If you have significant debt

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just curious for those people with $6K mortgages...what is the term of your mortgage?

Our mortgage would be $6K if we amortized over 15 years, but it's about $3300 when amortized over 30 years. I pay about $4K per month on the mortgage and it will be paid off in about 22.5 years (6 years gone, 16 to go!), fortunately, just before our newborn twins are going to go to college!

Our mortgage is about 6500, interest only. Will be adjustable next year. Hopefully rates stay low. 30 yrs--- 25 yrs to go

I don't understand - if it's interest only, what does "25 years to go" mean? Interest only means that the principal is never paid off - so in 25 years, the term of your mortgage will be finished and you'll still owe the entire principal (unless you're voluntarily paying it down, which your subsequent posts seem to indicate is not the case).

My rough calculations show that at a 4.5% interest rate, if you're really paying $6500 "interest only" you have a mortgage of $1.25 million. That's just insane, when you're makign close to $300,000. Even more so as an interest only, where the only way you can make money is if the house appreciates. You basically have a $6500 rental payment combined with a gamble on the real estate market.

[Anonymous]

Yes, it's important to learn budgeting and money management, but when everyone you know skis, plays tennis, goes on trips for spring break, you want your children to fit in. Skiing and other activities may not be important to you but to some people they are important. I've accepted the fact that we won't be going skiing or traveling for a long time, if ever, but that doesn't mean that living an upper middle class life with all the trimmings can't be important to some.

You can dress it up however you like, but the phrase for what you're talking about is "keeping up with the Jonses." And if you can afford that, knock yourself out. But it's apparent that you can't. So stop trying. And when you get out of debt, that is not the time to start trying again - you'll find yourself in the same situation all over again. Remember Einstein's definition of insanity . . .

[Anonymous]

Anonymous wrote:

Yes, it's important to learn budgeting and money management, but when everyone you know skis, plays tennis, goes on trips for spring break, you want your children to fit in. Skiing and other activities may not be important to you but to some people they are important. I've accepted the fact that we won't be going skiing or traveling for a long time, if ever, but that doesn't mean that living an upper middle class life with all the trimmings can't be important to some.

You can dress it up however you like, but the phrase for what you're talking about is "keeping up with the Jonses." And if you can afford that, knock yourself out. But it's apparent that you can't. So stop trying. And when you get out of debt, that is not the time to start trying again - you'll find yourself in the same situation all over again. Remember Einstein's definition of insanity . . .

Agree. The point is to live within YOUR means, not within the means of the neighbors (or the Joneses as the axiom goes). I have never understood the mentality of people who buy into a better school district because they want their children to go to good schools and then feel obligated to live up to the peers there. You made your sacrifices to get your children into the right schools. Don't sacrifice your and their future just to live up to the standard of living of people who earn more than you. Be satisfied that you took the step to give them a good education. If you value those other things, then buy in a a cheaper area, let them go to a less prestigious school system and then you'll have the money for the other perks. Remember, when you are giving your children all of those fleeting things, that you aren't saving for their college and your retirement. It won't help your children if they're limited in their college choices by the fact that they have to pay their own way through college. And they won't appreciate it when they have to support you in retirement and won't be able to do enough for themselves and their children because they are supporting you.

[Anonymous]

Anonymous wrote: [

OP, I never learned to ski as a child. I took gymnastics at the local YMCA, and we traveled only rarely. As an adult, I have enjoyed traveling all over the world and do not feel like I had a deprived childhood because the first time I went to France was when I was 20. It would seem that your financial decisions have created an environment in which your experiences of a normal childhood are not going to apply, and I think it's important that you recognize that your child is not going to suffer because they cannot have private tennis lessons or go skiing every winter. Putting things like that in the same category as occasionally going out to dinner is crazy to me.

You can budget for movies occasionally - like, one summer blockbuster and one Christmas thing. You can go out to dinner occasionally. Even if you have a ton of debt, it is possible to create a budget for fun money (like one of the PPs suggested) that allows you to have these things as treats occasionally. It stops being an occasional treat when it happens once a week or even once a month.

This PP is absolutely correct, one of the most valuable life lesson you can teach your kids is how to manage their finances and live within their means. Skiing lessons, er, not so much.

Yes, it's important to learn budgeting and money management, but when everyone you know skis, plays tennis, goes on trips for spring break, you want your children to fit in. Skiing and other activities may not be important to you but to some people they are important. I've accepted the fact that we won't be going skiing or traveling for a long time, if ever, but that doesn't mean that living an upper middle class life with all the trimmings can't be important to some.

It sounds like what is important to you is keeping up with the Joneses, even if that means spending beyond your means.

