Credit...

[my-rifle]

My wife just bought a 2007 Volvo for right at $19,000 which new (2011 model year) costs $31,000. How's that for depreciation? We saved $12,000 by buying a four-year old car. Buy that $40,000 car four years from now, and get it for $26,500 (30% depreciation). Self-control is a better thing to have than a $40,000 car, trust me.

 

[flamatrix99]

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

Your bank sux.

We have two credit cards. We paid them off and they just sit in my wallet in case of an emergency. Once in awhile I will get gas with one then pay it off. Everything else is paid using debit cards. We are bad about buying unnecessary things like guns n ammo for me and clothes n stuff for the wife.

 

[my-rifle]

I believe that starting next year people who use debit cards are going to get charged a fee for doing so. They may not be a viable alternative for much longer.

 

[swagge1]

Pangris, I may send u some messages in the future about how to go about renting or leasing my house. I am always interested in investments. Originally I had planned on just outright selling the house and using the $$ as a down payment on my new house. A few guys I work with have me considering going the lease/rent route now. I could probably rent it out for close to what my new house note might be!!! Im looking to buy land in 2012 and start building in 2013.

Now on the subject at hand... I like to use the credit card for gas, groceries, and household items. Pay it off every month and gain those rewards $$. I prefer to pay for everything outright. No bills except for cable/internet, electricity, water, insurance, and cellphone.

 

[c10seven]

I believe that starting next year people who use debit cards are going to get charged a fee for doing so. They may not be a viable alternative for much longer.

Not all banks are going to be doing this. I have decided if mine were to do this (which there is no indication they are) I will go to using actual cash and writing checks.

 

[Guate_shooter]

Dang some of you really make my head and eyes hurt when I read your responses.......

CREDIT system SUCKS, I have worked hard to build some sort of credit in America I had a late start and didnt started until I was 19'ishhhh and without any parents to co sign, I had to start with CD Secure Loans until I had built enough for a bank to want to let me borrow without using my own money.

I hate that the only way you build it is if you in the negative digits, I make a very decent living with both of my jobs but that doesnt count for much

 

[Nomad.2nd]

I believe that starting next year people who use debit cards are going to get charged a fee for doing so. They may not be a viable alternative for much longer.

Nope, depends on the institution.

 

[JadeRaven]

Thread Cliffnotes:

JWG223 likes to buy lots of **** and somehow has it worked out in his head that he's saving money in the long run.

 

[PrairieCajun]

Thread Cliffnotes:

JWG223 likes to buy lots of **** and somehow has it worked out in his head that he's saving money in the long run.

Yep, he'll grow to find that paying for things when you have cash on hand is the only way to build wealth. Until anyone realizes that Credit Card companies give you "cash back" is not costing them a dime, only then will you understand that you have to pay for things with money you already have to WIN with money. Paying for things should ALWAYS make you think about what you are paying and what you are getting for it. Credit cards were invented to make you forget about that. I don't need you to respell your mental domination over credit card companies and the use of such, I am just telling you that those others here are right. Not using credit allows you to use your brain to focus on other ways to make and save money when you don't have to worry about the vultures. Get your identity stolen.....you'll hate it. Keep your life simple and make wealth. These guys are giving the best advice. I once held debt and when i got ready to buy a house years ago, I squashed it and had plenty of cash ever since. My wife is currently unemployed(for 10 months) and we don't worry. We have no debt. I see so many turns where a young man could not and will not see pitfalls. Be ahead of the curve. Give up debt and bring on the cash. You will never regret that path. Having money and no debt is living life unstressed. Borrower is SLAVE to the LENDER. Neither a Borrower nor a Lender be. I'm sure you will not take any of my advice, but I will sleep at night knowing I've done all I could do as a husband to my wife - 15 wonderful years tomorrow - and she has confidence in my leadership of my home.

P.s. I borrow money from -- ME.

 

[my-rifle]

Really, seriously JWG223, we're all kind of ganging up on you, and I guess that's not helpful, but after being burned by credit cards a few times most of us figure out that they have their place, and if you can afford to live without them you should either do so or pay them off every month, so you don't have to worry about what happens if you lose your job and can't pay. That stress is what makes guys kill themselves.

 

[LACamper]

A few other points:
Credit cards are dangerous. Its like having a pet water moccasin. Yep its fun to play with but stop paying attention one time and you'll end up 10K in debt in a flash. BTDT... Playing the game to make that 1% is like feeding mice to that snake bare handed. You will get bit eventually. Not worth it for a few bucks.
Having credit cards is a nice backup if you end up in a jam. Having 2 cards with 10K available each is plenty.
For the cash crowd, don't forget how many things judge you by your credit. Its not right, but that's life. Your auto insurance rates are a good example. Keep your score up- charge a few bucks every month and pay it off.
As far as building credit to buy a house... don't waste money on interest trying to build credit. Yes, open a gas card. Use it and pay it. Don't go buy a sports car to show how responsible you are! Once you get a house the credit card companies will be stuffing your mailbox with credit card offers. You could probably heat the house all winter with them!

