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#1 of 38 Old 12-06-2012, 02:18 PM - Thread Starter
 
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OK, I am totally on board with being debt-free. But I'm finding it hard to figure out exactly, um, why. (We will be debt free this January, and unless something goes terribly wrong with the new baby, should be staying that way.)

 

See, here's the thing. We already have a mortgage at a super rate, and we will probably pay it off early. We don't need a car loan and will probably pay cash next time we buy (hopefully not for another few years). We aren't going to be applying for jobs. We aren't going to be looking for an apartment. We're not looking to secure new credit. Our interest rates, insurance rates, etc. are pretty good.

 

Other than feeling good about being "disciplined" and of course the whole not-having-debt-hanging-over-your-head thing... What would a good credit score do in our situation? (Or not even credit score, really, but specifically, being debt free.) TIA!

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#2 of 38 Old 12-06-2012, 02:43 PM
 
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Not having to pay interest on purchases would save you money. And you could put money (or extra money, if you're already doing it) into retirement, school, big holiday, house renovation etc savings.

Is that the sort of thing you mean?

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#3 of 38 Old 12-06-2012, 02:47 PM
 
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Being debt free means you owe no one. Everything you have is yours. Of course, the big thing is ... NO interest. Every dollar you owe will cost you something. Sometimes you may need something enough that it's worth it but it sure sucks knowing that money is going out the door just for the privelege of using a credit card. Rates are pretty high these days. I hate owing MORE money just because I owe some money. Hope that makes sense. 

Also, while it's wonderful for you that you have such a great situation now, that doesn't mean unforseen things can't happen. People unexpectedly get sick or lose their jobs all the time. It's so much better to go into a situation like that without debt hanging over your head. 


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#4 of 38 Old 12-06-2012, 03:36 PM - Thread Starter
 
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"Thankfully" there is no immediate possibility of losing any jobs or getting ill - mostly because we're already living off of disability benefits from the military and otherwise.  (No, that's not exactly fun...  but right now that's what has to happen.)  So it's a fixed income.  OTOH that also means there are no raises and no bonuses, and no possibility of getting a higher-paying job... I think that's encouraged us to live within our means.

 

I do think that not paying interest is a good thing.  I mean, yes, obviously, that's just losing money for sure.  Then again, we never had a really high interest rate on our cards (I've had mine for... umm.... since the start of college).  I do want to keep the cards open in case there's an emergency.  But we have a pretty decent emergency savings going now too (that we are now going to be adding to, what we used to pay in credit card payments).

 

I guess the reason I'm concerned is that now that we've reached this goal of "debt free, whoo" - DH is already starting to talk about, "well, we might as well buy me a new computer and that elliptical" - immediately putting us back in debt.  I'm trying to figure out ways to convince him that we reached this goal, so let's not go right back into the cycle of it.

 

I can't use the goal of college or retirement savings.  College is taken care of already (if the kids want to go) and the benefits are lifelong, so there's no retirement.  And DH is mostly housebound so there really is no vacation fund to speak of...  Our house is pretty much perfect, we just moved to a low-COL area where we got a pretty much ideal house and there's no one place I can say, "hey look, DH, we should save up to do xyz in renovations."  And yes, I can use "saving up for a computer" as a goal but he grew up poor and never got the idea of saving for anything.  Even being debt-free will be a new experience for him.  (Well, that one for both of us, although I am much more of a saver.)

 

I think I'm just grasping at tangible reasons to convince him to STAY debt-free.

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#5 of 38 Old 12-06-2012, 05:15 PM
 
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Maybe use an online calculator to work out how much the new computer and elliptical machine will *actually* cost if you buy them with the credit card rather than saving up for them.

