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Old 14th March 2012, 12:19   #1
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Default Debt free life?

When I was searching for a existing thread I saw many threads for credit card, loan problems, payment issues and CIBIL reports. Is there anyone who believes in the old fundamental of debt free life anymore?

Personally speaking, I have been earning a salary for last 15 years. But I don't have a credit card for last 11 years. I hold debit cards, but I have not used one is years. I have never taken a loan. I do all my shopping by paying cash.

I am wondering, am I the only one here who is relic of past or there are other people out here who don't believe in taking a debt at all?
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Old 14th March 2012, 13:14   #2
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Default Re: Debt free life?

I believe in a debt free life. After having splurged way beyond my means with credit cards, I finally gave them up and now am debt free. Live within my means and I am so much more happier.
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Old 14th March 2012, 13:26   #3
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Default Re: Debt free life?

A debt free life is a good idea, but sometimes credit is both practical and beneficial. As long as we have control over our credits we can use them to actually save us money.

The first case trotted out is about home loans. The tax benefits are known to everyone. Other than this there is the convenience of using bill payment options with your credit card. This could save you the time of driving to and queuing up for payment of bills for mobile connections, electricity, other utilities, insurance, etc.

Of course there are other things such as inheritance which greatly affect the ability of a person to live without debt. So this can also be a bit more subjective and differ case to case.

Ideally I would like to live a life without any debt, but other aspirations usually take priority.
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Old 14th March 2012, 13:27   #4
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Default Re: Debt free life?

I would love to lead such a life but it's extremely difficult for someone with limited means.

E.g what If a middle class guy living off a limited salary intend to buy a car or a home? What are his options? Loans comes as a rescue to help in fulfilling dreams.

We may classify these loans thing in short term and long term borrowing, while credit cards, Personal loans can be classified in former while loans for Capex like home loan, car loan can be categorized under late.

Short term borrowings can be avoided by exercising self control but long term borrowings have become an integral part of our lives.

PS: As of now I have few Credit cards outstanding and home loan.
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Old 14th March 2012, 13:30   #5
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Default Re: Debt free life?

^ True that. I guess, one learns best from his/her own experience. And I have too. In fact, continuing to learn, while it's a struggle to switch to debt-free.

But, pressing demands like a home-loan, definitely sucks one into the debt-pit and I'm still yet to figure a way around that.
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Old 14th March 2012, 13:32   #6
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Default Re: Debt free life?

Well so far i do have a debt free life and yes i do own two credit cards. Having said that i do make sure those are paid in full before the due date !!

But in todays market does it really make sense to have a debt free life ? I am saying from a perspective where taking a Home Loan is considered smart to avoid Tax. And to cover that you'll have Term Insurance. So why not take advantages of such loans which even thou would not give you a debt free life but atleast help you save on Tax ?

This again is my personal opinion as i feel its better to live a life with Debt just to save on Tax rather than letting the hopeless govt take a bite into my hard earned money !!

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) ?

Last edited by dar3dev|l : 14th March 2012 at 13:38.
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Old 14th March 2012, 13:37   #7
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Default Re: Debt free life?

Great Idea. Still implementing.

Still running on OLD nokia phone, only used for making calls and receiving calls.

Bought my car with cash and no loans.

Still holding out to buy a home.

Strongly believe that all about loans is being marketed for the benefit of the organisations.
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Old 14th March 2012, 13:48   #8
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Default Re: Debt free life?

Quote:
Originally Posted by carbookie View Post
When I was searching for a existing thread I saw many threads for credit card, loan problems, payment issues and CIBIL reports. Is there anyone who believes in the old fundamental of debt free life anymore?

Personally speaking, I have been earning a salary for last 15 years. But I don't have a credit card for last 11 years. I hold debit cards, but I have not used one is years. I have never taken a loan. I do all my shopping by paying cash.

I am wondering, am I the only one here who is relic of past or there are other people out here who don't believe in taking a debt at all?
Lets be practical man. Its rarest of rare case where a person can afford to buy a house without loan. Of course if the person is staying with his parents and no problem of splitting house with brother etc later, then the person can buy his commute like decent entry level bike without loan (that too not everyone can afford).
But tell me how many such cases you see?
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Old 14th March 2012, 13:55   #9
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Default Re: Debt free life?

