Comments on: The single greatest obstacle to building wealth (or, what is keeping people in debt) http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/ Debt relief solutions so you can live debt free Fri, 30 Jul 2010 21:52:17 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: JOHN P http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/comment-page-1/#comment-14704 JOHN P Thu, 16 Oct 2008 19:00:15 +0000 http://www.conqueryourdebt.com/?p=14#comment-14704 JAKE M. YOUR AN IDIOT! YOU MUST BE ONE OF THE SPOILED RICH KIDS. JAKE M. YOUR AN IDIOT! YOU MUST BE ONE OF THE SPOILED RICH KIDS.

]]> By: kentuckyliz http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/comment-page-1/#comment-9242 kentuckyliz Sun, 24 Feb 2008 16:25:39 +0000 http://www.conqueryourdebt.com/?p=14#comment-9242 For a graduating senior, the cashflow issues are such that short term survival and transition needs rate higher than retirement savings. That's as it should be. It would be stupid for them to take out college student loans to make an IRA contribution. However, I agree with you about college students and cars and credit card debt. I didn't own a car until after I graduated from college--and that was common for most of my peers. When did it become a God-given right for a 16 or 18 year old or a college student to have a car? It's such a financial burden during a low cashflow time in life. I wonder how many car owning college kids have student loan and credit card balances trying to keep up with car payments, auto insurance payments, registration, repairs, etc. plus having to work big hours to afford the driving lifestyle...and not having as much cash to spend on other things during college. (Opportunity cost!) But those seniors you were talking to--they needed to think about trading down in car, or buying a beater to start with; clearing up their debt, living on a budget; and ASAP. The debt burden actually affects their decisions about bigger life issues such as marriage, buying a house, starting a family. They will put off or forego those things because of a crushing debt load. They might not be thinking of those things very seriously as a senior, but it's just around the corner and it takes time to clean up the debt mess. They need to 1. live frugally (including the humble car) 2. live on a budget (including quitting the credit card debting, saving for coming expenses like business attire, relocation expenses, apartment deposit, etc.) 3. pay off their debts in 2-3 years max. 4. sign up for their retirement plan at work, to get that employer match, right from the start (then increase their voluntary additional contributions once they're debt free) 5. focus on their careers/first jobs--working hard, learning, achieving, and moving up..."paying their dues" 6. don't be so concerned what their peers or clients think while they do what they need to do. The Millionaires Next Door drive humble vehicles. For a graduating senior, the cashflow issues are such that short term survival and transition needs rate higher than retirement savings. That’s as it should be. It would be stupid for them to take out college student loans to make an IRA contribution.

However, I agree with you about college students and cars and credit card debt. I didn’t own a car until after I graduated from college–and that was common for most of my peers. When did it become a God-given right for a 16 or 18 year old or a college student to have a car? It’s such a financial burden during a low cashflow time in life. I wonder how many car owning college kids have student loan and credit card balances trying to keep up with car payments, auto insurance payments, registration, repairs, etc. plus having to work big hours to afford the driving lifestyle…and not having as much cash to spend on other things during college. (Opportunity cost!)

But those seniors you were talking to–they needed to think about trading down in car, or buying a beater to start with; clearing up their debt, living on a budget; and ASAP. The debt burden actually affects their decisions about bigger life issues such as marriage, buying a house, starting a family. They will put off or forego those things because of a crushing debt load. They might not be thinking of those things very seriously as a senior, but it’s just around the corner and it takes time to clean up the debt mess.

They need to
1. live frugally (including the humble car)
2. live on a budget (including quitting the credit card debting, saving for coming expenses like business attire, relocation expenses, apartment deposit, etc.)
3. pay off their debts in 2-3 years max.
4. sign up for their retirement plan at work, to get that employer match, right from the start (then increase their voluntary additional contributions once they’re debt free)
5. focus on their careers/first jobs–working hard, learning, achieving, and moving up…”paying their dues”
6. don’t be so concerned what their peers or clients think while they do what they need to do. The Millionaires Next Door drive humble vehicles.