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#6 of 38 Old 12-06-2012, 06:34 PM
 
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Well, for many people, I am not sure that the completely debt free thing makes perfect sense.  If you have a very low interest rate on a mortgage, for example, it might be more prudent to invest.  However there is a risk with investment and a guaranteed return on a mortgage pay off of say, 5% or whatever.  However, in a case like yours where there is zero chance of a future increase in income (well, I assume you get some cost of living increases occasionally), I would be even more inclined to become debt free.  Debt costs money that could get you into trouble later on.  Let's say you bought that computer on credit, and then you had some kind of emergency, even a small one like needing a new water heater. Then you couldn't pay off the credit card for months and some of them charge up to 30% interest.  So a $400 computer would cost you an extra $120 EACH MONTH which is then added to the debt and then you pay interest on that as well.  Not pretty.  The $400 computer (that you can probably get for closer to $300 if you wait and shop around) could end up costing you twice that if not more.  I think that a good case can be made for many people to not pay off a mortgage early, but credit card debt is crazy expensive and just not worth it.  It may seem that in your case your credit score may not matter all that much.  But going back to the hypothetical water heater, or potentially a more expensive repair -- a good credit score might mean that you could finance that emergency (if you had to) at a much lower interest rate, maybe even a 0% card.  Great credit scores will save you money all kinds of ways.

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#7 of 38 Old 12-07-2012, 10:45 AM
 
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If I understand this you have no debt or payments other than mortgage and are not funding into college and retirement. Even on your fixed income does that leave you a lot over each month? If it's a good amount then just put that towards buying these things in the next few months. If it's not then that shows that paying it off on a card that is going to charge you more is not a good plan. 

Quite frankly, it's miracle if you have an amazing rate on your credit card. I have had one of my cards for close to twenty years. Both dh and I have good credit, we have never bankrupted or defaulted on anything ever in our lives, we don't even make late payments and they have still crept my rate up since 2008. Everyone I know has had the same thing happen to them. I think the lowest we have is 11% which is pretty damn high, imo. We have tried to negotiate a better rate and no one is budging. 

Also, while you may not need renovations right now, houses are a lot to upkeep in general. I can't tell you how much my supposedly move in ready house has cost me in the last year. There's always things. I have a friend who bought new construction with that idea. Well ... something happened with the plumbing and it cost a fortune when they had to cut into all the ceilings on her first floor to fix it all. 


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#8 of 38 Old 12-07-2012, 12:46 PM - Thread Starter
 
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Unbelievably, we are actually pretty comfortable right now.  Mostly because right now I'm getting paid as a full time caregiver for my husband.  This is a pilot program and in theory it could go away in the future, so we're not counting on that forever, but for now it's an extra chunk in savings every month.  That's our long-term savings (for house repairs, car replacement, etc) and we put a decent amount into short term savings (for property taxes, insurance premiums, meat, etc. that sort of thing).  Thankfully insurance is also taken care of so outside of dental/vision we don't have a lot of medical expenses.  Our bills are really low, btw... we don't do cable, we keep our food budget as low as possible by eating simple foods, keep our electricity bills low, don't use disposable anything really, we have only one tiny car, little driving, don't shop for fun... stuff like that.

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#9 of 38 Old 12-07-2012, 08:19 PM
 
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headscratch.gif I hope this doesn't offend you, but I find that a really weird question. Why would you WANT to have debt? To me, debt-free is the default. ITA with the poster who said being debt-free is freedom. It means no one can come and take away your stuff or kick you out of your home. It also means no one can tell you you have to keep your car or stay in your house (if you pay off the house, anyway), if you decide you're done with the car or the house. You may not think that's likely, but life can change in crazy ways. I guess part of it, too, is the philosophy that if you buy with cash, you always know you can afford something. There's no chance that next month you will not be able to afford the payments, because you paid it all up front.


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#10 of 38 Old 12-08-2012, 04:10 AM - Thread Starter
 
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I mean, that doesn't offend me... I just think I explained that in my view, of course being debt-free is ideal.  Where did you get the idea that I want to have debt?  I was trying to find tangible reasons to convince my husband that it's really the way to go, even in our situation where credit score doesn't *appear*, at first glance, to have a huge effect.  I was wondering if there was something I was unaware of.  I don't think he wants to have debt either, but to a lot of people charging a bit to the credit card is perfectly reasonable, and being debt-free isn't the default.  To you and me, maybe, but not to a lot of people (including the DH).

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#11 of 38 Old 12-08-2012, 05:59 AM
 
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Have you ever read Dave Ramsey? Getting to be debt-free is only half-way through his plan. His babysteps go on to build a 3-6 month emergency fund, save for house repairs, furniture replacement, and vehicle replacement so when you need a new roof or furnace or whatever it's not the end of you. After that you save 15% of your income for retirement, you can then save for college for your children, pay off your home early, then get down right wealthy!

