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Ok, I corrected your misconception and vocalizations of factually incorrect data, and merely turned YOUR words back on yourself.
You are doing nothing other than a baseless, factually hollow personal attack. And to be honest it's getting tiring given the multiple places you are doing so.
Feel free to attack me, I don't mind that. But please do it using facts and figures, not mindless, and statistically incorrect insults. They bore me.
I will attack, without any reservations, any poster that declares that anyone is "delusional" for merely living a lifestyle in which his needs and conveniences are not in accordance with those of the individual and personal prejudices of the poster in question.
I have no problem with anyone who says "I prefer not to have a credit card". But I do not accept your bare-faced declaration that anyone who has one is "delusional".
So there is my personal attack. Take it or leave it. I made no other representations about you, except to accuse you of making a blanket psychiatric diagnosis of the entire body of civilization that holds a different opinion from yours on single, isolated characteristic of lifestlye choices.
By the way, have you ever looked at the comparative advantages and disadvantages of credit card vs. debit card? Aside from yourself, it is very hard to find a knowledgeable financial adviser who will say that debit is better than credit for a prudent, thrifty consumer. Such a view is not at all delusional.
Quote:
Originally Posted by Themanwithnoname
There is no need for a credit card when you have MONEY!
Anyone who believes otherwise is delusional.
delusion
n.
A false belief strongly held in spite of invalidating evidence, especially as a symptom of mental illness.
I will attack, without any reservations, any poster that declares that anyone is "delusional" for merely living a lifestyle in which his needs and conveniences are not in accordance with those of the individual and personal prejudices of the poster in question.
I have no problem with anyone who says "I prefer not to have a credit card". But I do not accept your bare-faced declaration that anyone who has one is "delusional".
So there is my personal attack. Take it or leave it. I made no other representations about you, except to accuse you of making a blanket psychiatric diagnosis of the entire body of civilization that holds a different opinion from yours on single, isolated characteristic of lifestlye choices.
By the way, have you ever looked at the comparative advantages and disadvantages of credit card vs. debit card? Aside from yourself, it is very hard to find a knowledgeable financial adviser who will say that debit is better than credit for a prudent, thrifty consumer. Such a view is not at all delusional.
Just because someone says credit is better doesn't make it true. I don't have a credit card, but I've had people try to persuade me to get a credit card.
My quibble is not about the utility of the credit card, whether needed or desired. It is about the words of the poster who said a person suffers from a psychatric disorder if he believes he needs a credit card, regardless of how the user defines "need".
It is not unreasonable for a rational person to use the term "need" for the attributes that have a significant positive impact on his quality of life. It is not "delusional" to say "I need 8 hours sleep", or "I need to replace that light bulb", or "I need to do the laundry tomorrow", merely because Manwithnoname prefers to arrange his life differently.\
It is not a clinical psychosis to say "I need a credit card, because it gives me cash back, there is no annual fee or other charges, I have the discipline to pay it off every month, it covers the insurance waiver when I rent a car, it gives me added warranty on goods I buy, it enables me to protest a purchase dispute, it limits my liability in the event of unauthorized use, it provides me with a convenient accounting of all my purchases, and it improves my credit score." But it may be a clinical psychosis if you are prone to reply "Well, then, you're delusional".
Willy702's philosophy is partly why we have a debt crisis now. Leveraging absolutely can be a way to make a very substantial return on an investment, but it entails quite substantial risk that can destroy someone financially if one winds up on the "wrong side" of an investment.
A quick and simplified example:
Joe buys a $500,000 property with 20% down ($100,000) and borrows $400,000 at 6% interest, payable annually. His property taxes and insurance are $4,000. At the end of year 1 he sells the property for $550,000, 10% more than its original price. He's paid $24,000 in interest plus $4,000 in taxes, for a total expense of $28,000, netting him $522,000 from the sale. Subtracting the $400,000 loan that he pays off when he sells the property nets him $122,000, $22,000 more than his money that he put up as the down payment. That's 22% return on his money for one year. Not bad.
But suppose the property decreases in value by 10%, to $450,000 in that year. Now he only nets $422,000 from the sale, after deducting interest and taxes. After he pays the $400,000 loan back, he is left with $22,000, 88% less than what his investment was worth a year earlier. It's this downside part of leverage that most people don't take time to understand--they get seduced by the upside potential and ignore the downside risk.
Take it one step farther, suppose the property declines 20% in value. Then Joe nets only $400,000 from the sale, not even enough to pay off the note if he pays the interest on the loan and taxes on the property. Even if the bank allows Joe to pay the principal of the loan with the sale proceeds, Joe is broke if he doesn't have other assets or income--his $100,000 is gone, plus he still owes $24,000 in interest to the bank and $4,000 in taxes and insurance.
Quite bluntly, most people do not have the financial savvy to properly estimate the risk involved in leveraged investments. In the current grossly uncertain economic environment, even seasoned investors are getting hammered when supposedly "sure thing" investments are going sour. Of course, the slick salesmen who tout leveraged investments only talk about those success stories and not about the large numbers of folks who wind up upside down or worse on a leveraged investment. Sort of like thinking that the State Lottery is a good deal if you only look at the winners.
