Paying in cash vs. financing?

[thill]

Originally Posted by shirker

I don't disagree. Hence why I said responsible debt management. Buying an frs/brz with debt can either make perfect financial sense or be completely reckless. It's just misleading when people make blanket claims like "debt is bad, period"

Yes, I think we understand each other. Like I said I financed $10K at 1.9%, so I would be a hypocrite to say I only pay cash. I wanted to invest the $10K in another investment which, as of today, looks like a good investment based on recent earnings reports. You win some, you lose some

And I am not perfect when it comes to credit. I was pretty stupid with credit cards in college and, once I got my degree, joined the Army for 4 years to pay down all my debt and get experience + travel the world.

It was hard, but I came out of the Army with zero debt including my car payment. I learned a lot the hard way, including paying some ridiculous interest rates on credit cards for a couple years, and also really needing to work to improve my credit rating after I fell behind on payments during college.

Some people need to make bad decisions before they learn, I was one of those people. Since then I simply hate debt of any kind.

[AznBRZer]

Originally Posted by suaveflooder

Providing for your family SHOULD be everyone's life goal. What if you get hurt and could never work again? Do you have money to support you and your family comfortably for the rest of your life? It's called "financial peace." Never having to worry about "what if" because the "what if's" are taken care of. If you die, your family is still taken care of.

Why does it have to be everyone's life goal? I know plenty of people that don't want to start a family. If you get hurt on the job, that's what worker's comp and disability/life insurance is for. If you're relying solely on your own ability to earn income to cover those unforeseen circumstances without the proper policies in place while doing your type of work, you're doing it wrong.

It's not just that interest that can make someone. If you were to invest $464 a month (average car payment) into a good mutual fund from age 30 through age 70, you would have a little more than $5 million dollars with 12% interest mutual fund.

Investing just that interest alone for 30 to 40 years would net you a pretty great return. I can promise you it will be worth more than that car will be.

That's nice and all, but if you're spending $25k+ on a car, that ship has already sailed for at least 3 of those years. Before we even address that, show me a mutual fund that guarantees 12% over 40 years and I'll sell you my car tomorrow for a $1. I'll even buy you lunch, so it'll be like paying you to take my car.

This couldn't be more inaccurate. If you follow any of Tony Robbins books, or have read T.Harv Eker's "Secrets of the Millionaire Mind", they both go into many reasons why more people aren't wealthy/rich. Both of those authors are multimillionaires.

With all due respect, maybe it's time that you do some reading. This stuff is really cool and it takes a certain mindset to actually follow through with it and become wealthy.

Uhhh...those dudes are snake oil salesmen. They make most of their money off their speaking engagements and book sales. You're better off reading Outliers by Malcolm Gladwell to see what it really takes.

This system of borrowing money is a fairly recent thing. It's gotten crazy out of control. I have no problem being the odd man out.

No one's judging you for wanting to pay for everything in cash and it doesn't make you a special snowflake, dude. If that's how you want to roll, then more power to ya. But the system of lending and borrowing money has been around for thousands of years. The biggest differences are that now, you don't become an indentured servant/slave and you don't go to prison to work off your debt.

Originally Posted by SkullWorks

Every account we have is on net 30, no interest paid, ofcourse we have company cards but they are cleared at the end of every month, no lines of credit from banks or lenders, ever.

Sounds like you have a lot of short-term debt there, buddy.

Sorry you can't cope or understand but that just makes my point. we have several million worth of machines and material on hand and none of it was bought on credit...joke is on you buddy. We simply do not carry a debt from month to month.

Nope, just from the day you access credit to the day you pay it back, which your company carefully plans payments to avoid any interest due to the money that was borrowed. I guess if there's no interest, then there's no debt, right?

Yes I sincerely believe if you have what it takes to become independently wealthy you will have done so by 30. you seem a bit bitter, maybe you should talk to someone about that.

LOLZ...yes...please tell me how bitter I am about not being independently wealthy by 30. If you think I sound bitter because I don't measure my "ego" by the size of my bank account, then I don't think I'm the one with the problem here.

And while we started talking about a 25k car the gentleman I responded to was (clearly) talking about a much wider view of finances in general.

I was trying to point the thread back to the original topic, but ok?