 

With that being said, we do periodically go into "debt" (i.e. put something on the credit card....even though technically we have the cash in our savings). But that's the exception, not the rule. If you truly have control of your finances are living within your means, I don't think the odd tiny purchase put onto a credit card is really an issue. Sure, it's not the smartest of moves, but as long as you pay it off that month and aren't carrying a balance, I don't think the Debt-Free Police will come after you.
 


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#12 of 38 Old 12-08-2012, 06:02 AM
 
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I guess it comes down to: there are better ways to use your  money than making payments for something you bought  a while back (and may or may not be obsolete by now).

 

With a DH, you can take the approach of "security" ...I need a cushion to feel secure and know that we're provided for should something happen. I need to know we can handle a repair or expense should something happen. That cushion is more important than short-term "stuff" purchases.


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#13 of 38 Old 12-08-2012, 10:05 AM
 
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It's just a totally different mind-set. I'm not sure there's much you can do to convince your DH it's worth it -- he'll need to come up with his own reasons that are meaningful to him, and live without debt for a while, to understand... I'd suggest locking the credit cards in a fire safe so that the "for emergencies only" becomes very tangible, if you don't want to cancel them altogether.

Being debt-free means that compared to everyone around you, you may have to make big sacrifices. In reality, not getting an elliptical isn't exactly a "sacrifice" since it's a want, not a need, but when you see everyone around you getting what they want when they want it, delaying gratification can become even harder. So I guess I can see why it might be hard for your DH to wrap his head around it!

One thing I would suggest is not putting every last penny into long-term/emergency savings. That can work great when both partners are on board but can backfire big time if you're not on the same page. It sounds like your DH would benefit from having a "fun" savings account. Maybe if he can see that $X/month is going into that account and in Y months he can buy the computer (or elliptical or whatever else he wants) then he would be more on board with the debt-free thing.

Anyway, we have a mortgage, but no other debts, and I have to say I wouldn't consider myself 'debt-free' until the mortgage is paid off. We struggle to pay our mortgage because of some unexpected events, so I can see the effect retaining that debt is having on us. We cannot get up & move & start fresh (well, at least not without foreclosure or bankruptcy!) We can't find a cheaper place to live to match our current financial needs & wants. Having debt -- any kind of debt -- kind of holds you hostage to your current financial situation, removes some of your ability to work your way to something better. So I guess for me the advantage of being debt-free would be flexibility -- financial, geographical, lifestyle, etc. You can make choices based on what works for you, what you want/need, not what your debts dictate. You have freedom & security. You have the emotional peace of knowing you don't owe anyone anything -- there's nothing hanging over your head.

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#14 of 38 Old 12-11-2012, 06:43 AM
 
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I think you are mixing a couple of issue together.  A good credit score and debt-free are two different things.  DH and I have been debt free since 2007.  We still have credit cards that we use and we still are on the grid and have utilities and cell phones so we continue to have a credit score and credit record.  Anyway in my experience you do not need to owe others money to have a good credit score (although it becomes increasingly irrelevant).  I have found good credit useful for car, homeowner's, renters insurance.

 

I find being debt free is mentally very freeing. For DH and I the commitment to be debt free add a layer of accountability. It give us more choices.  When we no longer wanted to live in a community we could move and not worry about having a mortgage in the old location. In this case we still had the hassle of selling a house.

 

I know it's not part of your question, but I would strongly disagree that you do not need to save for retirement.  DH is disabled not you and you could easily live another sixty years. You should qualify for an IRA of some sort. You should check you might even qualify for the Saver's Credit.

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#15 of 38 Old 12-11-2012, 09:31 AM
 
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For me it's a sense of security now.

Before all this and the kids even, I got caught in the dot com bubble and for around 2-3 yrs i'd work at a job for 6-8 weeks, be let go, take me 4-6m to find another job...6-8 weeks and let go...etc.

Then I worked for verizon dsl *customer service* (I'm in IT) for several months and was let go because they were closing the call center, and then I finally got a job at a lawfirm when I was 5m PG with DS#1. the firm "manager" would scream "you are too effing fat to fit behind the effing desk" and "you are too effing stupid to fix the effing computers" etc. every day, all day....and he did this sort of thing to everyone not just me.

