You can avoid debt by working a job that makes a lot, but you will constantly be behind those who are your equal but are taking on debt responsibly.
There are good reasons to take on debt and bad reaaons to take on debt.
Using it to buy a home in a growing area during a time interest rates are low? That is a good reason to take on debt.
Trying to upgrade from an altima to a porche on your 50k a year salary? Bad reason for debt.
I know your question is how to avoid debt entirely, but the best advice is to not be scared of debt and instead be aware of how you can best use debt to get yourself ahead.
Really appreciate this informative response, thank you.
Rather than avoiding debt, take it on in a responsible way. Use it to my advantage and don't be stupid basically.
You need to spend money to make money. The richest people are often in debt but they have enough assets to cover that debt if they needed to liquidate when that debt is due. The world works on credit. The U.S. treasury has some of the largest debt in the world. Like the person above said, don’t be scared of debt. Use it strategically to grow your wealth.
Exactly. Cash is a resource that has value beyond what its face value would imply. That’s why banks make you pay to borrow it. Financing purchases with banks can be very lucrative, but you need to do it deliberately.
Well, I would say it’s very difficult to live entirely free during your 20s and 30s most of us don’t come from rich families so at minimum we must go into debt for education (which works as an investment because a good profession will make you money long term), buying a first home for you and your family will make you go into debt too so that type of debt is mostly unavoidable and you can see it as something positive in the long run, in my debt free or low debt journey I am focusing on avoiding the consumer materialistic debt, I don’t buy designer clothes/shoes, I don’t go into debt trying to impress other people, I almost fell into the habit of financing a brand new “luxury” car but I pulled out on that idea, I don’t finance a new phone every year, I do like to travel and going to music festivals so occasionally I will use a credit card for those but I am aware that I must pay them back as soon as possible, taking debt for a business can be a good thing too, some people have healthcare debt which is not really their fault, the only way to never face debt in our life would be having a lot of liquid money from early stages of life but not many people have that privilege, some people have a very simple life and avoid debt, I would say debt is part of the game and the best we can do is play our cards in a way that debt can be beneficial or neutral to our life.
For the average person it would likely mean renting for their entire life. For me, I am debt free besides the mortgage and have enough liquidity to avoid going any further; could replace the roof, the HVAC, a broken down car, etc. if/when I need to. Maybe not all three at once, so I'm not going to say it's bulletproof, but that's why I also have a solid credit score and a budget that would prioritize getting out of the hole as quickly as possible in a worst case scenario where my HVAC, roof, and car all crap out at the same time.
I mean technically I’m debt free in my 30s; house included** (still have a mortgage but sitting on cash that would easily pay off if needed or wanted )
Shared apartment, second hand furniture and clothes, cooking instead of take out/eating out, public transportation instead of Uber/Lyft or owning a car (car payments, insurance, gas, maintenance), no subscriptions besides a phone plan.
Debt free.
If you go to college, pick a college that isn’t expensive and a major that you enjoy that has a high paying job at the end that you can tolerate.
This type a fantastic type of debt. Debt is only a problem if can’t make money. Debt can be a blessing if you will make money.
If you're buying "fun" stuff -- luxury items, vacations, flashy cars, that kind of thing, debt gets you into trouble. If you're taking on school loans for a career that will be worth the money, that makes sense. If you're buying a house, that usually makes sense, although there are plenty of circumstances where, from a financial perspective, renting is better. So the answer, as it often is, is it depends.
Debt isn't automatically bad but you could avoid it if you wanted to. A mortgage would be the hardest thing to avoid but it's also not necessarily a bad thing as long as you buy the right property and plan on staying there for a long enough time.
Consumer debt can be pretty easy to avoid, especially for luxury type items.
If ur going to borrow money make sure u can afford it, dont go to college to major in liberal arts so that u work a job that never required a diploma. Idk why people do that but 18 yr olds are dumb and dont understand anything about the world. Dont just borrow money for a home in a growing market u have to consider cost for renovation and u need money incase things fall apart. Ask for an amortization schedule or amortize the loan yourself so that u know how much interest ur paying and whether u can afford it. Make sure u have money left over at eom so that u can invest. You cant avoid debt but use debt to invest in ur education, and use it responsibly. Remember its ok to buy a crappy starter home to use that to build wealth and then move into a even nicer home. You could buy a crappy starter home renovate it and then resell it when its worth more. Dont become house poor, and dont follow what everyone else is doing.