Quote:
Originally Posted by subscrive View Post
Lets be practical man. Its rarest of rare case where a person can afford to buy a house without loan. Of course if the person is staying with his parents and no problem of splitting house with brother etc later, then the person can buy his commute like decent entry level bike without loan (that too not everyone can afford).
But tell me how many such cases you see?
I believe it is just a mindset. I come from a poor family. My parents could hardly make ends meet. When I started working in my job, I started at exact ground zero. Over the years, I have bought two cars, multiple properties and other things which money can buy. But never ever taken a loan. For me loan is never a option on the table.

As I said, it is just a mindset. I will generalize now, but you get the idea. People use loans to buy luxuries. Then they pay interest to fund those luxuries. The monthly fixed commitments are high, and the salary vanishes before it arrives. Next thing you know, you need a personal loan to survive. And the cycle continues.

Why do you need a loan to fund your Motorcycle? Either you can afford the motorcycle or you cannot. And If you cannot afford a motorcycle, it is a luxury for you. You don't need it. (The only exception to this rule is if you are planning to use motorcycle to generate money. Going to office on a bike is not the same)
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Old 14th March 2012, 13:58   #10
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Default Re: Debt free life?

loan is not bad,until & unless you are repaying,it is just a format of business.
no MNC company can ever be on top without loans or or CV.
the mantra is "Debt is bad when you take a loan to repay a loan".that is where the downfall starts.
as you would pay interest much more than the principle amount
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Old 14th March 2012, 14:00   #11
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Default Re: Debt free life?

In an economy where the inflation is high and interest rates are comparatively low (dont believe the government declared inflation rates) it makes total sense. My sister who bought a flat in 2005 is getting rent which is equal to her emi.
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Old 14th March 2012, 14:01   #12
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Default Re: Debt free life?

There is a very simple reason why a debt free life is a rarity in todays world. It is a question of want vs need and credit can provide for the needs while living debt free as a rule of thumb provides for wants.

I mean when you see a kid two years out of B school buying himself a BMW and a massive house, you have to ask, wouldn't a smaller car and house have done the same job. Of course, if you are looking at it from the point of view of transport from A to B and a roof over ones head, credit is not a necessity. Unfortunately, people view it from the point of view of, I have to live comfortably and show it off from day 1, so credit is unfortunately an evil that is here to stay and will become a bigger vice, like it was in the West a couple of years ago.

I personally believe in a debt free life and live my life on those terms.
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Old 14th March 2012, 14:09   #13
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Default Re: Debt free life?

I have been debt free till now.
Don't know if I have been right or wrong, but perhaps I am not a normal human being, and my wants are overshadowed by needs. And thus, I was never compelled to succumb to the psuedo demand pressures created by marketing and social expectations.

Perhaps I am bad for the progress of the human society.
(Human society has grown on the basis of credit)

Last edited by alpha1 : 14th March 2012 at 14:11.
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Old 14th March 2012, 14:10   #14
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Default Re: Debt free life?

Who doesn't want a Debt-free life and who doesn't want latest Mobiles, Cars, home, etc. But as they say excess in anything is dangerous.
Credit Cards are though dangerous but are very very convenient and helpful if used judiciously. I am using 2 Credit cards since last 7 years and have paid interest/charges only once and that too after knowing beforehand. The secret is to always remember your due date (banks anyway send reminder sms) and maintain a reasonable limit. (I am eligible for much higher limit but kept it to 30K for each card).
Mobile is highly tricky area. IMO if a person is comfortable with the used idea, then he can go for a used handset but not more than 3 months old. But the trick is to find one and a reliable dealer.
Cars and Home are different area altogether. One can refer to 'Beauty of Lateral Upgrades' thread and few others for better insight.
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Old 14th March 2012, 14:11   #15
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Default Re: Debt free life?

Very good idea, implementing it as dealing in interest is not allowed in my religion, Islam.

The only loan I have is a housing loan. I went with the herd to save taxes and get money at low interest rate, but later realized how much more I would be paying with the power of compound interest. The amount outstanding is less after few repayments. I am trying to sell a property to become a debt free person soon, Insha Allah .

Desire is the cause of all misery. Trying hard to follow it by avoiding splurges.

Last edited by PatienceWins : 14th March 2012 at 14:16.
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