Taking Debt to Your Grave Now Acceptable?

"I want the last check I write to bounce." - Saul Bloom.

alfadriver said:

pheller said:

 

 

- get a good paying career in an area with low cost of living area, hold minimal debt

- get an average paying job in an increasing more expensive metro area, and hold lots of debt. 

Just want to point out that it's very possible that the first person is getting something like $100k/year while the second person could be closer to $200k/year.  Salary average is very dependent on where you live.

And this was an issue 20 years ago, too- although the school part of debt was different.

Lastly, the whole chase for the betterment of the Jones' is very relative.  Not everyone is chasing the mcmansion and trying to always buy up.  Our neighborhood is quite old, and in Ann Arbor is also quite reasonably priced.  There are quite a number of people who move here and never leave- meaning they start a mortgage early, and finish it while working.

Yes but also no. Single earner households used to be normal, and pretty easy to make middle or upper middle class, even if that single earner was blue collar. I live in a lower cost area, earn a fairly high wage, do not spend extravagantly, and cannot live as well as my grandparents did.

I was listening to a sermon this weekend, and it was about generosity and caring for strangers, feeding and that sort of thing. All good stuff. One of the illustrations was Abraham serving the angels (that he did not know were angels) that happened along on a journey. They stopped by, Abraham was sitting in the door of his tent, he implored them to stay, told one servant to slay a calf and prepare a meal, and told his wife to make some loaves of bread. Now I have more cash reserves than Abraham, but a reasonable calf slaughtered ready to eat is like $1500, and my wife couldn't drop everything to make many loaves of bread either. Also, I haven't had time to sit in the door of my tent in a decade. Now I have running water, hospitals, HVAC, and all sorts of comfort Abraham did. My standard of living is much higher. My spending power, though, is drastically reduced. I don't even have any servants. Abraham had 318.

Anyway in there was the ubiquitous quote "Americans are the richest people ever to live on this planet", but I am not sure I believe that quote. Not really. I don't know anyone who could afford one servant. I get it that I have a phone that serves me, etc, but that's really not the same thing. 

For a less Biblical example: https://thehustle.co/americas-favorite-family-outings-are-increasingly-out-of-reach/

In reply to 93EXCivic :

Debt free is a form of investing and it is pretty much guaranteed. 

When investing in equities, remember that the entire retail industry refused  fiduciary duty to their clients and said it out loud; that means you work for them, they don't work for you. You can spin it all you want, but the net result is that the equities market is a Casino and the house is the only one allowed to win. 

Another one of these threads, wonder if it'll be any different from the last 100 just like it?

As far as College goes, there are plenty of cheap ways to get a degree, I've never seen a regular job posting that says "Must have degree from X school", it's usually a have a degree Y/N option.

In reply to tuna55 :

Better is relative.  I got one line into that "favorite vacations" and we never, ever, ever, did any of those as I was growing up.  And my dad had a great career.  Our vacations were mostly camping, and going to visit family.  I know those are "destination" vacations, and many families actually go on them- but I doubt that it's an endemic problem where masses of families go into huge debt to get their 5yo to *somthing*land.  

And I'm curious about your grandparents- my grandparents grew as much as they possibly could to eat, and had been since my dad was a kid.  And they never took any serious vacations other than the camping trips we took them on.  They were happy, no doubt.  

It wasn't until my brother and I were mostly through college did my parents ever go on any massive trips that required flying.  Since retirement- they have taken quite a few more.

We have been blessed with the ability to travel a lot and still have a considerable amount to donate.  And retire what most would consider very early.  Then again, I was in the last generation of students where states actually used taxes to make sure their children could get a degree of whatever kind and not face massive debt.  Since then, tax breaks have ended that (and many of those who get the best breaks are also the ones benefiting by you taking debt to go to school, one should add).  

BTW, as I remember- a lot of this started in the late 90s- when I noted billboards in my home state of Idaho telling kids they had to go to college- this after massive tax cuts and pretty robust tuition raises in the state schools.  And now we are paying for that in two ways- college debt + a shortage of skilled labor (and I would personally put truck drivers into skilled labor).

tuna55 said:

Anyway in there was the ubiquitous quote "Americans are the richest people ever to live on this planet", but I am not sure I believe that quote. Not really. I don't know anyone who could afford one servant. I get it that I have a phone that serves me, etc, but that's really not the same thing. 

Having servants is an upper class thing, not a middle class one.  There really was no middle class in those times anyway.

Steve_Jones said:

Another one of these threads, wonder if it'll be any different from the last 100 just like it?

