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Old 14th March 2012, 21:58   #61
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Default Re: Debt free life?

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Another point is imagine if everyone will starts having a debt free life ? How will the banks/financial institutions earn ? How will you ever get to make up to those unforeseen circumstances, the dreams (Car, House, Education, Foreign travel, etc) ?
“That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.” - Marriner Stoddard Eccles
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Old 14th March 2012, 22:24   #62
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Those who are for Debt free life they are of the opinion that do a lot of saving then buy something, and reduce your saving. And god forbid if you loose your job at that point? You don't have savings, you sell your asset at a less price, did you guys think about this scene? Job lose can happen to both types who takes loan and who enjoys debt free life.
.
Even if the person has spent all his savings on a property and unfortunately he does not have any saving while losing job, he can sell off the property as it entirely belongs to him. Price may be less depending on the market conditions, but he will have ready cash to tide over the crisis. Imagine the plight of the same person with a loan. The bank will not release the property deed as long as he does not pay the outstanding amount. He will have to live with EMI payments to the bank (aka goons) when he is jobless along with his daily expenses during the crisis.

This is what happened to many IT professionals who lost jobs or got pay cut during recent recession. They lost their income suddenly and did not have money to service their liabilities (which included depreciating assets - gadgets - as well) whose value was down. They also had to meet their daily needs. Many of them had to take help of parents/ relatives just to service their loans.

It is always advisable to maintain 3 months salary as an emergency fund. I would advise to have a substantial part of your savings in the form of gold, which should not be used at any cost. My father died in an accident when I was in school, we could manage the marriage of my elder sister by using the gold reserves in the family. It is easy to liquidate gold compared to other physical assets and it does not lose value in the long term. I am a believer in gold from then on.

Last edited by PatienceWins : 14th March 2012 at 22:53.
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Old 14th March 2012, 22:25   #63
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Default Re: Debt free life?

One question. You guys who have a credit card to pay bills online, why not use a debit card?
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Old 14th March 2012, 22:29   #64
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Default Re: Debt free life?

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One question. You guys who have a credit card to pay bills online, why not use a debit card?
Maybe I'm just being paranoid, but one reason why I don't use my debit card for any payment (esp.online) is that it's linked directly to my bank account.
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Old 14th March 2012, 22:33   #65
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Default Re: Debt free life?

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Maybe I'm just being paranoid, but one reason why I don't use my debit card for any payment (esp.online) is that it's linked directly to my bank account.
I have created standing instructions in my savings account to pay utility bills and my only credit card. This also ensures that my credit card always get paid in full before the due date. The credit card is only used in situations (paypal etc) where other modes of payment is not acceptable. I have been doing this for a long time, so far no issues.
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Old 14th March 2012, 22:49   #66
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Default Re: Debt free life?

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Originally Posted by anekho View Post
One question. You guys who have a credit card to pay bills online, why not use a debit card?
When I can use a Credit Card, why use a Debit Card ?(especially for online transactions to non standard payees).
Fact: Online transactions in the US/US based websites do not go through one more level of security as in India (not sure if this is changed now)
All my Credit Cards are configured to send me an SMS on every transaction.
I get 20-50 days to pay up, meanwhile the money earns me a small interest.
Lastly, Credit Card based Reward Points are better than the Debit Card based ones (imho)

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Maybe I'm just being paranoid, but one reason why I don't use my debit card for any payment (esp.online) is that it's linked directly to my bank account.
I am paranoid too.

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I have created standing instructions in my savings account to pay utility bills and my only credit card.
The only standing instruction from my debit card is to my non-linked credit cards at the same bank.
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Old 14th March 2012, 22:55   #67
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Default Re: Debt free life?

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Originally Posted by anekho View Post
One question. You guys who have a credit card to pay bills online, why not use a debit card?
Quote:
Originally Posted by StarrySky View Post
Maybe I'm just being paranoid, but one reason why I don't use my debit card for any payment (esp.online) is that it's linked directly to my bank account.
Quote:
Originally Posted by PatienceWins View Post
I have created standing instructions in my savings account to pay utility bills and my only credit card. This also ensures that my credit card always get paid in full before the due date. The credit card is only used in situations (paypal etc) where other modes of payment is not acceptable. I have been doing this for a long time, so far no issues.
I don't use credit cards or debit cards for online bill payments. I just use net banking. (Is that what you mean by using a debit card?)
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Old 14th March 2012, 22:59   #68
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Default Re: Debt free life?

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I don't use credit cards or debit cards for online bill payments. I just use net banking. (Is that what you mean by using a debit card?)
Yes, that is what I meant. Standing instructions in savings account is created using net banking where by the payment for utility bills and credit card is made automatically before the due date.
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Old 14th March 2012, 23:13   #69
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Default Re: Debt free life?

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Even if the person has spent all his savings on a property and unfortunately he does not have any saving while losing job, he can sell off the property as it entirely belongs to him. Price may be less depending on the market conditions, but he will have ready cash to tide over the crisis. Imagine the plight of the same person with a loan. The bank will not release the property deed as long as he does not pay the outstanding amount. He will have to live with EMI payments to the bank (aka goons) when he is jobless along with his daily expenses during the crisis.
But in loan case too, the person can sell the property and till the time that happens he can use his savings.
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Old 14th March 2012, 23:26   #70
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But in loan case too, the person can sell the property and till the time that happens he can use his savings.
He can get the bank off his back if the property fetches more than his loan outstanding during a recession. The issue occurs mainly when the person is in the initial stages of mortgage payment and sell off does not cover his liability as the buying price was higher. I would prefer to lead a simple life or rather starve in my own house instead of getting tortured by bank for using their property without payment when I am going through a financial crisis.
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Old 14th March 2012, 23:33   #71
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Default Re: Debt free life?

