[macfantn]

what is the best place to finance a mac? any places do interest free for 12 months or anything?

[SpaceMonkey]

You might as well just spend 12 months beforehand saving up the cash to buy one outright.

[alligator]

You have a couple of choices:

1. Apple financing
2. Local bank financing
3. Credit card

Of the three, I would suggest none unless your absolutely need it for school and you have the means to pay it off within six months. Taking on more debt should be avoided at all costs. I financed my first computer through my local bank, had it paid off in six months, and built up excellent credit that way.

Please, think twice before buying something you can't afford to pay for with cash.

[Eug]

Aren't you the guy with the big mortgage? If so...

Having a big mortgage doesn't mean you should go without a computer. However, if that mortgage is preventing you from having $1000 for a computer, then you should probably think twice about getting that computer, unless you absolutely need it for work.

Remember, it's always good practice to have a slush fund for a couple of months of mortgage payments and household expenses, just in case. It sounds like you may not have that either.

[Art Vandelay]

This is also the same guy that's recently been looking for a new job that he didn't know what the pay would be, has been looking for a new digital camera, new flat panel tv, new home theater system, and a new entry level luxury car.

Looks like you've already burned through that extra money you said you had to get this stuff.

[macfantn]

well i passed on the job, pay was too low i make more at my current job. I just bought the canon sd1000, waiting til tax time for the tv and may finance a mac or just save up money not sure. depending on what they announce at macworld. the car is a year or so away

[ort888]

When I was about 22 I took out a loan to buy a Powermac 6500 and a monitor for $2,500. The $1,299 original iMac came out about 6 months later.

I was paying it off for 3 years, and for most of that time, I owed more to the bank then my computer was worth.

I would recommend against financing computers unless you need it for work.

[rozwado1]

yeah, don't finance tech. bad financial move.

[AngelaBaby]

Originally Posted by macfantn 

what is the best place to finance a mac? any places do interest free for 12 months or anything?

Are you serious? Who the hell would finance a computer? What the hell is this world coming to? Debt is where it's at?

[Lateralus]

Originally Posted by macfantn 

what is the best place to finance a mac? any places do interest free for 12 months or anything?

NewEgg.

I could have bought my MacBook outright, but NewEgg is offering 12mo/no payments (no interest if you pay it off by the 11th) on all purchases over $1000. So in my continuing efforts to build up a credit history, I decided I had no reason to not finance.

[imitchellg5]

Originally Posted by AngelaBaby 

Are you serious? Who the hell would finance a computer? What the hell is this world coming to? Debt is where it's at?

Financing ≠ debt if you pay it off. Financing = debt when you let it sit around and build interest for an extended period of time. If financing = debt, nobody would live in houses or drive cars.

[RAILhead]

Why in Hades would someone "finance" a computer? Sock money into a CD for a year, get a little interest, then buy it outright.

[CreepDogg]

I concur with most in here. Don't finance it unless you ABSOLUTELY need it.

Even if you get 12mo/no payments - then in one year you'll pay $1300 or whatever for a year-old Macbook that's probably all scratched up and has year-old tech.

Or - save for that year and you'll pay $1100 for new hotness...

[♥]

Don't finance a depreciating asset.

Buy used on Craigslist - trade cash for it only.

[Trygve]

Originally Posted by imitchellg5 

Financing ≠ debt if you pay it off. Financing = debt when you let it sit around and build interest for an extended period of time. If financing = debt, nobody would live in houses or drive cars.

I know lots of people who simply pay cash for thier cars and a few who have done it for thier house. I have financed my property but will not finance a car unless I can get an interest rate that is much lower than what I can safely earn elsewhere.

[wallinbl]

Originally Posted by imitchellg5 

Financing ≠ debt if you pay it off. Financing = debt when you let it sit around and build interest for an extended period of time. If financing = debt, nobody would live in houses or drive cars.

Yes, it is still debt. A house is about the only thing you can buy that doesn't depreciate. Really, you should pay cash for cars. I know that marketing works well and tells you that you need the newest, coolest car, but you really don't. Notice that nearly all car ads show you a monthly payment? That's one of the most ridiculous ways to go about deciding on a car, but nearly everyone does it. Buy what you have the cash for. Houses are the only real exception, but even with houses, you should be careful to buy what you can reasonably afford. People get focused on how they can afford $XXX monthly payment and then end up in screwy loans because they were squeezing out a payment amount.