JWG, you're young (or at least I assume so). You came to this site originally to learn from more experienced shooters (or I would hope). Learn a little more from our past mistakes. All of us would have done some things differently in the past.
Listen to the wisdom presented here...

 

[my-rifle]

I defaulted on my student loans back in the 80s. They were a godawful time for young people starting out. In the 90s I decided to pay them off, and afterward I realized that by doing so I had destroyed my credit rating. At about the same time I decided to buy a house, and stop paying rent. To rebuild my credit I got a pre-paid credit card, and used it every month for two years until my credit score was high enough to get a loan to buy a house. Ever since then I've been living well. Aside from the house loans (now right at about $270,000) I've stayed out of debt, and kept accumulating assets. Having them rocks. Needing them and not having them is godawful.

I'll never forget that week in 1985 when I couldn't afford food. I made my rent, but couldn't eat. I had to sell most of what I had, and got only about $200 for about $7000 worth of stuff. People knew I needed it, so they screwed me. Never again.

 

[JWG223]

You are WAY off man. You cannot find a 2% savings account, you cannot find a 5%CD, Exactly, I gave the "money saver" guys an absurdly awesome scenario and it still didn't measure up imo. and you will NEVER save money by borrowing. Depending on the interest rate, disagree. Buying a $40k car is downright foolish. Maybe in your opinion, but you know what they say about opinions...besides, I didn't buy a $40K car. It was an example for the sake of number-crunching. 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. Moot point, my last vehicle purchase was a luxury purchase, not a necessity purchase. 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. Again, the inaccurate numbers were to benefit the case of people who are "save up and buy" types, not intended to be realistic. 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. I spend over 5 years planning my last vehicular purchase, how quick did you make the decision to buy your last vehicle? 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. I was unaware I had "a situation". My credit-cards hit 0 balance twice a month, and my LOC fluctuates with my mood, while I steadily pay all my bills as well as on the loan I took out to pay my Dad back for college. What "situation" are you referring to?

My wife just bought a 2007 Volvo for right at $19,000 which new (2011 model year) costs $31,000. How's that for depreciation? We saved $12,000 by buying a four-year old car. Buy that $40,000 car four years from now, and get it for $26,500 (30% depreciation). Self-control is a better thing to have than a $40,000 car, trust me.

I could have done so, but I wanted a new vehicle. Full warranty. I know how it was treated 100% from the time it was built. I have never owned a new car, and nor has anyone in my family. It's an experience I wanted, and was willing to pay for. Further, there were a lot of changes made in 4 years to the model line. Better transmission, better exhaust, better quality control/steering/interior, etc. It's more than just a timeframe. I wanted the latest and greatest and I paid for it. As a luxury item, I view it as expected. Right now the car is worth what I owe for it, it's my second car, and if I need to I can sell it. No big deal, I just love owning it. It's like owning my private roller-coaster and I enjoy the hell out of it. So...why not? I spend every weekend dealing with people covered in blood, feces, and on the edge of dying, and I want to come home to something I enjoy to make me feel like there is some sort of reward in it. To me, that was obtaining what I had wanted since highschool and had saved for since I graduated (admittedly, only about a year). I'm sorry if that appears to be "impulsive", but I enjoy the heck out of cruising around like some of you enjoy going plinking in your back yard. (I enjoy that, too, or used to when I had a back-yard growing up).

Thread Cliffnotes:

JWG223 likes to buy lots of **** and somehow has it worked out in his head that he's saving money in the long run.

Somehow, I think you missed that I pay my credit-cards down to 0 several times a month and have paid only membership fees ($39) and yet gotten several hundred $$ cash-back.

How do you support your above statement?

Yes, I did buy a new car, I don't think there is anything wrong with that, though. I'm not Amish (not that there is anything wrong with being Amish).

