S/O How to be comfortable with debt

[Anonymous]

Anonymous wrote:

Anonymous wrote:You shouldn't be comfortable with debt. I was raised and still firmly believe that you only borrow for three things -- a house, an education, and a car. I don't even do the car thing, and I hope to have enough saved up for my son that we won't have to borrow for that.

If you can't pay for the fancy vacation, don't take it. If you don't have enough to pay for a fancy vacation, it also means you don't have enough in savings either.

OP here. I have plenty in saving to take the fancy vacations, but I won't touch it. Savings is kind of "out of sight, out of mind" for me. It is there for emergencies, not a trip to the beach.

So maintain separate accounts. We have several savings accounts, all earmarked for various things. Every month, $200 goes into the "Vacation fund," and we spend it without guilt. We save separately for emergencies, a down payment, a new car, gadgets, etc. I found we were both a lot more comfortable spending guilt-free the money we actually had set aside, when we knew and planned to spend it for that purpose.

[Anonymous]

I hate debt, it keeps me up at night. We have never carried balances on our cards until DH lost his job at the end of 2011 and was unemployed for a year. I started working, thank God, but we still wracked up about $40K in cc debt. Im nauseous just writing it!!

DH finally found a great job paying what he was making before losing his last job but I just dont see how we can pay it off. We already live modestly. I am seriously considering using retirement to pay it off....and hit the re-set button - wipe the slate clean if you will.

While I know it's a huge NO-NO, I just dont know what else to do. I know there will be penalty and taxes but in 2012 our income was only around $40K - for a family of FOUR. If we use some retirement before Dec 31st then we wont be hit with such a huge tax bill come april 15th as we basically made nothing this year. If we wait till next year ti will be a differnt story all together.

ugh....I have a headache....

[Anonymous]

Anonymous wrote:You're contradicting yourself - in your first post, you said, "I'd rather have CC debt and significant savings if one of us were to get laid off" - so you couldn't pay off the $20k in card debt. Now that same $20k "is a drop in the bucket." Which is it?

If you have sufficient savings to live comfortably for 2-3 years, there is just no reason to maintain consumer debt. It's not fine wine, it doesn't get better with age.

Actually money is like fine wine and can get better with age.

Again the stocks are EMERGENCY FUNDS. I would not want to pull money that is making money unless completely necessary. I woud rather keep the 50k in savings and dip into that if there were a lay off while my CC stay at 0% interest. I would HOPE that we could live off of 50K comfortably for a good 6 months until someone found a job. Of course we have the money to pay it off, but when you have a large chunk of money often times it is best to not liquidate unless the debt is costing you more than the earned interest. This is what is called making your money work. If we were laid off the LAST thing I would do is use money that is MAKING MONEY to pay off debt that is costing me nothing. Get it? Let me simplify it for you:

No interest CC'd=deferred spending while your money makes money.

For instance

If I spend 20K on home improvements on a card that is 0% for 18 months, I stand to make approx 3K on that money in capital gains (which are taxed at a lower rate). If I had just shelled out the cash, then I would have lost 3K. Of course this is a losing situation if you are using CC's that carry an interest rate.

[Anonymous]

I have the exact same problem for the exact same reason!!! I'm exactly like you a 100.00$ creditcard balance will make me cry even though I know I have over 6,000 available. I understand what you're going through in terms of wanting to be able to go on vacation. It's difficult when money rules your life to the point where before buying an ice cream cone you consider your entire monthly budget at that exact moment. What I would suggest is waiting til your creditcard is at about 500.00. and then making 2 250$ payments towards it one each month. That's what I'm trying to do. It is EXTREMELY difficult and you might fail the first two times but after that you'll be able to tell yourself that it's okay to not pay in full every month as long as its manageable

[Anonymous]

Eight months after it started and I still hate this thread. There's no need to "practice" carrying cc debt. The goal should be zero consumer debt (pay balance in full monthly), pay student loans and ok to carry reasonable mortgage debt. That's it. I understand that this might not be possible at all times. That's why it's a goal.