[wallinbl]

Originally Posted by Lateralus 

NewEgg.

I could have bought my MacBook outright, but NewEgg is offering 12mo/no payments (no interest if you pay it off by the 11th) on all purchases over $1000. So in my continuing efforts to build up a credit history, I decided I had no reason to not finance.

Yes, the old Room To Go trick. The vast majority of people fail to pay in the first 12 months. So, at the designated month, they are slapped with all of the back interest and a new monthly payment. Not to say that it won't work for you, but it's a practice that's designed to prey on those that are less responsible.

[BRussell]

Originally Posted by imitchellg5 

Financing ≠ debt if you pay it off. Financing = debt when you let it sit around and build interest for an extended period of time. If financing = debt, nobody would live in houses or drive cars.

It's still debt, but there's such a thing as good debt. Financing a house is generally good debt because your house appreciates in value, and you end up with more in the long run. Financing a car is bad debt because it depreciates in value. Same with a computer. But it can depend on the context: If you need a computer to get a good job, or to get an education, then it's arguably good debt because it leads to something better. But that's probably not the case for most people.

[Eug]

Originally Posted by BRussell 

It's still debt, but there's such a thing as good debt. Financing a house is generally good debt because your house appreciates in value, and you end up with more in the long run. Financing a car is bad debt because it depreciates in value. Same with a computer. But it can depend on the context: If you need a computer to get a good job, or to get an education, then it's arguably good debt because it leads to something better. But that's probably not the case for most people.

Furthermore, even if the house depreciates, it generally doesn't depreciate by very much, and in the meantime you actually have a place to live.

Not so with a car or a computer. That said, people do need cars, and it's a fairly big ticket item so it makes sense for many to finance it. However, by North American standards a MacBook is a pretty small ticket item. If you need to finance a MacBook then perhaps your financial situation/goals/practices should be reevaluated.

As much as I dislike PCs, if I were that strapped for cash, I'd just buy a low end used PC (with a 90 day warranty), for perhaps $200 (which includes a Windows licence).

[imitchellg5]

Originally Posted by BRussell 

It's still debt, but there's such a thing as good debt. Financing a house is generally good debt because your house appreciates in value, and you end up with more in the long run. Financing a car is bad debt because it depreciates in value. Same with a computer. But it can depend on the context: If you need a computer to get a good job, or to get an education, then it's arguably good debt because it leads to something better. But that's probably not the case for most people.

Right, that's what I meant. My post wasn't very articulated. I personally don't think you should finance a computer, but if you can pay it off quickly it will build positive credit history. My car was bought with cash, but when we bought the Xterra we payed for about $15,000 on credit card (for airline miles ) and payed it off when the bill came. We are financing the last (approximately) $10k with a 3 year loan that has no interest. It's not a bad deal. Of course, about the only reason we can do this is because according to the credit company we have the best credit of anyone in the city, which isn't too hard to believe. We buy everything on credit card and pay it off immediately, mainly for the air miles. We can get about 8-10 round trip tickets a year which we use to fly down friends.

[BRussell]

Eug, you could apply your logic of buying a PC to car-buying too: If you need a car but don't have the money, you buy a cheap car.

Financing a car is very common, but it still violates the principle of good vs. bad debt. Most people just want much nicer cars than they can afford.

[BRussell]

Originally Posted by imitchellg5 

Right, that's what I meant. My post wasn't very articulated. I personally don't think you should finance a computer, but if you can pay it off quickly it will build positive credit history. My car was bought with cash, but when we bought the Xterra we payed for about $15,000 on credit card (for airline miles ) and payed it off when the bill came. We are financing the last (approximately) $10k with a 3 year loan that has no interest. It's not a bad deal. Of course, about the only reason we can do this is because according to the credit company we have the best credit of anyone in the city, which isn't too hard to believe. We buy everything on credit card and pay it off immediately, mainly for the air miles. We can get about 8-10 round trip tickets a year which we use to fly down friends.

