LoveToGod

Poll: What is your view about using Credit?

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Well there ya go. A 2001 V6 Honda Accord with about 50K miles lists for about $10,500. So you'd probably pay about $9000 for it. Had you saved that $350/month instead of putting it towards a Taurus that you can't stand three years ago, you'd be counting out the green backs instead of signing on a dotted line.

You'd also have enough left over to pay for the gas for the next 90 weeks at $40 a tank full. Just imagine how free you'd feel with no car payments.

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I'm definitely in agreement with paying for cars outright. Nothing worse than car payments, especially in the last couple years when its worthless and starting to hit the shop. Same payment as the first month when it was awesome and you got suckered in. Yet people turn around and do it again lol.

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I'm definitely in agreement with paying for cars outright. Nothing worse than car payments, especially in the last couple years when its worthless and starting to hit the shop. Same payment as the first month when it was awesome and you got suckered in. Yet people turn around and do it again lol.

As an acquaintance of mine likes to say; "the worst accidents happen on the showroom floor"!

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Well there ya go. A 2001 V6 Honda Accord with about 50K miles lists for about $10,500. So you'd probably pay about $9000 for it. Had you saved that $350/month instead of putting it towards a Taurus that you can't stand three years ago, you'd be counting out the green backs instead of signing on a dotted line.

You'd also have enough left over to pay for the gas for the next 90 weeks at $40 a tank full. Just imagine how free you'd feel with no car payments.

Well that is true, but fortunately I did not buy a Taurus. Those cars suck. :)

I like the little SUV I have, but Accords are my favorite.

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For me it is cheaper to use credit for auto and mortgage purchases as interest rates are so low. So that's what I use credit for and try and increase my Fico for.

Even if the auto manurafturer gives you 0% interest, you are still getting hosed big time.

For that matter, paying for something with cash is always cheeper than paying compount interest, even for a house.

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I am slightly different than some off you, I guess, I use my credit to get through school. I am in the middle of getting my ratings as an airline pilot, I have already got my Private pilot and instrument ratings, Noe I just need to build my flight hours, The small CL I have on my two cc's get me through flight training when I don't have cash, but I do pay it off by the end of the month if possible. I guess I am using my credit to build my future so I don't mind paying a little interest if I have to.

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No, paying cash isn't always cheaper than credit.

If I can borrow and only have to pay 6% interest on the money I borrow and I then take my funds and invest and earn a 30% return I have profited by using credit and it was the financially better course to take.

Even if the auto manurafturer gives you 0% interest, you are still getting hosed big time.

For that matter, paying for something with cash is always cheeper than paying compount interest, even for a house.

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No, paying cash isn't always cheaper than credit.

If I can borrow and only have to pay 6% interest on the money I borrow and I then take my funds and invest and earn a 30% return I have profited by using credit and it was the financially better course to take.

That seems like a lot of moving money around to me. Where are you earning a 30% return on your investment, out of curiosity?

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No, paying cash isn't always cheaper than credit.

If I can borrow and only have to pay 6% interest on the money I borrow and I then take my funds and invest and earn a 30% return I have profited by using credit and it was the financially better course to take.

Your analogy is flawed - you are ignoring the Beta on both the investment and the debt and ignoring the fact that the value of your car "investment" is sinking like a rock.

You are also ignoring that if you follow the plan I outlined earlier, you can be driving a car with no debt and STILL have money to invest.

Tell me where you are getting a 30% reaturn with no Beta because I want to invest in it!

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I Trade Securities, Last Year I had a 127% return on my My Trading Account.

My business is capital intensive so obtaining low financing for a mortgage or auto loan is financially to my advantage.

That seems like a lot of moving money around to me. Where are you earning a 30% return on your investment, out of curiosity?
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I am slightly different than some off you, I guess, I use my credit to get through school. I am in the middle of getting my ratings as an airline pilot, I have already got my Private pilot and instrument ratings, Noe I just need to build my flight hours, The small CL I have on my two cc's get me through flight training when I don't have cash, but I do pay it off by the end of the month if possible. I guess I am using my credit to build my future so I don't mind paying a little interest if I have to.

