Credit...

[JWG223]

cut it up now and leave the account open. you can continue to make payments and just ask for a duplicate card if you ever pay it off.

I have also heard of people freezing their cards in a large zip-lock bag in the freezer. A bit less permanent. My cards have survived multiple washing-machine trips, so it *should* work afterward.

 

[JWG223]

The way I look at the whole pay off credit card every month thing is, if I can afford to pay it off every month I can afford to buy whatever was bought with the card without it. Just have to get over instant gratification and wait till I can afford it, if by the time I can afford it I no longer want it then I must not have wanted it too bad to begin with, also I now have that much more money in savings.

But then you pay more money for it. Use the card, get the cash-back, build your credit score.

For example, if I buy the ACOG I want NOW with my card, I will get $10 off the purchase-price. If I pay cash, I will not. Why not get what amounts to free shipping?

I think of it completely differently than that. I much prefer to use plastic over actual cash or checks, so it's either a credit card or a debit card. My debit card is just instant access to what's in my bank account. No more, no less. My credit card gives me 2% cash back on most things. So basically, everything I buy is 2% cheaper than I'm paying for it. It's not much, but it ends up being around $500 a year. That's a decent chunk of change for doing nothing differently than I would have done with a debit card.

Well, I guess the one difference is that my bank account gets hit 1x/month instead of dozens of times. No big deal there though.

^yeah, that.

 

[JWG223]

... mindset.

Understand, that is why I created this thread. I know successful people of both schools of thought, and it seems to be a hot topic lately. Was curious how different sides would represent their belief.

 

[c10seven]

If I want something NOW I will be buying local and not have to worry about shipping, and at the same time supporting a local business.

 

[Nomad.2nd]

To me, money is worthless. I want stuff. Paper and its electronic substitute mean nothing to me. Assets>Cash

Cash gets assets.

I don't understand that. You can't take it with you. Different mindsets.

You CAN:
1. Have enough not to worry
2. Not really care about 'status objects' (If I had millions I'd probably be driving my 4 runner.)
3. Give your kids an inheritance.

I would agree, except my $7000 japanese car was a POS. I'd have saved money buying a new American car like a Cobalt or something, based on money spent to-date vs. car-note on a Cobalt.

Once again, this shows your alternate reality. A COBALT....!!! REALLY?
NOT what comes to mind when I think quality car.

As to your POS... it happens, but japs make good cars.

Agree fully. That is my plan in the future, although the $5K civic isn't for me.

I took my $2,500 4 runner, paid taxes on it, bought all new 'disposable parts' (Belts, hoses, bulbs etc) and paid a mechanic to go over it and replace them on the way (I could of done most of it, but I got lazy... I HATE working on cars)
It's now got 130,000 miles on it (Had 125K) and I've got less than $3,500 in it.

My dad owns several. It's more headache than it's worth to me. Takes him years to find GOOD renters, and I used to work for him and have been in hundreds of homes. Renters trash stuff. Saw it all the time. That rental property is likely to cost more than it makes if you aren't VERY careful about who you rent to.

Many ways to wealth. Spending it all on cars (AND loans you forget about) isn't the way.

You had a stable environment to build your "wealth" in. I do not.

Yep. Arn't we lucky! We have SUUUCH a great opportunity!
(Yes, I am serious)

I feel a certain urgency to procure a house and property while the getting is good. That is my sole issue. If I knew the economy would be stable, building supplies affordable, etc. I would be all for saving up and living in an apartment for the next 15 years until I could do it. However, I feel that the interest will be pennies on the dollar compared to what building costs are going to go to if I were to save vs. finance.

Doesn't take that long if you are willing to sacrifice for a couple years. I know.

It's obvious you are not willing to sacrifice and think debt is the way to go.

We will see.

 

[Nomad.2nd]

Yep, difference of desire.

Not really. I don't frolic in piles of cash or anything...

The only thing I plan on buying is downgrading cars. Everything else I have pretty much bought in this last year.