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Originally Posted by PatienceWins View Post
rather starve in my own house

But the poor soul, who I pray to God is NO ONE EVER, has sold the house.


I started earning a regular income from 2003.
Bought my bike using a personal loan in 2003.
Got married using a personal loan.
Bought a car, using a personal loan.
Dad wanted to add an additional floor to his house, I got a personal loan.

So if anyone speaks against a loan, I take it personally.

If I buy a house, I would guess what...sorry wrong answer not a personal loan, but a home loan.

A loan is a very powerful instrument. It can either help you or if you are careless, destroy you.
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Old 14th March 2012, 23:54   #72
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I believe in debt free life but that does n ;t mean that i don ;t use Credit cards . I do use one credit card but always make sure that payment is done 1 day in advance . that;s been the pattern for 4 years now .

I regularly invest in LIC policies ,having Burned my hands in stock markets / ULIP as well but minimized my losses to a extend via way of investing via SIP ;s and Bowed never to invest in Ulip 's my whole life. SIP are best IMO if one wants the gains of stock market . this brings in financial discipline as well . I make sure that i deposit at least 40 K in my PPF account each year, the 1 lakh limit not withstanding. When ever i change my job;s I never withdraw PF money , Always transfer it to new organizations PF account , so this way I earn hefty 9.5 % interest rate as well and my money is also safe. Best part is that i am building a corpus which i can use as and when I retire. I bought a CAR & opted for Interest free car loan from company . rest arranged my self and paid fully in cash .Only reason I took this loan was because it was interest free . this way i didn ;t need to touch my savings kept in govt bank on which i am earning interest .

Another thing is that i always keep my saving in a govt bank. Have never seen a Single paisa as interest credited to my account with ICICI bank a/c.

Thinking of buying Land and that will be first time i am thinking of taking 40 % of the total amount as Loan . still trying to figure out finances and will try to pay fully. LOAN is last option in my books.

IMO, the One thing which i have seen in current generation is that they don ;t Believe in savings much. To save tax, they do invest But halfheartedly and without thinking where they are putting money in, all they want are receipt to save on tax. Have seen few investing in ELSS scheme ;s for receipts, Only to withdraw from fund after 30 days . They will withdraw P F Money the movement they shifts their jobs and will spend what ever they saved in that P F account on pubs and all .

I M O one can live a debt free life , provided One has the financial discipline in life. Nothing is impossible .
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Old 15th March 2012, 00:05   #73
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But the poor soul, who I pray to God is NO ONE EVER, has sold the house.

In that scenario, he has become a rich soul without a job. He can rent a penthouse until he finds a job.

Last edited by PatienceWins : 15th March 2012 at 00:07.
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Old 15th March 2012, 00:12   #74
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I prefer living debt-free too, but the real estate market is one that is like the merchant of Venice story - the property mafia keeps prices so high it is nigh impossible for most to buy a house - forget bungalow/rowhouses ( you own the land there ), even apartments are prohibitively expensive. And yes, I work in IT but unlike the impression so many seem to have, IT doesn't pay anywhere as well you think, most of the big expensive cars I see, the big luxurious bungalows aren't owned by IT folks. 7 years in the industry, never took any loan yet, rarely use credit card and pay it fully within the due date , no expensive habits , bought 2 cellphones in 7 years, 2 desktop computers, 2 Indian motorcycles, 1 digicam, 1 DSLR, 1 hatchback. What's left - a house. At 40+ lac , it's daunting. Oh wait, I have 3 expensive habits - motorcycles , computers and photography , and starting the 4th - cars !

I really don't know how to go about real estate at these unreal prices - the prices never reduce, they only go up but at a rate far exceeding salary increments and inflation. If it's a bubble as many "experts" say, why isn't it crashing ? if IT people who the world thinks are most well paid, aren't buying these houses, who is ?

The fear in taking a loan is you commit to 15-20 year loans but you can't tell when the next recession hits and you find yourself unemployed. Of late, we seem to have economic crises with increasing frequency as compared to the post-WW2 the 90s era , where you had 2-3 severe economic meltdowns. Something tells me this is conspiratorial work, take the subprime crisi - banks and real estate developers are private for profit organizations and the interests behind them have one aim - to divest people of their possessions by forcing them to borrow, then bring economic upheaval and take advantage of those unable to pay EMIs to confiscate and sell the property - except that here several banks have made losses from unrecovered loans (maybe they underestimated the number of delinquencies , maybe they overestimated the disposable income of people ). Maybe nobody really understands the modern economy well enough to stabilize it.

Last edited by Ricci : 15th March 2012 at 00:23.
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Old 15th March 2012, 00:20   #75
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Default Re: Debt free life?

I totally subscribe to the idea of a debt free life, 6 months ago I had a choice of buying another property vs closing of my existing HL & guess what? I closed off the loan to save the interest I was paying the bank all these years. It was hard as the greed to acquire another property was strong. But I can say today that I'm happy to be debt free than managing 2 housing loans...
I also do not purchase anything unless I've the money upfront how ever big or small, but that's just old fashioned me.
cheers,
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