Maximizing earning potential, minimizing expenses

[Indiana]

Or they could have a kiss on the beach. Really, Dubai sounds like an absolute hellhole!

Ha ha, it's not a hellhole at all...in fact, the UAE is the most livable country I've ever lived in. You just have to use common sense, and kissing and groping and other such public displays are a criminal offense here. At least I don't have to witness people kissing and feeling each other up in public like I used to see in the States...that grosses me out!

If you know the rules and abide by them, it's easy to live here. The only hellish thing about Dubai is the traffic at rush hour.

[Indiana]

I've never really understood the theory about putting someone in jail for being in debt. It's fine if the person has a friend or relative to bail them out (maybe that's the point -- the punishment is in being embarassed and the pressure not to screw your friends or family), but what about those who don't have such a benefactor? How does it help anyone (the person owing the money, the person owed the money or the person paying for the prison stay)? Does the person in debt literally stay there indefinitely? Didn't this happen to Dostoyevsky on at least one occasion?

That said, at some level, I'm sympathetic to the concept so long as there is full disclosure of the fees, interest and other terms by the person or institution lending the money. More people in the West need to figure out what financial responsibility is without everyone expecting them to have their hands held and noses wiped through the entire process, and perhaps a swifter, harder kick up the backside in some way would help in that process. How many Emrati citizens (or even other Muslims) end up in debtors' prison? Probably very few I should imagine, at least compared to Westerners. I can be very critical of Islam and Islamic cultures, but I actually think this is +1 to them.

Very few Emiratis would end up in debtor's prison I would imagine. They have money, and if they run into trouble there will always be family / friends to help them out. Most people in debtor's prison here would be foreign expats from all over the world, at least that's what I presume.

The person remains in prison until the debt is paid. So if a person doesn't have anyone to help them out, they are basically screwed. I'm not sure if the sentences are indefinite or not. I would imagine not, but it's hard to find out definite info on this.

I agree about people in the West needing to be more financially responsible. I think that you have two extremes here and in the West. It would be nice to make people more responsible for their finances, but a jail sentence is very, very harsh.

[zyzzx]

Interesting discussion. You sound a lot like me Guy. I've always been a saver, and do sometimes have trouble understanding how people with decent salaries end up spending it all. Hell, I even managed to save a fair amount as a grad student. I think that it does come easy to some as a matter of personality - I've saved a lot of money without really trying, and without really budgeting just because I find it very easy to not spend. I don't like shopping and hate having a lot of stuff (moving a lot is very helpful - when you know you're moving in 6 months, it's much easier not to buy stuff). I'm also a big procrastinator, and will put off purchases until often, something I thought I needed turns out to be not so necessary after all. My mom is the opposite and it drives me nuts - she complains about money, then buys more (expensive) stuff and claims that the stuff makes her happy (it doesn't). I don't eat out much, but that's actually mostly because I enjoy cooking, and because what I make is much much healthier than what I could buy. For me it's a question of value - I'll drop a large amount of money on something without blinking if I think it's worth it, but why the hell would I pay $2 for a cup of coffee every day if I can make coffee at home? I'm even frugal with other peoples' money - I travel a lot for work, and even though I get reimbursed for everything, I still can't bring myself to spend on something that I consider a waste of money. If someone looks down on my because I haven't 'kept up with the Joneses', screw them, they're not the type of people I want to associate with anyway.
Having savings gives you such a sense of security and freedom - if there's something I really want to do, some place I really want to go, I can just do it without worrying about where the money's going to come from. If something unexpected comes up, it's no problem. I'm now where I could live off my savings for years if necessary (and I've still got 30+ years till retirement). It's a great feeling. I can't imagine being trapped by loads of debt.

[Indiana]

I can't imagine being trapped by loads of debt either, what a horrible feeling that must be. Being in debt would make me very nervous; I only feel truly at ease with enough cash in the bank to hold me over for a few years or more in case anything happens.

[zyzzx]

I can't imagine being trapped by loads of debt either, what a horrible feeling that must be. Being in debt would make me very nervous; I only feel truly at ease with enough cash in the bank to hold me over for a few years or more in case anything happens.

Yep, and I really don't understand how some people get that way. Not talking about, say, families not making much who get hit by something unexpected. But take my brother - young guy, single, no responsibilities - he managed to run up something like US $10,000+ in credit card debt by his midtwenties He liked to eat out and had a taste for expensive toys (dirtbikes, snowboards, that sort of thing). When I first heard this it really blew my mind - how the hell does the "I can't afford this" not overcome the "I want this" when you're 10K in debt (and how the hell did we come from the same family?). He's going to be saddled with that for years and years (since he also makes very little). It's crazy.
I'm likely to move back to the US soon, and, depending on where I end up, may look into buying a house, but even the thought of a home mortgage makes me a little nervous.