Yep, the classic 'get out of school and go nuts rather than living the same lifestyle for a couple years.

I listed my auto loan, I have a small loan from the bank, but I don't even really consider it. A few thousand if I recall. They just draft it out of my pay-check. It was worth it to pay my dad back for college early. Besides that, I have a CC that I pay off bi-weekly, and an LOC of $2500 that I owe something like $1900 on that I really should pay off, but the interest rate isn't bad, so I have been lazy.

Like I said.... LOL!

That's cool, I don't do stuff like that. I prefer hard assets to things of that nature. I spent $400 on a case of MK318SOST the other month at random, for example.

I rarely do. making a point. And I've got 'enough' ammo!

Exactly. I am paying all my bills and not asking for hand-outs.

You asked...

I understand, but it's still 2% you didn't have to pay, on top of the 2% you could have been making back on all your food/gas purchases. yet you refused to do the credit-card thing, even though you cannot argue against it, much like I insist on wanting to finance my land/house and have it before I am 30 instead of saving until I am 50 and being iffy on whether or not it's even attainable anymore and having to live in an apartment or travel-trailer for 20 years while I save.

Several things:
1. It's 2% I don't have to pay, correct.
2. 2% on food, gas etc. I SAID that was less than what you DON'T spend paying cash.
For things like Gas etc... i use a Debit card. Which I GET MONEY BACK ON...WITHOUT needing a credit card.
3. I DID argue against it...... Just did AGAIN.
4. WHO says 50, OR years in a Trailer... DUDE... I'm 29. (And not knocking the mortgage, just the rest)

...but will you? It sounds like that's not what you really want.

I'm undecided.
If it wasn't due to:
1. Year of free time
2. Pension
3. Some family issues

It wouldn't even be a consideration.

No, they did not. Times were also different back then. Things cost proportionately less. They virtually built their house as they paid for it.

Good enough.

To make money. If you do it smart and on YOUR terms, you always win. 0% interest car loans are a sick deal!

LOL! RICH!!!!

NOT charging interest on a depreciating asset that will loose (What, 40%?) in the first two years is a "Sick Deal"
Your RIGHT... that is sick(ening)

I understand all of what you are saying, but what you are missing in my case is that I finance things because I CHOOSE to, not because I need to. If you are "living on credit" there is a problem. If you are USING credit, what's the deal? It's when credit uses you that there is a problem.

I don't think you do.
You CHOOSE to, but you 'forget' about all these loans that you must service every month. I COULD choose to work 2-3 jobs, but I don't choose to .
You ARE living on credit! You are just living in denial! (And not in the middle of the river!)

I agree, but it's owe the man, or live in a travel-trailer. I'll owe the man for a while.

Good thing those are not the options. (Although I've lived in worse)

I bet you have met someone who paid off their house and loved living in it for the past 20-30 years, though, and now has a very nice piece of property worth a lot more than it cost them.

Check out how much in INTEREST they paid!
(Although as I said, it's CONSUMER debt that REALLY does it for me!

It's paying for the privilege of owning something, which is all about utility cost.

No, it's convince costs! (And I don't like paying for that)

My Dad is a master of money-management, making about what you do and owning 10 acres of very nice property with multiple houses (the whole neighborhood), and having owned 'vettes, planes, boats, and other such toys. However, my other grandparents (not mentioned until now) financed things, and they too own a nice property with a nice house on it and had the joy of living in that house for decades longer than my father has had the joy of living in his. Both ended up with houses paid off, one got to enjoy it for several hundred percent longer.

What I keep going back to... is it doesn't take living in a van till your 50.

A few years of living cheap, and then avoiding consumer debt, and living within your means is all it takes.
I know.

 

[kcinnick]

About the only time I use a CC these days is to make online purchases or any situation where someone takes my card from me to swipe it. I pay it off monthly and having it helps with my credit score.