I should have made that another option, because many only use credit in the form of student loans, and that is it. They are in the #1 camp, except that they will use student loans for school since they see that yields a good career down the road.

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I Trade Securities, Last Year I had a 127% return on my My Trading Account.

My business is capital intensive so obtaining low financing for a mortgage or auto loan is financially to my advantage.

Forgive me for being blunt but I’m having a difficult time reconciling someone earning 127% return on their investments and suggesting that debt is “good” for such things as cars and mortgages, juxtaposed with many of your prior posts on the board.

In the past year, you’ve mentioned the need to settle debts, negatives on your credit history, large tax liens and even a FICO well under 500 - I’m not trying to be rude or judgmental but I have to say, that while you may be doing well at the moment, the things that you've posted about would seem to indicate that credit/debt has not been much of a blessing in your life.

I also know that any 127% return only happens with huge risks…maybe you feel those risks are under control…maybe you are simply ignoring them but the risks are there nevertheless.

You can certainly do what you want but I wouldn’t recommend your approach without a significant (as in “many years of”) success to show that it works in the long-term because to be blunt again, I don't believe it will.

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Not to thread-jack, but I have a soft spot for the Taurus. They are unusally dependable!

Really? Must be the later modeled ones right? My first car was a 1989 Ford Tempo GL. It was a disaster. It had the same engine that some Ford Tauruses of that time had and about the same ratings too.

I guess for me my first car being a Ford was so bad that it scared me away from those. The trucks are better though.

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Really? Must be the later modeled ones right? My first car was a 1989 Ford Tempo GL. It was a disaster. It had the same engine that some Ford Tauruses of that time had and about the same ratings too.

I guess for me my first car being a Ford was so bad that it scared me away from those. The trucks are better though.

My first car was a '85 Ford Tempo GL!! Small world...biggest brown POS ever........garbage to say the least.

I did own a '91 Taurus...the only major thing I had to spend was for a water pump...but the car ran like a champion. Definitely got me to where I had to go. I had to sell it due to financial problems at the time... :( but it found itself a good home. The Taurus name is so good that Ford BROUGHT IT BACK! LOL It died a couple a years ago...now the 500 series or whatever they called it became the new Taurus.

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We still have a '91 Taurus as well. Bought it for $900 in 2003 and a friend and I threw some new paint on it (it had the classic hood and roof faded paint of the terrible paint jobs they all got), and anyway it served us pretty well... though we did put an engine in it once. Just bought a '00 Astro passenger van to replace it so it's just sitting out in the parking lot now as an extra in case something is in the shop. Probably worth more that way than selling it, plus it's easier for me to put my blue van (below) in for upgrades for longer periods.

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Even if the auto manurafturer gives you 0% interest, you are still getting hosed big time.

For that matter, paying for something with cash is always cheeper than paying compount interest, even for a house.

I'd like to elaborate on Robert's point a little. 0% financing is always part of an either/or "deal". Anytime 0% financing is offered, it is always in leiu of some sort of rebate. i.e., 0% financing or $2,000.00 "cash back". When you calculate the difference, the rebate option ALWAYS comes out cheaper than the 0% option. Therefore, common sense dictates that the cash purchase is cheaper than the rebated/6% interest purchase.

For those in the back of the room, that proves Robert's point that the cash purchase is way cheaper than the 0% financing purchase.

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I'd like to elaborate on Robert's point a little. 0% financing is always part of an either/or "deal". Anytime 0% financing is offered, it is always in leiu of some sort of rebate. i.e., 0% financing or $2,000.00 "cash back". When you calculate the difference, the rebate option ALWAYS comes out cheaper than the 0% option. Therefore, common sense dictates that the cash purchase is cheaper than the rebated/6% interest purchase.

For those in the back of the room, that proves Robert's point that the cash purchase is way cheaper than the 0% financing purchase.

Well, while what you just state is absolutely true, let me elaborate on that!

The most significant financial reason not to buy ANY new car off the show room floor (and I say this as someone with a vested interest in the automotive industry and as a certified, dyed in the wool car nut) is that you are loose tons of money EVEN if you pay cash…financing the deal only makes a very bad financial decision worse.