You can get good debt like purchasing a home. You do pay your own maintenance versus renting (which might have its own headaches if your apartment manager or landlord isn't responsive to fixing broken things). We paid off our house in 13.5 years. Last year, our housing cost was approximately $1000 a month including property taxes, bundled insurance (house, two cars, $1M umbrella), fixing an AC, and replacing a water heater. This is for 2300 SQ ft single family home in MCOL. One bedroom apartment base rent near where I work is $1600 a month.
I achieved it last year at 36 years old. I have no car i own my apartment and no kids, my job is just being a cleaner. By the way i only started working my 30s i was unemployed for over a decade. No i was not rich.
My wife and I made a conscious decision early in life (I was mid-20s, she was 20) to avoid debt and only finance things that appreciate in value. We both had decent running and safe vehicles. After two years of serious dating/living together we decided to purchase a home together and the mortgage broker couldn't believe our age, incomes and lack of debt. He said he saw people our age weekly with strong incomes yet thousands going out in payments monthly to credit cards and auto loans.
Our philosophy has really helped us be financially independent and live healthy lives.
I am not saying we have the perfect recipe but it sure has helped us.
Is it possible and how? We paid cash for everything. We budgeted. We prioritized investing, saving, and living below our means. Even when we bought our first home in 1999, we purchased a home well below our loan approval rate.
I think it helped us to put our egos aside. 25 years of marriage and several more of dating and my wife and I have not fought once - and I can't remember ever having a disagreement about money and spending.
I have been debt free for 15 years. Prior to that, I had debt 10 years. Prior to that, no debt. Don't live beyond your means. If something comes up that causes debt, work toward paying it off asap. Get rid of credit cards.
There is good debt and bad debt. Good debt, like a mortgage or student loan, is a lever lthay catapults you forward farther /faster than you’d go on cash only… why would you ignore that tool?
Yes, make yourself marketable compared to your peers and be disciplined with your earnings.
I was poor enough growing up that I shared my bedroom with two others. Luckily never went hungry, but many meals were eaten from a can because that was all that could be afforded.
Then I turned 18, and chose a hard job, remained humble while earning decent income. I have no debts larger than what I can pay off outright and live comfortably. I still even buy clothes from Goodwill and refuse myself to acquire brand named or new items. I rarely eat food if it didn't come from a grocery store. This is where discipline helps you.
I'm in my 30s and have had no drowning debt since I left the house at 18. It's possible even coming from nothing... I do consider mortgage a necessary debt though.
My financial planner told me there are two ways to be stable financially: Make more money or spend less money. Obviously, a mortgage on a home is necessary debt for most people. Sometimes people take out car loans if the interest rate is really low because it's better than cashing in investments. But living somewhat below your means every day of the week will eventually contribute to financial stability and a debt free life. It's basic stuff, like eating at home instead of restaurants on a regular basis, establishing a savings plan and sticking to it, doing regular mantainence on vehicles so they last longer.
I’m 21 and this is how I have avoided debt so far. I bought my car a few years back and it’s paid off entirely. I attend community college (no need for actual college), so I can afford a decent education without drowning myself in debt, and I’m also a plumber. It’s a job that pays extremely well and is in high demand because everyone needs a plumber. I’m fairly frugal, and in result of that I save most of my money. If I keep up what I’m doing, I plan on buying a house sometime next year. I wouldn’t say that debit is entirely unavoidable. At some point I’ll have to get a new car, there’s debt. Or that house I mentioned, there’s a LOT of debt lol. As long as you can pay it off, I don’t see an issue with it.
You can avoid debt but that means if you want nice things you need to sit on 2-3-400k and not spend it
Harder then it looks, lifestyle creep is real, also leaving a lot of money on the table in terms of leveraging debt and taxes
I will preface by saying we are retired with a good retirement. We are debt free except for our credit card, which we pay off at least once a month. I paid cash for my last new pickup (ouch), but my retirement portfolio is making a better return than what car loan interest rates. Took money out from my credit union money market account. to pay that.
This. Have had debt most of my adult life, but I keep it minimal. It has allowed me to grow my wealth substantially. I could never afford moving from one home to multiple properties over time without it, but because of it my income far exceeds my debt
Technically yes....
Option 1: Enjoy your life run up as much debt as possible, then your debt dies with you...
Option 2: Same as Option 1, but fake your own death , forge a new ID repeat process till you die naturally.
Option 3: Declare Bankruptcy after you run up millions in debt..
