I belong to several forums and find that people are in/going into debt is really skyrocketing. Before anyone makes me out to be the bad guy; Im just confused on how people end up in such hardships. Is it one thing; is it multiple things. I will agree that these days its harder to save and taxes are outrages. I have been at a point with just $1,000 in the bank and praying for no emergencies. I have seen my brother pressure cleaning apt. buildings on the side to help with expenses, before he became an engineer for FPL. Im just wondering how things spiral out of control. I hope Im articlating my questions correctly. Its not meant to hurt anyone.

I paid for my own car, my own college, car insurance and never took out student loans; they always come to bite you in the butt for years to come. I did work at Denny's through college. I did not shop. Ive never been a shopper. I took my dad's financial class and made up my mind to never rely on credit cards except for emergencies; an emergency is not a 50% off sale. LOL
When I got married I had $500 to my name but no debt. My dh was a bit older and had saved and that bought our first duplex.
I worked full time for 7 years before having kids and banked it.

However that money was used to buy our home, it was a forcloseure. We did all the work to fix it up. At that point we really had a few dollars to our name. But no debt other than the home. We made up our minds to live on his paycheck and bank mine. Which allowed us to buy a bigger home. Still no credit card debt. No fancy vacations, no fancy jewelry.

Now I said that to say this; why do people get into crazy debt in the first place. I can understand medical debt. Trust me, I had a $100,000 heart operation three years ago. So I know what its like to pay off debt; even though my portion was only $10,000. Is it shopping debt? Loss of a job( understandable espeically now) is it not having saved for the rainy day? Is it things going up in General?

In my area the amount of homes that have been abandonded is completely out of hand. How do this many people go into bankruptcy? And why? Did they buy a home they couldnt afford. I have a friend with ten credit cards. YIKES. I only have one. And if the company doesnt accept it, then oh well.

I hope Im really articulating this correctly. Its not directed at one particular person. I have friends in the same boat. I just scratch my head and wonder how they got into the fix they are in.
We have just been savers. If we didnt have the money we didnt but it. Im so glad. It has afforded me to be home ten years now and Im not going back to the rat race. We made small investments that did grow; but Im not living off that. That is my retirement. I know how much my husband makes in our business and its not as much as you may think. We have employees to pay, workmans comp. , and a thousand other things.

I hope you understand my question. Between what I hear on the forums and what I see on the Suzy Ormon show; Im just wondering how this happens to so many people. I think the biggest thing is to not get into debt in the first place if at all possible. Im really scared for a lot of people when the dollar is no longer worth anything. The whole world will go bonkers.

I have watched my sister get into this trap in the last few years. For her, it started with buying a house that they really couldn't afford. She wanted the big-fancy-house-thing, but didn't want to work her way up to it (you know...buy smaller house, build equity, sell, buy next bigger house, build equity, etc.....). Once they had the mortgage that ate up too much of their paychecks, then it became a struggle to manage the other things - car payments, medical expenses, emergencies. Things started going on the credit card that should really have been paid out of the paycheck.

There are probably other ways to get yourself in trouble financially, but paying too much for housing seems to be a common one.

I was going to post earlier to something I had read, but was afraid to because I didn't want to offend anyone. I was raised to be very frugal, that's what my mom had taught me. If we didn't have the cash we didn't buy it. Period. Don't forget, some people were raised in homes where money wasn't spent wisely. My dh and I bought our first home less than 5 yrs ago. We had a small down payment(we saved ourselves) and we have always paid cash for things, never loans. We only have a house payment of 375 a month(I pay extra every month). That is the only debt we have. We only owe around 35,000, but that is how we chose to live. We don't want to be in debt. We do not live in a mansion and do not drive a Cadillac. I used to envy people who lived like that, until I would hear them complain about bills and how they wished they could live a more simple and easier life(like how we live). We chose this set-up so I can be home/homeschool my kids. Any extra money my dh makes from overtime gets saved. (He does not get paid holidays and he works for his parents!) So, when Thanksgiving and Christmas come I need to save his overtime money to cover those days. I'm not saying ALL people are materialistic, but we do live in a very materialistic world! I realize marriages don't work causing financial problems, people have to pay for college themselves, maybe at one time you had a great paying job and purchased expensive items and lost a job, anything can happen. I really think in this day and age people have to keep up with the Jones'. I know people (many) that have admitted when their neighbor gets a new car it's time for them to get one. My nephew's mother is 28 and just purchased a $140,000 home (in this area, PA, that is pricey), also a new vehicle(she and her boyfriend both have one). Yes, her home is very nice, and so is her vehicle, but I couldn't imagine paying her monthly mortgage/car payment. That is just how I feel. I'm not saying she is wrong, I'm just saying, I personally wouldn't do that. I know for a fact that she and her boyfriend make a tiny bit more than my dh does. (My nephew told me a few years ago that she was using her credit cards too much and people keep calling wanting their money). So, in her situation I think it's wrong. But, for someone who makes very good money and a home in that price range is chump change, then I see nothing wrong with it. I remember listening to a christian radio station years ago and their advice was that you should try to live off of only one income, any other income should be extra. So in other words, only have bills that that one income can pay. Don't rely fully on that second income. That is how we have always lived. I figure when my kids are gone I'll have much more free time to work or make extra money and we can do more things/or fix up our house. So those of you who have good paying jobs and CAN afford these things and you are not mounting yourselves in debt, I'm not referring to you. I'm referring to people that know they should not purchase something and still do. Sometimes I 've been tempted, but I think of how easily one thing can lead to another and I've watched too many people lose houses/vehicles over not so wise decisions.(Not job losses). So, those of you who don't live in mansions or drive nice cars you are not alone!