As far as College goes, there are plenty of cheap ways to get a degree, I've never seen a regular job posting that says "Must have degree from X school", it's usually a have a degree Y/N option.

 

There are millions of jobs that are MUST have degree, mine included. That said, there is a range of majors that work (usually with some extra coursework if it's not the exact match degree) and while they do not specify which school or type of school, they do specify that it has to be accredited by a certain accreditation.

alfadriver said:

In reply to tuna55 :

Better is relative.  I got one line into that "favorite vacations" and we never, ever, ever, did any of those as I was growing up.  And my dad had a great career.  Our vacations were mostly camping, and going to visit family.  I know those are "destination" vacations, and many families actually go on them- but I doubt that it's an endemic problem where masses of families go into huge debt to get their 5yo to *somthing*land.  

And I'm curious about your grandparents- my grandparents grew as much as they possibly could to eat, and had been since my dad was a kid.  And they never took any serious vacations other than the camping trips we took them on.  They were happy, no doubt.  

It wasn't until my brother and I were mostly through college did my parents ever go on any massive trips that required flying.  Since retirement- they have taken quite a few more.

We have been blessed with the ability to travel a lot and still have a considerable amount to donate.  And retire what most would consider very early.  Then again, I was in the last generation of students where states actually used taxes to make sure their children could get a degree of whatever kind and not face massive debt.  Since then, tax breaks have ended that (and many of those who get the best breaks are also the ones benefiting by you taking debt to go to school, one should add).  

BTW, as I remember- a lot of this started in the late 90s- when I noted billboards in my home state of Idaho telling kids they had to go to college- this after massive tax cuts and pretty robust tuition raises in the state schools.  And now we are paying for that in two ways- college debt + a shortage of skilled labor (and I would personally put truck drivers into skilled labor).

My grandparents married at roughly the same age as me. Gramps was an engineer and got his pilots license for fun. He was the sole breadwinner. They bought a brand new mid range Civic every few years, and Gram got the new one and Gramps got the old one. He spent more money on cigarettes, pipe tobacco and alcohol than I do with internet, amazon prime and phones combined. They raised three kids to our four. Gram gave generously to her church, and fed and clothed a lot of people. Gramps was a volunteer EMT and fireman. I don't know too much about their vacation history growing up. I know they owned some apartment/cabin thing in Michigan and went there annually to rest, but they retired with a pension and millionaires with a modest inheritance adding to their net worth along the way.

I think colleges have priced themselves out of the market.  Now for people to just wake up to that fact.  So many students who graduate with fluffy degrees will have nothing to show for it but a mountain of debt and a worthless piece of paper.   Don't buy the lie.

Meanwhile, capable tradesmen are earning six figures and up, and have more work than they can use.

Are the collection agencies really going to dig people up from their graves to go through their pockets?

It really wouldn't surprise me at this point if they thought there was some money there.

Steve_Jones said:

Another one of these threads, wonder if it'll be any different from the last 100 just like it?

As far as College goes, there are plenty of cheap ways to get a degree, I've never seen a regular job posting that says "Must have degree from X school", it's usually a have a degree Y/N option.

 

When I went to school, I started in aerospace engineering but later changed to mechanical. There were no in-state schools at the time that offered aerospace engineering and one within reasonable driving distance from my home town (about an hour drive and it was an expensive private school). So living at home wasn't really an option. Fortunately since there was no in-state options I was able to get in-state tuition at some out of state schools for three years. I received a "full tuition" scholarship at the school I went to which covered 15 credit hours in spring and fall semesters. I came in with 12 credit hours and the school I went to was called one of the best values at the time. Even with all that it still costed about $50k out of pocket between boarding, lab fees, books, meal plans we were required to buy, the credit hours beyond what my scholarship covered.  This was in 2007-2011 I am sure the cost have only gone up since then.

I was fortunate that my parents had invested money from my grandmothers estate to cover a lot of that and I worked a couple internships to help pay for it. I came out of college with $5k in debt ($3.5k from buying a car. the rest to pay for my last summer semester). Probably wouldn't have owed any money if not for the recession in 2007-2008

GameboyRMH said:

I think the house being worth more at a later date for no material reason is a large part of what got us into this mess...

IMHO, the best thing about buying a house is that your mortgage is (well, can be) fixed.  Double bonus if you're 'lucky' enough to buy in a relatively high interest environment and can refinance later.  My mortgage payment, including taxes, is $600/mo less than it was 22 years ago but our income is about twice what it was then (in the middle of the dot com boom).  My loan to value is about 25% now.