They also paid me 23K a year for the abuse and worked me 80hrs a week. I sent out resumes like a mad man, and still got no callbacks for 3 years!

 

I started working at my previous job when I was 6m preg with #2, and a year later I was going through a messy divorce. I had a 99 kia that was in desperate need of major work however the KBB value of my car in excellent condition was barely more than a set of new tires. we had around 8K in debt that quickly went to around 16K with me taking cash advance (I had to ask how!) for my lawyer and ex running up a bunch too. I got stuck with the house since ex couldn't afford it on his salary (1600/mth takehome, ordered to pay 500/mth in CS) and still live there.

I also coughed up around 30K in legal stuffs for the divorce in the course of 18~ months.

 

I started taking on more and more and more work, accepting anything and everything they asked me to do, working 20hrs a day most days, all weekend, traveling to portland and missing out on time with the kids...etc. all because I was scared i'd lose my job and be SOL. I have no family here and nowhere to go. my ex would have jumped at the chance to bury me (and tried to, obviously based on legal drama. the 30K was all me just responding to his filings against me!) and take the kids.

 

Now I have a brand new car (well, a year I think? it's a 2012 tho) and I only have a car payment because i'm trying to rebuild credit. I have NO credit card debt. I have around 45K in savings/investments right now.

I've done the math and between unemployment and child support - if I lost my job TODAY I could easily make it 2yrs, and probably 3+ years without working if I was frugal.

I'm currently putting away about half my salary every month. and i've been splurging lately and bought a upright freezer and a dyson...lol.

 

I (for once in my life) feel like I can say NO when projects come up that I otherwise might have volunteered to do, or work all weekend or all night to accomplish. and by NO I mean "um, how about we schedule this in 3 weeks when I can do it during normal hours?" not a flat out no. LOL.

and i'm not constantly on edge worrying about losing my job or not being able to feed my kids.

 

I still live on what I USED to make (45K a year, roughly) and put everything else aside, and daycare is STILL my biggest expense at 700/mth....but used to be 1300 before both kids started school. if I was unemployed obviously that expense would disappear.

It makes me feel good I have a buffer rather than a black hole, and that if I did lose my job I could live on considerably less with ease. I actually kept my ex and I in food on under 30K a year while paying 900/mth for apartment and 280/mth for his car payment.

 

I was pretty close to homeless a few times and grew up poor and hungry. Having kids makes it even scarier and we were pretty broke up until the divorce when life did a full 180 for me. Once all the drama was over anyway.....but I was scared ALL THE TIME worried about where i'd come up with money for lawyer AND food.

 

I'm SOOOO much more relaxed now. I feel like whatever happens, I have us covered and most importantly I have my boys covered. And I don't have to KILL myself trying to keep us safe and fed and sheltered anymore.

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#16 of 38 Old 12-15-2012, 10:47 PM
 
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I was thinking that this sounded a little bit like a "troll" style thread but then I couldn't help thinking how the OP sounds a lot like my sister. Maybe just a young couple with a 2012 mind set and not a troll at all?


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#17 of 38 Old 12-16-2012, 01:10 PM
 
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we want to be debt free because paying interest is like throwing money in the trash.  the credit score doesnt mean a whole lot, dh's score is over 810 so it's already pretty near perfect. 


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#18 of 38 Old 12-17-2012, 04:11 PM - Thread Starter
 
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Quote:
Originally Posted by trekkingirl View Post

I was thinking that this sounded a little bit like a "troll" style thread but then I couldn't help thinking how the OP sounds a lot like my sister. Maybe just a young couple with a 2012 mind set and not a troll at all?

 

 

The wha?  I'm a TROLL now??  That is a new one.