So this is what you are teaching your children?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:[quote



I agree with these PPs. OP what you are teaching your children is that it's important to try and keep up with the neighbors/peers even if you can't afford it and are drowning in debt. That's such a bad life lesson. You are not upper middle class so stop trying to keep up the facade. I am also wondering whether your kids actually really want to go skiing etc or as I suspect you are pushing them into these things to maintain your false image. If you teach your children to live within their means then probably they will not end up in the financial mess that you are dealing with now.

PP-- you are making a lot of incorrect assumptions. We are not trying to keep up any facade. We have cut back on pretty much everything and are leading a very frugal life (especially compared to the rest of our family and friends) and especially given the fact that we make about $280k. This thread is about people who have debt and are agressively paying it back. I think it's weird you'd think we would push our kids into skiing. In fact I pray they don't ask to go skiing, or to Disney or to take music lessons etc because it's hard to say no, but right now we have to say no.

Your family and friends are irrelevant and your comparisons to them (even as a parenthetical) are just exacerbating your problem.

WHAT YOUR FAMILY, FRIENDS, NEIGHBORS DO IS NOT RELEVANT.

[Anonymous]

I'm an earlier poster with a 6k mortgage. Currently, we're on a 30 year fixed, paying more than required each month. We'll likely refinance 4-5 yrs to a 15 year when DH gets a big bonus. We probably won't pay off the entire mortgage until the kids are out of college but we've socked away a lot of $ for college and we plan to work until they graduate and then downsize. With any luck we'll make 500k like we made on our last house!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:[quote



I agree with these PPs. OP what you are teaching your children is that it's important to try and keep up with the neighbors/peers even if you can't afford it and are drowning in debt. That's such a bad life lesson. You are not upper middle class so stop trying to keep up the facade. I am also wondering whether your kids actually really want to go skiing etc or as I suspect you are pushing them into these things to maintain your false image. If you teach your children to live within their means then probably they will not end up in the financial mess that you are dealing with now.

PP-- you are making a lot of incorrect assumptions. We are not trying to keep up any facade. We have cut back on pretty much everything and are leading a very frugal life (especially compared to the rest of our family and friends) and especially given the fact that we make about $280k. This thread is about people who have debt and are agressively paying it back. I think it's weird you'd think we would push our kids into skiing. In fact I pray they don't ask to go skiing, or to Disney or to take music lessons etc because it's hard to say no, but right now we have to say no.

Your family and friends are irrelevant and your comparisons to them (even as a parenthetical) are just exacerbating your problem.

WHAT YOUR FAMILY, FRIENDS, NEIGHBORS DO IS NOT RELEVANT.

OP, I am the non-skiing PP who posted last week about how these things are not essential. Since this was my childhood, I can tell you from first hand experience that yes, it is hard to be the only family not going somewhere fancy for Christmas. It is hard being the kid who isn't having a hugely expensive birthday party. I think that what you have to accept is that, for whatever reasons legitimate or otherwise, you are the parents and it was your decisions that have led to these "hardships" (if you can even call them that) for your children. Protecting them from the hard realities of being a family with debt is not doing them any favors. I was well aware of my family's financial situation as a child. I knew why we had less money than my classmates' families did. Honestly, when I started going to public school in middle school, my peer group changed a lot. I wasn't the poorest kid in the class anymore and I became self conscious about other things (as pre-teens are). In my opinion, it is important to have age appropriate conversations with your kids about why they can't have that thing they want or go to the place that everyone else is going. It is important, as the parent, that you explain that as a family, you are investing your money in other important things, like the house and the retirement account. It is important that you present this in a light of "but here is what we will do this year that is fun" as well, lest it become a doom and gloom scenario that they could misinterpret.

Furthermore, frankly, it's important for you to understand that the while some people might value the trappings of an upper middle class lifestyle, ultimately, those things are actually pretty fleeting. If it is more important to you that your kids get fancy vacations and expensive new clothes than it is for you to be saving for retirement or investing in your childrens' college fund, that is a fairly depressing commentary on your value.

[Anonymous]

PP -thanks for your post. We are working very hard to pay off debt and don't value expensive vacations/clothes more than college or retirement. I'm not sure I completely agree with you about sharing our financial struggles with our kids. Honestly it's not something I want them to worry about but I do want to teach them to be frugal and live within their means. Did your parents lose their jobs when you were in MS or have some other financial problem? Mostly I feel lucky we have good jobs and have been very fortunate, but it's like constantly being on a financial "diet" that gets tiresome, but it could be a lot worse.

[Anonymous]

Anonymous wrote:PP -thanks for your post. We are working very hard to pay off debt and don't value expensive vacations/clothes more than college or retirement. I'm not sure I completely agree with you about sharing our financial struggles with our kids. Honestly it's not something I want them to worry about but I do want to teach them to be frugal and live within their means. Did your parents lose their jobs when you were in MS or have some other financial problem? Mostly I feel lucky we have good jobs and have been very fortunate, but it's like constantly being on a financial "diet" that gets tiresome, but it could be a lot worse.

