumers and like good little consumers, we're supposed to consume more more more.

The get-out-of-debt folks are a small minority. For many Americans, it is hard to change course from the constant spending spree they've always been on.

I had to sit down with my 44 year old SIL two years ago and work out a budget for her. She'd never done one, and had no idea whatsoever how much she had coming in for income and how much she had going out in expenses. No idea. No clue. She was a homeowner at the time too.

People aren't taught basic financial lessons, and so they never learn them. They do, however, learn how to spend. And consume.

I recommend Your Money or Your Life to anyone that shows an interest.

[Lorien]

52. That's a great book. I also like the video series "Affluenza" and

"escape from affluenza".

[onethatcares]

32. those that write those books are the same ones that

write the books about "Get Wealthy Overnight", "Riches without Work". The only people that get out of debt or get rich off them are the writers and publishers.

[recoveringrepublican]

33. except for our mortgage we will be debt free next month

The only reason for this is I got pregnant. Before we would just keep paying a little over the minimum. But when I found out I was pregnant again, I knew I wouldn't want to work for a couple of years. So my husband just started paying them down like a madman. They will be paid off as soon as we file our taxes and get our refund (if we weren't using our refund, it would take until April to pay them off).

That said, my husband works for the federal government and makes well above the median wage here in Florida. I work full time, but for a just above minimum wage job while my kids are in school during the day. I doubt we could have paid the debt off if we made less than $50k. The cost of living down here has just skyrocketed. Our family is very fortunate that my husband has the job he has and we bought our house right before the boom, without these two things we would be screwed just trying to pay the mortgage and to put food on the table, forget about paying off debt in any meaningful way.

[Wcross]

34. Congratulations on your freedom recoveringrepublican!

If you guys can start hitting that mortgage with the money you used to pay on the retired debts you will knock it out also! Think of the freedom that would get you! You could use the mortgage payment towards your retirement or putting the little ones through college. You could save & invest to a point of true wealth. You could use that wealth for helping others.

[Wcross]

35. You should ask yourself what the benefits of staying in debt are.

Some people claim that home debt is great because you can deduct the interest on your taxes. I am amazed at that myself. For every dollar you spend on interest you can use it to lower your taxable income. The problem is that you are spending a dollar to save 15-34 cents (depending on your tax rate).

[MadHound]

39. Excepting mortgage, I've always been out of debt.

Never had a credit card, never wanted one. When I buy a new car, afterwards I immediately start stashing money into an interest bearing account of some sort for the next car. I'm even on track to paying the mortgage off early, probably by ten years at least.

Being in debt, whether CC, car or home, allows to many people and corporations to have hooks in you. Besides, without CCs, I'm had to worry less about ID theft. Plus I keep strictly within a budget. If I can't afford something, then I wait on buying it until I can. And I really can't fathom how people can stand up under so much debt. The average debt load for a CC holder is now $10,000(up from $8,000 just a few years ago). Sorry, but to me that's insane. Yes, I know some folks have medical or other emergencies, but the vast majority of those people have simply gone out and blown money they didn't have on consumer crap they didn't need.

Cut up your cards, get out from under the debt load you carry. You will be much better off if you do.

[KG]

40. i went into debt buying "get out of debt now" books!

:hi:

[Angela Shelley]

41. Any recommendations?

[Wcross]

43. Start listening to Dave ramsey on the radio & save your money.

You don't need to buy anything Angela. You will understand the concept easily enough by just listening to his show. As I stated in the post up at the top, he is a fundy/conservative but his idea is sound. He also likes to brag on how he is a millionaire (from selling his books & tapes) and he claims it is a "ministry".
If you can tune out the Bull crap & just use his ideas it can work.

[supernova]

49. Clark Howard

He lives in atlanta and openly admitted that he bought his wife's wedding ring at Costco! :D :rofl:

But he does overtime figuring out the best deals on cell phone plans, insurance, everything financial.

http://clarkhoward.com/

[KG]

58. um, was just kidding....

[supernova]

47. Credit Card debt is a big shell game

that the banks play with you. And just like in a casino, the house odds are always against you in the house's favor. They are free to set whatever rate they want, whenever they want. Fees, ditto. And your payment patterns are their key. They don't want people who pay off their balances evrey month, because they don't make the bank any money (the interest and fees that you pay.) You are actually a liability to the bank of you reset your balance to zero every month. They want people to carry balances from month to month to provide the bank with a steady income stream.

Do you really want your hard earned $$ to be an income stream for someone else? Or do you want to put that $$ to work for you in savings or investments make you money?

I am debt free today and intend to remain so. If I want something, I pay cash for it upfront. If I don't have the money, I don't buy it. I even paid cash for my latest car, a 2002 Honda CRV.

[pitohui]

60. almost everyone would like to be or is actively working to be out of debt

to a certain extent all the books and seminars are a hoax, because the reason people i know are in debt is because of medical issues (the high price of health care plus the high price of missed work, in other words, lack of social safety net in usa) or else because they have invested in something you can't buy without incurring significant debt (a college education, a house)

i have no debt because i have no children but it would be impossible for us to have a middle class lifestyle with paid-off house AND have kids AND have retirement, today's salaries just don't pay enough, esp. after the huge health insurance costs

i think almost everyone has this dream of being out of debt, and the books are sold to pander to a dream, a dream that is unfortunately not going to be attainable if you want to have "everything" and by "everything" i don't mean a flight to china on the concorde, i mean having a house, two cars, two children who graduate college, and a retirement fund, most jobs don't cover this

[fascisthunter]

62. I Am Personally

and I know a few others who are too. Most people have some form of debt... most people I know, and it wasn't on frivolous means, either.

[Generic Brad]

64. Same here

I almost have my house paid off. I am as conservative with my money as I am liberal in my politics.

[annabanana]

66. We're doing it.

Sending in extra principle on the mortgage. .. . tax refund going to take down the credit card.. no car loan . .no education loan.. We're doing it.

[RayOfHope]

67. We are going to be debt free by August

we're paying off almost $12,000 in debt by August. We're doing the Dave Ramsey thing. His book is pretty light on the Jesus aspect (thank goodness) but it really is a good plan, if a little severe. I am nervous about the economy and I'm tired of feeding The Man with our paychecks.

[Angela Shelley]

69. Good for you! Sounds like Dave Ramsey

is quite a popular advisor on this topic.

I think we all should be nervous about the economy too.