I'm not theorizing here this is my life, this is what I have learned and been exposed to, and even though we are no-longer a startup I still work the 60-80 hr work week and have a company of my own aswell. And to answer your next question, no I'm not 30...yet...

And your life is not the type of life that everyone experiences nor does everyone have the same access to the same resources as you do/did.

you can feel how you feel, but you are lying to yourself if you think you need to start big to end big, This machine shop started by making fold up cardboard view finders for the first Kodak Cameras...now we make rocket components and Satellite parts day in and day out.

Your employer is a 60+ year old company owned by the same family for what, maybe 3-4 different generations? If you think it's a simple success story about fiscal conservatism for a small business, someone's been putting something funny in the water cooler. There's a lot of bs that can build up in the company PR line in those 60 years.

Feel free to keep making passive aggressive swipes at me though. Honestly, I just wish they were more creative. Either way, I'm done with this derail.

Originally Posted by jmaryt

what he really means is if you DON'T NEED to '"float a note" to buy this car,
then you shouldn't.you would be better served to avoid the debt altogether..just sayin'

And you'd be even more better served by buying a used 10 year old Civic for $5k instead of a $26k RWD sports coupe if we're talking about bad financial decisions...just sayin' But I think he's more interested in telling me how bitter I am.

[SkullWorks]

2 generations 6 employees just so you have an idea how far of base you last line of logic is, I won't address the rest of the post, opening statement told me all I need to know about your self worth

[suaveflooder]

Originally Posted by AznBRZer

Why does it have to be everyone's life goal? I know plenty of people that don't want to start a family. If you get hurt on the job, that's what worker's comp and disability/life insurance is for. If you're relying solely on your own ability to earn income to cover those unforeseen circumstances without the proper policies in place while doing your type of work, you're doing it wrong.

Lol, you are thinking small, my friend. I'm assuming you are being somewhat facetious, so I am going to move past this question.

(by the way, I carry health, life, auto, renters, have a will, etc. I am set up for the "just in case" events. I'm working on getting long term disability for both my wife and I here in the next month or so)

Originally Posted by AznBRZer

That's nice and all, but if you're spending $25k+ on a car, that ship has already sailed for at least 3 of those years. Before we even address that, show me a mutual fund that guarantees 12% over 40 years and I'll sell you my car tomorrow for a $1. I'll even buy you lunch, so it'll be like paying you to take my car.

Are you talking about me personally? My $30k (tax tittle license and a couple other stupid goodies) car will be paid off in a year, year and a half max. Now if I knew then what I know now, I would have waited the year and saved the interest money.

Originally Posted by AznBRZer

Before we even address that, show me a mutual fund that guarantees 12% over 40 years and I'll sell you my car tomorrow for a $1. I'll even buy you lunch, so it'll be like paying you to take my car.

lol, no mutual fund will "guarantee" 12% and I never said that they will, but you can find mutual funds with a good track record and invest in those. This is another reason for diversification. Some years will be way high, other low, others won't move at all, but in general, you can find ones that are close and over the period of 40 years, you will have a good return. Even if it only yields a 6% return, you will still be a multimillionaire.

Originally Posted by AznBRZer

Uhhh...those dudes are snake oil salesmen. They make most of their money off their speaking engagements and book sales. You're better off reading Outliers by Malcolm Gladwell to see what it really takes.

HAHA! I love that you think this. They are successful men who have studied A LOT and analyzed wealthy people. Funny thing is that most wealthy people point out the same ideas for success. Tony Robbins and Harv Eker didn't come up with these ideas, they simply wrote it down and put it in a pretty cover. There is NOTHING wrong with sales. lol, we are all sales men/women to some degree.

Not to doubt you on how they make there money, but Tony Robbins is worth 480 million dollars. He actually goes in to how he makes his money in some of his CD's....while book sales and speaking engagements are part of it, they aren't the majority of it.

Honest question, have you read any of the authors books that I mentioned? My vote is no or you wouldn't be accusing them of something they are not. Let me guess....internetz telling you what to think? I will not speak to Malcolm Gladwell, because I haven't read his material, but a quick google search showed me that he is doing the same as the authors I mentioned. He is a salesman as well. Once again, not a bad thing. I will absolutely pick up his book.