Look, if you make 280k and you have consumer debt, you are living beyond your means. Read the Millionaire Next Door - talks all about how parents don't share info on finances or frugality with their kids to "give them a better life" etc -but just just wind up setting their kids up for failure / debt by not modeling / discussing the hard decisions needed to avoid these critical issues.

From the outside, DH and I probably appear to be wasting our $ to our neighbors - we are very young and take ski vacations, we go to far flung places, but you know what- it took us 8 years to furnish our TH b/c we deferred that to travel b/c we would not compromise college or retirement savings for our vacation preferences. I think PPs point is- you have to compromise somewhere. You want to do everything (it sounds like) and maybe the activities and the private school are super important to you - that's fine. But you have to pick something in your lives to defer so you have have these things and manager your debt. We ditched furniture- what are you ditching? You asked for advice on getting rid of consumer debt, you're getting it, and now you are acting like you don't want it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just curious for those people with $6K mortgages...what is the term of your mortgage?

Our mortgage would be $6K if we amortized over 15 years, but it's about $3300 when amortized over 30 years. I pay about $4K per month on the mortgage and it will be paid off in about 22.5 years (6 years gone, 16 to go!), fortunately, just before our newborn twins are going to go to college!

Our mortgage is about 6500, interest only. Will be adjustable next year. Hopefully rates stay low. 30 yrs--- 25 yrs to go

I don't understand - if it's interest only, what does "25 years to go" mean? Interest only means that the principal is never paid off - so in 25 years, the term of your mortgage will be finished and you'll still owe the entire principal (unless you're voluntarily paying it down, which your subsequent posts seem to indicate is not the case).

My rough calculations show that at a 4.5% interest rate, if you're really paying $6500 "interest only" you have a mortgage of $1.25 million. That's just insane, when you're makign close to $300,000. Even more so as an interest only, where the only way you can make money is if the house appreciates. You basically have a $6500 rental payment combined with a gamble on the real estate market.

I thought the same thing. The poster should've bought a $500,000 house (more affordable) with half the mortgage and not be paying this outgragous amount

[Anonymous]

if they make $280K, they can afford the mortgage. the mistake is getting the interest only. our income and mtg are in that ballpark, but my mtg is 3.25% 15 year ...

[Anonymous]

Anonymous wrote:if they make $280K, they can afford the mortgage. the mistake is getting the interest only. our income and mtg are in that ballpark, but my mtg is 3.25% 15 year ...

The interest only turns into an ARM in about 10 months.

[Anonymous]

Anonymous wrote:

Anonymous wrote:PP -thanks for your post. We are working very hard to pay off debt and don't value expensive vacations/clothes more than college or retirement. I'm not sure I completely agree with you about sharing our financial struggles with our kids. Honestly it's not something I want them to worry about but I do want to teach them to be frugal and live within their means. Did your parents lose their jobs when you were in MS or have some other financial problem? Mostly I feel lucky we have good jobs and have been very fortunate, but it's like constantly being on a financial "diet" that gets tiresome, but it could be a lot worse.

Look, if you make 280k and you have consumer debt, you are living beyond your means. Read the Millionaire Next Door - talks all about how parents don't share info on finances or frugality with their kids to "give them a better life" etc -but just just wind up setting their kids up for failure / debt by not modeling / discussing the hard decisions needed to avoid these critical issues.

From the outside, DH and I probably appear to be wasting our $ to our neighbors - we are very young and take ski vacations, we go to far flung places, but you know what- it took us 8 years to furnish our TH b/c we deferred that to travel b/c we would not compromise college or retirement savings for our vacation preferences. I think PPs point is- you have to compromise somewhere. You want to do everything (it sounds like) and maybe the activities and the private school are super important to you - that's fine. But you have to pick something in your lives to defer so you have have these things and manager your debt. We ditched furniture- what are you ditching? You

asked for advice on getting rid of consumer debt, you're getting it, and now you are acting like you don't want it!

Actually I didn't ask for advice on getting rid of consumer debt. I asked if anyone else was aggressively paying off debt and felt they couldn't spend money on anything except debt reduction, which is how I feel. Partly I'm venting that it's unpleasant to not be able to spend any money, although I'm well aware we really have no choice (due to our own fault) and that it will be wonderful and save us tons of money once we are debt free, or very close to it. No one has to convince me that I need to pay off debt, in fact one of the more helpful posts was about the fact that we should allocate a small amount of money to infrequent treats (a movie a few times a year). I'm assuming others find it tough to penny pinch and not spend money.

[Anonymous]

Yes, i'm constantly having to deny myself things I want and it can get depressing. My kids want so much..... Ice cream, clothes, toys, guitar lessons, sleepover camp, trips, electronics, you name it. But I just have to keep my eye on the goal.....retirement and college and savings.

[Anonymous]

Do you just never spend $ on anything but essential bills?