Here is why…

The average new car selling price right now is hovering around $20,000. Most people finance that purchase and the average car note is sixty months (Five years)…even at a fantastic interest rate of, say, 3%...your monthly payment will be $359.37 and by the time the vehicle is paid for in full you will have paid a total of $21,562.20…now, that doesn’t sound bad does it? Of course, I’m assuming you have no out of pocket expenses for anything other than normal maintenance and replacement items (oil changes, tires, etc.)…in other words, no major repairs not covered by warranty.

At the end of the five years, your brand new vehicle is worth about $8,000; a net loss of value of $12,000.

So, your total cost for the vehicle is $13,362.20 (the interest paid plus the loss of value).

But it gets worse…let’s look at what you could have done with the same $359.37/month payment over those five years.

Starring from Zero, $359.37 invested in a high performing (and very low –risk) investment will be worth approximately $29,643 at the end of five years…so, total cost for your new vehicle over that five year period is $39,205.33 (the price of the vehicle plus interest paid less the value of the vehicle at the end of the five year period plus the money you could have had if you had invested the same dollars each month instead of spending them).

If you continue this scenario (buying a new vehicle every five years and financing it), and keep reducing your net worth by nearly $40,000 every five years through your adult life, it doesn’t take a math wiz to see why people wind up living on SSI and nothing else when they retire. Oh yeah…had you continued to save just the $359.37/month from, say, age 30 to age 67 and never saved another penny other than that, you would have about $3.4Million in the bank.

I understand that good, dependable transportation is a necessity of modern life and for the vast majority of us, that means a car or truck. But it only makes good sense to limit the damage as much as you possibly can. You can mitigate a lot of the financial damage by buying a good used car that is one or two years old (a new car looses about 45% of its value in the first two years) and even more if you use cash when you do buy.

Financing a car purchase is probably the worst financial decision most of us will ever make; financing a new car purchase only makes it a monumentally bad financial decision.

Trust me when I say that this “truth” hurts me at least as much as it hurts anybody else!!!

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My first car was a '85 Ford Tempo GL!! Small world...biggest brown POS ever........garbage to say the least.

I did own a '91 Taurus...the only major thing I had to spend was for a water pump...but the car ran like a champion. Definitely got me to where I had to go. I had to sell it due to financial problems at the time... :( but it found itself a good home. The Taurus name is so good that Ford BROUGHT IT BACK! LOL It died a couple a years ago...now the 500 series or whatever they called it became the new Taurus.

Yeah, what happened with that? I thought they discontinued that model and then I see it back...

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Forgive me for being blunt but I’m having a difficult time reconciling someone earning 127% return on their investments and suggesting that debt is “good” for such things as cars and mortgages, juxtaposed with many of your prior posts on the board. I NEVER SAID INVESTMENTS, I SAID I TRADE SECURITIES.

In the past year, you’ve mentioned the need to settle debts, negatives on your credit history, large tax liens and even a FICO well under 500 - I’m not trying to be rude or judgmental but I have to say, that while you may be doing well at the moment, the things that you've posted about would seem to indicate that credit/debt has not been much of a blessing in your life.

DON'T WORRY ABOUT ME AND MY LIFE AND BE JUDGMENTAL ABOUT IT. I LOST A CHILD TO CANCER. FINANCIAL DISASTERS HAPPEN, THAT'S LIFE, CREDIT OR NO CREDIT. CREDIT/DEBT HASN'T BEEN A NON BLESSING IN OUR LIVES AS YOU ARE TRYING TO INSINUATE. THERE IS NOTHING WRONG WITH FINANCING A BUSINESS, FINANCING A HOME WITH A MORTGAGE ETC. LOOK AROUND, YOU SEE MILLIONS OF SUCCESSFUL BUSINESSES AND PEOPLE IN HOMES DUE TO A LOAN.

I also know that any 127% return only happens with huge risks…maybe you feel those risks are under control…maybe you are simply ignoring them but the risks are there nevertheless.

