Living a Completely Debt Free Life

Living a Completely Debt Free Life

Author
Discussion

V8Triumph

Original Poster:

5,993 posts

214 months

Thursday 12th July 2012
quotequote all
CaptainSlow said:
davepoth said:
Get a credit card, buy something small (like a packet of crisps) on it each month, and pay it off in full each month. You'll pay nothing in interest, but it'll get you some good credit history fairly rapidly.
This, plus a pay monthly phone if you don't have one already.

Maybe even take out a small unsecured loan and pay it back over the term...it'll cost you in interest but will make your credit history a lot stronger.
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?

hapless

3,558 posts

216 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
CaptainSlow said:
davepoth said:
Get a credit card, buy something small (like a packet of crisps) on it each month, and pay it off in full each month. You'll pay nothing in interest, but it'll get you some good credit history fairly rapidly.
This, plus a pay monthly phone if you don't have one already.

Maybe even take out a small unsecured loan and pay it back over the term...it'll cost you in interest but will make your credit history a lot stronger.
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?
Not if you intend to live entirely off the credit grid.

eta: if you've never had credit, you won't have a rating so you'll be an unknown risk. Lenders don't like an unknown risk. If you have some tiny pointless credit, you'll rack up a record of paying promptly and being a "good" debtor.

Edited by hapless on Thursday 12th July 14:14

CaptainSlow

13,179 posts

211 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
If you want to been seen as a lower credit risk for things such as a mortgage and will make you eligible for lower rates.

Also helps with other things such as contact hire leases and monthly mobiles etc.

Reason being it's better to have a history of paying back credit than no history at all.

Rugbyman

1,625 posts

202 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
CaptainSlow said:
davepoth said:
Get a credit card, buy something small (like a packet of crisps) on it each month, and pay it off in full each month. You'll pay nothing in interest, but it'll get you some good credit history fairly rapidly.
This, plus a pay monthly phone if you don't have one already.

Maybe even take out a small unsecured loan and pay it back over the term...it'll cost you in interest but will make your credit history a lot stronger.
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
Its always best to have a credit line availiable just in case you need it for an emergency ....... you DONT have to use it !!!!

Anything can happen in this little life best be prepared ...a little like insurance

V8Triumph

Original Poster:

5,993 posts

214 months

Thursday 12th July 2012
quotequote all
CaptainSlow said:
V8Triumph said:
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
If you want to been seen as a lower credit risk for things such as a mortgage and will make you eligible for lower rates.

Also helps with other things such as contact hire leases and monthly mobiles etc.

Reason being it's better to have a history of paying back credit than no history at all.
Thank you for the info. In all honesty this feels irrelevant to me. I'm trying to avoid the mortgage by buying outright - saving for the house itself.

I do not ever plan on having a contract hire lease and don't see the point in having a monthly mobile - I ring almost everyone on my BT landline phone. Only have a mobile for 'emergencies'.

So for someone who does want to avoid ANY type of credit - are there any benefits to having a 'good credit score'?

hapless

3,558 posts

216 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
CaptainSlow said:
V8Triumph said:
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
If you want to been seen as a lower credit risk for things such as a mortgage and will make you eligible for lower rates.

Also helps with other things such as contact hire leases and monthly mobiles etc.

Reason being it's better to have a history of paying back credit than no history at all.
Thank you for the info. In all honesty this feels irrelevant to me. I'm trying to avoid the mortgage by buying outright - saving for the house itself.

I do not ever plan on having a contract hire lease and don't see the point in having a monthly mobile - I ring almost everyone on my BT landline phone. Only have a mobile for 'emergencies'.

So for someone who does want to avoid ANY type of credit - are there any benefits to having a 'good credit score'?
No. If you truly will not ever use credit, then it's irrelevant. But I bet you will.

Obiwonkeyblokey

5,399 posts

239 months

Thursday 12th July 2012
quotequote all
Adenauer said:
Me too.

But be very careful as it can turn out a lot more expensive then you had budgeted for. About 50% more expensve in my case banghead
100% in my case and still not done. ho hum.

CaptainSlow

13,179 posts

211 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
So for someone who does want to avoid ANY type of credit - are there any benefits to having a 'good credit score'?
Yes, it's worth having, especially if you can obtain one for no cost to yourself ie paying of a credit card each month. There may be somethings you want that you don't consider as credit eg Sky subsription etc. Also, you may want to avoid credit now (don't we all?) but things change in life and later on you may not be able to avoid it.

V8Triumph

Original Poster:

5,993 posts

214 months

Thursday 12th July 2012
quotequote all
Obiwonkeyblokey said:
Adenauer said:
Me too.