Hmmm, where to begin...I don't think I could blame our house. We built a modular for $160k which is a good deal in our area. Monthly loan payments were (ARM which has not been bad for us) ranged from $875 to 1200 at the most which is cheaper than renting. We had two clunker vans that both died in the same summer. DH really needed a truck (used) and I got a new van (5 yr lease-maybe not a great idea, comes due next yr). We were getting by, DH was office mgr/broker in charge of a real estate office plus he always does side jobs to make a little extra. Well, he got so stressed at job he had to go to hospital, thought he was having a heart attack. Small hospital sent him to big city hospital via a $1000.00 dollar ambulance ride. Oh, and we don't have insurance. When all was said and done, there was nothing wrong with his heart, though it stopped beating for 18 seconds (stress related, body overloaded). Anyhoo, $12,000 in bills, we got a discount on some if we paid quickly so we put them on credit cards. DH ended up losing his job. Then, since he was technically self-employed in real estate we were hit with a $10,000 IRS bill which we put on c/c. Then we started moving the amounts from one card to another, whoever would offer zero percent interest with no payments for a year. Oh, and the dh invested with some partners in a small land deal and haven't been able to sell the land. So, we do live rather cheaply, and God always provides just enough to get by another month, and we manage. We have tried to sell the house for several years but no luck. If we could, we would be debt free. So, looking back, some of our debt was not expected. We never can save anything because everything we make we pay bills with. I did work for about three months this year and I do odd jobs as well to make some extra.
squidward

Here is my little story about debt....basically, my dh was Mr. Financially Savvy when I married him. He'd been working since he was 15, had bought his first home when he was 18 or something like that, had no debt, didn't even want to marry me until his other home sold and we could buy a house with cash in the area he was now in. Well, we did end up marrying before that happened, but I say those things to show you what kind of person he was regarding finances. I, on the other hand, had no training whatsoever regarding finances except to know that my parents were always in financial hardships - there were five of us children, my mom stayed at home and they sacrificed much to put us in a Christian private school (worked cleaning jobs at night together during one point).

So, when we got married, I probably was thrilled with the fact that I had money and slowly started resenting that my husband was so "cheap". Well, I say resented. I don't know if that's a good word to use. But, I started speaking my mind about "not being so cheap" and "living a little", etc., etc. I convinced (hmmm...that sounds a lot better than nagged, doesn't it?!) him to buy a house we could not afford because I was an idiot and then convinced him that I did not want a used minivan for our growing family, so we bought a bigger car that cost more. And, that is where our debt started. Because of that house payment mostly.....it just started snowballing from there.

Then, during that period, God saved me and one of the many things I was immediately convicted of were all of those bad decisions and my refusal to let my husband lead us financially. The worst part was that because of my behavior, my husband's attitude towards money actually changed for the worse and still I can see that my actions back then have had their consequences because of this change in his attitude towards money. But, I started praying that God would get us out of the mess we were in and through different circumstances, he completely delivered us out of all of our debt except for our house payment. As a matter of fact, He reminded me of that just last night and I view this story as one of the miracles that He has done in my life.

I never was a huge shopper, but boy, did I want a nice looking house and a nice car at that time in my life. You know, just trying to get my needs met from material things rather than from Christ.

Well, in our case we both wanted higher education degrees. We both have a BA and my husband has an MA. Higher Education is not cheap. We could not have done it without school loans. I worked for a year before college and more than 20 hours a week all through-out college and still needed loans. Neither of our parents were willing (or even able) to foot the bill.

So upon getting married we already have $50,000+ in school loan debt. Then DH got his Masters and added another $15,000. We had to work really hard to pay that off.

I think for most people, what happens is that they are just living on the edge. They can't or don't save enough and then literally the roof needs replacing or a child gets sick so they pull out the credit card. Having that emergency fund is sooo important. We don't have nearly enough in it but at least we don't carry any kind of balance on our credit card. The ideal would be 3 months worth of income. A $1,000 would just barely cover deductibles.

This post was edited on Nov 05, 2009 11:45 AM

<<<I have been at a point with just $1,000 in the bank and praying for no emergencies.>>>

Consider yourself blessed! I'm happy if we have $10 left after paying everything...lol

Hi! I am a student, and not a grown-up yet, but I DO know I will never want to take a debt or borrow from someone, unless I absolutely HAVE to! I had to write an essay about debt a few weeks ago in Estonian, but now I was reading a little bit of your post here, and decided I should translate my little "essay" into English and post it on here. Maybe someone will get a couple of ideas, and I hope it might be a help. Hope you enjoy it. Sorry, I don't know much else to write. I know this is very simple, and I don't answer very many questions in it, but here it is.

Debt

Many people have a big problem – debt. If you have debt, you are a slave. I would like to show a few things, which I hope will help someone understand it a little better.
Really, it is not so hard to get out of debt. First of all, decide immediately that you will never borrow, then buy only the things you really need, not the most fashionable clothes, rich restaurant foods, etc. Then pay all the debts you possibly can. Don’t get into more debt, to get out of debt!
When you are free from debt then you have a wonderful feeling, a feeling of being free – not having to be a slave to anyone. Proverbs 22:7 says: The rich ruleth over the poor, and the borrower is servant to the lender.
When you get free from debt, continue using your money wisely. Don’t borrow and don’t spend more money than there is in your income. You do not have to buy just everything possible, which comes to your head, and what you will not use anyway. Learn to make things yourself, save, and reuse things. Learn to save money for the future.
Essay written by Agape B.
October 23, 2009