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What's wrong with "DO NOT BUY THINGS YOU CANNOT AFFORD" ?
Umm. excuse me but i had to use my credit cards to supplement my living expenses, keep my car going to get to school and work etc. It's a bit tough to go to school full time, work part time when Mom and Dad doesn't help out in anyway. Not everyone was born with a silver spoon in their mouth and had everything handed to them or paid for them.
Invest equals house and car since that might be the only mode of shelter and means to travel to work. Invest does not equal HDTV. Period.
A car is not an investment, and in most cases there are alternatives.
A house, well contrary to popular opinion its not a good investment either (It is a good hedge against inflation though). Regardless, what you are saying is way to black and white. I purchased a new computer on my CC (twice!) while in graduate school that I couldn't afford, was that an "investment"? What if a film student purchased the new TV?
The fact is that people often need to purchase things they currently cannot afford. If people stopped the economy would crash and more and more people would be forced into poverty.
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Also, it's highly unwise to borrow to consume, since you must inherently forgo future consumption.
If you can reasonably predict that you're income is going to be much greater in the future (e.g., students) then its not so "unwise". If I had a crystal ball and new how long I was going to live I would believe what you said, but I don't. So I'm perfectly happy to sacrifice my future self a bit for making my current life better.
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Do you charge houses and cars on your credit card?
I could easily purchase a car on my credit card, but that wasn't the point. People typical take on debt to purchase houses and cars.
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Why not work full time and go to school part time?
Its not always possible to go to school part-time, also it typical costs you more.
A car is not an investment, and in most cases there are alternatives.
A house, well contrary to popular opinion its not a good investment either (It is a good hedge against inflation though). Regardless, what you are saying is way to black and white. I purchased a new computer on my CC (twice!) while in graduate school that I couldn't afford, was that an "investment"? What if a film student purchased the new TV?
The fact is that people often need to purchase things they currently cannot afford. If people stopped the economy would crash and more and more people would be forced into poverty.
If you can reasonably predict that you're income is going to be much greater in the future (e.g., students) then its not so "unwise". If I had a crystal ball and new how long I was going to live I would believe what you said, but I don't. So I'm perfectly happy to sacrifice my future self a bit for making my current life better.
Being content with future sacrifice for current rewards will result in Generation X's lunch being eaten. There will likely be no social security available at that time for these folks. Many don't care because they naively assume that some socialist program will save them from financial ruin. Quite the contrary.
A car most certainly is an investment. I am not talking about a strict return as in a stock or other equity. I am referring to the return in utility for purchase. A car rewards you with the ability to get to your job (sans mass transit), take your sick child to the hospital/doctor, and other factors. A house is an investment in the sense that it provides a forced savings program for the responsible. Buying healthier foods is an investment. Buying a gym membership, assuming you use it, is an investment in possibly lowering your medical bills and obtaining a true higher quality of life. Borrowing for instant gratification will doom those who attempt it once too often.
An economic crash is unavoidable regardless of what politicians tell you. People will return to cash purchases, mark my word. This consumer credit fad is no more real or sustainable than dot bomb companies trying to "shift the paradigm" of stock investing. Continuing to borrow to consume will make the eventual day of recknoning that much worse. No one knows what this recession will bring. Stagflation worse than the 70's? God forbid hyperinflation and the inevitable command and control form of government that results from such a transition? Attempts at price fixes and the retaliatory black markets that ensue?
I am studying for my Ph. D. in Computer Science and require a new computer every couple of years as well, but I also temper my purhcases by not buying high end machines. I buy on value and base all purchases on the utility it will provide.
It is indeed that black and white, my friend. EZ credit is ending just like it did in the 20s and won't return for quite some time, probably not in our lifetimes.
Being content with future sacrifice for current rewards will cause Generation X's lunch to be eaten.
How is this? I have a ton of debt from school, a lot of it is from things I could've done without that I purchased to make life better.
I don't feel bad about this at all, I have much more money now then I did in school even though I'm paying off the debt.
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An economic crash is unavoidable regardless of what politicians tell you
I'm glad you've figured out how to predict chaotic systems, but I haven't (and well..the rest of the world). To suggest that an economic crash is unavoidable is simply short-sighted, the system is far too chaotic to predict in a reasonable way.
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I am studying for my Ph. D. in Computer Science and require a new computer every couple of years as well...
So then you are purchasing things you cannot afford? Which is just my point - what is a good purchase and what is a bad purchase is highly relative to the person. Its not black and white, "HDTV is not an investment period".
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EZ credit is ending just like it did in the 20s and won't return for quite some time, probably not in our lifetimes.
Sure, credit standards are going to return to where they are known to be stable. But people will still have credit cards to purchase things they can't afford, people will still buy/lease cars they shouldn't and purchase houses they can't really afford.
A $3000 car will get you to work and to your child's medical appointments just like a $20,000 car will. It's not an investment if you're borrowing money to get some sort of utilitization that you can get for a whole lot less - it's massaging your ego.
A $3000 car will get you to work and to your child's medical appointments just like a $20,000 car will. It's not an investment if you're borrowing money to get some sort of utilitization that you can get for a whole lot less - it's massaging your ego.
Oh I completely agree. I'm just saying that the minimum car that you need to get you to work is an investment.
Then again, a highly unreliable junker can cost you your job if you call out all the time due to it being in the shop. I tend to buy new only because the overall cost is much lower since the apr is 0 or 1.9% and I get more use from soup to nuts on it. Plus, that money I save on not paying upfront goes into solid investments (non-US based) generating high dividend yields, especially against a sinking dollar. By the end of the payment cycle, I paid nothing for my last car.
I tend to buy new only because the overall cost is much lower since the apr is 0 or 1.9%
I've never seen it work out that new cars cost less. Also, they don't give away money at 0%-1.9%, when you get the low rates you pay more on the car then you would if you purchased with cash (They are incentives after all, and they want to attract both cash rich and cash poor folks). Also, you could've lost a lot of the money you invested (Unless you can also predict the markets), in your case your gamble worked out.
Anyhow, nice preaching one thing but doing another. New cars are surely a necessity for graduate students.
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