But be very careful as it can turn out a lot more expensive then you had budgeted for. About 50% more expensve in my case banghead
100% in my case and still not done. ho hum.
Good to hear from people actually building houses smile. Doesn't seem really ideal for a first property, IMO. Still may be worth looking into though. smile

sideways sid

1,371 posts

214 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
CaptainSlow said:
davepoth said:
Get a credit card, buy something small (like a packet of crisps) on it each month, and pay it off in full each month. You'll pay nothing in interest, but it'll get you some good credit history fairly rapidly.
This, plus a pay monthly phone if you don't have one already.

Maybe even take out a small unsecured loan and pay it back over the term...it'll cost you in interest but will make your credit history a lot stronger.
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
OP, I can appreciate that you don't want to get into debt but there's an important difference between credit cards and a mortgage, which you're not showing that you understand.

A mortgage is secured on a property and enables you to live where you want to live today and pay for your home over time using the money that you would otherwise be saving up. You obviously understand the horrors of unsecured debt that can creep up quickly and multiply.

Perhaps you should consider saving until you have 25% of the value of your house (£25k or £45k given your examples) and then apply for a mortgage with two or three years of accounts behind you. The mortgage would be for the remaining £75k or £135k, which you could easily pay back over the normal 25-yr term, or overpay at your savings rate of £17k pa. That way you could be a homeowner in a couple of years and debt-free 5 years after that if being debt-free is still your priority then.

V8Triumph

Original Poster:

5,993 posts

214 months

Thursday 12th July 2012
quotequote all
CaptainSlow said:
V8Triumph said:
So for someone who does want to avoid ANY type of credit - are there any benefits to having a 'good credit score'?
Yes, it's worth having, especially if you can obtain one for no cost to yourself ie paying of a credit card each month. There may be somethings you want that you don't consider as credit eg Sky subsription etc. Also, you may want to avoid credit now (don't we all?) but things change in life and later on you may not be able to avoid it.
I can certainly see where you are coming from. However, I know that I cannot (or wasn't able to when younger) handle having credit.

To be honest if I couldn't live within my means these days I'd go without and if st really hit the fan I'd sell one or two of my (more expensive) cars. It doesn't cost me an awful lot per week to 'get by'. Perhaps I'm happy with a lifestyle most people would hate, I don't know. paperbag

CaptainSlow

13,179 posts

211 months

Thursday 12th July 2012
quotequote all
I don't think having a sensible mortgage is living beyond your means, everyone has to live somewhere and most will have to pay a mortgage or pay rent like you may be doing now. By starting getting a credit history now it will help you get a mortgage at better rates in the future if you decide to.

Renting v buying is another subject that has been discussed at depth so I don't want to start that one again.

V8Triumph

Original Poster:

5,993 posts

214 months

Thursday 12th July 2012
quotequote all
sideways sid said:
V8Triumph said:
CaptainSlow said:
davepoth said:
Get a credit card, buy something small (like a packet of crisps) on it each month, and pay it off in full each month. You'll pay nothing in interest, but it'll get you some good credit history fairly rapidly.
This, plus a pay monthly phone if you don't have one already.

Maybe even take out a small unsecured loan and pay it back over the term...it'll cost you in interest but will make your credit history a lot stronger.
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
OP, I can appreciate that you don't want to get into debt but there's an important difference between credit cards and a mortgage, which you're not showing that you understand.

A mortgage is secured on a property and enables you to live where you want to live today and pay for your home over time using the money that you would otherwise be saving up. You obviously understand the horrors of unsecured debt that can creep up quickly and multiply.

Perhaps you should consider saving until you have 25% of the value of your house (£25k or £45k given your examples) and then apply for a mortgage with two or three years of accounts behind you. The mortgage would be for the remaining £75k or £135k, which you could easily pay back over the normal 25-yr term, or overpay at your savings rate of £17k pa. That way you could be a homeowner in a couple of years and debt-free 5 years after that if being debt-free is still your priority then.
I understand entirely. My problem, however, is with having credit. I have an issue with it. If I can obtain it - I *will* want it *now*.

If I had a mortgage and after a couple of years, I'd be remortgaged to buy *that* E-type I've always wanted and one thing would become the next because I'd managed it once the next time it'd be an Aston Martin etc. etc. I know it sounds absolutely ridiculous. I know that really I should be able to control myself but the fact is I know I can't. If my access to money is locked away in assets - I'm fine. If it's liquid / attainable I have an overwhelming desire to spend it and yes that includes money I do not have!

For the past few years I've learnt to live credit free and as far as assets I have bought, completely depreciation free as well (not just cars, I buy other 'stuff' as well) which has not only satisfied my horrendous need to spend but has proved to be rather prudent.

What I was asking is for a person like this, am I best off staying completely credit free even as far as buying a house goes?