I don't care what anyone says about security, IME it is easier to dispute charges on a CC than a Debit card. When my CC was being used in California when it was tucked nicely in my wallet in Louisiana it took a 3 minute phone call and the charges went away that day. When my debit card was fruadulently used I needed police reports and had to wait for the merchant to complete their case and it took months to get my money back.

 

[Nomad.2nd]

About the only time I use a CC these days is to make online purchases or any situation where someone takes my card from me to swipe it. I pay it off monthly and having it helps with my credit score.

I don't care what anyone says about security, IME it is easier to dispute charges on a CC than a Debit card. When my CC was being used in California when it was tucked nicely in my wallet in Louisiana it took a 3 minute phone call and the charges went away that day. When my debit card was fruadulently used I needed police reports and had to wait for the merchant to complete their case and it took months to get my money back.

Same for me, With a DEBIT CARD from a Credit union, and a bank (Respectively)

Your bank sux.

 

[JWG223]

Not really. I don't frolic in piles of cash or anything...


Yep, the classic 'get out of school and go nuts rather than living the same lifestyle for a couple years.
When you live meal to meal for a few years, it's nice to buy one or two things you have always wanted. I bought a car, and a few firearms and some ammo.

Like I said.... LOL!
Which is really insignificant and will be wiped out by the end of the calendar year, save for the bank loan which I want to pay off as scheduled to enhance credit score for a small fee in interest.

I rarely do. making a point. And I've got 'enough' ammo!

You asked...

Several things:
1. It's 2% I don't have to pay, correct.
2. 2% on food, gas etc. I SAID that was less than what you DON'T spend paying cash.
For things like Gas etc... i use a Debit card. Which I GET MONEY BACK ON...WITHOUT needing a credit card. Nice, I still like credit-cards. Easier to dispute purchases with when the seller doesn't make good.
3. I DID argue against it...... Just did AGAIN.
4. WHO says 50, OR years in a Trailer... DUDE... I'm 29. (And not knocking the mortgage, just the rest)
I want to mortgage, you don't, fair enough. What do you think, I blow all my $$ on stuff without redeemable value? Like I said, I cook most of my meals, and my only frivolous expense so far has been some guns (redeemable value) and a car (money-pit that I wanted).

I'm undecided.
If it wasn't due to:
1. Year of free time
2. Pension
3. Some family issues

It wouldn't even be a consideration.
As you are seeing, sometimes "life" happens and when it does, credit can be just as good a thing to have as cash, because sometimes the cash you have won't work/isn't enough.


Good enough.


LOL! RICH!!!!

NOT charging interest on a depreciating asset that will loose (What, 40%?) in the first two years is a "Sick Deal"
Your RIGHT... that is sick(ening)
You need a vehicle, and used cars/trucks are crap unless they have a warranty remaining. I now have spent about $8K on a $4K car because it had no warranty. Buy the vehicle RIGHT and you will be fine--or don't screw up like me and buy something without a warranty.


I don't think you do.
You CHOOSE to, but you 'forget' about all these loans that you must service every month. I COULD choose to work 2-3 jobs, but I don't choose to .
You ARE living on credit! You are just living in denial! (And not in the middle of the river!)
I guess if you choose to see it that way? I could burn every form of credit I have right now and be just fine, and pay the accounts off in probably 2 months. I don't see where it's an issue.


Good thing those are not the options. (Although I've lived in worse)




Check out how much in INTEREST they paid!
(Although as I said, it's CONSUMER debt that REALLY does it for me!




No, it's convince costs! (And I don't like paying for that)
Convenience? Yes, sometimes I will pay it.



What I keep going back to... is it doesn't take living in a van till your 50.
Yes, but I don't like how the cost of thigns keeps going up, up, up. I would rather get in at a good price and pay a note on it.

A few years of living cheap, and then avoiding consumer debt, and living within your means is all it takes.
That is how I plan on living. I wanted to enjoy life for a year or two, and then focus on buying land/a house. Selling the 'vette next year and down-sizing so I can sock away money to buy 40-50 acres.
I know.