That's cool if you can do it. I don't think I'm organized enough.

[imitchellg5]

Originally Posted by BRussell 

That's cool if you can do it. I don't think I'm organized enough.

Yeah. My mom actually worked as a financial consultant a few years ago after her boss told her to take a break from dentistry. They had been in a bit of a financial hole, but she figured a way out. She is so good with money, it's crazy. She is always very very organized. She is trying to teach me how to manage money, and I'm good at it, but I don't think I could ever be like her.

[Eug]

Originally Posted by BRussell 

Eug, you could apply your logic of buying a PC to car-buying too: If you need a car but don't have the money, you buy a cheap car.

I agree, but the difference here if you go too cheap on a car, you're may have serious problems with repair costs and time lost, etc.

For many people it makes much more sense to spend a little more on a car that has a significant warranty.

Do you buy a $7000 car out of warranty, or a $10000 car with a reasonable warranty? I would generally take the latter.

I suppose one could get a $3000 car, but it could end up being a serious PITA.

I agree though. If you can't afford a $10000 car, then don't buy one.

Originally Posted by BRussell 

That's cool if you can do it. I don't think I'm organized enough.

It's not that hard... if you have some will power (and your finances aren't too bad).

In fact, I generally buy stuff like computers and small luxury items when I have enough cash in the bank... but still buy them on my credit card, for a couple of reasons:

1) Extended warranty, at least on some stuff, with certain credit cards.
2) I get 1-2% cash back from my credit card.
3) Easier time dealing with problems with retailers.

Because I have the cash in the bank already, I pay off the credit cards immediately. If I really can't pay them off immediately, then I use my line of credit. Now, many people can't get a line of credit, but many people can even though they think they can't.

It annoys me to no end when I hear someone is carrying a credit card debt yet has a relatively stable financial situation but has never even looked into getting a line of credit. That said, the "bad debt" idea can apply here too. The other side of the coin is that some will get a line of credit, and then max it out as well, just because they have the extra access to cash.

In the end I don't think takes that much organization. It's not hard to actually put a cheque in the mail or pay a bill online. It just takes discipline to not spend too much money. That's the hard part.

[wallinbl]

Originally Posted by Eug 

It annoys me to no end when I hear someone is carrying a credit card debt yet has a relatively stable financial situation but has never even looked into getting a line of credit. That said, the "bad debt" idea can apply here too. The other side of the coin is that some will get a line of credit, and then max it out as well, just because they have the extra access to cash.

Why have a line of credit? Save your money and you don't need one. You only need the line of credit if you're spending more than you should or you're under 30. By the time you're 30, you should have saved enough of your own money to have a cushion without needing a line of credit for emergencies.

[Eug]

Originally Posted by wallinbl 

Why have a line of credit? Save your money and you don't need one. You only need the line of credit if you're spending more than you should or you're under 30. By the time you're 30, you should have saved enough of your own money to have a cushion without needing a line of credit for emergencies.

I definitely disagree with this.

I have an extremely good credit rating and good savings, yet I have a line of credit... which I rarely use. But I have needed it once in a while, when large unexpected expenses have hit. For example, when a family member passed away in a different country. Airline tickets for me and family members, funeral expenses, etc. add up very quickly. Yes, I did have investments I could have cashed in, but then I would hit with taxes, etc. and such investments aren't always the most liquid anyway.

Personally think it poor advice to advise against getting a line of credit... that is if the person is going to actually use it responsibly. In fact, every single person I know who has a good financial situation also has a line a credit... again that they rarely use. A line of credit can be a very powerful tool... for those who don't abuse it.

P.S. As I've gotten older, I've increased my line of credit... even though I don't generally use it. Having a cushion never hurts. For me, this means both cash and just in case, extra credit.

[RAILhead]

Our cushion is tens of thousands of dollars is a money market fund. It's also known as our emergency fund. So, if what happened to you were to happen to us, we would use that cash rather than credit.

[Eug]

Originally Posted by RAILhead 

Our cushion is tens of thousands of dollars is a money market fund. It's also known as our emergency fund. So, if what happened to you were to happen to us, we would use that cash rather than credit.

Is the money market fund inside or outside a tax deferred account?