Maxf

8,402 posts

240 months

Thursday 12th July 2012
quotequote all
hapless said:
boobles said:
Do you pay rent at the moment? If so, you are not debt free. wink
Only if it's overdue, surely?
No - you'll owe the landlord for 12 months rent at a total of £x pa. They are just letting you pay it in manageable installments.

sideways sid

1,371 posts

214 months

Thursday 12th July 2012
quotequote all
V8Triumph said:
sideways sid said:
V8Triumph said:
CaptainSlow said:
davepoth said:
Get a credit card, buy something small (like a packet of crisps) on it each month, and pay it off in full each month. You'll pay nothing in interest, but it'll get you some good credit history fairly rapidly.
This, plus a pay monthly phone if you don't have one already.

Maybe even take out a small unsecured loan and pay it back over the term...it'll cost you in interest but will make your credit history a lot stronger.
Are you saying it is better to live life with credit than to just save up for stuff you want and pay cash?

ETA - If so why?
OP, I can appreciate that you don't want to get into debt but there's an important difference between credit cards and a mortgage, which you're not showing that you understand.

A mortgage is secured on a property and enables you to live where you want to live today and pay for your home over time using the money that you would otherwise be saving up. You obviously understand the horrors of unsecured debt that can creep up quickly and multiply.

Perhaps you should consider saving until you have 25% of the value of your house (£25k or £45k given your examples) and then apply for a mortgage with two or three years of accounts behind you. The mortgage would be for the remaining £75k or £135k, which you could easily pay back over the normal 25-yr term, or overpay at your savings rate of £17k pa. That way you could be a homeowner in a couple of years and debt-free 5 years after that if being debt-free is still your priority then.
I understand entirely. My problem, however, is with having credit. I have an issue with it. If I can obtain it - I *will* want it *now*.

If I had a mortgage and after a couple of years, I'd be remortgaged to buy *that* E-type I've always wanted and one thing would become the next because I'd managed it once the next time it'd be an Aston Martin etc. etc. I know it sounds absolutely ridiculous. I know that really I should be able to control myself but the fact is I know I can't. If my access to money is locked away in assets - I'm fine. If it's liquid / attainable I have an overwhelming desire to spend it and yes that includes money I do not have!

For the past few years I've learnt to live credit free and as far as assets I have bought, completely depreciation free as well (not just cars, I buy other 'stuff' as well) which has not only satisfied my horrendous need to spend but has proved to be rather prudent.

What I was asking is for a person like this, am I best off staying completely credit free even as far as buying a house goes?
Apologies if this sounds flippant; but you're not happy to take on a mortgage through fear of remortgaging in the future, but you're happy that you won't spend £100k in cash!

afrochicken

1,166 posts

208 months

Thursday 12th July 2012
quotequote all
Stay debt free as much as practically possible. If you are of a mindset that you will be able save enough money in the next 6 years to buy a home that you will be happy with outright, then there is no downside. The feeling of sleeping in a home that you own is a good one.

hapless

3,558 posts

216 months

Thursday 12th July 2012
quotequote all
Maxf said:
hapless said:
boobles said:
Do you pay rent at the moment? If so, you are not debt free. wink
Only if it's overdue, surely?
No - you'll owe the landlord for 12 months rent at a total of £x pa. They are just letting you pay it in manageable installments.
Is that standard rental practice? I had no idea (I've had a mortgage since I was 24). Don't people pay monthly in advance, or are all rental contracts annual now?

cwis

1,147 posts

178 months

Thursday 12th July 2012
quotequote all
Sigh.

At 20 I smoked and slobbed out. My resting pulse rate was in the mid 70's

At 40 I do triathlons. Resting pulse rate is in the low 50's

So - with respect, I beg to differ...

hapless said:
And with respect, at 40 you were not as fit as you were at 20. Unless you'd been frozen like Walt Disney.

hapless

3,558 posts

216 months

Thursday 12th July 2012
quotequote all
cwis said:
Sigh.

At 20 I smoked and slobbed out. My resting pulse rate was in the mid 70's

At 40 I do triathlons. Resting pulse rate is in the low 50's

So - with respect, I beg to differ...

hapless said:
And with respect, at 40 you were not as fit as you were at 20. Unless you'd been frozen like Walt Disney.
Well done, then.

cwis

1,147 posts

178 months

Thursday 12th July 2012
quotequote all
Cheers!

I was making a point about assumptions with my previous post. Did you get it?


hapless said:
cwis said:
Sigh.

At 20 I smoked and slobbed out. My resting pulse rate was in the mid 70's

At 40 I do triathlons. Resting pulse rate is in the low 50's

So - with respect, I beg to differ...

hapless said:
And with respect, at 40 you were not as fit as you were at 20. Unless you'd been frozen like Walt Disney.
Well done, then.