Are you financing or paying cash?

[EWalshak]

jgillott the example that you used about working your way thru school is an awesome testimony to the relationship of appreciation for something earned vs something given. Ill bet money that you appreciated your education a lot more than somebody whose parents provided everything and all they had to do was show up to school. Parallel that with pay cash vs monthly payments. I want my kids to have nice things. I also am more interested in showing them that they can figure out ways to provide for themselves and helping them to have the confidence to do it. My kids realize there is no such thing as a free ride, that is not the real world. Its a thought process thing. Live like no one else!

 

[BILLUA]

Opm

Other Peoples Money.



While it is noble to strive to have zero debt, sometimes in life as in business debt does pay...



What am I talking about? Zero Percent Financing.



That is how I bought my '05, which has 3 payments for $648. 00 left.



I put a chunk down from selling my '01 and Chrysler offered me 0% for the balance... 32K or so.



I had a choice, pay cash out of savings, or use Chrysler's money for the balance. It was a no brainer.



The money remained in my savings for emergencies. I was able to keep investing that money and if the monthly payments would have been too much to handle, I could have bucked up and paid the truck off early.



So, if you can swing the payments while using OPM, that is a very wise way to go.



Regards

 

[rbattelle]

The tolerance of debt by society should come as little surprise, given the way the federal government operates.

When I bought my truck, the ratio of the cost of the truck to my income level was probably roughly the same as the ratio of my current income to the cost of a brand new 2010 right now.

I saved for about 1 year, put down about 33%, and financed the remainder for 5 years. I then paid off that loan in under 18 months, incurring relatively minor interest charges.

Never underestimate the utility of early payoff!

Ryan

 

[EWalshak]

Keep in mind when using OPM. Most people dont have a savings account. Most people spend $400-$600 more per month then they bring in. This being the case. If they were to have an emergency or job challenge and not make the truck payment, The bank takes the truck back and they are out the money they did pay towards the truck. If you pay cash for things and you have challenges arise like they often do, the repo man cant come take your things away. The US govt likes to use OPM. Theyve used a lot of China's money lately and did so without having a savings acct waiting in case we need to pay "The Man"(or was that "The Country") Its a weak thought process. Living above your means as an individual or a country is weak. Maybe it has something to do with the fact that this generation we have in congress is twice removed from the generation that went thru the great depression. Being "income statement affluent" is not the way to create true wealth. You are still broke, just at a higher level. Live like no one else.

 

[rbattelle]

A quick comment regarding cash vs. credit. Many cards give 1-2% (sometimes more) cash back on purchases with no upper limit.



That's real money, if you use the card a lot and pay in full every month (of course).



Ryan

 

[BILLUA]

Apples and Oranges

Keep in mind when using OPM. Most people dont have a savings account. Most people spend $400-$600 more per month then they bring in. This being the case. If they were to have an emergency or job challenge and not make the truck payment, The bank takes the truck back and they are out the money they did pay towards the truck. If you pay cash for things and you have challenges arise like they often do, the repo man cant come take your things away. The US govt likes to use OPM. Theyve used a lot of China's money lately and did so without having a savings acct waiting in case we need to pay "The Man"(or was that "The Country") Its a weak thought process. Living above your means as an individual or a country is weak. Maybe it has something to do with the fact that this generation we have in congress is twice removed from the generation that went thru the great depression. Being "income statement affluent" is not the way to create true wealth. You are still broke, just at a higher level. Live like no one else.

You are confusing using OPM with being able to afford the vehicle in the first place.

Regardless if using OPM or other financing, if your income level does not support the purchase, you should not be buying the vehicle in the first place.

With regard to 0% financing offered by Chrysler, they are the ones financing their own paper in order to sell the vehicle.

If you in fact can afford to buy the vehicle and have the means to pay for it, 0% interest is an excellent way to go if offered.

The aforementioned cash back credit cards are also an excellent financial move.

 

[Ncostello]

The stronger a people are, the less they need govt. The weaker they are, the more they need govt. After all the Federal Govt was originally started to do two things. Deliver the mail and protect the shores, and that was it. Look at it now. Some people think they need the govt to do everything for them. Remember the govt is supposed to serve the people, not the other way around.

Like my dad always says... "the Constitution describes what the Government cannot do to you, not what it can do for you".



Even Dave Ramsey will say there is nothing wrong with financing a home, but only for 15 years MAX. Other than that... he's pretty much NO credit cards, NO financing anything else. Period. Not college, not cars not anything.



While some car loans for 0% sounds good... it IS still a loan and you are STILL in debt and you STILL owe someone money. The payments are just as real each month (whether you can make them or not) and the effects of default are just as real.

 

[rbattelle]

he's pretty much NO credit cards, NO financing anything else. Period. Not college, not cars not anything.

We should bear in mind two things about Ramsey's message:



1. There is a difference between operating a credit card with and without revolving debt.



2. He is pandering to a group of people with no willpower, and who therefore require somewhat extreme measures in order to stay out of trouble.



Ryan

 

[EGroeneveld]

We should bear in mind two things about Ramsey's message:



1. There is a difference between operating a credit card with and without revolving debt.



2. He is pandering to a group of people with no willpower, and who therefore require somewhat extreme measures in order to stay out of trouble.



Ryan

He is for helping those who need help, does not mean they have no willpower. It usually means they made a stupid choice and then things changed on them. I know many people at my church who have used his system to get out of debt and get to building wealth. Its not only about credit cards, its also about being content with maybe slighly older cars with no loan payments and sticking to a smaller house so your mortgage does not eat up so much of your monthly income.