Different priorities. When I am 29, I will be right where you are though, except I will just be finishing up paying a note on some land/starting in on a mortgage.

 

[JWG223]

Cash gets assets.
Yes, and thats what I use it for.

You CAN:
1. Have enough not to worry
2. Not really care about 'status objects' (If I had millions I'd probably be driving my 4 runner.)
A car is only a status object if you want it to be, just like you don't view your AK as a status object, I don't view my car as such. I view it as a fun toy. Screw what others think when they see it.
3. Give your kids an inheritance.
I don't plan on having kids, and if I do, it means I will be alive a lot longer to worry about that.

Once again, this shows your alternate reality. A COBALT....!!! REALLY?
NOT what comes to mind when I think quality car. It was an example with a 100K mile warranty.

As to your POS... it happens, but japs make good cars. Well they certainly **** the bed on this one. Planning on a 370Z when I trade the 'vette in, maybe it will be better.

I took my $2,500 4 runner, paid taxes on it, bought all new 'disposable parts' (Belts, hoses, bulbs etc) and paid a mechanic to go over it and replace them on the way (I could of done most of it, but I got lazy... I HATE working on cars)
It's now got 130,000 miles on it (Had 125K) and I've got less than $3,500 in it.
I have heard good things about them.

Many ways to wealth. Spending it all on cars (AND loans you forget about) isn't the way.
I bought one car. Noone in my family ever owned a new car. I wanted to do something for myself. Will trade it in on a cheaper new car when I'm done enjoying it in a bit. Yes, I paid for the experience, yes, I would do it again.

Yep. Arn't we lucky! We have SUUUCH a great opportunity!
(Yes, I am serious)
Yes we do. Whatever you say, this country is still a really nice place to live compared to many alternatives. I am grateful!


Doesn't take that long if you are willing to sacrifice for a couple years. I know.
I plan on paying the land I buy off before I put a house on it. It can be done in a couple of years, yes. Your plan to build a house for $50K is not my plan, though. It would take me a lot longer.
It's obvious you are not willing to sacrifice and think debt is the way to go.
Why, because I want a mortgage at a good rate? : /
We will see.

Part of the whole reason I bought a 'vette was to show that I can foot a note so when it comes time to buy a house, the bank won't blink, and the rate will be very nice. Yes, I am paying now for saving money later. Over 20-30 years, 1/2 percent will trump the depreciation and the interest paid on my car many times over. So yes, I got out of college and bought a money-pit--but it's going to be a money-maker in the end.

 

[Nomad.2nd]

When you live meal to meal for a few years, it's nice to buy one or two things you have always wanted. I bought a car, and a few firearms and some ammo.

Couple things, yea. 'Toy' car and over what? $8K of debt?
Not so much.

Which is really insignificant and will be wiped out by the end of the calendar year, save for the bank loan which I want to pay off as scheduled to enhance credit score for a small fee in interest.

My point: One second that's it, next your 'remembering'
It's a Mindset issue.

Nice, I still like credit-cards. Easier to dispute purchases with when the seller doesn't make good.

ACTUAL EXPERIENCE says differently. (But then, we already know you don't accept that!)

I want to mortgage, you don't, fair enough. What do you think, I blow all my $$ on stuff without redeemable value? Like I said, I cook most of my meals, and my only frivolous expense so far has been some guns (redeemable value) and a car (money-pit that I wanted).

Perhaps, methinks (As has previously been shown) things are not exactly as you originally believe.

As you are seeing, sometimes "life" happens and when it does, credit can be just as good a thing to have as cash, because sometimes the cash you have won't work/isn't enough.

Actually no. My point was 'credit was not required' (Extraneous)

You need a vehicle, and used cars/trucks are crap unless they have a warranty remaining. I now have spent about $8K on a $4K car because it had no warranty. Buy the vehicle RIGHT and you will be fine--or don't screw up like me and buy something without a warranty.