If enough people die in debt, credit will become harder to get.

Dying *with* debt is a different matter and almost unavoidable. For example, that last power bill you have is a debt and the assets of your estate can be used to handle those.

mfennell said:

GameboyRMH said:

I think the house being worth more at a later date for no material reason is a large part of what got us into this mess...

IMHO, the best thing about buying a house is that your mortgage is (well, can be) fixed.  Double bonus if you're 'lucky' enough to buy in a relatively high interest environment and can refinance later.  My mortgage payment, including taxes, is $600/mo less than it was 22 years ago but our income is about twice what it was then (in the middle of the dot com boom).  My loan to value is about 25% now.

I agree. I have had my house for 17 years. When we bought it it was a stretch and an increase in cost over renting. Now we see rental houses that are smaller than ours and cost 1.5 to 2x what our mortgage (included taxes and insurance) cost. Plus we have greater than 50% equity in the house. When I first bought it I kept doing the math to rentals and thought renting was a better idea but history has proven me wrong there, due to the fixed(ish) pricing.

Steve_Jones said:

Another one of these threads, wonder if it'll be any different from the last 100 just like it?

As far as College goes, there are plenty of cheap ways to get a degree, I've never seen a regular job posting that says "Must have degree from X school", it's usually a have a degree Y/N option.

 

Amen to all of that.  I have some debt and I'm OK with it.  I know what it is, know what my limits are and make decisions that are right for me and my family.

Regarding college I suppose it depends on your line of work, but in general I totally agree.  For many jobs, even the field of study on your degree is irrelevant.  I'm in the insurance world and my degree is human biology.

As an interesting point, my step-father (solidly middle class) always owned nice cars and was very strict with his budget. He didn't consider himself living to paycheck to paycheck, even if every paycheck was totally used up in his budget.

In his mind, as long as he paid his bills, put the max he could into retirement accounts, and had enough money left over for a few beers and cigars, he was in the black.

Thing was, he never had substantial amounts of cash on hand. A big purchase had to be planned. 

He sees what my wife and I make, and he always asks "why don't ya'll buy a nice new car, you have make more than I ever did!"

I just get nervous with tight budgeting. 

In reply to tuna55 :

More like my parents, although while I was at home, my parents bought maybe 6(?) new cars- most of them when I was too young to know.  Some people find a way to work into a great life.

BTW, honest question- what does the Bible say about comparing your life to other people?  Or desiring *stuff* like other people?  

I think it's just like businesses (or countries) really.   Debt is good (or more realistically, useful) if you are putting it to good use.  If that mortgage saves you money in the long run, good debt.  If that college debt give you a degree that makes you more money, good debt (degree in French Literature... maybe not).

As far as dying in debt, that really depends on what you think about inheritance / family money etc.  If you don't concern yourself with that, then debt is not an issue, timing is.  It's hard for most to predict when they will die, and it would be less than ideal for you financial world to collapse near the end of your life.

Institution wise (banks etc), most large debt will be collateralize, so they are not too worried.  Die with a huge mortgage, worst case, the bank gets the house etc.

My ex wife borrowed money to get an MBA, Biology degree, and to get an MD in medical school.   She, without my knowledge, deferred paying on the loans for close to 20 years and is now $200k in debt.   

I don't think she can ever pay this off.  (To her credit she did not ask me to take on liability for those loans as a part of the divorce settlement.  )

In reply to pheller :

Your stepfather uses the same philosophy I do. 

I max out or get close to maxing out my retirement accounts and put away a fixed percentage of my paycheck into my savings account. I pay the bills the first of the month, and everything left is for gas, car mods, and beer. 

Works out for me. I try to not spend too much so I have ~$500 to buy a track day for the next month.

I had a different long reply typed up but it kind of got bogged down in details so I didn't post it.  This one probably will too, but here goes.

DW and I both grew up in single-breadwinner, traditional families.  None of our parents graduated college, and some didn't even attend.  Her father worked a city union blue collar job and while he always put food on the table and a roof over their heads, they lived in fairly modest circumstances.  My father worked in a sort of hybrid blue/white collar job in a nonunion large corporation, but he always had several long-term side hustles that helped provide a few more luxuries for us.  But we didn't live an extravagant lifestyle in any way.  Even the luxuries we did have (motorcycles, small boats) were modest, older models, bought used, and involved a lot of sweat equity.

