Zero CC debt

[JeremyD]

Good for you Lube - we just did this last month too - for us we remodeled two houses, sold one at a loss and refurnished another. It was a little dicey - but we are now down to one house payment and one car payment.

If we could have been back in our house (after remodeling) on time - we would have been in good shape - damn contractor!

[the]

Originally Posted by Tim Hancock

We made double payments on the house for many years until we recently paid it off, buy nothing but used cars with cash and always pay the cc off at the end of the month. Of course I happen to love living in a 40 yr old plain jane house and driving 5-30 yr old german cars all the while knowing that losing my job would not be the end of the world.

Sounds exactly like me.

I've never carried a penny of credit card debt in my life, and, really, don't even understand the concept behind doing that. So someone, help me to understand it.

I can see if you need money for an emergency, and you are broke and have no choice.

But someone fill me in on the rationale behind paying interest to a credit card company (non-emergency stuff). Is it just to be able to buy stuff you can't afford to pay for? If that's the case, and you can't afford to pay for it today, is there something planned that makes you think you can pay for it in a few months? (Like a big raise or something).

If one is that close to the edge on finances, it seems like paying big interest to a credit card company is the *last* thing you'd want to do. That seems so obviously moving in the wrong direction, I don't understand how anyone could do it.

My other guess is that it may be related to how you were raised/your family? Parents or others around you carried cc debt, so it's just viewed as a normal way of doing things?

Not judging anyone (I don't care), but I am interested in getting into the heads of those who carry credit card balances (for non-emergency things). 'splain your thinking to me!

[IROC]

Originally Posted by carnutzzz

Probably should have left the account open but cut-up the cards. Would have been better for your FICO score.

I don't think it makes a difference. My wife and I have never used credit cards since we've been married (about 6 years) and recently bought a house and my credit score was an 823 (found out the credit score with the home loan application - I didn't know what it was).

[DARISC]

I'm one of those idiots that's ruining the economy by not buying anything that I can't pay cash for (since divorced). No CC debt or car payment for last 22 yrs.

Well, not 100% true; took out a HELOC for an 08 Volvo C30 and have a small mortgage, both of which I could pay off, but with the tax write-off on the interest (interest only payments on the Volvo) the loans cost me about 3% in the end and I do better than that with the money left invested.

Paying off one's house isn't always the best business decision, depending on one's tax situation.

I have one VISA card through a credit union that is automatically payed off monthly. When I opened up the HELOC for the Volvo last Feb., I found out my FICO score is 848 (850 is max).

I may be helping to destroy the economy, but I HATE paying interest!

[Palum6o]

I am also proud to not have any CC or home equity debt. One mortgage, one car payment which is a finance, other two cars are paid off and they are working for me now. Its definitely easier to spend than save. Having a credit card is very necessary for me though, I use AMEX for all my expenses both for work and personal and I pay it off each month. AMEX provides a lot of value by using their card and I'm a happy customer.

[onewhippedpuppy]

Never carried a CC balance in my life. Current debt is my house (20 yr fixed) and school loans, which aren't yet due. I hope to have the cash on hand to pay 1/2 of the school loans off when payments start (Dec). The rest we'll pay of aggressively. The cars aren't impressive, but paid for with cash. I absolutely hate debt.

Anyone that thinks they're building credit by making payments on CCs or having multiple cards is kidding themselves. As others on this thread have noted, my wife and I have had very little debt in our lives, and both have excellent credit.

[Dave L]

$0 CC debt for 5 or 6 years. My wife leases her car and I have a small loan on my "newer" car. The mortgage is on track to be paid off in 5 years for when I hit 40.

My wife grew up with out a lot of money (okay none) so she is really fearful of debt, I dont think she has ever paid interest to a credit card company. I have always had expensive hobbies and they do continue but they are more incheck now. I guess my wifes fugalness and refusal to go in debt is wearing off on me.

[KFC911]

Good for you Luby! I too can't even comprehend CC debt...just wasn't raised like that. Absolutely, "No debt = No stress", even when the crapola hits the fan (like today). Heck, I even lost my corporate gig exactly one month ago (knew it was coming - outsourcing), and couldn't be happier these days. I'm in the middle of a few house projects, and will take a few months to figure out what I'm gonna do next..."would you like to supersize it" .

[Joe Ricard]

It is a good feeling.
Welcome to the club.
1 house paid for, all cars paid for, other 2 houses paying for themselves (rentals). balance on all cards comes up to 300 bucks. Hey had to fill up with gas this week. Payed off each month.

[madmmac]

Originally Posted by the

But someone fill me in on the rationale behind paying interest to a credit card company (non-emergency stuff). Is it just to be able to buy stuff you can't afford to pay for? If that's the case, and you can't afford to pay for it today, is there something planned that makes you think you can pay for it in a few months? (Like a big raise or something).

Not judging anyone (I don't care), but I am interested in getting into the heads of those who carry credit card balances (for non-emergency things). 'splain your thinking to me!