 

[JWG223]

A few other points:
Credit cards are dangerous. Its like having a pet water moccasin. Yep its fun to play with but stop paying attention one time and you'll end up 10K in debt in a flash. BTDT... Playing the game to make that 1% is like feeding mice to that snake bare handed. You will get bit eventually. Not worth it for a few bucks.
Having credit cards is a nice backup if you end up in a jam. Having 2 cards with 10K available each is plenty.
For the cash crowd, don't forget how many things judge you by your credit. Its not right, but that's life. Your auto insurance rates are a good example. Keep your score up- charge a few bucks every month and pay it off.
As far as building credit to buy a house... don't waste money on interest trying to build credit. Yes, open a gas card. Use it and pay it. Don't go buy a sports car to show how responsible you are! Once you get a house the credit card companies will be stuffing your mailbox with credit card offers. You could probably heat the house all winter with them!

JWG, you're young (or at least I assume so). You came to this site originally to learn from more experienced shooters (or I would hope). Learn a little more from our past mistakes. All of us would have done some things differently in the past.
Listen to the wisdom presented here...

I'm just not understanding the severe aversion to properly managed debt. I see a lot of people have made mistakes and are now scared to venture back into the world of credit. That would be like me never driving again after having a wreck, or something like that. I simply don't see why I should pay cash for my gas, groceries, etc. and forgo a discount. I'm going to buy them and pay for them anyway, why not pay less? I guess I'm not seeing the problem.

Yes, I have gotten tons of CC offers. I only have 2 CC's and they fulfill my needs.

I have always been into sports cars, and wanted a 'vette or a viper since I was 18. 7 years passed and I can now afford one and so I bought it. I don't see a problem with that. Maybe you have different interests, and that's totally cool, but why knock someone else's hobbies just because you don't share them?

To be honest, I used the "building credit" deal as an excuse to myself because hell, I wanted the car and I worked hard for it. I had wanted it for years and years, I bought it. End of story on that one pretty much.

 

[JWG223]

Really, seriously JWG223, we're all kind of ganging up on you, and I guess that's not helpful, but after being burned by credit cards a few times most of us figure out that they have their place, and if you can afford to live without them you should either do so or pay them off every month, so you don't have to worry about what happens if you lose your job and can't pay. That stress is what makes guys kill themselves.

Understood, and this board is ultra-conservative. I expected the fact that I use credit to be a bit taboo and that's fine. I pay mine to a 0 balance no less than once a month, often twice a month. If I lose my job, I do not foresee trouble getting another job within a few weeks at the worst.

 

[JWG223]

There's your problem right there.

Well yeah, huge problem if you don't put some money down to at least make the car worth it's trade-in the instant you drive off the lot. That's my minimum. Make sure I can trade it in at ANY TIME and break even, if worse comes to worse. Again, it was hypothetical.

 

[JWG223]

I think a lot of you view people/actions the way I used to.

I was sitting in lecture one day, and it dawned on me...

...those people I overheard talking about whatever it was in the parkinglot? I thought they were dumb as a brick discussing whatever it was/having trouble with whatever. I wondered "How do they get dressed in the morning?!"

...yet here they are. They are sitting next to me. They got into the same program I did. They are passing. They are my age. They are RIGHT where I am in life right now. Had they REALLY been as dumb as I thought they were based on other actions I had seen them making, how could this be? Am I a dumbass? No, I passed the hardest academic program that exists (per Guinness world records, current record held, although I think it's BS, it was difficult). So I can't be COMPLETELY stupid...so what about them?

Well, I thought about a lot of stuff my roommate had talked with me on that I told him "will never work, why would you do that?" Yet the guy had made it work!

I then thought about all those people I was looking at in class. Maybe neither them or I were dumb. Maybe we were just different. Maybe their way wasn't bad, just...different. We certainly had arrived at arguably the same point in life, so who was I to condemn their path?


I don't know, just a thought for some of you. It was a real wake-up call to me---there were paths diametrically opposed to mine that still yielded good results. What a shock for my young mind.

 

[Nomad.2nd]

Understood, and this board is ultra-conservative. I expected the fact that I use credit to be a bit taboo and that's fine. I pay mine to a 0 balance no less than once a month, often twice a month. If I lose my job, I do not foresee trouble getting another job within a few weeks at the worst.

Here's the thing...

You SAY this, but the actual FACTS are different... (Once you went into details earlier)

You do NOT pay them off every month.

Also, you CANNOT 'afford' to pay for the car.... You can afford the PAYMENTS!


You MAY get a job... but what if you do something that will make you loose your license (As one example)

Your budget works... till you get hit with child support

You don't 'Break even' on the car... you pay THOUSANDS AND THOUSANDS to drive it for a few months.

etc.

 

[JWG223]

Here's the thing...

You SAY this, but the actual FACTS are different... (Once you went into details earlier)

You do NOT pay them off every month.
My CC's have never carried a balance. As stated earlier, my LOC goes from 0 to $2500 throughout the year several times.