If outside, that's fine, but if it's inside, then things get much more complicated.

Furthermore even my money market funds take a few days to show up in my account, and longer during holidays. My line of credit money shows the very next day or even the same day.

I just don't understand why people are against lines of credit if they can use them responsibly. The are completely free if you don't use them. There is no downside, unless you have no will power.

Furthermore, many people don't have the luxury of having 5-digit money market funds outside a tax-deferred account. In fact, such a financial setup is probably inappropriate for many people even if they could technically do it. One shouldn't have to over-compromise to do this. Having a line of credit can help out here, and doesn't negatively affect your finances, since an unused line of credit has zero financing cost.

[RAILhead]

I should have expounded further, but my point was that people can save for emergencies (GASP!) and not rely upon credit.

I'm "against credit" because of what it does to most people, financially. The average college student graduates with $5000 +/- a few CC debt -- not counting loans, etc. They add a car note. They add all the other stuff they thinkt hey need, and befor eyou know it, the vast majority of them are in a life pattern of revolving debt with no real savings or planning for retirement, etc.

Look, only people that live under a rock think that debt and CC spending aren't a problem with the vast majority of Americans. The solution is to NOT get people "hooked" on debt and credit. A few of us may be able to handle high lines of credit (last I totaled, I have about $800k available), but most people can't -- and that's a fact.

[Eug]

Originally Posted by RAILhead 

I should have expounded further, but my point was that people can save for emergencies (GASP!) and not rely upon credit.

I'm "against credit" because of what it does to most people, financially. The average college student graduates with $5000 +/- a few CC debt -- not counting loans, etc. They add a car note. They add all the other stuff they thinkt hey need, and befor eyou know it, the vast majority of them are in a life pattern of revolving debt with no real savings or planning for retirement, etc.

Look, only people that live under a rock think that debt and CC spending aren't a problem with the vast majority of Americans. The solution is to NOT get people "hooked" on debt and credit. A few of us may be able to handle high lines of credit (last I totaled, I have about $800k available), but most people can't -- and that's a fact.

Many people can't, I agree. However, several people I know who had heavy credit card debt were helped immensely by getting a line of credit. When your interest rate drops from 18% to 7%, it's hard to argue with that.

The solution to credit card problems isn't just to dogmatically declare that debt is bad.

It's easy to say "well you shouldn't have spent so much money and should have saved for a rainy day", but once they're in a difficult situation, stuff like credit lines (or other forms of lower interest rate debt consolidation) can help.

It reminds me of a friend of mine. He always told his bank to limit his credit card to $500. He's responsible with his money, but uses that hard limit to ensure his monthly credit card spending is less than that, so he never has any significant credit card debt. That's all fine and dandy, but then he started telling people that they should do the same because... debt is bad. I'm sure you'd agree that a limit of $500 would simply be too annoying, and having more "potential" debt in the form of a higher credit card limit would be fine for many people... like yourself.

P.S. In case anyone is wondering: He was paying cash for a lot of stuff. Personally I generally don't feel comfortable carrying $1000 in cash around, but that's just me.

[RAILhead]

...until the next "bad thing" happens -- or they see that 50-inch plasma -- and their debt increases yet again.

[Eug]

Originally Posted by RAILhead 

...until the next "bad thing" happens -- or they see that 50-inch plasma -- and their debt increases yet again.

Didn't you just say you have a big line of credit? If you do, then why, if you don't need it?

Did you run out and buy a new Porsche just because your line of credit would allow you to do so?

P.S. If I'm reading this thread (and previous threads) right, then macfantn might not be the best candidate for a line of credit. However, many people are, esp. once they settle down and put their minds to getting control of their finances.

[wallinbl]

Originally Posted by Eug 

Is the money market fund inside or outside a tax deferred account?

You should have both. Read any book about finances.

Furthermore even my money market funds take a few days to show up in my account, and longer during holidays. My line of credit money shows the very next day or even the same day.

I get 5.05% from a savings account with eTrade. I can have the money in my checking account (different bank) the next day.

Furthermore, many people don't have the luxury of having 5-digit money market funds outside a tax-deferred account. In fact, such a financial setup is probably inappropriate for many people even if they could technically do it. One shouldn't have to over-compromise to do this. Having a line of credit can help out here, and doesn't negatively affect your finances, since an unused line of credit has zero financing cost.

