Should You Buy During the Pandemic?

[extrashaky]

Originally Posted by iLuveKetchup

I still dont think it's financially responsible to buy a car at the moment.

It may or may not be. If you know you will make it through just fine, it might be a good time to get a good deal. I've been halfway considering it.

It's also possible that it's unavoidable because you need reliable transportation. I'm in such a remote area right now that even if I lost my income and didn't expect to have to drive to work when the restrictions are lifted, I'd still need reliable transportation to be able to reach the grocery store for food.

Whether it's financially responsible depends 100% on the person and his or her situation.

[iLuveKetchup]

Originally Posted by extrashaky

Whether it's financially responsible depends 100% on the person and his or her situation.

Originally Posted by iLuveKetchup

I still dont think it's financially responsible to buy a car at the moment.

I do agree with you.

[Tcoat]

Originally Posted by iLuveKetchup

If times are bad enough that you have to sell your car, you are going to have a hard time finding a buyer.

I still dont think it's financially responsible to buy a car at the moment. Hard assets, (keep your) property, and maybe a sniper rifle is more reasonable.

If times are so tough you are using a sniper rifle then all of the rest of these conversations are meaningless.

[saltywetman]

Originally Posted by Tcoat

If times are so tough you are using a sniper rifle then all of the rest of these conversations are meaningless.

it's a pretty crazy mindset south of our Canadian borders. I don't think I've seen many Canadians on the forums/reddit/facebook talk about stockpiling guns and ammo right now.

[Tcoat]

Originally Posted by saltywetman

it's a pretty crazy mindset south of our Canadian borders. I don't think I've seen many Canadians on the forums/reddit/facebook talk about stockpiling guns and ammo right now.

We already have them!

[Dadhawk]

Originally Posted by extrashaky

Obviously the calculation changes if you have $100K in the bank instead of $30K, or you own your house outright, or whatever. But usually I'm going to go for the choice that leaves me the most options and reduces my risk. I have considerably more cash on hand right now than my example, and I'd still pick up the free money by financing it.

You are right, it has to be part of a larger plan. You can't talk about the car debt by itself, and it varies by person. To get there though you have to have a plan. Having no debt simplifies you plan. I have no debt, only living expenses, so it's "easy" for me, but I had to plan for years to get there. Now that I have, there is no level of debt that is "good debt". Obviously not everyone sees it that way, and that's OK.

I will add, I could agree that a 0% loan (or something below the inflation rate) could be seen by some as not truly a debt and there are some advantages to using it, as long as the fine print isn't hiding some big gotcha and you have enough money in the bank to pay off the loan tomorrow. I have done that myself, but always end up paying it off early because I get tired of writing the checks.

Originally Posted by extrashaky

BTW, before I went to business school and learned how to use debt, I would have looked at it exactly the same way you do. Getting comfortable with how debt works has completely changed my approach.

It's not just me. There are very large businesses that run with zero debt. There are 10 businesses in the Fortune 500 are that debt free. Zero debt is much harder than running with debt. Both are valid choices, within reason.

[Dadhawk]

Originally Posted by Tcoat

We already have them!

I was going to say that, but thought better of it. Glad you did!

[Dadhawk]

Originally Posted by iLuveKetchup

If times are bad enough that you have to sell your car, you are going to have a hard time finding a buyer.

Not really. I would happily sell the car at a loss to feed my family. I would put it on eBay with zero or minimal reserve. If we are at the point the car won't sell that way, cash on hand is probably not going to help much either.

[Jordanwolf]

Originally Posted by saltywetman

it's a pretty crazy mindset south of our Canadian borders. I don't think I've seen many Canadians on the forums/reddit/facebook talk about stockpiling guns and ammo right now.

Probably because the states decided to take this whole outbreak more seriously a little too late, now they're in full pandemic world is ending mode.

https://globalnews.ca/news/6700878/s...0-coronavirus/

https://www.worldometers.info/coronavirus/

[Tcoat]

Originally Posted by Jordanwolf

Probably because the states decided to take this whole outbreak more seriously a little too late, now they're in full pandemic world is ending mode.

https://globalnews.ca/news/6700878/s...0-coronavirus/

https://www.worldometers.info/coronavirus/

Nah. Just because they are Americans.

