[crikli]

Take a step back though.

Why were you pursuing these loans in the first place?

Did you really need to get a car loan or did you just not have the cash to buy the car that you wanted. Could you have bought a little less car, paid cash, and have been payment free? Or could you have stayed in what you had, saved up, and then paid cash.

Same with a home. Did you need to buy a home? Or did you want to buy a home.

My point here isn't to indict your decision making, so please don't take my questioning as a personal attack.

My point is that this idea of borrowing money to make purchases has become so engrained in our thinking that very few people stop and question it.

There are cases where a clear need exists and sometimes the only way is to borrow money. I've been there. But the messages we hear on a daily basis don't talk about borrowing to satisfy needs; rather they serve to support the idea of borrowing to satisfy wants.

[flacon]

"Why were you pursuing these loans in the first place?"

As much as I wish I had $250K in the bank....

"Did you need to buy a home? Or did you want to buy a home."

LOL - as a married father of 2 kids in the Midwest I find this quite a funny comment. After renting for many years and dealing with horrible landlords ex: coming home on a cold winter Friday night to find my apartment bedroom with no windows with a little note stating "Be Back on Monday" - sleeping in a sleeping bag as a result.

So yeah, we "needed" our own home.

Also, given it is a great time to buy home (great rates, low prices, we got a tax credit in 2009 too) it felt like we would be stupid not to capitalize on purchasing a piece of earth/dwelling etc. Now we have a fat veggie garden, doing a remodel etc. Sometimes we regret it but overall it was the right decision for us.

Unless mammy and pappy or granny and grampy have the dough, or you sold your last company to Google, I'm guessing if you choose to buy a home, you will be calling your local loan officer and after the meeting wishing you had established some credit.

[jarek]

> LOL - as a married father of 2 kids in the Midwest I find this quite a funny comment. After renting for many years and dealing with horrible landlords ex: coming home on a cold winter Friday night to find my apartment bedroom with no windows with a little note stating "Be Back on Monday" - sleeping in a sleeping bag as a result.

> So yeah, we "needed" our own home.

This might be semantic wankery, but you didn't "need" to buy a house, you needed a place to live without a shitty landlord and - unfortunately, I would argue - the easiest, most feasible way to do that where you lived was buying a house.

[eridius]

Agreed. I have never been in debt in my life (not even student loans), and I really REALLY don't want to start now. That said, it still remains to be seen whether I can make enough money to afford to buy a house without a loan when the time comes that I decide that's what I want.

[flacon]

I graduated from college with no loans. Then got married and had kids...thats when reality kicked in and life got waaaay more expensive.

Who can agree with me?

[underwater]

I'm completely with you on car loans (why pay so much interest for something that depreciates in value so quickly; you're losing out twice).

But for the majority of people it is simply not possible to buy a house without either making massive life changes or getting a loan. I don't think that becoming a life-long renter is a smart choice either.

[waqf]

For a fair number of people it is simply not possible to get their finances in order without massive life changes. Doesn't mean they shouldn't do it, for values of "shouldn't" such as "wouldn't be better off and happier, five or ten years down the road".

[jarek]

> I don't think that becoming a life-long renter is a smart choice either.

As someone contemplating if not life-long then seriously long-term renting, serious question, why do you not think it's a smart choice?

[underwater]

Firstly, there is a lot less security in renting. I can be evicted with a months notice. While I'm young that's part of the trade off but when I have a family I wouldn't appreciate that level of control over my life being in the hands of my landlord.

The second reason is the fact that when I fully own a house I will feel more financially secure. I won't have to worry about making rent payments for the next X years of my life and I'll feel better prepared for unforeseen circumstances. I might be able to achieve the same security by investing my money in other areas; but I much prefer investing in something tangible.

[rweir]

if nothing else, most landlords have loans so you're subsidising their loan (so paying at least as much as you would if you had the loan).

[jarek]

Perhaps, not certainly, but is that a drawback?

A mortgage is essentially a huge long-term bet, renting is a smaller, shorter term bet. The owner is betting that everything lines up nicely: the value of his property stays put or rises, nothing bad unexpectedly happens to the property, undesirable people don't move in around it, a whole-sector bubble doesn't pop. As a renter, there is no commitment: if the house is outdated you can move to a newer one with far less hassle; you don't have to worry about cost of maintenance; if you move during a bubble you can move once again when the bubble pops and pay less. The owner may end up with a property in 20 years if everything goes well, but a renter will never be underwater.