Originally Posted by AznBRZer

No one's judging you for wanting to pay for everything in cash and it doesn't make you a special snowflake, dude. If that's how you want to roll, then more power to ya. But the system of lending and borrowing money has been around for thousands of years. The biggest differences are that now, you don't become an indentured servant/slave and you don't go to prison to work off your debt.

You're a funny guy. I never claimed to be a special snowflake and I've gotten quite a bit of judgement for what I think about debt, from friends as well as people on this site.

Originally Posted by AznBRZer

But the system of lending and borrowing money has been around for thousands of years. The biggest differences are that now, you don't become an indentured servant/slave and you don't go to prison to work off your debt.

Borrowing and lending in the way that you and I know it with FICO scores and putting everything on a credit cards to build your credit is actually very recent. The credit card was born in 1950 by Frank McNamara in New York.

As far as not becoming a "slave" I wont agree with you on that. People are crazy enough to ring up INSANE amounts of debt, they work INSANE hours to make the minimum payments on 21% interest credit cards that they either got for "an emergency" or because it started off as a "90 days same as cash" idea. Ask them if they feel trapped and enslaved by their debt.

[jlu]

Originally Posted by SkullWorks

2 generations 6 employees just so you have an idea how far of base you last line of logic is, I won't address the rest of the post, opening statement told me all I need to know about your self worth

6 employee company, hmmmmm...

Meanwhile you can go look at the corporate/government bond market and see what the market thinks of debt.

There's nothing inherently wrong with debt, just with not using it properly.

[shirker]

Originally Posted by suaveflooder

If you follow any of Tony Robbins books, or have read T.Harv Eker's "Secrets of the Millionaire Mind", they both go into many reasons why more people aren't wealthy/rich. Both of those authors are multimillionaires.

With all due respect, maybe it's time that you do some reading. This stuff is really cool and it takes a certain mindset to actually follow through with it and become wealthy.

Excerpt from the book description on Amazon:

Eker's claim to fame is that he took a $2,000 credit card loan...turned it into a chain of 10 within two and a half years and sold it in 1987 for a cool $1.6 million.

Wait, what??? Did the very first sentence just say that he took on debt to make money? Yes, yes it did. Please, and I ask this completely sincerely, how you can reconcile the method with which he made his millions (carrying debt for several years) with your advice to "always be debt free"?

With all due respect, the evidence that you cite to support your claims really irks me. IMO, you spend too much effort citing names, book titles, and anecdotal examples of those who "made it" rather than examining the hard analysis behind the numbers. Have you ever whipped up an excel spreadsheet or made your own financial models of cost-benefit analysis for a significant purchase?

My bet is that you haven't, and neither have the vast majority of people. I did, and that's how I decided to finance for the longest term possible at a ridiculously low rate - because by the end of my 48 month term, I'll have made back my interest payments in spades by diligently putting my liquidity into higher return investments and come out cash positive (earned interest >> paid interest). If I paid cash outright for the car, I'd neither pay interest nor make interest, and come out cash neutral.

In general, there is NOTHING wrong with reading other people's advice, and in fact I applaud you for going through such efforts to research. But there is absolutely EVERYTHING wrong with taking said research at face value and blindly following it. I get the impression that that is what you do, and I do recall another post of yours where you say that you "imitate what wealthy people do" in order to become wealthy yourself. I don't care who makes money, I care how. To understand how, you must trace the steps they take. In Eker's case, he made money by responsibly taking on debt.

Debt in and of itself isn't the problem; it's those people too ignorant to understand how to manage it, and manage it well.

[shirker]

Originally Posted by SkullWorks

Every millionaire I know has always told me to stay out of debt, there is no such thing as a guaranteed return on anything. So only spending money you have will always keep you above water, and you will never be moving backwards, does this mean it is a little harder to get a leg up, yes sometimes it does

Not to sound pejorative, but a small sample size of however many millionaires you know does not constitute mass consensus. People like to talk about debt as if all debt is the same, when in reality that couldn't be further from the truth. Basic example: revolving debt vs. installment debt.

