[joeltrout]

$this->bbcode_second_pass_quote('jdmartin', '
')
I should have added that his highest interest rate is really low, about 6% I think, the rest of the stuff he's got on special offers. In other words, he's not paying a whole lot in interest right now anyway. Would that change your strategy?

[benzoil]

$this->bbcode_second_pass_quote('jlw61', '')$this->bbcode_second_pass_quote('jdmartin', 'Y')'all are a smart bunch, so I'd like to see your take on this.

[joeltrout]

$this->bbcode_second_pass_quote('benzoil', '
')
Didn't Kiyosaki recommend investing in real estate? If so, I'd keep my powder dry for another 2 years. No sense in trying to catch a falling knife.

[Ferretlover]

I agree with BigTex. This month, we paid off everything but one car and the house (and, we are working on the car).
While it would be a relief to be debt-free, there is no telling what could and would happen to those who stop making payments on contractual agreements.
And, there is your personal honor to consider...

[joeltrout]

$this->bbcode_second_pass_quote('Ferretlover', '
')And, there is your personal honor to consider...

[benzoil]

$this->bbcode_second_pass_quote('Ferretlover', ' ')there is no telling what could and would happen to those who stop making payments on contractual agreements.

[Tyler_JC]

6% interest on a credit card? Sign me up!

The advice is pretty simple.

Pay off the highest interest debt until the return on a reasonably safe investment exceeds the interest on the debt.

Think about it.

If I have $1000 in debt compounding at 6% a year and $1000 in spare cash, paying off the debt leaves me with no gain or loss.

But if I put that $1000 into an account paying 8% a year, I'll be $20 richer after one year.

$1000*1.06=$1060 in debt

$1000*1.08=$1080 in wealth

However, given that a safe 8% annual return is rather difficult, especially in today's environment, I'd pay down as much debt as possible.

[heroineworshipper]

Suspect once the short squeeze ends, inflation should be 20 - 50%. So taking a Suzie Orman approach probably isn't the best idea.

[mrobert]

Keep enough cash to cover any potential incident that can occurs in the near-term (loss of job, illness, unexpected expenses). Use the rest to pay of the debt.

[Ludi]

Pay off debt. Your debtors will try to find you, and make your life miserable, if you don't.


In my opinion.


I should mention I do not carry debt besides a small (by modern standards) mortgage on my house.

[WisJim]

Creditors are going to be trying to collect debt no matter how bad things are, so get out of debt. Never having owed money beyond the current telephone bills since we paid off the land for our first farm in 1978 or so, I have little sympathy for people who have credit card debt beyond the current month's purchases.

[jlw61]

$this->bbcode_second_pass_quote('benzoil', 'D')idn't Kiyosaki recommend investing in real estate? If so, I'd keep my powder dry for another 2 years. No sense in trying to catch a falling knife.

[wisconsin_cur]

I'll just say what I am doing: both.

I have been paying back debt and laying aside some cash, I am trying to take to heart the idea of diversification.

I am putting aside the cash in case of some type of bank failure, either my own bank or the bank my employer uses to pay me. I want to make sure that I can minimally function in those circumstances.

I am agressively paying off debt both because it is a bad idea and the uncertain future of interest rates. If the interest rates become a problem and the banks start to look ok, I can use the cash against the debt.

As in most things I don't believe in either/or but both/and. Sounds like your friend is in an ok spot. I would keep the 10g's just in case it is needed and aggressively pay off the debt as he/she is able. It is a matter of having options. He/She could use that 10 g anytime they wanted to if it becomes more attractive to have no debt than to have the cash in the bank.

[IslandCrow]

If I was in the situation I would use most of the spare cash to pay back the debt, keeping enough to cover one or two months expenses. Given the income surplus I would probably put about 80% towards paying down the debt, and the other 20% either as cash savings or as stock items that would help me survive if I lost a job.

At the end of last year I used most of my cash reserves to reduce the level of debt I was getting into, but having no spare cash has left me feeling rather vulnerable. So while I am aggressively working on getting out of debt I think a small cash reserve is also needed. I suppose I can get away with a smaller cash reserve than you in North America because if I were to loose my job the firm will need to give me 6 months pay (this is guaranteed by the government in case the firm goes bankrupt --- this unemployment insurance is deduced from my salary and paid into the tax office).