If your investment strategy is making more % wise than the cost % on your loan or CC, then you are that much ahead by not using your investment funds to pay it down and to keep putting your money towards those investment funds.

[rattlsnak]

You either all live in shacks, or you make millions of dollars a year. I have never been in this deep of debt in all my life. I will proudly die with tens of thousands of debt in CC bills because there is no way I could EVER pay them off in the next 50 years. Don't know exactly how it happened, as I certainly don't have "many things", but it just has plumped over the years.

p.s., you all suk..

[KFC911]

Originally Posted by madmmac

If your investment strategy is making more % wise than the cost % on your loan or CC, then you are that much ahead by not using your investment funds to pay it down and to keep putting your money towards those investment funds.

I don't think many of us are suggesting using investment $ to pay down CC debt (and it's damn hard to play the %s the way you suggest w/o risky investments imo), we're of the position of "don't use CCs to begin with". If you're financially prudent enough to be debt free, it goes without saying that investment side of the house is being taken care of too . Being totally debt free allows for lots of options. IMO, your strategy is a "sucker's bet" over the long haul for MOST people.

[DARISC]

Originally Posted by madmmac

If your investment strategy is making more % wise than the cost % on your loan or CC, then you are that much ahead by not using your investment funds to pay it down and to keep putting your money towards those investment funds.

Right.

Rough figures, If you owe $100k @ 5% on your house, that $100k that you've borrowed is really only costing you about 3% after you write the interest off your taxes, i.e., your mtg. is effectively at 3%.

So, if you have $100k in investments paying 5% and you use it to pay off your $100k mtg,, which is really at 3%, you're losing 2%, maybe more, depending on your tax situation.

I think a lot of people don't realize this or don't care because it's psychologically comforting to them to have their house paid off.

[KFC911]

Originally Posted by DARISC

I think a lot of people don't realize this or don't care because it's psychologically comforting to them to have their house paid off.

Yes, it is comforting to have house(s) paid off, but I can sure understand someone taking that approach with their mortgages or other appreciating assets (different strokes). CC debt is "usually" not used for purchasing appreciating assets, but rather for "living beyond one's means" for "most" people imo...a different game entirely.

[DARISC]

Originally Posted by rattlsnak

I will proudly die with tens of thousands of debt in CC bills because there is no way I could EVER pay them off in the next 50 years. Don't know exactly how it happened, as I certainly don't have "many things", but it just has plumped over the years.

p.s., you all suk..

Have you considered this?

If you own a home and can get a HELOC for the total amount of money that you owe on credit cards, take out that one loan, which will be a HELLUVA lot less % than credit cards charge, then pay off the credit cards in full.

Then you'll be able to write off the interest you're paying on that HELOC, which, as I say will only be 3% (if you get a 5% HELOC) and save a lot of money as well as getting out of debt.

Sound like a no-brainer?

[on2wheels52]

I must have absorbet money management from my parents. Never any cc debt or car payments, house paid off 10 years ago.
Jim

[DARISC]

Originally Posted by KC911

Yes, it is comforting to have house(s) paid off, but I can sure understand someone taking that approach with their mortgages or other appreciating assets (different strokes). CC debt is "usually" not used for purchasing appreciating assets, but rather for "living beyond one's means" for "most" people imo...a different game entirely.

Maybe I'm not understanding you. I'm only saying that, since interest on a mtg. and interest on a HELOC are tax deductible and MUCH less than credit card interest, it doesn't make any sense to me to pay high interest as opposed to low.

In general it definitely doesn't make sense to use a CC to buy appreciating assets (what assets can you imagine that dependably appreciate at a greater % than what the money would cost you on a credit card?). What I'm saying is that, whatever you used CC's for to build up a debt, it's simply money that you now owe and are paying back at an interest rate that is exorbitantly expensive compared to a HELOC.

[KFC911]

Originally Posted by DARISC

...In general it definitely doesn't make sense to use a CC to buy appreciating assets... .

I agree wholeheatedly. From my perspective it also makes EVEN less sense to use a CC to buy a non-appreciating asset . CCs are the financial heroin of the masses..."here try some...it won't hurt ya...you'll like it" . In theory, your advice of using a HELOC to pay off CC debt sounds good, but ONLY if those CCs are destroyed and never used again. Barring extenuating circumstances, someone who's "lived beyond their means" on CCs, probably should NOT use their HELOC as "financial methadone" in order to get off the "heroin" either and risk losing their house also. I'm with Jim all the way on this one...

[Rick Lee]

I haven't carried any CC balances in years, but am just now back into it, as my income has gone way down and a few surprise expenses hit me. It's nothing I can't knock out in a few mos and it chaps my a$s that I'm paying interest. But the upside is that I'll never pay as much interest as I would have spent on the RT flight to China I'm about to get out my CC miles.

[Jagshund]

I pay for everything possible on a Hilton card for the purpose of points (5 pt/$1). Then pay it off regularly (nearly every other day). FYI, we can stay at the W-A in NYC free for a week every year by doing this - or just about any Hilton brand resort in the world for the same length of time. There are ways to use ccs without going into debt.