Revolving debt is high interest, which makes it inherently bad - there's no way you can take that money and put it in something that will earn you more (e.g. 20% credit card loan interest)

Installment debt is generally low interest, which at best CAN be good, if and only if incurring that debt grants you the funds to make even more money elsewhere. At worst, it's still far less bad than revolving debt.

I don't disrespect the efforts and business savvy of those who stay perpetually debt free. I just despise the fearmongering anytime someone utters the word "debt"

[suaveflooder]

Originally Posted by shirker

Excerpt from the book description on Amazon:

Wait, what??? Did the very first sentence just say that he took on debt to make money? Yes, yes it did. Please, and I ask this completely sincerely, how you can reconcile the method with which he made his millions (carrying debt for several years) with your advice to "always be debt free"?

With all due respect, the evidence that you cite to support your claims really irks me. IMO, you spend too much effort citing names, book titles, and anecdotal examples of those who "made it" rather than examining the hard analysis behind the numbers. Have you ever whipped up an excel spreadsheet or made your own financial models of cost-benefit analysis for a significant purchase?

My bet is that you haven't, and neither have the vast majority of people. I did, and that's how I decided to finance for the longest term possible at a ridiculously low rate - because by the end of my 48 month term, I'll have made back my interest payments in spades by diligently putting my liquidity into higher return investments and come out cash positive (earned interest >> paid interest). If I paid cash outright for the car, I'd neither pay interest nor make interest, and come out cash neutral.

In general, there is NOTHING wrong with reading other people's advice, and in fact I applaud you for going through such efforts to research. But there is absolutely EVERYTHING wrong with taking said research at face value and blindly following it. I get the impression that that is what you do, and I do recall another post of yours where you say that you "imitate what wealthy people do" in order to become wealthy yourself. I don't care who makes money, I care how. To understand how, you must trace the steps they take. In Eker's case, he made money by responsibly taking on debt.

Debt in and of itself isn't the problem; it's those people too ignorant to understand how to manage it, and manage it well.

Lol, Tony Robbins took out debt too to make his money. Why not use him as an example?

The two authors I listed was in response to the comment "If the path to wealth was just being debt-free, there'd be a lot more wealthy people out there." made by AznBRZer. He was incredibly inaccurate in his thinking and I used two authors who make a very good living getting people to think like a successful person/wealthy person.

How's that for reading advice and following it blindly? Damn....sounds like you messed up. I'm not following EITHER of their start up plans. Guess what? I will still be a millionaire.

My ideas come from this: Our society is based on "I deserve this." You can fight me on this all you want, but the sad fact of the matter is that people are NOT responsible with debt and end up paying A LOT of money and becoming enslaved to their debts. It is no fault but their own. You show me one or two people who are actually good with debt, I'll show you eight or nine that AREN'T.

I've chosen a different path based on advice that I have gotten from millionaires (one of them is my uncle). None of them are perfect, they all make their mistakes. All of them have told me to get rid of debt and stay that way! I've weighed my options and looked and the pros and cons. My decision is to pay for everything in cash. Yes, God willing this even means a house.

You can continue to try and pick apart every part of my thinking, but it won't work. Yes, you can become wealthy while taking out debt, but that is not my choice and I'm going to stick with spending money I actually have.

As far as a cost-benefit analysis, I've done them for insurance. As of now, that is the only "significant purchases" that I need to do it for. How long will I have to remain healthy, how many accidents will I have to be in, if I get sick, how much can I afford......they've all helped me adjust my premiums on my different insurances. I know what a cost-benifit analysis is and I know the benefits of doing them. Right now, the only personal experience I have with them is transferring risk from myself to the insurance company. That's all I need right now as I pay off debt.

Don't judge what you don't know (I'm referring to me as a person). Just because I chose something that you don't like, doesn't mean I haven't researched other options.

With all due respect, read everything in its entirety so that you know what I'm referring to. Context is a good thing. I hardly believe everything I read.

[mav1178]

Originally Posted by mav1178

No two people can offer you the right answer. It all comes down to what your "time value of money" equals.

If you have nothing better to do with your money and see a car as an investment, buy it outright. You take the risk of keeping it in good running order and/or avoiding damage, and you can sell later and get back your investment (minus depreciation.)

If you can invest the money and can get better than a 2% return, finance it. Any ROI percentage over your "time value of money" (interest plus inflation, rounded to 1% for sake of simplicity here) would be better off in the long run.