Now I'm not THAT much older than you... but long enough. And I've driven well over 250,000 miles....
Sorry dude, I can unequivocally state you are ABSOLUTELY WRONG on this one...

I guess if you choose to see it that way? I could burn every form of credit I have right now and be just fine, and pay the accounts off in probably 2 months. I don't see where it's an issue.

ONE of my points is that people believe this... till they wake up one day and realize otherwise.
(And it's not the way to wealth)

Yes, but I don't like how the cost of thigns keeps going up, up, up. I would rather get in at a good price and pay a note on it.

Interest... and as I said, Consumer debt...

That is how I plan on living. I wanted to enjoy life for a year or two, and then focus on buying land/a house. Selling the 'vette next year and down-sizing so I can sock away money to buy 40-50 acres.

IF you can make the change... You'll be fine. HOWEVER what I have observed is that traits can be hard to break, Frugality, or spendthrift...

Different priorities. When I am 29, I will be right where you are though, except I will just be finishing up paying a note on some land/starting in on a mortgage.

Doubt it.
(OR, if you are it will be DESPITE much other debt)

 

[Nomad.2nd]

Yes, and thats what I use it for.

So you detract your statement?

A car is only a status object if you want it to be, just like you don't view your AK as a status object, I don't view my car as such. I view it as a fun toy. Screw what others think when they see it.

Yea, not so much.

I don't plan on having kids, and if I do, it means I will be alive a lot longer to worry about that.

You asked why HE did... Not you.

It was an example with a 100K mile warranty.

And while it's in the shop?
1st hand experience again... Doubt I'll ever have a vehicle with a warranty.

I bought one car. Noone in my family ever owned a new car. I wanted to do something for myself. Will trade it in on a cheaper new car when I'm done enjoying it in a bit. Yes, I paid for the experience, yes, I would do it again.

Lack of regrets is important. Hope it continues.

Yes we do. Whatever you say, this country is still a really nice place to live compared to many alternatives. I am grateful!

Not what I meant. Fortunes were made following the 1920's....

I plan on paying the land I buy off before I put a house on it. It can be done in a couple of years, yes. Your plan to build a house for $50K is not my plan, though. It would take me a lot longer.

Not what I was talking about.

Why, because I want a mortgage at a good rate?

No, because you are espousing a lifestyle and lifetime of debt.
Paying much more for the 'good rate'

Part of the whole reason I bought a 'vette was to show that I can foot a note so when it comes time to buy a house, the bank won't blink, and the rate will be very nice. Yes, I am paying now for saving money later. Over 20-30 years, 1/2 percent will trump the depreciation and the interest paid on my car many times over. So yes, I got out of college and bought a money-pit--but it's going to be a money-maker in the end.

See, here's the thing:

If you had said: "I wanted it. That's good enough. I don't care"
I would of accepted that. But your attempts to justify it tell me all I need to know.

(Believe me, I have NOOO room to talk, I could sell enough guns to buy your vette and hardly miss them... it's that bad.)

 

[JWG223]

Couple things, yea. 'Toy' car and over what? $8K of debt?
Not so much.
College wasn't free? I currently have about $5K in debt, counting the loan I took out to pay my father back, which I don't really think you can knock me for having $4K left to pay off for getting a 4-year degree.


My point: One second that's it, next your 'remembering'
It's a Mindset issue. ??



ACTUAL EXPERIENCE says differently. (But then, we already know you don't accept that!)
PLenty of people will disagree, but it's a moot point. My debit card doesn't offer cash back, my CC does.


Perhaps, methinks (As has previously been shown) things are not exactly as you originally believe.
Perhaps not. If I stopped learning at age 25 that would be pretty lame, wouldn't it?


Actually no. My point was 'credit was not required' (Extraneous)
Not in this case, no.


