Join Early Retirement Today
Reply
 
Thread Tools Display Modes
A lifetime of debt? Really? Apparently so...
Old 01-29-2015, 03:42 PM   #1
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,290
A lifetime of debt? Really? Apparently so...

I received a postcard-type advertisement for life insurance today that initially frosted me. Now, normally I don't even look at those things but this one for some reason caught my eye and was particularly insulting. As if I would leave DW saddled with a bunch of debt! It lists as "typical" debts of $8,343 in funeral expenses, $15,956 in credit card debt, and $12,596 in auto and other loans.

That got me to wondering - is that really the norm? Do so many people carry that much debt that they still have it when they get The Big Ache? So I started searching for a bit and came away a tad better informed and somewhat sadder. While the ones on the postcard seem typical they are a bit on the high side. and probably not the norm for people of retirement age This article is typical: A Lifetime of Debt: The Financial Journey of the Average American

According to this article the average American will spend $600,000 on interest payments over their lifetime. How sad.

It also reinforces the point about what a bunch of outliers this group is. Oh well, I guess I'll just go on my ignorant way and spend that $600k on things other than enriching bankers.

Just a sort of rant, but I kinda would like to think that people were smarter than that.
Attached Images
File Type: jpg postcard side 1.jpg (57.7 KB, 65 views)
File Type: jpg postcard side 22.jpg (201.9 KB, 64 views)
__________________
When I was a kid I wanted to be older. This is not what I expected.
Walt34 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-29-2015, 04:18 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
I'm not surprised
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 01-29-2015, 04:25 PM   #3
Recycles dryer sheets
Choices's Avatar
 
Join Date: Jan 2015
Location: Rural VT
Posts: 307
Oh, Darlin', we are the oddballs! Many folks just assume credit is how you buy everything. I have a friend who was talking to me about retirement planning and said "well, we'll always have a car payment", it was just a given. I wonder how many of our fellow citizens are still just one mortgage payment away from homelessness?
Choices is offline   Reply With Quote
Old 01-29-2015, 04:27 PM   #4
Full time employment: Posting here.
 
Join Date: Dec 2012
Posts: 656
Wow, $600,000! I haven't come close to making that in my life.
Elbata is offline   Reply With Quote
Old 01-29-2015, 04:29 PM   #5
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,290
Quote:
Originally Posted by mikefixac View Post
Wow, $600,000! I haven't come close to making that in my life.
I haven't either so I wonder where that number came from.
__________________
When I was a kid I wanted to be older. This is not what I expected.
Walt34 is offline   Reply With Quote
Old 01-29-2015, 04:52 PM   #6
Recycles dryer sheets
 
Join Date: Aug 2014
Location: Western Canada
Posts: 393
Quote:
Originally Posted by Walt34 View Post
I haven't either so I wonder where that number came from.
I think you should check your arithmetic. $20K X 30 years is $600K.

In my case, my first j*b in 1967 paid ~$4K, in 1975 $9K, in 1980 30k and in 2000 100K. Even if my income stayed at 1980 level it was well over $600K by 2000, forgetting the part before 1980.

That said, the number seems really high. I probably made $1.8KK between 1967 and 2005. I was probably at least 75th percentile in income most of that time. I doubt I paid $50K in interest and it was 90% mortgage.
__________________
I'm not crazy. Honest, the judge had me tested.
Rick_Head is offline   Reply With Quote
Old 01-29-2015, 05:26 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by mikefixac View Post
Wow, $600,000! I haven't come close to making that in my life.
remember these ppl are making mortgage pmts up until they die, so they are using SS, etc to pay that interest

like a previous poster said, 600K is 30k over 20 yrs or 20K over 30 yrs
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 01-29-2015, 07:20 PM   #8
Recycles dryer sheets
 
Join Date: Feb 2014
Posts: 215
Imagine if they all put that $600k in their retirement funds! Oh, yeah, we did.
__________________
DH retired 2014.
Sold my business in '16 and retired 5-17!
Ginny is offline   Reply With Quote
Old 01-29-2015, 07:41 PM   #9
Full time employment: Posting here.
cooch96's Avatar
 
Join Date: May 2014
Location: Lakewood
Posts: 916
If you bought your first house at the peak of the housing bubble, like me, then paying $600k in mortgage interest alone wouldn't be difficult. I know many, many who got nice new homes on very modest lots twenty miles outside of Seattle for well over $400k.

If you got a mortgage like that with a 30-yr ARM, I bet you'd pay over $2mm in interest. Plus, I don't believe most banks would let you refinance when underwater.
__________________
Why be normal when you can be yourself?
cooch96 is offline   Reply With Quote
Old 01-29-2015, 07:54 PM   #10
Thinks s/he gets paid by the post
gcgang's Avatar
 
Join Date: Sep 2012
Posts: 1,568
Quote:
Originally Posted by Walt34 View Post

Oh well, I guess I'll just go on my ignorant way and spend that $600k on things other than enriching bankers.
.

Not so much bankers as mortgage backed securities owners, like me, with 13% of BND. Tyvm.


Sent from my iPad using Early Retirement Forum
__________________
You know that suit they burying you in? Thar ain’t no pockets in that suit, boy.
gcgang is offline   Reply With Quote
Old 01-30-2015, 07:51 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,679
I have paid just under $40k in interest and nearly all of it is from the mortgage on my co-op apartment I paid off in 9 years, ending in 1998. The tiny remainder is student loan interest from a small balance I paid off in 18 months back in the mid-1980s. I am not counting my small share (about $26k) of the mortgage interest paid by my co-op on its underlying mortgage.


