Debt help

[EastCoaster]

I’m a get out of debt at whatever cost kind of person. I agree the market is where to grow your money…..but that growth will be squashed if you have to dip into your retirement early to pay your bills. Also, most people saying play the market and don’t worry about your mortgage have never been hit in the mouth economically. Being self employed……having no debt equals peace of mind during hard times.

 

[CorbLand]

Daves philosophy is based off low risk. Paying off your home early is guaranteed savings. Putting money in the stock market is not a guaranteed increase.

Not saying I agree with either one but you need to weigh out your options.

 

[JLane330]

Being debt free is well worth the effort. Being cautious and having money in savings should also be a priority, something I'd recommend before paying off debts aggressively. That way, if something comes up, you don't sink. Once savings is sufficient, go nuts paying down debt.

Question for those who have no debt and are investing...theoretically, if you had a large lump of cash in savings, and no debt in life, what would you do with it? Let's assume retirement accounts are out of play (not available, already maxing out, etc), and cars/home are in good shape and don't need attention. Given today's uncertainties in the market/future of this country, how would you invest the lump, stocks, bonds, realestate, savings bonds (limited to 10K/yr iirc), gold, guns, hunting gear, etc? Or would you stash it under a mattress and hope for a crash?

I appreciate the answer will depend on risk tolerance, age, etc. I'm worried about inflation and keeping up with that while balancing risk profile. Day trading sounds terrible... Savings pays essentially 0%, CD rates are terrible.

 

[browning2480]

Good growth stock mutual funds

 

[UtahJimmy]

Being debt free is well worth the effort. Being cautious and having money in savings should also be a priority, something I'd recommend before paying off debts aggressively. That way, if something comes up, you don't sink. Once savings is sufficient, go nuts paying down debt.

Question for those who have no debt and are investing...theoretically, if you had a large lump of cash in savings, and no debt in life, what would you do with it? Let's assume retirement accounts are out of play (not available, already maxing out, etc), and cars/home are in good shape and don't need attention. Given today's uncertainties in the market/future of this country, how would you invest the lump, stocks, bonds, realestate, savings bonds (limited to 10K/yr iirc), gold, guns, hunting gear, etc? Or would you stash it under a mattress and hope for a crash?

I appreciate the answer will depend on risk tolerance, age, etc. I'm worried about inflation and keeping up with that while balancing risk profile. Day trading sounds terrible... Savings pays essentially 0%, CD rates are terrible.

I'm literally going through this right now. My company went public this year and I cashed out some shares to realize those "gains" and reduce my risk exposure to a single stock. I just put it back into the S&P500 because I don't have any other use for it and it's all a windfall in my opinion so I'm just going to let it grow. I'm thinking that I'll probably buy a rental property with it eventually but I want things to cool down and stabilize a little. The local housing market in Utah is unreal right now with big money coming in and snatching everything up with cash at 20-30% over list price on profitable rentals.

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[unclericco]

I think that in alot of cases, families are trying to keep up with their friends/families and getting into alot of un necessary debt just for appearance. It's a terrible thing to think you need to be accepted in others circles. Why not just worry about you and your own happiness instead of worrying about what others think? My dumb ex got me into alot of debt trying to fit in with her friends. Glad she is out on her own now and not ruining my life with that crap

 

[ewade07]

I think that in alot of cases, families are trying to keep up with their friends/families and getting into alot of un necessary debt just for appearance. It's a terrible thing to think you need to be accepted in others circles. Why not just worry about you and your own happiness instead of worrying about what others think? My dumb ex got me into alot of debt trying to fit in with her friends. Glad she is out on her own now and not ruining my life with that crap

Keeping up with the Jones'. Its a real thing.

 

[awasome]

Being debt free is well worth the effort. Being cautious and having money in savings should also be a priority, something I'd recommend before paying off debts aggressively. That way, if something comes up, you don't sink. Once savings is sufficient, go nuts paying down debt.