Also, you CANNOT 'afford' to pay for the car.... You can afford the PAYMENTS!
I don't see the harm in payments. Why is everyone so against paying interest for the privilege of owning something. Paying for it is ok. Paying the mfr. profit margin is okay....but interest! OH NOES! I just don't understand that. I consider it part of the cost of the item, and weigh it in with the utility I think it will bring me. I like a good deal, but I'd rather be happy than feel like I got something rock-bottom cheap equity-building etc. Life is too short to view it as a ledger, and as long as you are making ends meet and socking a bit away at the end of the month, why not enjoy yourself?

You MAY get a job... but what if you do something that will make you loose your license (As one example)
This is possible, but then, a bullet could come zipping through the window before I press "Post Quick Reply" and spatter my gray-matter all over the opposing wall. I still have not decided to replace it with Lexan, though. I get what you are saying, but the sheer act of living is a risk (as you of all people are aware).
Your budget works... till you get hit with child support
I don't see that happening, but anything is possible. Maybe some long-lost girlfriend has been raising one of my children in secret all this time.
You don't 'Break even' on the car... you pay THOUSANDS AND THOUSANDS to drive it for a few months.

etc.

I bought it bought it...er...pay on it...because I want it. Priceless. You don't break even on your cell-plan or your computer or a bunch of other stuff, either, but you sure do like the utility, no?

PS.

I agree with you on my line of credit. Like I said, it will hit and maintain a zero-balance by the end of the year, more accurately, most likely by the end of this month. Even with the purchase of my Noveske w/optic. Already paid off the suppressor I ordered. It was worth the $2-3 interest I think I might have paid to go ahead and get the paperwork rolling on that.

In the end, the car is a toy. It starts to weigh me down? I sell it, consider the depreciation hit price of doing something very few people have done, and move on. It's worth the price for the experience...TO ME. You may view other things like that.

So...worse comes to worse, I dump the car, and my living expenses will drop to roughly $1400/mo. Bam. Yes, I would take a hit on the car from depreciation, but that was no secret going into it. Pay to play.

 

[Nomad.2nd]

I don't see the harm in payments. Why is everyone so against paying interest for the privilege of owning something. Paying for it is ok. Paying the mfr. profit margin is okay....but interest! OH NOES!

You don't get it.

Yes, I don't like paying interest.

But the issue is:
You don't own it if you owe on it!

I just don't understand that. I consider it part of the cost of the item, and weigh it in with the utility I think it will bring me. I like a good deal, but I'd rather be happy than feel like I got something rock-bottom cheap equity-building etc. Life is too short to view it as a ledger, and as long as you are making ends meet and socking a bit away at the end of the month, why not enjoy yourself?

B/c when you offset that with how much you owe/pay in interest you COULD be improving your life with...
Life sux.

I bought it bought it...er...pay on it...because I want it. Priceless. You don't break even on your cell-plan or your computer or a bunch of other stuff, either, but you sure do like the utility, no?

Actually I am more than breaking even on my phone.
Computer is a work (School) expense... but that's not the point.
I bought a BMW motorcycle B/c I wanted it...

but I PAID CASH!
It's MINE. Yes, I'm not paying interest on the money, but that's not the point... Anybody who tries to take it I can shoot.
You on the other hand, if you screwed up at work can have ALL your little toys taken from you in a short amount of time.

That security is nice.

We have gone over alot by PM, do you remember me going into detail about how if you are JUST willing to continue to 'live cheap' and save for a couple years after college you can buy the BMW motorcycles (Or equivalent), HAVE the nice things, and NOT owe on them!

This gives you 2 things:
1. Security... it's yours and you arn't gonna loose your toys
2. No interest... and you can take that money you are paying in interest and MAKE money with it to buy MORE toys!
(Or speed up your retirement)

PS.

I agree with you on my line of credit. Like I said, it will hit and maintain a zero-balance by the end of the year, more accurately, most likely by the end of this month. Even with the purchase of my Noveske w/optic. Already paid off the suppressor I ordered. It was worth the $2-3 interest I think I might have paid to go ahead and get the paperwork rolling on that.

Like I said... You DON'T pay it off each month, you admitted it, but you KEEP saying it!

In the end, the car is a toy. It starts to weigh me down? I sell it, consider the depreciation hit price of doing something very few people have done, and move on. It's worth the price for the experience...TO ME. You may view other things like that.

So...worse comes to worse, I dump the car, and my living expenses will drop to roughly $1400/mo. Bam. Yes, I would take a hit on the car from depreciation, but that was no secret going into it. Pay to play.

IF you get market price. (Or what you bleieve is)

I just picked up my Toyota a couple mon ths ago for 50% of Blue book.