 

DH and I are in our early 30's and have been together since 2004, living together since 2005; we have two kids (5 and 6) and a third on the way.  So, um, not really all THAT young, although I guess it's all relative.  As far as a "2012 mindset"... whatever that is... we're not.  I thought I explained that we have worked very hard in the past couple of years to work down any debt we had (which was from medical bills and the fact that we were raising kids on 1470 a month with no gov't aid... and then our recent moving costs) so it's not like we were out getting clothes and smartphones and TV's and eating out every night.  I've been frequenting this board since about 2007 (under a different profile, obviously) - we buy almost exclusively secondhand, cook from scratch, cut corners wherever we can...  Drive a paid-off used Civic that is fuel efficient despite having to get three carseats in a row in the back seat when we could technically afford an upgrade, but want to be frugal about it.  So again, not sure that's a 2012 mentality.   I can't even remember the last time I bought a new outfit (probably about 4 years ago) or gotten my hair done - probably back in college, circa 2001.  We are essentially suburban homesteaders who save money whenever we can - but now that we are doing better than ever, financially, I needed to brainstorm ideas on how to keep DH on track with it.

 

But seriously, why did you think I was trolling?  I don't get it.  And yeah, I'm a little offended, but hey.  Life goes on.

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#19 of 38 Old 12-17-2012, 04:59 PM - Thread Starter
 
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Also fwiw I'm not sure I mentioned this, but we did have more than enough in our savings to cover whatever purchases would have needed to be made.  That said... I am very strict about savings accounts and they're for true long-term emergencies etc.  If we need to pay taxes, insurance, etc we have that covered without having to scrimp - even if for some reason all of our benefits stopped overnight we would have enough to cover taxes etc.  As far as emergency repairs on the house, or if the car breaks down etc we would have enough in savings to cover those items without having to put them on a card.  The card is really for... I dunno, convenience, I guess.  We always have paid off more than we put on there in any given month (minus the aforementioned debt we had from earlier) but there was always still a balance.  Now we have the balance paid off, and it's hard (for DH) to resist the idea of saying, well, our credit limit is 19K on it, why not have a low balance on there?  But yeah, thanks for all the posts.  It does help to read your perspectives.  :)

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#20 of 38 Old 12-17-2012, 05:07 PM
 
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Uh yeah... I don't know why anyone thought you were a troll LOL. But anyway... I think if all of your savings are for emergencies only, that doesn't really leave you any room for fun or wants or things that may not be emergencies but still are needed. A treadmill might count in that category, if there are health reasons for it, for example. So I'd really consider starting another savings account for those kind of things. Another way to do it, if you don't want multiple accounts & you need to motivate your DH to save, is to build in rewards when you reach certain savings goals. Something like, after saving $X, you can spend 5% (or even 10%) of the savings on something fun. Then keep moving the mark up. After $100 you can spend $5. After $1000 you can spend $50. When your savings account reaches $10K, you can spend $500 and get the treadmill. Etc.

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#21 of 38 Old 12-17-2012, 05:17 PM - Thread Starter
 
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I like that!  That's actually a really good idea, I haven't considered it.  Thanks. :)

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#22 of 38 Old 12-17-2012, 05:21 PM - Thread Starter
 
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And yes, the elliptical is for health reasons.  DH needs to use one for blood pressure and knee issues, and he can't use one in a community facility as he doesn't leave the house.

 

The computer is trickier because it's a bad habit for him, he spends at least 12 hours a day on it, and it has to be a top-notch computer... so not just a 300$ practical one but one that is a minimum of 2000 on sale.  (He actually knows his stuff and can assemble one for relatively cheap for the quality, and wait for sales to get it, etc.  But it is NOT cheap.  But since he spends all day every day on it, it seems like it's as necessary for him as it can be, I guess.  Rather, I can see why HE sees it as a necessity... even though I am baffled as to what's wrong with the 2 year old one that works just fine.  (He is going to give his old one to me as my laptop is pretty much worn to shreds, I've used it so much.  But I'm considering just selling his hand-me-down and buying myself a cheaper computer, since I don't need a fancy one... and then pocketing the change for, yeah, savings...)

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#23 of 38 Old 12-18-2012, 04:52 AM - Thread Starter
 
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Originally Posted by mnnice View Post

 

I know it's not part of your question, but I would strongly disagree that you do not need to save for retirement.  DH is disabled not you and you could easily live another sixty years. You should qualify for an IRA of some sort. You should check you might even qualify for the Saver's Credit.

