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Justify it how you want, if you owe money to a person, you are a slave to them. If you are comfortable being a slave... GO FOR IT!
Comments like that are exactly what I'm talking about.
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Regardless, using debt to pay for consumption items is always a stupid financial move....
IF the debt is costing less than what's being earned on that same amount in an account...is it still "stupid?"
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They make it as difficult as one of those "If train A leave Station B going 80 miles an hour" problems, throwing all sorts of numbers at you so you absolutely forget that all you have to do it take the amount you owe and divide by 5 (so you pay it off a little early) or 6 (so you pay it off on time) and pay that amount.
I don't see what's hard about figuring that $5,400 for furniture with 18 months to pay if off means you should pay 350.00 a month if you want to be SURE and pay it off well before 18 months? Or $1,500 for a refrigerator with 6 months no interest mean $300 a month to be under six months. Th whole point of doing it is to use the financing to your advantage. Make the payment a regular monthly payment. If the person is not going to stay on top of it, and make it their business to pay it off, that's not the company making it difficult. That's the person, not staying on top of their finances. (Some deals you don't have to make ANY payments as long as the amount is paid off before the deal is through. Others, require monthly payments but just no interest.)
IF the debt is costing less than what's being earned on that same amount in an account...is it still "stupid?"
With the exception of short-term deals to get you to buy things, the interest rates on debt are always going to be higher than the low-risk rates you can generate on the money otherwise. As far short-term deals, these are bad for another reason, namely they cause people to spend more....and that is precisely why they are offered. Making a major purchase with cash is psychologically different than doing it with credit....
Everything thinks they are clever using the 0% deals as if they are super special and taking advantage of some great "deal"....when in fact these deals are crafted by the retailers to get people to spend more.
I don't see what's hard about figuring that $5,400 for furniture with 18 months to pay if off means you should pay 350.00 a month if you want to be SURE and pay it off well before 18 months? Or $1,500 for a refrigerator with 6 months no interest mean $300 a month to be under six months. Th whole point of doing it is to use the financing to your advantage. Make the payment a regular monthly payment. If the person is not going to stay on top of it, and make it their business to pay it off, that's not the company making it difficult. That's the person, not staying on top of their finances. (Some deals you don't have to make ANY payments as long as the amount is paid off before the deal is through. Others, require monthly payments but just no interest.)
My point was that the finance company will not make easy for you -- they will make it as confusing as possible. They know if they throw tons of numbers around, you very well may throw your hands up in the air and pay them the minimum payment, because so very many people do.
I just don't think that CC debt by definition = financial responsibility.
Agreed. I took advantage of plenty of 0% balance transfer offers (with no balance transfer fees) back when they were offering them like candy to anyone. I made more than a thousand bucks doing it. A nice boost to my income for me .
But it also hurt me because I was forced to move because they converted my apartment complex into a low income complex (I made too much money to keep living there). When I moved to my new place, they made me pay an extra $500 toward my deposit because I had a high debt to income ratio. I showed them statements that I had the cash in the bank to pay off the credit card debt, but no dice...I had to pony up the extra cash. Even taking that out, I made more than 1K off of doing the credit card game, but I'm not sure it was worth it.
As with anything, there will always be exceptions to the rule...but not that many.
Justify it how you want, if you owe money to a person, you are a slave to them. If you are comfortable being a slave... GO FOR IT!
I would go a step further and say the entire money system, the way it is currently structured (fractional reserve banking) is a way of keeping humanity enslaved. The best thing that could happen would be for all of us to reduce our dependence on our current system.
I don't think money is inherentlly bad, by the way;it's just that it's been hijacked by a tiny elite to feed their obsession for power and control over the rest of us.
I think debt is bad for people who can't add and don't realize how much they are actually paying for something. Some rent to own places charge 30% interest! Plus the item is the cheapest they can find and the base price is jacked up. So a stereo you could buy for $90 by shopping around might cost $500!
All the people look at is the monthly payment of $25 or whatever. Not the interest rate or how long the payments will be for.
Credit can be good if you shop around and get the best rate. And maybe you have an IRA or investment and will have to pay penalties or high capital gains taxes to use that money. In some cases it would be cheaper to get a personal loan than to pay the penalty or capital gains.
I have a credit union credit card and I can get emergency cash from that "right this second" for no fee and their regular not too high interest rate. That comes in handy for when I must have cash for something (rare but happens).
Depends on the debt. How many people can pay cash for a $250,000 house? In my area, thats considered cheap now. I paid $34K OTD for my car, financed it at 2.4% for 5 years. Even if I had the cash on hand to pay for it outright, I wouldn't have - I'd have financed it at 0% for 3 years. Why put out 34 grand all at once when I can let the money work for me? I have debt yes, and some of it is stupid debt that I call a lesson learned (credit card), but I don't see "all" debt as bad. Now, buying a car, then trading it in upside down and rolling that to your next one a couple of times, I consider bad debt and you didn't need the car!
Even if I had the cash on hand to pay for it outright, I wouldn't have - I'd have financed it at 0% for 3 years. Why put out 34 grand all at once when I can let the money work for me?
Do you imagine that the dealer is giving you 0% for your benefit and not theirs?
Usually when a dealer is offering 0% they will, instead of the 0%, give you a discount off the price of the car if you pay cash. Its all the same to them....
If you have to finance your purchase of a luxury car....then you can't really afford it.
I used credit cards as a payment method, not as a way to finance debt. It is easier to slide your card at the pump than it is to walk inside and wait in line to leave your card and have them turn on the pump and then go wait in line again to sign the slip. It is also easier to do things such as renting a car, U-Haul, or pressure washer, like another poster mentioned. I pay the card off each month.
I don't like gimmicky financing so I steer away from deals offered by furniture companies and instead just pay cash.
Cash is king, but there are smart ways to use debt. Particularly if you can make more money by taking on some debt.
Do you imagine that the dealer is giving you 0% for your benefit and not theirs?
Usually when a dealer is offering 0% they will, instead of the 0%, give you a discount off the price of the car if you pay cash. Its all the same to them....
If you have to finance your purchase of a luxury car....then you can't really afford it.
Depends on how you negotiate. I don't tell them how I'm paying for it until we agree on a price. Just like I don't care about the cost of the car - I negotiate on the OTD price. When I bought my Jeep, I didn't even see its price until I signed the paperwork. I know what tags, tax and title should cost me and I use that to my advantage.
My parents drive a BMW. They also have a '94 Bronco that my dad keeps, regardless of the repair cost, because he likes it. Could have paid cash for the beemer and didn't. Paid my tuition in cash when I went to college. What was that you were saying about not being able to afford a luxury car if you have to finance it? I hear that from many a person, but none can ever prove their point.
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