Everyone's answer will be different. YMMV.

-alex

I like how no one reads what I wrote... so I'll just quote myself.

As for anyone saying it works for them... well, if it works for you, more power to you.

The rest of the thread went to shit, so for the OP: value your own money accordingly and go from there.

-alex

[shirker]

Originally Posted by suaveflooder

My ideas come from this: Our society is based on "I deserve this." You can fight me on this all you want, but the sad fact of the matter is that people are NOT responsible with debt and end up paying A LOT of money and becoming enslaved to their debts. It is no fault but their own. You show me one or two people who are actually good with debt, I'll show you eight or nine that AREN'T.

I have not and will not take issue with that point at all...yes it's true that too many people think that they can/should get something just because they can afford the monthly payments, or "deserve it" regardless of financial consequences. Yes, bad debt users far exceed good debt users, but something needs to be said of the rationale behind good debt.

Originally Posted by suaveflooder

Don't judge what you don't know (I'm referring to me as a person). Just because I chose something that you don't like, doesn't mean I haven't researched other options.

No judgment, just disagreement. I've tried to stay away from ad hominem attacks and focus specifically instead on your arguments themselves.

Originally Posted by suaveflooder

All of them have told me to get rid of debt and stay that way! I've weighed my options and looked and the pros and cons. My decision is to pay for everything in cash.

You can continue to try and pick apart every part of my thinking, but it won't work. Yes, you can become wealthy while taking out debt, but that is not my choice and I'm going to stick with spending money I actually have.

I'm not trying to pick everything apart at all - just the wisdom behind your specific conviction to stay 100% out of debt. Though your basic financial philosophy is diametrically opposite to mine, that's perfectly fine - my sole raison d'être for continuing this discussion is NOT to convince you to change your views, but to present another viewpoint. It's not necessarily for your benefit (you seem to have made up your mind), but it might help out someone, somewhere on the internet. Then again, this is a car forum and not a personal finance forum, so maybe nobody cares :happy0180:

/end of thread derail

[suaveflooder]

Originally Posted by shirker

I have not and will not take issue with that point at all...yes it's true that too many people think that they can/should get something just because they can afford the monthly payments, or "deserve it" regardless of financial consequences. Yes, bad debt users far exceed good debt users, but something needs to be said of the rationale behind good debt.

No judgment, just disagreement. I've tried to stay away from ad hominem attacks and focus specifically instead on your arguments themselves.

I'm not trying to pick everything apart at all - just the wisdom behind your specific conviction to stay 100% out of debt. Though your basic financial philosophy is diametrically opposite to mine, that's perfectly fine - my sole raison d'être for continuing this discussion is NOT to convince you to change your views, but to present another viewpoint. It's not necessarily for your benefit (you seem to have made up your mind), but it might help out someone, somewhere on the internet. Then again, this is a car forum and not a personal finance forum, so maybe nobody cares :happy0180:

/end of thread derail

:happy0180:

[xdudefromheaven]

Originally Posted by rmjjensen

DO NOT PAY CASH! DO NOT DO NOT DO NOT - it is completely foolish right now.

The cost to borrow money is so cheap now you need to take advantage of it (assuming you can actually afford the car). Assuming you borrow $27.5k @ 0.74% / 48 months ...you'd pay $580 in interest over 4 years - that's $12/mo ...in the meantime, take your $27.5k and buy some corporate bonds (perhaps the new Apple issuance) - you'll make a lot more than $580 over 4 years...

i pay about 530$ a month and i only put 5k down payment and insurance will kill you tho when you get an FRS OR A BRZ

[Jahdai42]

Originally Posted by shirker

Just realized I forgot leasing as an option...oops.


PenFed (Pentagon Federal CU) offers a 0.74% rate on new cars bought through their free "car buying service" that are financed for 48 months or less


Don't mind at all - just a dollar shy of $380 in total interest

PenFed is awesome, I financed my CR-V through them. Great customer service too.

[DR1FT]

Originally Posted by xdudefromheaven

i pay about 530$ a month and i only put 5k down payment and insurance will kill you tho when you get an FRS OR A BRZ

What's your loan term? And how much for insurance?