My wage earnings in the 23 years I worked (16 full-time, 7 part-time) were just over $1M.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 01-30-2015, 08:22 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by Ginny View Post
Imagine if they all put that $600k in their retirement funds! Oh, yeah, we did.
it's difficult (but I guess technically possible) to do that over one's career on a pre-tax basis with the 402g limit - it definitely takes discipline
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 01-30-2015, 09:03 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,396
Quote:
Originally Posted by Walt34 View Post
It lists as "typical" debts of $8,343 in funeral expenses, $15,956 in credit card debt, and $12,596 in auto and other loans.
....
Just a sort of rant, but I kinda would like to think that people were smarter than that.
Those numbers do not surprise me at all, and no, most people are not smarter than that. Most people consider debt in all its forms to be a normal part of life.... mortgage payments, car payments, credit card payments, student loan payments. Anyone who lives a lifestyle that does not involve debt is an outlier in this society.
JustCurious is offline   Reply With Quote
Old 01-30-2015, 09:21 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,865
Quote:
Originally Posted by Walt34 View Post
It lists as "typical" debts of $8,343 in funeral expenses, $15,956 in credit card debt, and $12,596 in auto and other loans.
Such debts do not mean a negative net worth. Even millionaires who pay their bill in full monthly are likely to die with credit card debt. That actually can be a smart thing since the card companies are quick to settle decedent debts for pennies on the dollar.
GrayHare is offline   Reply With Quote
Old 01-30-2015, 09:26 AM   #15
Thinks s/he gets paid by the post
timo2's Avatar
 
Join Date: Jul 2011
Location: Bernalillo, NM
Posts: 2,717
I don't think this is particularly a new phenomenon. I used to look through all the old land records When I was an oil and gas landman in North Dakota in 1980. Back around 1915, most of the farmers in western North Dakota took out a loan to buy property, then when the balloon note came due in a few years, they would get another loan to pay off the first loan, which would be due in a few years, and so on until they died or sold the land.

It was an eye opener for a 28 year old.
__________________

"We live the lives we lead because of the thoughts we think" ...Michael O’Neill
"We can cannot compel others to do our will" ....Norman Goldman
"There never is shortage of the gullible to accept the illogical"...Anonymous
timo2 is offline   Reply With Quote
Old 01-30-2015, 09:29 AM   #16
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 47,468
There's a certain appeal to borrowing to the hilt during highly inflationary times, like the 1970's. The money one borrows is paid off later in dollars that are worth less and less each year. I am reluctant to borrow at all, and right now inflation is not high enough to persuade me to borrow to the hilt.

Then again I do not NEED to borrow. Some of those who have borrowed so much are probably in extreme circumstances, with no job, the baby needs milk, and so on. I feel for them even though I would sure try to find another way out if I was in that situation.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.

Happily retired since 2009, at age 61. Best years of my life by far!
W2R is offline   Reply With Quote
Old 01-30-2015, 10:29 AM   #17
Dryer sheet aficionado
Capwest28's Avatar
 
Join Date: Mar 2014
Location: Steamboat Springs
Posts: 41
My mother always said "I deserve this" and IIRC there was never a conversation about financial prudence, deferred gratification or paying cash for anything. Except you really could not pay cash since you were only able to make minimum CC payments.

In my late 40s I married a conservative man who taught me the error of my ways and delivered me from the financial pit I so eagerly dug for myself. If not for him I would not be reading this forum.


Sent from my iPhone using Early Retirement Forum
Capwest28 is offline   Reply With Quote
Old 01-30-2015, 11:15 AM   #18
Thinks s/he gets paid by the post
wmc1000's Avatar
 
Join Date: Apr 2013
Location: Gosport, IN
Posts: 1,213
while that seems a bit high - even if cc's are paid off each month but you average a $100,000 mortgage from ages 22 to 65 at a average interest rate of 5% you would have paid $215,000 in interest on that average debt over those years. I remember having a mortgage at an interest rates of 8% to 12% in early years.
wmc1000 is offline   Reply With Quote
Old 01-30-2015, 11:40 AM   #19
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,396
Quote:
Originally Posted by Capwest28 View Post
In my late 40s I married a conservative man who taught me the error of my ways and delivered me from the financial pit I so eagerly dug for myself. If not for him I would not be reading this forum.
I'm just curious, did he marry you before he taught you the error of your ways?
JustCurious is offline   Reply With Quote
Old 01-30-2015, 11:50 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
athena53's Avatar
 
Join Date: May 2014
Posts: 7,306
In my case, I know that's high- I paid about $20K in mortgage interest annually for 7 years when I lived in NNJ. I've always had a mortgage but that was the peak. Our mortgage interest in 2014 was $3,300. I may have paid a total of $200 in credit card interest my entire life, thanks to the occasional accidental late payment, but that's it.


In 2014 the average credit card debt for those what had debt was $10,900. Assuming 15% interest, they're paying $1,600 per year.


The $600K seems high. You could get to it by having an average mortgage balance of $250K and an average interest rate of 8% over a 30-year period but in our neck of the woods a respectable starter house might be $160K.
athena53 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Apparently I need to quit the Niacin today! timo2 Health and Early Retirement 12 03-15-2013 08:27 AM
Mac/Apple Malware - patched and apparently harmless ERD50 Other topics 2 04-07-2012 10:38 AM
Overall happiness is apparently in decline. omni550 Other topics 8 12-22-2011 10:05 AM
Apparently I'm an Institution! BOBOT FIRE and Money 2 03-24-2010 10:31 AM
Apparently we're going to beat this dead horse until it becomes another animal.. cute fuzzy bunny Other topics 100 06-21-2005 01:15 PM

» Quick Links

 
All times are GMT -6. The time now is 03:09 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.