Originally Posted by Juliacat
My two cents: Yes, mortgage debt is debt. You still owe money to the bank, and if you don't pay it they can take your house away from you. Whereas, if you own a house free and clear, you get a place to live all your own, as long as you pay the taxes and insurance.
Well, yes, of course, it's better to own a house outright, but, honestly, how many people of parenting age can do that?
I've read a lot of posts and I've noticed a trend. Most people who own a house have a mortgage unless:
1) They inherited either money or a house. Now, that doesn't count, really does it as good financial management because they didn't buy the house themselves. They lucked out, more or less.
2) They hit the market at just the right time and either bought low or sold high. Again, luck.
3) They live in a low cost of living area. This isn't just luck. It is choice, but we don't all have that choice depending on factors such as where we get jobs. But, yes, that is still a choice to an extent and more something we can control than 1) or 2) above.
The comparison is not about owning a house outright versus having a mortgage.
The comparison is having a mortgage and renting. If you rent, and you don't make your payments, they take away your rental. It's the same as if you owe on a mortgage but don't make your payments, right?
And you owe what's left on your lease just as you owe what's left on your mortage. Yes, a mortgage is a bigger commitment, but a lease is still a commitment and no one is counting a lease as debt.
I'm getting a little tired of people who chime in and say that they inherited money or a house or received a gift from family for a large down payment and so they have no debt.
I'm sorry, but that isn't the same financial management as someone who comes up with the down payment themselves and makes the payments and maintains great credit scores. It's just not.
Likewise, I see so many posts about people being debt free because their parents or grandparents paid for them to go to college. Yes, that is a blessing, but that is the easy way!
It's easy to be debt free is someone else paid for these major expenses.
I paid for college all on my own, because I had to, and because I really wanted to go to college. I also couldn't live at home because my parents didn't have a home and lived very hand to mouth. So, it's not like I had any option to save expenses by not having the dorm experience or something.
In fact, I financially helped my parents...a lot during college, and after.
I don't have a chip on my shoulder about any of this. I'm just saying I have a hard time understanding some of the views on debt and why people with more assets to begin with have fallen into financial struggle.
I came from a poor family, whom I've had to help out financially. I haven't even spent all my money on just myself and my household, but on other people.
I had to take out lots of debt to go to college, but I managed it and have it nearly all paid off.
I bought my house myself (and DH's help) with a down payment we saved ourselves.
We have savings from money we made and saved.
We have retirements.
We get by. We have great credit scores and other than house and student loans we have no debt and never have. We have never had one dollar of consumer debt and we pay off other kinds of debt right away.
The one blessing I see that has been to our benefit is having our health (big factor, no medical bills, which I know is a struggle for some) and we've never yet had a job loss from a lay off, etc.
Our "trick" or tactic is, I guess, just knowing how much you earn. Making a budget. Sticking to it. And not buying things you can't afford. Or if you want something, making it a goal, saving up for it, and paying for it.
Dave Ramsey and Suze Orman make a lot of sense, but it's really just common sense.