Now I'm not THAT much older than you... but long enough. And I've driven well over 250,000 miles....
Sorry dude, I can unequivocally state you are ABSOLUTELY WRONG on this one...
I've only driven around 175K miles. You got me there. I drive 30K a year though, so I should be passing you soon . I'm tired of the "surprise" expenses that come along with owning most older vehicles that can be bought for $4-8K. Having a car that doesn't fall apart randomly is a convenience issue I guess.



ONE of my points is that people believe this... till they wake up one day and realize otherwise. Did it last year. CC was paid off from near max, and same with LOC. It was quick and easy to do. Took about 1.5-2 months. I also set $1500 a month aside in savings while doing it. Past performance is the best indicator of future performance. I don't expect it to be difficult. We can re-visit that topic Jan 31, '12 though.
(And it's not the way to wealth)



Interest... and as I said, Consumer debt...



IF you can make the change... You'll be fine. HOWEVER what I have observed is that traits can be hard to break, Frugality, or spendthrift...
What EXACTLY do you think I buy? Let me show you something...

A lot of that "merchandise" you see on there is setting up my lifestyle. By that, I mean buying material to build a bed (I built it because I wanted to, and it saved $$), mattress, sheets, clothing, pans, all those things you need to sustain yourself. Take a good look at "dining" and "entertainment".
I know this sounds incredibly "punk kid" and all that, but you really don't know me very well regarding my spending habits other than I enjoy sports cars and like to make money off my credit-cards. That bank-loan? It was because I wanted to pay my Dad off early for helping with college. I chose to eat $200 or so in interest so that he could get his ASAP. I don't think there is anything reckless about that what-so-ever. He went out on a limb and helped me go through college, the least I could do is pay him back as fast as possible.




Doubt it.
(OR, if you are it will be DESPITE much other debt)

You really don't know how I manage my finances.

Tell me...what exactly do you think I waste my money on?
Things I have bought in the last year that cost over $500...

Computer (old one literally died).
Car (always wanted a real sports car, we discussed this ad nauseum already)
A few firearms (Glock 19, Benelli M4, Sig P226, Suppressor, AR15, sold G19 for more than I paid)
Transmission for car (died).

That is literally all I can think of that I spent more than $500 on as a singular item in the last year. So tell me, exactly where do you think I am piling all this debt up at? I'm just not seeing it. When I went to Vegas for 3 days, do you know how much I spent, including room and air-fare, car-rental, merchandise purchased, and food? About $700. I really just don't feel like this big "spender" you seem to make me out to be.

Again, ask me how much I owe Jan 31,2012. Aside from the remainder of the loan I took out to pay my Dad back, I am planning on telling you "Zero, aside from the CC debt I am going to pay off next pay-day because I put gas in the car and food in my belly and a book on my shelf last week".

Hold me to it.

PS. I currently owe about $60 on my credit-card and $1900 on my LOC (it fluctuates wildly, depending on what I am buying/selling/doing. Some months it's a 0 balance, sometimes near max.) + that loan to pay back my Dad. You can count the car also if you want, but since I have something to show for it and the car is nearly equal in value to the amount owed, I consider it a wash.

 

[my-rifle]

These third-generation embedded posts are making my eyes bleed.

There is a place and a time for credit cards and loans. There is a place and a time for cash. It's important to know when the one is right to use and when the other is appropriate. Learning that takes time and age. Using credit cards extensively in your 20s is almost always a recipe for disaster. The great thing about cash is you always know how much you just spent and how much you have left. On the other hand credit cards are great when buying on-line, and loans are useful when you're buying investments that will appreciate. Buying something on credit when the item will lose value (like a car) is bad business.

 

[Takuan]

We use credit cards that get us airline miles. We pay off the balance every month, so there's no interest. By next March, I think we'll have enough for two round-trip tickets to Japan. The only hassle has been credit card fraud... twice in the last year (including yesterday). It's a pain, but free flights are worth it.

 

[JWG223]

These third-generation embedded posts are making my eyes bleed.
I'm sorry, I have noticed that this forum does use a very cumbersome format for quotations.

