Debt: Does it Get a Bad Rap (million, mortgage, savings)

[ReblTeen84]

Originally Posted by user_id

Umm...huh? People are jealous that someone purchased something with credit? Why would someone be jealous of that?

Because there are any number of people I know that can't GET credit, much less credit with the kind of rates some of us can, because they ruined theirs. Regardless of what people think, credit is very much a large part of your life, up to and including determining whether you get certain jobs, can get a house, etc.

[ReblTeen84]

Originally Posted by DSOs

Actually if people had skin in the car (down payment or cash purchase) the car would not depreciate so much/fast. This is what I don’t like about revolving credit/debt—it makes products more expensive & the products artificially depreciate prematurely!

I put down something like 7 grand when I bought my Jeep, between trade and cash. I doubt I'd be upside down on it anytime soon, other than gas going up and making SUV's less desirable. Course, that happened before and it bounced back too. I'd never finance 100% off the car, you're upside down on it the minute you drive it off the lot.

[CaptainNJ]

Originally Posted by DSOs

Actually if people had skin in the car (down payment or cash purchase) the car would not depreciate so much/fast. This is what I don’t like about revolving credit/debt—it makes products more expensive & the products artificially depreciate prematurely!

when i finance something, i look to get the lowest interest rate and i look to put little to nothing down.

[DSOs]

^^and the Banks love you for that. Why do you think the USA Auto Industry relies more on quality financing than quality cars? All I’m saying is, in the aggregate, the financing enables higher prices. I have nothing against responsible credit use.

There’s a niche consumer out there that growing by the day (think bubble)—never pay the car off, just keep revolving the product/financing. This artificially inflates the price, & IMO, brings about phantom depreciation.

[user_id]

Originally Posted by ReblTeen84

Because there are any number of people I know that can't GET credit, much less credit with the kind of rates some of us can, because they ruined theirs.

There are two reasons someone would have a low credit score. 1.) They don't use credit, 2.) They have used credit and defaulted on some level.

So you're suggesting that the people that speak poorly about credit are either the people that have plenty of money to pay cash for everything or the people that have used credit heavily in the past.....yeah...that sure makes sense.

Regardless, there are numerous reasons why one shouldn't utilize debt for the purchase of consumer goods....

[CaptainNJ]

Originally Posted by DSOs

^^and the Banks love you for that. Why do you think the USA Auto Industry relies more on quality financing than quality cars? All I’m saying is, in the aggregate, the financing enables higher prices. I have nothing against responsible credit use.

There’s a niche consumer out there that growing by the day (think bubble)—never pay the car off, just keep revolving the product/financing. This artificially inflates the price, & IMO, brings about phantom depreciation.

easy access to debt does inflate prices. but as an individual, there is nothing i can do about that. i just try to use it to my advantage. so, as an individual, once you have made the decision to finance a purchase you are better off finacing all of it and putting nothing down (as long as you get the lowest rate available). its funny to me to see people putting extra money down to reduce payments. ive even see people suggest that you shouldnt finance the tax portion, just the car. as if it matters.

[ReblTeen84]

Originally Posted by user_id

There are two reasons someone would have a low credit score. 1.) They don't use credit, 2.) They have used credit and defaulted on some level.

So you're suggesting that the people that speak poorly about credit are either the people that have plenty of money to pay cash for everything or the people that have used credit heavily in the past.....yeah...that sure makes sense.

Regardless, there are numerous reasons why one shouldn't utilize debt for the purchase of consumer goods....

Actually it does make sense. I know people that have plenty of cash but zero credit and it's come back to bite them in security deposits and financing. I also know a family member where her and her husband have declared bankruptcy in the past. She just bought a car and has something like a 11% interest rate on it. I just bought a car with a 2.4% interest rate and qualified for the 0% - I didn't want the 3 year payment, though I considered it and decided I didn't want that much cash going out.

In both of those scenarios, they b*tch about credit and how "wrong" it is. Both of those scenarios are caused solely by their own mistakes, though having cash isn't necessarily a mistake until you need to finance something and can't, or even have to put down a healthy security deposit on something because you have no history.