I don't think there is any one answer to the college issue.  It's good for some people; it's not for others.  But any 18 year old that is smart enough to get into college is smart enough to figure out that going into massive debt for a degree in a rarely-employable or low-paying field is a bad idea.  I don't buy the "It's all my advisor's fault" line.  At some point you need to take responsibility for your own choices.

DW and I both graduated college in the second half of the '80s, just before the '89-'90 recession.  We both had student loans from college, totaling about $75,000 in 2022 dollars.  We both got career-oriented, full time jobs and got to work paying off those loans, which took about 10 years for each of us.

We took on a mortgage (the equivalent of a bit over $300,000 in 2022 money) in 1993 to buy our house.  We paid that off in a little over 15 years while raising 2 kids and saving for retirement.  In 2010 we borrowed about $200,000 in today's money to do much-needed renovations, and paid that off in about 8 years.  We've been pretty much debt free since then, except for occasional car loans, and plan to keep it that way for the rest of our lives.  Since that time we've been saving even more heavily for retirement, since our expenses are reduced.

We both expect to retire before our 60th birthdays, and have a plan (and self-saved resources) in place to live in our current comfort until age 90 or beyond.  We should be able to leave a decent amount to our children even then.

During that same 2010-2018 timeframe we also put both our kids through college at our state university.  We had saved enough to put them both through a 4-year degree program there debt free, but we insisted that they borrow a reasonable amount of money in order to make sure they had some of their own skin in the game.  Not a cripplingly large amount, but enough to make them take some responsibility for themselves.  Both of them left school in less (equivalent) debt than we did.

This was a good school albeit maybe not either daughter's first choice.  We told them the amount of money we could contribute each year, and we let them do the math about how much they would have to provide to go elsewhere.  Both chose the more economically feasible path.  DD#1 took a fairly academic degree and has never worked in that field, but she applied herself and has paid off her student loans within 5 years of graduating.  DD#2 took a less academic degree but has also never worked in that field.  She has applied herself a little less thoroughly and is still carrying most of her debt at age 26.

We strongly encouraged them to go to college, but both wanted to on their own initiative.  DW was probably a little more adamant than I that they go, given her family background.  If either daughter had proposed a plan to go to a trade school instead, I would certainly have considered it.  Having zero plan for the future would not have been acceptable.

I have a nephew and niece who are about 10 years older than our kids, brother and sister.  One tried college at the insistence of his parents, but during his first year it became obvious to everyone that it wasn't right for him.  Since then he has worked in a variety of skilled trades and seems happy enough.  Like my father, he has a lot of toys but mostly they were all bought cheaply and fixed up by his own hands.  My niece went the other route and got an expensive private-college degree in a field that she loved but clearly was not going to be lucrative.  She has struggled a bit but is making continual progress overcoming the fallout from that decision.  Her husband never attended college but is in a skilled trade (he may have attended trade school; if so, I think it was for auto mechanics, which is not what he is doing now).

So I guess what this all boils down to is that there is no single right path to financial security, but there is one constant:  You need to live within your means, whatever those means may be.  Debt is an instrument to be used to your advantage, but it should not be a chronic way of sustaining your chosen lifestyle.

alfadriver said:

In reply to tuna55 :

More like my parents, although while I was at home, my parents bought maybe 6(?) new cars- most of them when I was too young to know.  Some people find a way to work into a great life.

BTW, honest question- what does the Bible say about comparing your life to other people?  Or desiring *stuff* like other people?  

That would derail this thread. I am happy to go into it in detail via Email if you want. Certainly a reasonable summary can be easily found in the ten commandments, “You shall not covet your neighbor's house; you shall not covet your neighbor's wife, or his male servant, or his female servant, or his ox, or his donkey, or anything that is your neighbor's.”

Im sure this has been covered but, dying with a mortgage 99.9% of the time is not taking debt to your grave.  Your home is worth more than the debt - still positive net worth.

tuna55 said:

Anyway in there was the ubiquitous quote "Americans are the richest people ever to live on this planet", but I am not sure I believe that quote. Not really. I don't know anyone who could afford one servant.

Perhaps that speaks to how much better off the 'servant class' is now, rather than how much worse off the 'middle class' is.

The fact that it sounds weird to even say 'servant class' in this day and age speaks volumes.

jharry3 said:

My ex wife borrowed money to get an MBA, Biology degree, and to get an MD in medical school.   She, without my knowledge, deferred paying on the loans for close to 20 years and is now $200k in debt.   

I don't think she can ever pay this off.

That is in no way the debt's fault.