[Tcoat]

Originally Posted by Dadhawk

You are right, it has to be part of a larger plan. You can't talk about the car debt by itself, and it varies by person. To get there though you have to have a plan. Having no debt simplifies you plan. I have no debt, only living expenses, so it's "easy" for me, but I had to plan for years to get there. Now that I have, there is no level of debt that is "good debt". Obviously not everyone sees it that way, and that's OK.

I will add, I could agree that a 0% loan (or something below the inflation rate) could be seen by some as not truly a debt and there are some advantages to using it, as long as the fine print isn't hiding some big gotcha and you have enough money in the bank to pay off the loan tomorrow. I have done that myself, but always end up paying it off early because I get tired of writing the checks.



It's not just me. There are very large businesses that run with zero debt. There are 10 businesses in the Fortune 500 are that debt free. Zero debt is much harder than running with debt. Both are valid choices, within reason.

[extrashaky]

Originally Posted by Dadhawk

Having no debt simplifies you plan. I have no debt, only living expenses, so it's "easy" for me, but I had to plan for years to get there. Now that I have, there is no level of debt that is "good debt". Obviously not everyone sees it that way, and that's OK.

I currently have no debt either. But I would go into debt in an instant if it made sense to do so.

I know a guy who is a multi-millionaire because of debt. He borrowed to buy property and put buildings on it. The income from that property plus more debt bought more property that brings more income. The income exceeds the cost of income (interest and maintenance) so that at this point he would still be a millionaire even if everybody stopped paying rent and the banks took the properties. He would never have gotten to this point without smart use of debt.

On the other end, I know a guy who came out of high school with basically nothing. He needed a job but didn't have a car. So he went to a buy-here-pay-here lot and got a horrible loan that most of us would think was a bad idea but was all he could get at the time. He bought a used truck that could get him to work, and that got him a job. He used that job to get a better job. Eventually he had saved enough to go to school while working.

Last I talked with him, he was vice president of a bank. Would he be there if he hadn't taken out that high interest loan? Probably eventually, but not as fast. He did what he had to do and grabbed the only bad option he could see to start climbing out of his situation.

Debt is bad when it's managed poorly and/or you don't understand it. Otherwise it's just a tool. A hammer isn't good or bad. Unless it's haunted or something.

Originally Posted by Dadhawk

I will add, I could agree that a 0% loan (or something below the inflation rate) could be seen by some as not truly a debt and there are some advantages to using it, as long as the fine print isn't hiding some big gotcha and you have enough money in the bank to pay off the loan tomorrow.

You don't have to excuse it. It's still debt. You're describing debt used productively.

Originally Posted by Dadhawk

I have done that myself, but always end up paying it off early because I get tired of writing the checks.

I was tempted to do that with the BRZ, but that would have run counter to the whole strategy of using someone else's money to finance my transportation. So I let it ride and put the money elsewhere.

Originally Posted by Dadhawk

It's not just me. There are very large businesses that run with zero debt. There are 10 businesses in the Fortune 500 are that debt free. Zero debt is much harder than running with debt. Both are valid choices, within reason.

So 10 companies, or 2% of the S&P 500. Not exactly a widespread strategy.

There's a reason for that. Running with no debt is great for a private company but can be extremely dangerous for a publicly traded company. Most public companies that could run with no debt "dirty up" their balance sheets with debt on purpose to discourage hostile takeover attempts.

There's a company in my home town that was almost debt-free and ended up getting swallowed up in a hostile bid. The invader laid off the majority of the employees because they were redundant and ousted the family that had started the company. The CFO had been trying to take on debt for years to prevent something like that from happening, but the family was still running it and wouldn't let him do it. They lost their company as a result.

Furthermore, if you run a public company that is making $X million in profit each year but could make $X + Y million if they took on debt to finance expansion or product development, it could be argued that you have a fiduciary duty to the shareholders to take on that debt and chase that extra profit. If the shareholders or board don't feel you are meeting your duty, they'll get rid of you.

[humfrz]

Originally Posted by Ernest72

My 2 cents. I am no auto expert, I am a scientist that makes drugs.

Do you mail order? .....

[Tcoat]

Originally Posted by humfrz

Do you mail order? .....

Maybe deliver?