 

I doubt I would live another sixty years, but that's neither here nor there.  Regardless, I would continue to get social security and VA benefits after his death.  Not like I'm thrilled about that prospect, of course, and I wouldn't be content to just sit at home and collect those benefits for convenience.  But it would also be true that if he wasn't alive, and I wasn't retirement age yet, I would be able to work, because I would no longer need to stay home with him.  Maybe I wouldn't be able to start a fabulous spectacular career later in life, but I imagine I would be able to earn enough to supplement savings, considering the bills themselves (which were low to begin with) would be covered.  (We specifically worked out different financial scenarios like this before we settled on our house; what if he died, what if I died, what if SS tanked, etc.  Not to say bills can and never will go up, inflation won't be a factor, etc., but we did lay out a zillion different scenarios before deciding on a property.) 

 

I imagine if DH wasn't around, and especially if the kids were already grown, I would also move to a much smaller house or something like that, so the bills would be even lower...  I dunno, maybe I'm justifying too much.  Truth is, I can't see into the future here, and I don't know really what would make most sense.  I don't know how long he will live, how long I will live, whether the kids would still be minors... there are too many intangibles for me to really wrap my head around.  But I guess right now, while retirement savings make sense in a way, it's not our #1 priority right now.

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#24 of 38 Old 12-18-2012, 10:16 PM
 
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like I said "at first" I thought troll.

 

You know on a frugality and finances board posting a thread about what's the point of being debt free. Then once I read through the thread I realized that you sound a lot like my younger sister who is a great saver but doesn't have time under her belt. That's why I guessed you were young. I'm 31 and my DH is 34 so it sounds like were about the same age. Sorry to offend you it's just that since MDC got on FB the number of trollers is just insane and it takes away from a really good board.


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#25 of 38 Old 12-19-2012, 01:59 PM
 
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Originally Posted by tiqa View Post

Originally Posted by mnnice go_quote.gif

I doubt I would live another sixty years, but that's neither here nor there.  Regardless, I would continue to get social security and VA benefits after his death.  Not like I'm thrilled about that prospect, of course, and I wouldn't be content to just sit at home and collect those benefits for convenience.  But it would also be true that if he wasn't alive, and I wasn't retirement age yet, I would be able to work, because I would no longer need to stay home with him.  Maybe I wouldn't be able to start a fabulous spectacular career later in life, but I imagine I would be able to earn enough to supplement savings, considering the bills themselves (which were low to begin with) would be covered.  (We specifically worked out different financial scenarios like this before we settled on our house; what if he died, what if I died, what if SS tanked, etc.  Not to say bills can and never will go up, inflation won't be a factor, etc., but we did lay out a zillion different scenarios before deciding on a property.) 

I imagine if DH wasn't around, and especially if the kids were already grown, I would also move to a much smaller house or something like that, so the bills would be even lower...  I dunno, maybe I'm justifying too much.  Truth is, I can't see into the future here, and I don't know really what would make most sense.  I don't know how long he will live, how long I will live, whether the kids would still be minors... there are too many intangibles for me to really wrap my head around.  But I guess right now, while retirement savings make sense in a way, it's not our #1 priority right now.

Statistically if you are 35 you will live another 45 years. I think about this more than most since I watched dh's one set of grandparents outlive their money and we live right down the road from dh other grandma who will be 95 next month. Anyway no one can see the future but it looks better for those that plan ahead.

I also have a former housemate that has been on disability since 1995. In her case it is a fixed per cent of her salary at the time she was disabled. Inflation has eaten away at her income considerable in the proceeding 17 years. I thought it was a very good income in 1996. I would hate to have to live on it in her fairly expensive city now.

SS is index to inflation. Are the va benefits?
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#26 of 38 Old 12-19-2012, 04:00 PM - Thread Starter
 
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Originally Posted by trekkingirl View Post

like I said "at first" I thought troll.

 

You know on a frugality and finances board posting a thread about what's the point of being debt free. Then once I read through the thread I realized that you sound a lot like my younger sister who is a great saver but doesn't have time under her belt. That's why I guessed you were young. I'm 31 and my DH is 34 so it sounds like were about the same age. Sorry to offend you it's just that since MDC got on FB the number of trollers is just insane and it takes away from a really good board.