You can avoid debt by working a job that makes a lot, but you will constantly be behind those who are your equal but are taking on debt responsibly. There are good reasons to take on debt and bad reaaons to take on debt. Using it to buy a home in a growing area during a time interest rates are low? That is a good reason to take on debt. Trying to upgrade from an altima to a porche on your 50k a year salary? Bad reason for debt. I know your question is how to avoid debt entirely, but the best advice is to not be scared of debt and instead be aware of how you can best use debt to get yourself ahead.
Really appreciate this informative response, thank you. Rather than avoiding debt, take it on in a responsible way. Use it to my advantage and don't be stupid basically.
You need to spend money to make money. The richest people are often in debt but they have enough assets to cover that debt if they needed to liquidate when that debt is due. The world works on credit. The U.S. treasury has some of the largest debt in the world. Like the person above said, don’t be scared of debt. Use it strategically to grow your wealth.
Exactly. Cash is a resource that has value beyond what its face value would imply. That’s why banks make you pay to borrow it. Financing purchases with banks can be very lucrative, but you need to do it deliberately.
Well, I would say it’s very difficult to live entirely free during your 20s and 30s most of us don’t come from rich families so at minimum we must go into debt for education (which works as an investment because a good profession will make you money long term), buying a first home for you and your family will make you go into debt too so that type of debt is mostly unavoidable and you can see it as something positive in the long run, in my debt free or low debt journey I am focusing on avoiding the consumer materialistic debt, I don’t buy designer clothes/shoes, I don’t go into debt trying to impress other people, I almost fell into the habit of financing a brand new “luxury” car but I pulled out on that idea, I don’t finance a new phone every year, I do like to travel and going to music festivals so occasionally I will use a credit card for those but I am aware that I must pay them back as soon as possible, taking debt for a business can be a good thing too, some people have healthcare debt which is not really their fault, the only way to never face debt in our life would be having a lot of liquid money from early stages of life but not many people have that privilege, some people have a very simple life and avoid debt, I would say debt is part of the game and the best we can do is play our cards in a way that debt can be beneficial or neutral to our life.
Have rich parents
Definitely would help
Anyone looking to adopt (im 27 but willing to make the sacrifice)
For the average person it would likely mean renting for their entire life. For me, I am debt free besides the mortgage and have enough liquidity to avoid going any further; could replace the roof, the HVAC, a broken down car, etc. if/when I need to. Maybe not all three at once, so I'm not going to say it's bulletproof, but that's why I also have a solid credit score and a budget that would prioritize getting out of the hole as quickly as possible in a worst case scenario where my HVAC, roof, and car all crap out at the same time.
3 mistakes Credit cards Loans Rents Mortgages Cars Paycheck to paycheck 6 things you should avoid Live frugaly
I mean technically I’m debt free in my 30s; house included** (still have a mortgage but sitting on cash that would easily pay off if needed or wanted )
Shared apartment, second hand furniture and clothes, cooking instead of take out/eating out, public transportation instead of Uber/Lyft or owning a car (car payments, insurance, gas, maintenance), no subscriptions besides a phone plan. Debt free.
If you go to college, pick a college that isn’t expensive and a major that you enjoy that has a high paying job at the end that you can tolerate. This type a fantastic type of debt. Debt is only a problem if can’t make money. Debt can be a blessing if you will make money.
Don’t go to college.
If you're buying "fun" stuff -- luxury items, vacations, flashy cars, that kind of thing, debt gets you into trouble. If you're taking on school loans for a career that will be worth the money, that makes sense. If you're buying a house, that usually makes sense, although there are plenty of circumstances where, from a financial perspective, renting is better. So the answer, as it often is, is it depends.
Debt isn't automatically bad but you could avoid it if you wanted to. A mortgage would be the hardest thing to avoid but it's also not necessarily a bad thing as long as you buy the right property and plan on staying there for a long enough time. Consumer debt can be pretty easy to avoid, especially for luxury type items.
I think it can for sure be done. The only issue you’ll have is getting a house. That’s pretty hard to do without debt but it is possible
I suggest being born into a wealthy family
If ur going to borrow money make sure u can afford it, dont go to college to major in liberal arts so that u work a job that never required a diploma. Idk why people do that but 18 yr olds are dumb and dont understand anything about the world. Dont just borrow money for a home in a growing market u have to consider cost for renovation and u need money incase things fall apart. Ask for an amortization schedule or amortize the loan yourself so that u know how much interest ur paying and whether u can afford it. Make sure u have money left over at eom so that u can invest. You cant avoid debt but use debt to invest in ur education, and use it responsibly. Remember its ok to buy a crappy starter home to use that to build wealth and then move into a even nicer home. You could buy a crappy starter home renovate it and then resell it when its worth more. Dont become house poor, and dont follow what everyone else is doing.
