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If owing $200k on a mortgage to be paid over the next 20 years is "debt", then why isn't $200k that will have to be paid in rent over the next 20 years considered "debt"? It's the cost of housing. You will be paying it either way.
I mean the mortgage is still debt, but it’s just a case of headline grabbing by not distinguishing between long term and short term debt. The only part of the mortgage debt that matters in my opinion for the purposes of them digging out of their issues is short term debt (what they’ll owe in the next 12 months)
And rent has an effect on cash flow but it’s not debt. There’s no interest. It’s also not fixed. It’s just an ongoing expense. That doesn’t mean it’s debt. You aren’t using someone else’s money.
Last edited by Thatsright19; 10-01-2018 at 04:35 PM..
If owing $200k on a mortgage to be paid over the next 20 years is "debt", then why isn't $200k that will have to be paid in rent over the next 20 years considered "debt"? It's the cost of housing. You will be paying it either way.
The cost of rent is an unknown and is owed right now for the 20 year period. What is and isn’t debt should be a pretty clear concept and having a mortgage is debt in every conceivable way
230k sounds like a lot but in higher income ranges you get hit with a ton of taxes. They probably only see about half that hitting their checking account.
It makes no difference. They could stop paying all their credit card and personal loans, watch their credit score crash, and still be fine. They already own a home and car so they don’t really need credit. The video also says they rent out a condo.
At $230K you have a lot of flexibility with the snowball debt plan. Dave Ramsey himself on the video says it would only take 3 years of cheap living for them to get out of it
There’s folks out there with more debt and they don’t even have jobs
It makes no difference. They could stop paying all their credit card and personal loans, watch their credit score crash, and still be fine. They already own a home and car so they don’t really need credit. The video also says they rent out a condo.
At $230K you have a lot of flexibility with the snowball debt plan. Dave Ramsey himself on the video says it would only take 3 years of cheap living for them to get out of it
There’s folks out there with more debt and they don’t even have jobs
As I've gotten older, just not a fan of debt. I know some make debt work for them. But, there's little like the feeling of being debt-free.
I mean the mortgage is still debt, but it’s just a case of headline grabbing by not distinguishing between long term and short term debt. The only part of the mortgage debt that matters in my opinion for the purposes of them digging out of their issues is short term debt (what they’ll owe in the next 12 months)
And rent has an effect on cash flow but it’s not debt. There’s no interest. It’s also not fixed. It’s just an ongoing expense. That doesn’t mean it’s debt. You aren’t using someone else’s money.
Of course you are. The apartment building you live in wasn't built with your own money. It was someone else's money. A huge pile of money that will be repaid over many years through rental income.
Sure, you might die or move in with someone else, but the majority of people will have to pay money to have a place to live. I'm not talking about economic defiinitions but the practical reality that you will have to pay a large sum of money over the next 20 years to have a place to live, whether it's a mortgage or rent.
Take 2 people making the same amount of money, one has a mortgage payment of $1000/month and one has a rental payment of $1000/month. I'm not shedding tears over the first person being deep in debt when it is likely the latter person who is worse off economically since that $1000 will escalate with inflation and there are no tax benefits.
The couple in this story deserve no sympathy. They have a clear path to financial success and no one to blame but themselves if they can't find it.
Not bad at all. It's really what that debt is that's the problem, eg the credit card debt. If it was a $400,000 mortgage and $10,000 on the credit card nobody would bat an eye.
As I've gotten older, just not a fan of debt. I know some make debt work for them. But, there's little like the feeling of being debt-free.
It's an illusion. Either way, you're paying as you go.
Let's imagine you could take out a loan and purchase a year of groceries in exchange for discounts and tax breaks, paying it off at $500 per month. Now it's "debt" and woe unto you, poor enslaved and shacked you. But you can pay $600 per month with no contract and rejoice in your freedom from debt. Who is really better off? Because in the long run, buying a home will usually be less expensive than renting in an apples to apples comparison.
Aw. They could pay it all off in less than10 years if they live like paupers, throw every dollar at the debt, and dedicate their lives to eliminating that debt.
$750k is NOT $1M, and if tge pay $60k in taxes, they have $170k left. If they can live on $70k, that gives them $100k to throw at the debt. They can pay off the car and personal loans and sone cc debt in year one, the rest of the cc debt in year 2, then tackle the $210 in mortgage years 3 &4. The student loans after that. EFFECTIVELY.
Even only $75k /yr fir debt service will take care of it in 10 years.
THE next 10 years they can devote to saving the $75-100k and have all debt done and $1m in savings in 20 years.
Its all in how you look at it, and what sacrifices they are willing to make.
It's an illusion. Either way, you're paying as you go.
Let's imagine you could take out a loan and purchase a year of groceries in exchange for discounts and tax breaks, paying it off at $500 per month. Now it's "debt" and woe unto you, poor enslaved and shacked you. But you can pay $600 per month with no contract and rejoice in your freedom from debt. Who is really better off? Because in the long run, buying a home will usually be less expensive than renting in an apples to apples comparison.
It's not about what's less expensive, but rather peace of mind from not owing anyone anything.
Of course you are. The apartment building you live in wasn't built with your own money. It was someone else's money. A huge pile of money that will be repaid over many years through rental income..
You’re renting space. You aren’t using another person’s money.
It’s kind of silly to try to create a debate about this. A rent isn’t a debt or a liability. The end.
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