Question for those who have no debt and are investing...theoretically, if you had a large lump of cash in savings, and no debt in life, what would you do with it? Let's assume retirement accounts are out of play (not available, already maxing out, etc), and cars/home are in good shape and don't need attention. Given today's uncertainties in the market/future of this country, how would you invest the lump, stocks, bonds, realestate, savings bonds (limited to 10K/yr iirc), gold, guns, hunting gear, etc? Or would you stash it under a mattress and hope for a crash?

I appreciate the answer will depend on risk tolerance, age, etc. I'm worried about inflation and keeping up with that while balancing risk profile. Day trading sounds terrible... Savings pays essentially 0%, CD rates are terrible.

Depends on when I would think I need the money.

If more than 3 years i would put it in mutual funds.

If I think I want to take a high priced trip or buy a high priced toy in the next year or two, I would park it in a high yield money market account and try to get 1-3% interest.

 

[Marble]

Being debt free is well worth the effort. Being cautious and having money in savings should also be a priority, something I'd recommend before paying off debts aggressively. That way, if something comes up, you don't sink. Once savings is sufficient, go nuts paying down debt.

Question for those who have no debt and are investing...theoretically, if you had a large lump of cash in savings, and no debt in life, what would you do with it? Let's assume retirement accounts are out of play (not available, already maxing out, etc), and cars/home are in good shape and don't need attention. Given today's uncertainties in the market/future of this country, how would you invest the lump, stocks, bonds, realestate, savings bonds (limited to 10K/yr iirc), gold, guns, hunting gear, etc? Or would you stash it under a mattress and hope for a crash?

I appreciate the answer will depend on risk tolerance, age, etc. I'm worried about inflation and keeping up with that while balancing risk profile. Day trading sounds terrible... Savings pays essentially 0%, CD rates are terrible.

If you want to stay ahead of inflation, invest your money in one of the S&P index funds and or a mutual fund. You keep the money available in your savings for oh crap moments and grow the rest of it.

Inflation is often thought of as a short term problem and it can be. It is only usually felt in the short term, but it is always realized on the long term when someone does not grow their money in an investment. Putting your money in a bank with else than 1% return is a sure way to loose money and be a victim of inflation. Put it in one of the previous mentioned funds and your problem will be solved.

For those afraid of perceived risk in the market, they need only to educate themselves with facts and and not the myths most beleive. It is safe, reliable and predictable over the long term.

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[Marble]

Being debt free is well worth the effort. Being cautious and having money in savings should also be a priority, something I'd recommend before paying off debts aggressively. That way, if something comes up, you don't sink. Once savings is sufficient, go nuts paying down debt.

Question for those who have no debt and are investing...theoretically, if you had a large lump of cash in savings, and no debt in life, what would you do with it? Let's assume retirement accounts are out of play (not available, already maxing out, etc), and cars/home are in good shape and don't need attention. Given today's uncertainties in the market/future of this country, how would you invest the lump, stocks, bonds, realestate, savings bonds (limited to 10K/yr iirc), gold, guns, hunting gear, etc? Or would you stash it under a mattress and hope for a crash?

I appreciate the answer will depend on risk tolerance, age, etc. I'm worried about inflation and keeping up with that while balancing risk profile. Day trading sounds terrible... Savings pays essentially 0%, CD rates are terrible.

It depends on how big the lump sum is. If it was enough to pay off my house, I would pay off my house. If it wasn't, I would keep 50-60k avaliable in cash and put the rest in an index fund if I didn't foresee needing it in the near future. If the money grew to enough to pay off my house, I would do it.

Becoming wealthy and secure is a combination of having a big enough shovel and making the correct choices financially. Additionaly, behavior is more of a predictor of future wealth then the amount of money you make.

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[JLane330]

Some good points made, thank you. This was all hypothetical, and each answer differs, as expected. Good ideas and comments.

Personally, there are a few factors at play that would limit my choices. Paying off a house would be nice, but if not planning on staying in said house very long (year or two), with a very low interest rate, that's an opportunity cost to pay it off. This is the real situation for me, I'd like to buy land and build, so having cash invested with the ability to pull it out for this purpose is important. Paying off the house, not so important (it has plenty of equity already), and is the only debt in my life.