The people who bought condos to flip in Florida were obviously not savvy, on this I agree. However smart risk means first of all determining if there is positive cash flow and if you have a cushion with that cash flow. What you are talking about is a typical home purchase made to live in. As most would agree that isn't really an investing asset. Now if you buy that house with a mindset that you will live in it for some time, but eventually will rent it out for cash flow and eventual equity growth plus loan paydown it becomes a different story. Most people just buy the house they want and since they are living in it pay no attention to what a similar house would rent for. They have no idea of the concept of the house costing them opportunity cost, essentially it costs them what they could rent it out for to someone else minus expenses. This is what separates smart leverage from just plain consumer debt. If you are making the proper decision to buy, ie. your payments after tax considerations are lower than rent, then you have a good chance at having value down the road.
I own one house that is somewhat underwater, but the cash flow on the property is still solidly positive and would appear likely to increase in the future. When I bought it it was cash flow neutral and I assumed it would grow which it has. The price paid and the balance on the loan make no real difference in that equation, the payment doesn't change and rents have only gone down a bit. The typical homeowner would just be tempted to walk away from it or if they had a crisis could lose it to foreclosure. I just rent it out and collect cash every month and know sometime in the distant future I'll own it free and clear. Whenever the selling price of the house catches up to that doesn't make a big difference to me as I plan on holding it for at least 15 more years.
This concept goes for other things as well, small businesses, storage units and other investments where a safe level of cash flow can be acquired for less than the net equity value of the investment. Thing is most people never get into this "game" because they don't have cash to invest because they are too busy trying to be debt free or they take any equity they have and put it into the biggest house they can possibly afford. Many of those I see competing in this space come from California, often times someone who sold a house(s) with large equity gain and are looking for ways to maximize their investment returns and cash flow. They could have put it in dividend stocks or bonds, but they realized using leverage properly made for a better investment with a big fat assist from the tax code. Even better a lot of these investments are offered at a nice discount to net equity value as people are always retiring or needing to get out in a hurry.
Sure there is some risk involved and some are just not financially literate enough to do these correctly, but they aren't really that tough to do as long as a proper process is followed. Occasionally some will fail at this, but I think those serious about it who bring in some cash tend to move up the ladder much more often than they fall off of it even in tougher times. Its the people who dabble and want easy investments who fail. Anyone who thought buying a pre-construction condo and flipping it was a no-risk investment are the types who fail.
My quibble is not about the utility of the credit card, whether needed or desired. It is about the words of the poster who said a person suffers from a psychatric disorder if he believes he needs a credit card, regardless of how the user defines "need".
It is not unreasonable for a rational person to use the term "need" for the attributes that have a significant positive impact on his quality of life. It is not "delusional" to say "I need 8 hours sleep", or "I need to replace that light bulb", or "I need to do the laundry tomorrow", merely because Manwithnoname prefers to arrange his life differently.\
It is not a clinical psychosis to say "I need a credit card, because it gives me cash back, there is no annual fee or other charges, I have the discipline to pay it off every month, it covers the insurance waiver when I rent a car, it gives me added warranty on goods I buy, it enables me to protest a purchase dispute, it limits my liability in the event of unauthorized use, it provides me with a convenient accounting of all my purchases, and it improves my credit score." But it may be a clinical psychosis if you are prone to reply "Well, then, you're delusional".
None of those other things are needs either, there are merely desires. To claim that they are needs is delusional. Simply identify them properly.
Well, I was debt free before I bought a car and took out student loans for grad school, 4 years ago lol. Now I'm a 26 year old single guy with a master's degree and have the car paid off as well as one of two student loans. The car was $20,000 and the loan was $8,000. All I have left is one $10,000 student loan. I hope to have it paid off later this year. My job pays well, so I should be debt free by age 27.
When we got married out of college, we married with two student loans of $7500 total and a car loan of $5000. Hubby earned 10K a year and I earned 6K.
My mom told us we could live with her for a while and save up and pay down debt. We had to pay for some groceries and the utilities.
We paid off his student loan and rolled his payment onto my student loan. We moved out and got an apartment -- soon after hubby lost his job... and we bargained with the apartment owner to work around the apartment for lower rent. Soon after we paid off the car, but kept making the payment to us. Same thing with our student loan payment. Wnen the loan closed, I kept paying it to me.
And I did just that. I'd deposit the my paycheck and hub's unemployment check into the checking and savings and then write myself a check in the amount of the car payment and another check in the amount of the student loan and deposit that into our savings as a separate transaction.
That really helped make it stick. Eventually, I stopped that, and just made it part of the normal checking/savings deposit, but I truly think that making those checks payable to myself sealed the deal.
The other thing -- it's way too easy to think I have to save save save or I have pay of pay off pay off.... you CAN do both. It does take a little longer to accomplish both goals, but in my opinion it's the wisest thing to do. And there's nothing like realizing you have a debt left of 1000 bucks and 5 thousand in the bank to pay it off and you can get rid of it, and add that payment amount to the amount you are saving....
None of those other things are needs either, there are merely desires. To claim that they are needs is delusional. Simply identify them properly.
OK, so the only needs are an oxygen machine and intravenous feeding tubes. There. I've just identified them properly.
It is delusional to think living organisms need anything else.
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