There is a place and a time for credit cards and loans. There is a place and a time for cash. It's important to know when the one is right to use and when the other is appropriate. Learning that takes time and age. Using credit cards extensively in your 20s is almost always a recipe for disaster. Why? I'm open to reason, but I don't understand your statement here. The great thing about cash is you always know how much you just spent and how much you have left. I find CC's allow me to better keep track of purchases, since I am not big on saving receipts like I should be. I just pull up my acct. online and it breaks it down to the penny where my spending occured. On the other hand credit cards are great when buying on-line, and loans are useful when you're buying investments that will appreciate. Buying something on credit when the item will lose value (like a car) is bad business. I'm not sure I understand why. See my post below.

Okay, lets say...car. Cars are money pits, NOONE will argue that, least of all me, if we are talking a modern vehicle.

So, let's say that right now, I have 0 money, and I want a $40K car. I can save $1000 a month toward that $40K car.

That means that in 3.3 years, I will have enough money to buy the car--if it is still in production--if it still is available with the options I want--if I have been able to hitch a ride with my friends for 3+ years or have bought a beater in the mean-time (which costs, and has impacted my $1K a month saving ability, but we won't go into that as it's a total wild-card...). So lets assume I had a car my parents gave me in highschool to eliminate logistics of transportation in the mean-time.

Here is the result of a quick inflation-calculator computation:
What cost $40000 in 2007 would cost $42015.58 in 2010.
http://www.westegg.com/inflation/infl.cgi

So, aside from the utility of the vehicle for 3.3 years, I have now lost about $2K to either increased price of the vehicle, or to the money I saved up being de-valued. If we assume I put it in a savings account that makes 2% interest--and we assume I somehow (since I don't want to do the math) put the whole $40K in there on day one, I still only earned $800 of that depreciation/price increase back. So, I am still down by $1200.

Right now, my bank is offering 3.9% financing. Financed for 5 years, it would cost me $734 a month, and a total of $4091 in interest. $2,000 of which we can ignore because our "early purchase" saved us that in inflation.

So, for the price of $2000, I have the utility of that car for 3.3 extra years. What if that car saves me $50/mo on gas? That's nearly $2K, and not at all unreasonable to expect from a new vehicle benefiting from more modern technology vs. a highschool beater.

Further, during those 3.3 years, I will have had almost $300 more a month to buy other things I want (or put into a 5% CD).

I do not see where buying a car on credit is a bad idea at all, once you actually dissect the numbers.

Then you run into things like GMAC's 0% financing, etc. which makes it just plain irresponsible to pay cash when that's an option.

_____________

Further, in 3.3 years, I will have + equity in the car, and will just trade it for something else. I will have only paid $700 a month to own it and you will have paid $1000 a month to own it. You paid 30% more than I did, got 0% of the utility, and I'm out rocking something else now. As Sheen would say...WINNING!

 

[JWG223]

We use credit cards that get us airline miles. We pay off the balance every month, so there's no interest. By next March, I think we'll have enough for two round-trip tickets to Japan. The only hassle has been credit card fraud... twice in the last year (including yesterday). It's a pain, but free flights are worth it.

I do exactly what you do except with $$ back rewards. I earned a few hundred bucks last year at $39 cost to me (membership fee). This year I hope to earn even more, as I got the card in the middle of the year last year. I also now have a card that does 1% back on EVERY purchase. Previously, I only got 2% back on food/gas. Now I get 2% food/gas and 1% on any purchase. Definitely the way to go!

 

[my-rifle]

Okay, lets say...car. Cars are money pits, NOONE will argue that, least of all me, if we are talking a modern vehicle.

So, let's say that right now, I have 0 money, and I want a $40K car.

There's your problem right there.

 

[sylvest]

Okay, lets say...car. Cars are money pits, NOONE will argue that, least of all me, if we are talking a modern vehicle.