I was curious if anyone would respond that they'd start a business. Not sure this is my plan, but considering that as well. It's a risk, but also an investment into myself. Given the craziness of mandates, etc...working for myself might be welcomed. I fully appreciate it's not a 40hr/wk gig and that's a cost as well, but potentially very rewarding in other ways besides money.

Nobody replied that they'd buy a rental, which is also interesting. Probably not the right time to be buying real-estate given the prices, but maybe I'm wrong. That can be a mixed bag, for sure. I'm interested in how current landlords are doing today, especially those who haven't collected rent for the last year+. If I was to invest in real-estate, it'd be to build a house for myself and earn that sweat equity while also building a house I want.

Index funds are where my retirement is currently, and have do well, like everyone else. I'm too young to retire and use those funds currently. So, they'll stay invested and grow. Not sure I want all my eggs in the stock market, although there may not be a better option. I have a concern about this country's future in terms of housing, debt, shortages, etc. Is a collapse around the corner? No idea, but there are definitely things happening now that may result in some seriously stuff in the near future.

 

[EastCoaster]

what I have found…..if you get out of debt really quick and then invest everything you were throwing at it……the numbers are spectacular. I also agree that real estate is another good way to grow your future as long as you keep your emotions out of it.

 

[michaelc10]

I also did Dave Ramsey course it's something you can do if your willing to tough it out . We paid off all our debt including our home. It's so nice to be able to learn to live on less and be appreciative of what you accomplished.

 

[PRC_GUY]

Credit cards is Black Devil

 

[isocyanate]

Debt (or credit) is a tool, like any other.

 

[jlh42581]

No one makes an ounce of sense with this "id put it in an index if i dont need it for a few years"

The S&P grows WAY faster than your savings ever will. So what if you pay short term capital gains on the money, youd pay that working a job too. Instead you let it sit in your checking making fractions of a penny on a dollar.

You can yank the money in and out of your brokerage account as easy as your checking. The issue is if you cant realize that all the gains are not free money. You can even yank original contributions out of your roth IRA without penalty. The taxes in any real brokerage like fidelity are handled with easy import into turbo tax. IF by chance you lose money, you write that off on your taxes. Your 401 is not your Roth is not your Brokerage.... learn what you can and cant do with each.

 

[mtnbiker208]

stop eating out!

 

[Venom One]

Lots of great advice in this thread. I've always been a person who believes that sacrifices today (spending less on wants) will allow for better tomorrow. This philosophy has worked well and has been echoed by many of the previous posts. However, there's a pesky little problem with that approach - jobs. If we all turn into savers, it reduces jobs and tightens liquidity. When we stop going to restaurants or when we cancel our gym memberships or delay buying a new car or washer/dryer, etc, etc, it directly affects someone's job. We see this when recessions/depressions hit; everyone tightens up their spending habits which costs people their jobs and reduces the flow of money. It's all a very finely balanced juggle that can quickly and easily go off the rails based on consumer confidence and their willingness to spend money. Our inflow should always exceed our outflow, but if we all sit on our money the system collapses that way too.

 

[Marble]

No one makes an ounce of sense with this "id put it in an index if i dont need it for a few years"

The S&P grows WAY faster than your savings ever will. So what if you pay short term capital gains on the money, youd pay that working a job too. Instead you let it sit in your checking making fractions of a penny on a dollar.

You can yank the money in and out of your brokerage account as easy as your checking. The issue is if you cant realize that all the gains are not free money. You can even yank original contributions out of your roth IRA without penalty. The taxes in any real brokerage like fidelity are handled with easy import into turbo tax. IF by chance you lose money, you write that off on your taxes. Your 401 is not your Roth is not your Brokerage.... learn what you can and cant do with each.

I'm trying to follow what you said but I'm not sure what you were getting at.

You only pay capitol gains on the profit and if it's not in an IRA or 401/457 you can pull it out at anytime. I think it's 20% less than a year invested and 10% over a year.

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[MattB]

Dave Ramsey is basically a debt reduction 101 course and I generally do not advocate it, but for you it sounds like the ticket.