IF YOU TRADE SECURITIES PROPERLY AND IF YOU MANAGE RISK PROPERLY THE RISK IS LOW, THE RETURN POTENTIAL IS LARGE.

You can certainly do what you want but I wouldn’t recommend your approach without a significant (as in “many years of”) success to show that it works in the long-term because to be blunt again, I don't believe it will.

I'VE BEEN TRADING SECURITIES FOR 26 YEARS, IT HAS WORKED WELL SO FAR. THANKS FOR THE RECOMMENDATIONS...:)++

:)++

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:)++

I think you are the one being just a bit "judgmental"...I never said this issue of using or not using debt is a right/wrong sort of issue...it's an issue of what works and what doesn't...which is better, financially long-term.

I'm am very sorry for you loss; I truly am.

I know quite a few security traders - quite a few of them think as you do - quite a few have seen their "safe/low risk" methods not be quite so safe or low risk as they thought precisely because of, as you say, financial (and other types of)disasters happen.

A lifestyle, or a business built on debt will always be more risky than one that is not and I've been around long enough to have seen (and in some cases, lived) multiple examples of why that statement is true.

We'll just have to agree to disagree - take care.

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Well, while what you just state is absolutely true, let me elaborate on that!

The most significant financial reason not to buy ANY new car off the show room floor (and I say this as someone with a vested interest in the automotive industry and as a certified, dyed in the wool car nut) is that you are loose tons of money EVEN if you pay cash…financing the deal only makes a very bad financial decision worse.

Here is why…

The average new car selling price right now is hovering around $20,000. Most people finance that purchase and the average car note is sixty months (Five years)…even at a fantastic interest rate of, say, 3%...your monthly payment will be $359.37 and by the time the vehicle is paid for in full you will have paid a total of $21,562.20…now, that doesn’t sound bad does it? Of course, I’m assuming you have no out of pocket expenses for anything other than normal maintenance and replacement items (oil changes, tires, etc.)…in other words, no major repairs not covered by warranty.

At the end of the five years, your brand new vehicle is worth about $8,000; a net loss of value of $12,000.

So, your total cost for the vehicle is $13,362.20 (the interest paid plus the loss of value).

But it gets worse…let’s look at what you could have done with the same $359.37/month payment over those five years.

Starring from Zero, $359.37 invested in a high performing (and very low –risk) investment will be worth approximately $29,643 at the end of five years…so, total cost for your new vehicle over that five year period is $39,205.33 (the price of the vehicle plus interest paid less the value of the vehicle at the end of the five year period plus the money you could have had if you had invested the same dollars each month instead of spending them).

If you continue this scenario (buying a new vehicle every five years and financing it), and keep reducing your net worth by nearly $40,000 every five years through your adult life, it doesn’t take a math wiz to see why people wind up living on SSI and nothing else when they retire. Oh yeah…had you continued to save just the $359.37/month from, say, age 30 to age 67 and never saved another penny other than that, you would have about $3.4Million in the bank.

I understand that good, dependable transportation is a necessity of modern life and for the vast majority of us, that means a car or truck. But it only makes good sense to limit the damage as much as you possibly can. You can mitigate a lot of the financial damage by buying a good used car that is one or two years old (a new car looses about 45% of its value in the first two years) and even more if you use cash when you do buy.

Financing a car purchase is probably the worst financial decision most of us will ever make; financing a new car purchase only makes it a monumentally bad financial decision.

Trust me when I say that this “truth” hurts me at least as much as it hurts anybody else!!!

Very nice. ::allhail::

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We still have a '91 Taurus as well. Bought it for $900 in 2003 and a friend and I threw some new paint on it (it had the classic hood and roof faded paint of the terrible paint jobs they all got), and anyway it served us pretty well... though we did put an engine in it once. Just bought a '00 Astro passenger van to replace it so it's just sitting out in the parking lot now as an extra in case something is in the shop. Probably worth more that way than selling it, plus it's easier for me to put my blue van (below) in for upgrades for longer periods.

Cynic...Is that photo your actual van? Because, if I might say to myself, that appears to be the most pimped out Astro I've ever seen with the coolest paint job.

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