Walking away from your Debt

[Spirituallifetime]

compassrose
Sorry that you have lost your husband, it takes a long time to recover from a huge life change event like that.
I agree with your post 100 %. I don't have credit cards or any other debt sucking the life out of me. I save for the things I need, if I don't have the money then I don't buy it. When I did have a mortgage, credit cards and vehicle loans and money invested in mutual funds and stocks I looked like I was living the dream. But when all added up I had more debt than money! Debt free people are not normal today, however they are free to do what they love to do and are not slaves to the bank!

 

[HarmonicaBruce]

I've loaned money as well, and it's a bad idea.  I've noticed that the people who need to borrow money are buried in credit card debt, and are out living high on the hog.  They eat in restaurants, drink no matter what the drinks cost, buy stuff they could do without, usually because it was SUCH a deal.  

Why should I loan money to someone who is living better than me?

But I'm all for credit cards, just know how to use them.  I get 3% cash back on everything I buy from Amazon, 2% on fuel, 1% on everything else.  My bill is paid automatically in full, which helped my credit score.  Can you even buy things on the internet without a credit card?  Or rent a motel room?  But when you have a credit card, you can't walk into walmart and think this is all your stuff, walmart is just "storing" it for you.  

"Neither a borrower nor a lender be, for loan oft loses both itself and friend, and borrowing dulleth the edge of husbandry".

 

[jimindenver]

My brother came to me to help him get into a house. I wrote him the check and before he could finish giving me a empty promise to pay me back, I told him it was a gift and a one time thing at that. I knew I'd never see the money and didn't need it creating issues for the rest of our lives. When he came back wanting to buy a cabin he didn't need, wouldn't take care of and would barely get to use, I told him to use the money he didn't have to pay back the last time.

 

[VanLifeCrisis]

only thing ive been unable to do with check card (visa/mastercard logo) is rent a car. online purcases and most hotels are fine.

 

[Canine]

Using a check card doesn't provide the same protection as a credit card from theft. Check cards (debit cards) are fine to use, but know that there are increased risks associated with that, but those risks can be mitigated or eliminated if used smartly.

 

[Theadyn]

I've been completely debt free, even a mortgage, since July. I cannot imagine going back. It is soul crushing. Steals your peace of mind and freedom of choices.

I also did the Dave Ramsey thing and got debt free except the mortgage in 2007 and have kept the same mentality. (I did incur a small debt to the hospital when I broke my wrist that required surgery right before my husband passed, and felt again like I did above... loss of freedom on choices) But these past few years, I didn't even like my mortgage debt. I guess you can say that is how I came to be here. If if means I choose to live mobile in something that is paid for to keep that noose off my neck, that is what I will so gladly do.

I never did get in to the credit card hamster wheel, thank goodness. Am only now delving in to the ones that offer cash back, paying in full every month, of course. But still.. I prefer the cash only feeling. Can't stand the thought that for whatever reason, I may not be able to pay that off and I am back into debt. You just never know what is right around the bend.

 

[karl]

I am debt free, use credit cards for the convenience, safety and cash back, paid in full every month- if I don't have the cash-I wait.
The down side is that I find it a little too easy too use a card- there are "things" I would hesitate and give more thought to if I were counting out dollars...even food and gas would be scrutinized a bit more...

A firm believer that if I CHOOSE the debt, then I am responsible to keep my agreement.
Found myself paying debts incurred by others several times, and watched them move from person to person leaving a trail of debt and debris in their wake.
There is something more than money/debt involved when people disregard their conscience and agreements.

 

[HarmonicaBruce]

Using a check card doesn't provide the same protection as a credit card from theft.

I guess a check card is the same thing as a debit card.  Someone can clean out your bank account if they get access to it.  With a credit card, you're only responsibility for up to $50 of fraudulent charges.  I had a fraudulent charge from some other country.  The credit card company called me, just to make sure it was fraudulent.  Because the credit card company is responsibility, they work hard to prevent fraud.  It seems every time I go on a road trip, my card stops working.  But, I call them, and talk to a recording that clears up the hold on my card.

If you're worried about "self-control", you could get a credit card with a low credit limit.  

 

[Matt71]

My debit card got compromised last summer. Someone charged $900 in six flag tickets to it. My bank got me all of my money back. The only way you get screwed is if the store/company that accepted the card contests the claim (which I was told is rare).

 

[offroad]

Wow. Such great stories. Mine is similar to many. So will not repeat.

Go see a non profit credit counseling service. You are legally required to use one before you can complete bankruptcy. Make sure that's documented before you move into a bankruptcy lawyer.

That story about $20 a month for twenty years, and then discharge the rest sounds like a good school loan deal. If you can get it.

Wish there was a legal link between school loans and the viability of education. Basket weaving is not going to be a great diploma to pay off $10000 school loan.

 

[Matt71]

Just for the record, I'm not planning to file for bankruptcy. I'm not behind on any payments, so doing so would be pretty difficult anyway. It's a lot harder to declare bankruptcy these days.

 

[offroad]

Donald Trump declared bankruptcy. Lots of famous people had to. Social stigma is a wrong perception about this for many.

Glad you have the finances to not declare bankruptcy.

 

[compassrose]

Using a check card doesn't provide the same protection as a credit card from theft. Check cards (debit cards) are fine to use, but know that there are increased risks associated with that, but those risks can be mitigated or eliminated if used smartly.

