Is It Possible to Ever Not Have to Worry about Debt

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gouldnm
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Is It Possible to Ever Not Have to Worry about Debt

Post by gouldnm » Tue Aug 21, 2018 3:18 pm

A friend and I had this discussion recently: He was arguing that truly wealthy people never have to worry about debt or running out of money. I argued that it's all proportional: yes, a truly wealthy person has a lot more money than I do, but that doesn't mean that they still couldn't get themselves into excessive debt and end up with nothing.

What do you think?

Jags4186
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by Jags4186 » Tue Aug 21, 2018 3:20 pm

https://en.m.wikipedia.org/wiki/Vanderbilt_family

You can always spend more than you have.

jminv
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by jminv » Tue Aug 21, 2018 3:32 pm

Problems usually occur when people don't worry about money. The Vanderbilt descendents from the post above are a good example of that. I view worrying about money as a good thing. It helps you keep your expenses and debt in check while leading you to spend time thinking about how to get more money.

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willthrill81
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by willthrill81 » Tue Aug 21, 2018 3:37 pm

If you don't have debt and don't go into it, you'll never have to worry about it.

While I understand the math involved in leverage, I think that for many, including me, the peace of mind of being debt outweighs any financial benefit for keeping it. We hope to have our mortgage paid off in under two years, and we hope that we will never have to use debt again.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Dottie57
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by Dottie57 » Tue Aug 21, 2018 3:40 pm

gouldnm wrote:
Tue Aug 21, 2018 3:18 pm
A friend and I had this discussion recently: He was arguing that truly wealthy people never have to worry about debt or running out of money. I argued that it's all proportional: yes, a truly wealthy person has a lot more money than I do, but that doesn't mean that they still couldn't get themselves into excessive debt and end up with nothing.

What do you think?
I am debt free so don’t worry about it. But I do worry about keeping my expenses low enough to not run out of money in retirement.

Jablean
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by Jablean » Tue Aug 21, 2018 3:43 pm

They do not pay attention to the bigly time business peeps who went bankrupt umpteem times? Of course they didn't seem to "worry" about it.

Best advice, live within your means, and plan for down the road.

deltaneutral83
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by deltaneutral83 » Tue Aug 21, 2018 3:44 pm

Jags4186 wrote:
Tue Aug 21, 2018 3:20 pm
https://en.m.wikipedia.org/wiki/Vanderbilt_family

You can always spend more than you have.
They'd have gone broke at some point, but the depression sped things up drastically. 85% reduction in equities and the system being "flawed" (for lack of a better term) would do in nearly everyone. I don't even know how a 60/40 allocation would have done.

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HomerJ
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by HomerJ » Tue Aug 21, 2018 3:55 pm

deltaneutral83 wrote:
Tue Aug 21, 2018 3:44 pm
I don't even know how a 60/40 allocation would have done.
It did fine. Because bonds did well, and there was deflation at the time (instead of inflation so your bond money INCREASED in purchasing power), and the even the stock side was still throwing off dividends.

4% withdrawals with 60/40 portfolio lasted 30 years even if you retired in 1929, right before the Great Depression.

That's where the 4% "rule of thumb" comes from. 4% isn't for normal times. It's for "retiring right before the Great Depression" times.

Now 100% stocks failed, but not as soon as you might think. Pulling 4% from 100% stocks starting in 1929 left you completely broke in 21 years or so. Again, the large dividends back then helped a LOT.

Edit: You may have been talking specifically about the Vanderbilts. They were probably pulling more than 4% a year :)
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adamthesmythe
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by adamthesmythe » Tue Aug 21, 2018 4:01 pm

I do worry a little about remembering to pay my monthly credit card bill on time.

JoeRetire
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by JoeRetire » Tue Aug 21, 2018 4:05 pm

I don't ever worry about debt.

That's likely because my wife and I are both relatively frugal and would never put ourselves into a situation where debt would be a problem.

So Yes - its possible. And it has nothing to do with being wealthy.

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Meg77
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by Meg77 » Tue Aug 21, 2018 4:11 pm

I think you're off base in this argument. Lots of truly wealthy people really do not have to worry about running out of money. They get $X from a trust each month or $Y distribution from a corporation they own a piece of each quarter. Sure the income could fall, but when you're talking about millions and millions of dollars invested conservatively and managed professionally, that's a serious long shot.

However that doesn't mean rich people don't worry about money or that non-rich people have to worry about money. We have one client with $40 million in bonds, and she's scared she's going to run out and spends very modestly. On the other hand My in laws have a net worth under a million dollars and modest pensions. But they are debt free and don't worry about money or running out of it. That doesn't mean they can afford to spend like trust fund babies of course. But they certainly aren't kept up at night by financial concerns either.
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stemikger
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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by stemikger » Tue Aug 21, 2018 4:15 pm

gouldnm wrote:
Tue Aug 21, 2018 3:18 pm
A friend and I had this discussion recently: He was arguing that truly wealthy people never have to worry about debt or running out of money. I argued that it's all proportional: yes, a truly wealthy person has a lot more money than I do, but that doesn't mean that they still couldn't get themselves into excessive debt and end up with nothing.

What do you think?
I didn't read the other replies yet, but all you have to do is look at the famous athletes and movie stars. There have been stories of them being worth millions and they blow it all. It's all relative. There are also people making $50K and never get into debt because they live within their means. As for me, I hate debt and when I do purchase something on credit, I try to pay it off as soon as possible. I paid off my 30 year mortgage in 20 years and it was like a burden was lifted off of me. Even if the math does not make sense to do so, I will always be in the camp that being debt free is how you obtain freedom.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Re: Is It Possible to Ever Not Have to Worry about Debt

Post by LadyGeek » Tue Aug 21, 2018 4:18 pm

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