[hamlet]

$this->bbcode_second_pass_quote('roccman', 'o')ne word...

(and this is supported by current actions and policies [read FDIC] on the part of our government)...

default

[IslandCrow]

$this->bbcode_second_pass_quote('hamlet', 'F')orget your daddies moral injunctions concerning indebtedness

[I_Like_Plants]

JDmartin - I've been there, done that.

If your friend has $1500 a month above and beyond his needs, and being an employee his taxes and SS are already being taken out, he's doing VERY WELL.

My advice is, Don't rock the boat! Keep the money in the bank, pay stuff down, don't "debt" any more, and keep it at that. He'll be out of debt within 2 years which is OUTSTANDING.

if he feels like he wants to "do more" when he's already doing so well, he probably just feels he's missing out on a social life or something. He needs a hobby that doesn't EAT money. Walking, volunteering, etc can supply that. Right now I'm glad I'm learning trumpet, because it's largely NOT a pay-to-play thing. You buy an old horn for a couple'a hundred bucks, you get some old books used to learn from, that and YouTube and you're set. Once I get good enough I should be able to play for groups, play with the hat out, whatever I feel like. Now that's a good hobby.

Hobbies that EAT money can be a real problem.

an accountant I was working with sings in a choir - that's another hobby that doesn't EAT money. There are a lot of things like that.

I just want to warn your friend: Don't get too extreme and rock the boat if things are going well, you'll tip the sucker.

I was living in newport beach and had my debt worked down pretty far, down around $20k. I had a nice large place, a car just about all paid off, and if I'd just sat tight and not rocked the boat, I'd have had everything all paid off in 04 or 05, but nooo.... I got all antsy about it, fucked up in some major ways, and now I'm in so deep that BK is my only option. And the Ebay money spigot's off for good. It was a good 10 years but now you have to avoid that thing like the plague.

So like the old song, "Don't rock the boat, baby!"

[paimei01]

What we the civilized people do in our quest to consume :
http://www.orionmagazine.org/index.php/articles/article/2962
$this->bbcode_second_pass_quote('', 'I')n a 1927 interview with the magazine Nation’s Business, Secretary of Labor James J. Davis provided some numbers to illustrate a problem that the New York Times called “need saturation.” Davis noted that “the textile mills of this country can produce all the cloth needed in six months’ operation each year” and that 14 percent of the American shoe factories could produce a year’s supply of footwear. The magazine went on to suggest, “It may be that the world’s needs ultimately will be produced by three days’ work a week.”

[TheDude]

To Save Gas , Shoppers Stay Home and Click - NYTimes.com

$this->bbcode_second_pass_quote('', 'B')y STEPHANIE ROSENBLOOM
Published: July 19, 2008

To go shopping these days, more Americans are trading in their car keys for a keyboard.

Online shopping is gaining at a time when simply filling up a gas tank to head to the mall can seem like a spending spree.

A number of retailers — including Gap, Victoria’s Secret and J. C. Penney — are experiencing double-digit sales growth at their shopping Web sites, creating a surprising bright spot during an otherwise gloomy time for sales in brick-and-mortar stores.

One popular strategy for getting shoppers’ attention is offering free shipping, in contrast to many other businesses, like airlines, that are adding surcharges and other fees to offset their higher costs.

The Web sites of Neiman Marcus, Saks, Nordstrom, Bloomingdale’s, Macy’s, Bon-Ton Stores, Aeropostale, American Eagle Outfitters, Target and Kmart were all offering a deal on shipping this week.

“With gas being such an issue, we know that mall traffic is down more than off-mall traffic,” said Mike Boylson, chief marketing officer for J. C. Penney, which had an 8.7 percent increase in Internet sales in the first quarter of this year.

That is in contrast to a 7.4 percent decrease in sales at stores open at least a year, known as same-store sales and a measure of retail health. “We see more people turning to online because it’s much more efficient in terms of time and money,” Mr. Boylson said.

[smallpoxgirl]

Huge spike up in Amazon today. Their stock was up over 10%.