Even if you make $200,000 a year he has some good info for people in general (maybe not you) . He really stresses having a budget and being content with what you have. I am sure their are many people who run their lives perfectly fine without his wisdom. I have used it more to keep us living below our means. Freedom for us is figuring out what to spend our extra money on. When you can take home $ xxxx a month home but your living expenses are less then half of that, that is freedom. Being able to travel, shop, save, invest, is freedom.



And yes I have a credit card, I use it because of issues with debit cards and I do not like to carry to much cash. However I usually pay the credit card off every week and get statements showing $ 0 due. For work I have an American Express that also is paid in full every time.

 

[rbattelle]

He is for helping those who need help, does not mean they have no willpower... He really stresses having a budget and being content with what you have.

Don't get me wrong, Ramsey's message is a good one - that debt is usually bad.

However, I would argue that an inability to "live within your means" comes down to willpower. Lack that essential element, and the only way to protect you is to tell you to completely abandon all forms of credit. Sort of like drugs - you must keep the addict away from even the temptation!

Ramsey's message works well and is quite appropriate for his audience. I'm just saying it's a mistake to apply, for example, the "no credit card" mantra to someone inherently capable of living within his income because there's good money to be made. NCostello is obviously a very intelligent, prudent individual. I have every confidence he will be just fine, without the need to adhere strictly to Ramsey's teachings.

Even the "no mortgage" idea can cause problems. You need a place to live, so if you decide not to have a mortgage you're going to need to get an apartment. What's the difference between paying a mortgage and paying rent? Very little, except in the case of the mortgage at least you're building a little equity.

So you sit in a cheap apartment paying, say, $400/month and saving up to buy a house with cash. Even an inexpensive home could take years to save up for. All the while you're shelling out $400/month and getting absolutely nothing in return (other than a roof over your head).

Anyway, we're way off topic. All I'm saying is, there are no absolutes - we each must carefully consider every choice we make.

Ryan

 

[EWalshak]

You are confusing using OPM with being able to afford the vehicle in the first place.



Regardless if using OPM or other financing, if your income level does not support the purchase, you should not be buying the vehicle in the first place.



With regard to 0% financing offered by Chrysler, they are the ones financing their own paper in order to sell the vehicle.



If you in fact can afford to buy the vehicle and have the means to pay for it, 0% interest is an excellent way to go if offered.



The aforementioned cash back credit cards are also an excellent financial move.

I'm not confusing any such thing. When I know I can afford to pay for something I pay for it. No much to be confused about.

As far as 0% being an excellent choice that is a matter of opinion, which you are entitled to. In my opinion 0% financing is what car companies use when dealing with someone who is "confused" as to weather or not they can afford to pay for something or afford the payments on time.

 

[EWalshak]

Affordability is a relative term. Irregardless of income level. While one person looks at a purchase and decides to pay for a product, good, or service based on "Can I spend this amount of money and not miss it". Another way to decide to purchase or not is based on "Can I afford to make the monthly payments". If you fall into the second train of thought. The Credit/Financing industry has been successful in training your mind that its acceptable to borrow money for something that you cannot afford. The terms of the financing make no difference. Its a mindset. This is what the "income statement affluent" consider being able to afford something.

 

[tempforce]

'0'% or cash

i used the 0% and kept the cash in the bank. then decided to just use my income to pay for it, instead of pulling the payments from the account, i had for the truck. this way the cash in the bank where it does more for me. if i was to pay interest, at a rate equal to or more than i made at the bank. i would of paid cash.

 

[SLangone]

Please read number 2 on consumer reports. If you keep that money in a savings account gaining around 1. 5% or maybe a little more you are not able to keep up with inflation with a rate around 3%. Not trying to make you sound like you made a dumb decision but we all learn from our mistakes. I bought a New Subaru Forester 2009 that I took out a loan for 24k (60 months) for and with an interest rate around 4. 5%. I loved that car for the short time that I had it but I was able to sell it and purchase my current 1996 Dodge Truck which is almost paid for.

7 ways dealers make you pay extra

 

[tempforce]

keeping up with inflation

keeping the money in the bank is marginal, when it comes to inflation, but a loan at 0% instead of pulling the money out. i would lose even more.

as it is, i'm earning slightly more than inflation, with time certificates.

 

[SLangone]

You could be doing so much better with a Mutual Fund gaining over 8% their easy to find and have great returns. I use USAA before that I went with T. Rowe Price, and Vanguard was one I considered but did not have the initial amount to open an account. Keep on Rolling

Mutual Funds - Average Return on Investment

 

[tempforce]

my last three mutual funds, one was a vanguard account, they lost me money. (long term). also my enron stocks, didn't fair to well. so i'd rather keep it safe, but earning less. if i was 20-40 i would probably go for a mutual again.
of course i may do another mutual, when i sell my place up north.

 

[SLangone]

Since I am only 25 I do consider my self extremely lucky. Knowing what I know now I would never invest in single stocks. Sorry to hear about your misfortune. I would recommending you consider reading the total money makeover or financial peace.

 

[Tomscreek]

It's simple really. The new pickup trucks are NOT affordable for the average guy anymore. C'mon, 50-60K for a truck???? Problem is we all WANT one and it's too easy to get into financial trouble by financing one. The "new" quickly wears off, the "all new" model is out, and you're stuck. At this point in my life I could afford one but they'll never get my money for a new one!! A person needs to ask themselves if they really NEED these expensive diesel motors. I know I'll never get another one.

 

[tempforce]

no new trucks

i figure my current truck will be my last new one. as my next truck will be my '56' f-100. when it has all of the bugs worked out. i plan on selling the 1 ton.

i bought the 1 ton, instead of the 3/4 due to being more sell-able when it's older. it wasn't that much different in purchase price.

when finished i'll have the '56' and a grocery getter. i'll use a trailer to haul stuff. the '56' will be cummins powered. :-laf:-laf:-laf:-laf