[Indiana]

Mortgages make me nervous too! We will only buy property outright. When we first moved to the UAE we financed our car through the bank and that even made us uneasy. It was a 2-year payment plan and when it was finished it was such a relief!!!

I read a study recently where they surveyed a number of people from the US and UK about their debt and why they overspent, and they found that many people feel 'entitled' to material things that they cannot afford, hence they abuse their credit cards and over-borrow from the bank. I don't understand that; but I think that a lot of people feel pressured to keep up with their friends who have more than they do. It's too bad.

My best friend did the same with her credit card when we were in college...she ran up about $10,000, mostly on gifts for her boyfriend! She had to claim bankruptcy at 20 years of age. Wow.

[GuyInTaiwan]

zyzzx: Indeed. I think we think similarly on this issue. I also don't have a problem with spending a lot of money on something I think is really worth it, but I do have a problem with spending money on things I don't really greatly desire or need. It's like that feeling after eating a whole box of chocolates in one sitting. I just couldn't get myself into that sort of debt because the stress from the debt would weigh far more heavily on me than the enjoyment of buying any stuff.

I also agree about mortgages or any other form of debt. I'm really not big on the idea at all. The important part of the word mortgage is the mort at the front.

Indiana: The irony with people trying to keep up with their friends is that they're all trying to keep up with each other and probably none of them is actually really in front. The sense of entitlement is really something else. My grandparents on my father's side lived in a very average house, had one car, and only went abroad once. They didn't have a lot of stuff. My grandfather's garage was full of tools, brooms, etc. with odd handles he'd glued back together or salvaged from other things. I don't know that they were any happier or unhappier than people today, but they didn't struggle under a mountain of debt (despite never earning a huge amount) and my grandfather left a lot of money for my grandmother to be taken care of medically and move into a nursing home after he died. My grandparents on my mother's side were/are a complete trainwreck in terms of managing money and expect/expected the state and their children to look after them in their old age, despite seeing small fortunes slip through their fingers.

[Gao Bohan]

I also agree about mortgages or any other form of debt. I'm really not big on the idea at all. The important part of the word mortgage is the mort at the front.

We bought our first house a little less than 5 years ago on a mortgage. Brand new house, solid construction, decent sized yard, no landlord to deal with. But the mortgage hangs over our heads like a cloud, even though the payment is modest. The trouble is, we may have to move soon, so we're continuing to save rather than pay it off. Once our situation stabilizes, paying it off is our number one financial priority. I can't wait to be completely debt-free. And rent-free, for that matter.

[zyzzx]

I feel like the mortgage is a tough one because, while debt would make me nervous, putting all of my savings into something as non-liquid as a house would also make me nervous. Plus in the US you get a tax break for having a mortgage. I haven't done any research yet (because the whole thing is still kind of pie in the sky), but I'll probably end up doing something like: make a hefty down payment (getting myself a good rate), but retain enough savings to give me a good cushion for the unexpected, and borrow the rest, but then pay it down like crazy. I dunno, I guess it all depends on rates and how much return you could get if you invested the money instead, and all that stuff. For all that I'm great at managing money day-to-day, I'm not so up on managing investments. I was getting into it and learning a few years ago, but the whole financial collapse really turned me off. But at least I can think of interest rates in terms of how much they're paying me, rather than how much I'm paying them

[Gao Bohan]

Plus in the US you get a tax break for having a mortgage.

Yes, and that's nice. But paying off the mortgage means subtracting a huge liability from your personal balance sheet.

I dunno, I guess it all depends on rates and how much return you could get if you invested the money instead, and all that stuff.

I've heard that one a lot. People compare their mortgage interest to what they anticipate they could make in the stock market within the same time frame, and "invest" accordingly. The trouble is, both the stock and housing markets are fickle.

My wife and I don't really think of our house as an investment, in the sense of being something we're planning on selling in the future for a profit. It's the place we live, and if all goes well we'll be there for many years to come. But it's something tangible. The house and the land are things we can touch and feel. They have utility. The house keeps us cool in the summer and warm in the winter. We grow food from our land. But we think about these things much differently from most Americans. And of course if you're on the go every six months, getting a house with a mortgage makes no sense.