So, let's say that right now, I have 0 money, and I want a $40K car. I can save $1000 a month toward that $40K car.

That means that in 3.3 years, I will have enough money to buy the car--if it is still in production--if it still is available with the options I want--if I have been able to hitch a ride with my friends for 3+ years or have bought a beater in the mean-time (which costs, and has impacted my $1K a month saving ability, but we won't go into that as it's a total wild-card...). So lets assume I had a car my parents gave me in highschool to eliminate logistics of transportation in the mean-time.

Here is the result of a quick inflation-calculator computation:
What cost $40000 in 2007 would cost $42015.58 in 2010.
http://www.westegg.com/inflation/infl.cgi

So, aside from the utility of the vehicle for 3.3 years, I have now lost about $2K to either increased price of the vehicle, or to the money I saved up being de-valued. If we assume I put it in a savings account that makes 2% interest--and we assume I somehow (since I don't want to do the math) put the whole $40K in there on day one, I still only earned $800 of that depreciation/price increase back. So, I am still down by $1200.

Right now, my bank is offering 3.9% financing. Financed for 5 years, it would cost me $734 a month, and a total of $4091 in interest. $2,000 of which we can ignore because our "early purchase" saved us that in inflation.

So, for the price of $2000, I have the utility of that car for 3.3 extra years. What if that car saves me $50/mo on gas? That's nearly $2K, and not at all unreasonable to expect from a new vehicle benefiting from more modern technology vs. a highschool beater.

Further, during those 3.3 years, I will have had almost $300 more a month to buy other things I want (or put into a 5% CD).

I do not see where buying a car on credit is a bad idea at all, once you actually dissect the numbers.

Then you run into things like GMAC's 0% financing, etc. which makes it just plain irresponsible to pay cash when that's an option.

_____________

Further, in 3.3 years, I will have + equity in the car, and will just trade it for something else. I will have only paid $700 a month to own it and you will have paid $1000 a month to own it. You paid 30% more than I did, got 0% of the utility, and I'm out rocking something else now. As Sheen would say...WINNING!

You are WAY off man. You cannot find a 2% savings account, you cannot find a 5%CD, and you will NEVER save money by borrowing. Buying a $40k car is downright foolish. You could have spent $10k on a 2007ish honda civic and driven it at 30-40mpg with little to no maintenance and saved yourself all that interest, maintenance, and initial cost. You are playing some numbers game to try and justify it to yourself. You need to take a serious look at your math, reasoning, personal desires, and the current financial system. You are spouting off numbers that are just not accurate. Cars do not ever have equity when you purchase them new. Equity is a BS term anyway.

You seem to be a foolish, stubborn, immature guy with a serious impulse complex. You need to spend less time on bs.com and a lot more time on daveramsey.com. You can turn your situation around but you first have to get out of the poor series of behavioral choices you seem to make and fix your reasoning.

 

[olivs260]

You are WAY off man. You cannot find a 2% savings account, you cannot find a 5%CD, and you will NEVER save money by borrowing. Buying a $40k car is downright foolish. You could have spent $10k on a 2007ish honda civic and driven it at 30-40mpg with little to no maintenance and saved yourself all that interest, maintenance, and initial cost. You are playing some numbers game to try and justify it to yourself. You need to take a serious look at your math, reasoning, personal desires, and the current financial system. You are spouting off numbers that are just not accurate. Cars do not ever have equity when you purchase them new. Equity is a BS term anyway.

You seem to be a foolish, stubborn, immature guy with a serious impulse complex. You need to spend less time on bs.com and a lot more time on daveramsey.com. You can turn your situation around but you first have to get out of the poor series of behavioral choices you seem to make and fix your reasoning.

This. A car takes a huge depreciation in the first 3 years... hell, it depreciates by an obscene amount the instant you're handed the keys. We bought my wife's car brand new in '07 (something we'll never do again). When I bought my truck it was 3 years old with under 60k miles, and I paid literally half of the original sale price.