[user_id]

Originally Posted by ReblTeen84

Actually it does make sense. I know people that have plenty of cash but zero credit and it's come back to bite them in security deposits and financing.

Sorry, I don't follow, if they have "plenty of cash" how exactly is it going to "come back and bite them"? They wouldn't need to finance things...

You are speaking as if people need to finance things, this assumption is particularly silly when you are talking about people with "plenty of cash". Why would someone with, "plenty of cash", ever need to finance anything? I don't know, maybe "plenty of cash" to you is a small sum....

Anyhow, I just find it highly amusing that you'd think someone would be jealous of debt... I suppose that is a statement about how far we've gone down the rabbit hole....where savings, etc doesn't matter instead just how much you get in loans.

I don't get the security deposit thing, the only thing that comes to mind is a rental and those are highly regulated in most states.

[Strate L O S S]

look at it from a point where they have very poor credit, and no debts because they don't qualify for any loans.

and "plenty of cash" being that whatever they get they pay in cash for.

'88 corolla
'03 dell
'08 nokia phone

vs

'12 bmw
27" iMac
iPhone 4S and iPad

there are people in that situation that are indeed jealous so to say that when they go and try to get a bmw they can't qualify or get terrible apr

don't have the $2500 for that new iMac and can't finance it

and also need to leave $500 deposits to get the iPhone on contract.

**now with that said**
those people aren't worse off, but if given the chance they would gladly get the above mentioned(meaningless material goods) items with the above mentioned terms.

[SCGranny]

A lot of people go into debt for the weirdest things.
We paid cash for our cars for the most part up front, and financed the remainder for six months.
We paid them off early (we always get a no-charge-for-early-payoff in the contracts). Both cars were brand-new - mine only had 1 mile on the odometer - but mine was a fleet-ordered pickup truck that the customer didn't want and had to be sold. It was, however, exactly what I wanted - for a lot less than comparable pickups, even on the same lot.

If we can't pay for something on our incomes in less than a year (other than our house) we don't buy it. We have a no-frills cell phone that we only use when we travel or go away from home (rarely) so we don't have a contract; we put a deposit on it before we travel, and if we don't use it, it carries month to month. I don't need to text, and if I want pictures I have a great dig camera. We have several credit cards that we occasionally max out for purchases - and pay them off within a month, maybe two or three at the most, which raises our credit limit and keeps the cards active.

We have never hated or feared our lenders; even when times got tight, we would call them and tell them what was going on, and they were always willing to work with us to get things paid in a reasonable time at a reasonable cost. It costs money to lend money, and interest is a necessary evil to keep the lenders' doors open, to others and to us as well.

We bought our first house -900 sq feet - for $20,000 in 1988, mortgaged it to put our kids thru college, pd off the 2nd mortgages, then sold it for $83,000 in 2008. We bought our latest (and final) home here for $97,000 - 100 year old farmhouse, 3000 sq feet, and 60 acres plus outbuildings. We paid more than half down and financed the rest; used the rest of the $$ to fix up the farmhouse and build a shop on the property where DH does small engine repair and woodworking.

Many people don't seem to understand that the way to grow wealth is to never overextend, to get what you need for the task at hand, not what you want, and build on it to get what you want. Too many think that what they 'want' is a 'need', and don't know how to figure their needs into a budget that does not solely depend on a fluctuating job or career, or even on fluctuating health or family problems or concerns. The one thing you can count on is change - and changes for the worse hit people harder who are not prepared to do without, wait, plan, and build their wealth. 30 years ago we were considered "poor" and we lived as "poor" as we could; saved, drove old cars, invested carefully, spent wisely - and now people think we're "rich". Too many folks want it all, right now - and who cares if someone else gets stuck with the bill further down the road?

Debt is not "bad" - unreasonable, unplanned and unbudgeted debt is horrendous, keeps you up at night, makes you paranoid at every phone call, makes you untruthful, sneaky, and angry. Why waste angst and drama on something that only gives you a fleeting sense of wealth or superiority, when you can live a satisfying, honest, whole life that steadily, quietly, and progressively improves?