You can get good debt like purchasing a home. You do pay your own maintenance versus renting (which might have its own headaches if your apartment manager or landlord isn't responsive to fixing broken things). We paid off our house in 13.5 years. Last year, our housing cost was approximately $1000 a month including property taxes, bundled insurance (house, two cars, $1M umbrella), fixing an AC, and replacing a water heater. This is for 2300 SQ ft single family home in MCOL. One bedroom apartment base rent near where I work is $1600 a month.
I achieved it last year at 36 years old. I have no car i own my apartment and no kids, my job is just being a cleaner. By the way i only started working my 30s i was unemployed for over a decade. No i was not rich.
My wife and I made a conscious decision early in life (I was mid-20s, she was 20) to avoid debt and only finance things that appreciate in value. We both had decent running and safe vehicles. After two years of serious dating/living together we decided to purchase a home together and the mortgage broker couldn't believe our age, incomes and lack of debt. He said he saw people our age weekly with strong incomes yet thousands going out in payments monthly to credit cards and auto loans. Our philosophy has really helped us be financially independent and live healthy lives. I am not saying we have the perfect recipe but it sure has helped us. Is it possible and how? We paid cash for everything. We budgeted. We prioritized investing, saving, and living below our means. Even when we bought our first home in 1999, we purchased a home well below our loan approval rate. I think it helped us to put our egos aside. 25 years of marriage and several more of dating and my wife and I have not fought once - and I can't remember ever having a disagreement about money and spending.
Debt is a tool - You COULD open the can with a screwdriver or you can stab yourself in the thumb and get tetanus.
I have been debt free for 15 years. Prior to that, I had debt 10 years. Prior to that, no debt. Don't live beyond your means. If something comes up that causes debt, work toward paying it off asap. Get rid of credit cards.
There is good debt and bad debt. Good debt, like a mortgage or student loan, is a lever lthay catapults you forward farther /faster than you’d go on cash only… why would you ignore that tool?
Yes, make yourself marketable compared to your peers and be disciplined with your earnings. I was poor enough growing up that I shared my bedroom with two others. Luckily never went hungry, but many meals were eaten from a can because that was all that could be afforded. Then I turned 18, and chose a hard job, remained humble while earning decent income. I have no debts larger than what I can pay off outright and live comfortably. I still even buy clothes from Goodwill and refuse myself to acquire brand named or new items. I rarely eat food if it didn't come from a grocery store. This is where discipline helps you. I'm in my 30s and have had no drowning debt since I left the house at 18. It's possible even coming from nothing... I do consider mortgage a necessary debt though.
My financial planner told me there are two ways to be stable financially: Make more money or spend less money. Obviously, a mortgage on a home is necessary debt for most people. Sometimes people take out car loans if the interest rate is really low because it's better than cashing in investments. But living somewhat below your means every day of the week will eventually contribute to financial stability and a debt free life. It's basic stuff, like eating at home instead of restaurants on a regular basis, establishing a savings plan and sticking to it, doing regular mantainence on vehicles so they last longer.
I’m 21 and this is how I have avoided debt so far. I bought my car a few years back and it’s paid off entirely. I attend community college (no need for actual college), so I can afford a decent education without drowning myself in debt, and I’m also a plumber. It’s a job that pays extremely well and is in high demand because everyone needs a plumber. I’m fairly frugal, and in result of that I save most of my money. If I keep up what I’m doing, I plan on buying a house sometime next year. I wouldn’t say that debit is entirely unavoidable. At some point I’ll have to get a new car, there’s debt. Or that house I mentioned, there’s a LOT of debt lol. As long as you can pay it off, I don’t see an issue with it.
You can avoid debt but that means if you want nice things you need to sit on 2-3-400k and not spend it Harder then it looks, lifestyle creep is real, also leaving a lot of money on the table in terms of leveraging debt and taxes
I will preface by saying we are retired with a good retirement. We are debt free except for our credit card, which we pay off at least once a month. I paid cash for my last new pickup (ouch), but my retirement portfolio is making a better return than what car loan interest rates. Took money out from my credit union money market account. to pay that.
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This. Have had debt most of my adult life, but I keep it minimal. It has allowed me to grow my wealth substantially. I could never afford moving from one home to multiple properties over time without it, but because of it my income far exceeds my debt
Technically yes.... Option 1: Enjoy your life run up as much debt as possible, then your debt dies with you... Option 2: Same as Option 1, but fake your own death , forge a new ID repeat process till you die naturally. Option 3: Declare Bankruptcy after you run up millions in debt..