 

I agree that the make-up of the posters has changed in the last couple of years.  MDC is just not what it used to be.  As for the rest... well, I guess I can now rest assured that I just sound uneducated/immature instead of a troll.  That's... progress?  shrug.gif  

 

Quote:
Originally Posted by mnnice View Post


Statistically if you are 35 you will live another 45 years. I think about this more than most since I watched dh's one set of grandparents outlive their money and we live right down the road from dh other grandma who will be 95 next month. Anyway no one can see the future but it looks better for those that plan ahead.
I also have a former housemate that has been on disability since 1995. In her case it is a fixed per cent of her salary at the time she was disabled. Inflation has eaten away at her income considerable in the proceeding 17 years. I thought it was a very good income in 1996. I would hate to have to live on it in her fairly expensive city now.
SS is index to inflation. Are the va benefits?

 

 

Yes, the VA benefits also get a raise each year due to inflation. There was only one year in the past six that we didn't get a "raise". Of course, it doesn't scale exactly to "real" inflation, but it does get a bit of a change each year.

 

The reason I said I doubt I'll live that long is because I have several chronic/autoimmune illnesses that will probably affect my lifespan.  They're not likely to mess with me in the near future, but I definitely won't be pushing 95.  And even if not for those issues, I have absolutely horrible genetics and none of my family is known for longevity.  They don't live unhealthy lives necessarily, they're not overweight chainsmoking couch potatoes or anything, but we have some bad stuff in our genes. 

 

That said... what you said makes sense.  It doesn't make sense to ignore savings altogether.  I'm just not sure how retirement savings would add into our life right now.  In previous years, when we didn't have any spare money at all, it just wasn't an issue to think about.  Since we've had a pretty generous cushion lately, it's been something I've been actively trying to think of.  But, at this point, I think it would make more sense to prioritize other types of savings issues (like paying off the last of our mortgage, saving for a car when this one can't be used anymore so we can pay cash for it again, investing in our children's current lives, putting in a garden, that sort of thing).  In a year or two we will probably revisit the retirement issue, but right this second it doesn't make much sense to wrap my mind around "retiring" when realistically I might not even live that long.  And due to inflation, etc., it's also harder to think about.  The benefits do scale but putting money aside in a savings account may be worth very little if the economy tanks.  I... I just don't know, really.  It's definitely something to mull over.

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#27 of 38 Old 12-19-2012, 06:45 PM
 
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To me, the fact that you don't know what the future holds is an even better reason for saving. Whatever my circumstances I can't imagine being sorry I had some spare money in the bank.

Regarding retirement savings, if you don't live long enough to use them then you could will them to your children. I imagine they would appreciate an unexpected inheritance to help them out when they have their own families, mortgage payments etc.

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#28 of 38 Old 12-20-2012, 06:12 AM - Thread Starter
 
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Well, I'm right there with you in believing that having savings is important.  We put away about 50% of our income right now in savings.  When we get to a healthy enough level (which... honestly I think we're at a healthy level now, but a bit more put away is the goal) we will probably reduce that amount and start paying off the mortgage faster.  Our last house was paid off and I liked owning it outright.  We have only a small payment now (much less than we would if we were renting, etc.) but it'd still be nice to pay it off faster.

 

But my question to you is, why *retirement* savings in particular?  It's not like we'll hit a magical age and "retire".  (Unless I went back to work at some point and then chose to retire, but that's different.)  I'm just not sure why that route is better than having long-term / short-term / emergency / discretionary / house repair / etc savings.

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#29 of 38 Old 12-20-2012, 06:35 AM
 
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Perhaps an advantage of "retirement savings" is for tax breaks right now and compound interest growth over a longer period of time for later.  Maybe the tax breaks are not useful for you, but it is fun to watch interest or dividends accumulate (not so fun when it crashes though); In my 30's I didnt see the point of saving for retirement, but in my 40's its become more appealing.  But, also have a chunk of liquid cash saved is good for security. And mid term savings is a good goal too. (And a paid of mortgage)


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#30 of 38 Old 12-20-2012, 07:25 AM - Thread Starter
 
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Yeah, the tax breaks wouldn't apply for us. The interest rate might be a bit better. I guess I'd have to look into that. I'm just not sure it would really make sense right now. I'm not closed to it, I just have to do more research.

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