Please understand that not all debit/check cards are created equal. If you have a debit/check card with the VISA or Mastercard logo on it, it is protected by those respective companies just like their credit cards. Private bank cards protections vary widely. I also have a Wal-Mart Moneycard with the VISA logo on it. My pay check is direct deposited into that account. I had it compromised last year (I think they got the card # & my pin # at a Wal-Mart self check out that I have never been to before, nor since). I live in NM and my account was cleaned out in Miami. I do tend to check my account balance every few days. I got all the money back but it took about two weeks to do so. Which is about the same time frame (or less) than BOA took. Plus I got a new card. Had to go change out all my auto bill pays. Now I go online and change my pin # a day or two before my pay check hits and whenever I get the feeling I want to change it. My Schwab account is only a month old so I haven't had a lot of dealing with them. The Wal-Mart Moneycard, I've had for several years. Got tired of paying BOA for the privilege of sitting on my money and making money (overnight interest for banks) for them. You would be amazed how much money even a small bank makes overnight on the money they hold.

Sometimes my debit card runs as a debit card, sometimes a credit card and sometimes I can specify which it runs as. And I get cash back as well (I try to keep my account empty and the cash in my fireproof safe). You should have enough cash on hand tucked away to keep you going for at least a month (absolute minimum).

 

[offroad]

Debit cards can be set to automatically text you upon every charge. I like that myself.

 

[Matt71]

Just thought I would update people with some college loan payment options.
https://studentaid.ed.gov/repay-loans/understand/plans

Two plans seem relevant for Vandwelling (at least for me)

Income-Based Repayment
Payment = 15% of your discretionary income (the difference between your adjusted gross income and 150 percent of the poverty line).
Duration = 25 years of qualifying monthly payments, then any outstanding balance on your loan will be forgiven.
                   You may have to pay income tax on any amount that is forgiven.
To Qualify: The annual amount due on your eligible loans under a 10-year Repayment Plan, must exceed 15 percent 
                   of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line.


Pay as you Earn Repayment
Payment = 10% of your discretionary income (the difference between your adjusted gross income and 150 percent of the poverty line).
                   Your payments change as your income changes.
Duration = 20 years of qualifying monthly payments, then any outstanding balance on your loan will be forgiven.
                   You may have to pay income tax on any amount that is forgiven.
To Qualify: The annual amount due on your eligible loans under a 10-year Repayment Plan, must exceed 10 percent 
                  of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line.

The 150% of the poverty line for 1 person is $17,655, so you'd be paying 10% or 15% of the difference between that and your Adjusted Gross Income.

 

[c_hasbeen]

Student loan you are stuck with, however the home loan you have an option.
this is what I did

* find a new residence
* rent your home out that you intend to walk away from (important because this is now a business and needs to be recorded on your income tax as such)
* month to month no long term lease
* keep the rent money
* after a while the bank will get butt hurt and come to foreclose, you can let your tennants know that you are getting letters from the bank and they may need to find a new location.
* renters will have time to find a new location and move out
* house will be forclosed and sold
* in a few years the place will sell, then you will recieve tax papers showing a net gain of the amount of money that you owed the bank minus the amount they sold it for, mine was around $30,000.
* now you can claim this a s abuisness loss because it was previously a rental.
* if you did not do the rental as a business you will have to pay income tax on that amount.

I got back onmy feet.

more people have been hurt by good credit than bad credit

 

[Matt71]

If we can find renters we won't have to walk away from the house, but that's a pretty good idea.
Though I would not feel comfortable renting the house and kicking someone out due to know fault of their own. That would be a pretty crappy thing to do.

We do have close friends who may rent the house from us, but we have to work out the rent because they can't afford what we'd need to charge. We are going to try to work something out so we can cut the rent in exchange for letting us store a bunch of stuff that we're not ready to get rid of. That way we don't have to pay for storage and we'll know our stuff is safe.

 

[offroad]

C-has been --- wow that's tricky. Sounds like a Donald trump move ( business move done by the rich). Have to say it has some serious advantages. My girlfriend is finally selling her house, but for a while we were thinking renting it. Glad to know if we rented we would have had a business option. Am sure many people will get upset about letting a foreclosure happen, but personally am thinking that credit is a tool, not a privilege.

 

[Seraphim]

I guess a check card is the same thing as a debit card.  Someone can clean out your bank account if they get access to it.  With a credit card, you're only responsibility for up to $50 of fraudulent charges.  I had a fraudulent charge from some other country.  The credit card company called me, just to make sure it was fraudulent.  Because the credit card company is responsibility, they work hard to prevent fraud.  It seems every time I go on a road trip, my card stops working.  But, I call them, and talk to a recording that clears up the hold on my card.

If you're worried about "self-control", you could get a credit card with a low credit limit.  

Stores that take your debit card are responsible if they dont check ID f the person using the card.  Had several people a week come in to file reports - they new we'd not catch the thieves, but they needed it so the bank could return your money. I got hit once for $900, part Internet purchase and part a local purchase, both using my debit card card info, and my money was back in the account in a week.

 

[raygun]

Matt71 - Please be careful renting to your friends. Make sure you get a signed lease. We were in that same position and our "friends" bailed on us and moved out in the middle of the night, after trashing the place. Just my 2 cents.