]]> By: chris http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/comment-page-1/#comment-2184 chris Thu, 19 Oct 2006 09:59:30 +0000 http://www.conqueryourdebt.com/?p=14#comment-2184 Well the article makes a good point about financial literacy of the next generation, but is a bit misleading. The future return figures quoted aren't entirely reliable as they aren'y adjusted for tax or inflation. One of the often ignored upsides of debt is that it is often tax deducible where investment contributions aren't always, and debt in theory gets smaller with inflation in the same way inflation errodes purchasing power of investments. Nevertheless, a good point about the hidden or not so hidden costs of owning a car. Let alone the gas, registration insurance... Well the article makes a good point about financial literacy of the next generation, but is a bit misleading. The future return figures quoted aren’t entirely reliable as they aren’y adjusted for tax or inflation. One of the often ignored upsides of debt is that it is often tax deducible where investment contributions aren’t always, and debt in theory gets smaller with inflation in the same way inflation errodes purchasing power of investments.
Nevertheless, a good point about the hidden or not so hidden costs of owning a car. Let alone the gas, registration insurance…

]]> By: Srinivasan http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/comment-page-1/#comment-1348 Srinivasan Thu, 17 Aug 2006 14:57:38 +0000 http://www.conqueryourdebt.com/?p=14#comment-1348 Jake is probably missing the point. To give an illustration, assume someone taking a loan of $10,000 at an interest rate of 8% and planning to pay it off in 5 years. The EMI in this case works out to be $203(Rounded off figure) and by end of 5th year, this person would have paid back $12,166(Rounded off figure)for his/her loan of $10,000. But instead if that person has invested the same amount every month for five years and assuming the same interest rate, they would get back $14,898 at the end of 5 years!. Now this should convince you. Jake is probably missing the point.

To give an illustration, assume someone taking a loan of $10,000 at an interest rate of 8% and planning to pay it off in 5 years. The EMI in this case works out to be $203(Rounded off figure) and by end of 5th year, this person would have paid back $12,166(Rounded off figure)for his/her loan of $10,000. But instead if that person has invested the same amount every month for five years and assuming the same interest rate, they would get back $14,898 at the end of 5 years!.

Now this should convince you.

]]> By: Aaron K http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/comment-page-1/#comment-1283 Aaron K Tue, 25 Jul 2006 14:07:23 +0000 http://www.conqueryourdebt.com/?p=14#comment-1283 There are so many things wrong with Jake's comment: 1) One would not expect a young person to be driving a mercedes in the first place. If that is the case, then we need to rethink our "status symbols" as a society. 2) Early years spent in a cheap car can equal even greater financialy success later in life. So, you can pay cash for 2 mercedes at 40 rather than finance 1 at 25. Plus, you'll have 2 new cars at that age rather than one 15 year old car that has eaten your financial carcas for many years. 3) A 40 year old with a new mercedes says success. A 25 year old with a new mercedes shows poor financial judgement (i.e. maxed out credit) or a spoiled rich kid. There are so many things wrong with Jake’s comment:

1) One would not expect a young person to be driving a mercedes in the first place. If that is the case, then we need to rethink our “status symbols” as a society.

2) Early years spent in a cheap car can equal even greater financialy success later in life. So, you can pay cash for 2 mercedes at 40 rather than finance 1 at 25. Plus, you’ll have 2 new cars at that age rather than one 15 year old car that has eaten your financial carcas for many years.

3) A 40 year old with a new mercedes says success. A 25 year old with a new mercedes shows poor financial judgement (i.e. maxed out credit) or a spoiled rich kid.

]]> By: Jake M. http://www.conqueryourdebt.com/2006/06/07/the-single-greatest-obstacle-to-building-wealth-or-what-is-keeping-people-in-debt/comment-page-1/#comment-1278 Jake M. Mon, 17 Jul 2006 23:35:12 +0000 http://www.conqueryourdebt.com/?p=14#comment-1278 Quote: "Now here is the lesson for you: If those 29 students each took that $230/month and invested only that much from now (at an average age of 23) until they are 60; at a very conservative annual return of 8% that would result in a nest egg of $600,000 at age 60. At 10%, a cool Million and change, and at a historical market average of 12%, nearly $1.7 million." 1.7 million in 37 years will barely be a down payment on a house..... I fail to see your point! Also, in our society, a nice car is a status symbol that can have a great effect on peoples opinions. This might mean the difference between getting or losing that big deal if you pick up your client in a new mercedes or a beat up '81 honda that you picked up for $400. Quote:
“Now here is the lesson for you:
If those 29 students each took that $230/month and invested only that much from now (at an average age of 23) until they are 60; at a very conservative annual return of 8% that would result in a nest egg of $600,000 at age 60. At 10%, a cool Million and change, and at a historical market average of 12%, nearly $1.7 million.”

1.7 million in 37 years will barely be a down payment on a house….. I fail to see your point!

Also, in our society, a nice car is a status symbol that can have a great effect on peoples opinions. This might mean the difference between getting or losing that big deal if you pick up your client in a new mercedes or a beat up ’81 honda that you picked up for $400.

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