How is in inappropriate to have retirement savings and emergency savings? Are you concerned that it will impact your standard of living to save in more than one place? I'd say that you're living above your means if you are substituting a line of credit for emergency savings.

The difference between your own money and someone else's should be obvious. Using someone else's money creates a liability to pay them back, which puts a restriction on your future finances. You should avoid creating future financial obligations for yourself because the future is unpredictable. You might be out of a job.

[Eug]

Originally Posted by wallinbl 

You should have both. Read any book about finances.

Yes you should. However, it is not always easy for everyone to have that.

I get 5.05% from a savings account with eTrade. I can have the money in my checking account (different bank) the next day.

That's fine, but how much taxes are you willing to accept on such a non-tax-deferred account? Do you have $30000 in that account for example?

How is in inappropriate to have retirement savings and emergency savings? Are you concerned that it will impact your standard of living to save in more than one place? I'd say that you're living above your means if you are substituting a line of credit for emergency savings.

The difference between your own money and someone else's should be obvious. Using someone else's money creates a liability to pay them back, which puts a restriction on your future finances. You should avoid creating future financial obligations for yourself because the future is unpredictable. You might be out of a job.

Yes you might, and that's why it's nice to have both emergency savings AND a line of credit just in case.

However, dogmatically ignoring the potential benefits of credit lines is foolish IMO.

I keep 3-4 months of mortgage payments and household expenses in a high interest savings account, outside a tax-deferred account. However, I still have a credit line just as a backup.

Anyways, I'll put it terms that might actually apply to many with heavy credit card debt (not us).

Scenario A:

Let's say Joe is 25 years old, and stupidly has racked up $5000+ on his credit cards. They're maxed out and he's struggling to make all his utility payments. No surprise, because he's paying say $100 a month just in interest on those 24% credit cards.

Because he's otherwise doing OK, the bank agrees to give him a line of credit for $5000 at 8%. Suddenly his interest payments drop to $40, leaving him an extra $60 per month.

He'd been paying about $100 per month to his credit card but doesn't change that for the line of credit, and feeling more comfortable, after a month he goes out and buys a new MacBook and a new digital camera, with a few accessories, and suddenly has another $2000 on his credit card.

Yes, obviously this is stupid.


Scenario B:

Let's say Joe is 25 years old, and stupidly has racked up $5000+ on his credit cards. They're maxed out and he's struggling to make all his utility payments. No surprise, because he's paying say $100 a month just in interest on those 24% credit cards.

Because he's otherwise doing OK, the bank agrees to give him a line of credit for $5000 at 8%. Suddenly his interest payments drop to $40, leaving him an extra $60 per month.

Knowing this, he asks that the bank to automatically withdraw $160 each month from his account, to be applied line of credit. Slowly but surely , that previous credit card debt gets whittled down.

I happen to know people who fit into Scenario B. Just because it was dumb to get into that situation in the first place doesn't mean you should just say it was dumb and that debt is bad. That helps nobody.

[RAILhead]

Yes, but it's a statistical fact that most people are Scenario A types, not B types, thus many of us do our best to keep people from ever having to decide which type to be in the first place.

[wallinbl]

Originally Posted by Eug 

Yes you should. However, it is not always easy for everyone to have that.

Because people are impulsive and irresponsible. I can say this because I've been there - I'm not trying to be better than anyone or demeaning.

That's fine, but how much taxes are you willing to accept on such a non-tax-deferred account? Do you have $30000 in that account for example?

I leave around $15-20K between that account and another non retirement account.

However, dogmatically ignoring the potential benefits of credit lines is foolish IMO.

I fail to see the benefit. Spend some of your cash and replenish your cash. Don't borrow from someone else.

I happen to know people who fit into Scenario B. Just because it was dumb to get into that situation in the first place doesn't mean you should just say it was dumb and that debt is bad. That helps nobody.

Debt is what got you into that position. Just because another form of debt helps lessen the problem you created with debt, doesn't suddenly make debt good. You're just talking about how "bad" in your examples. It's all bad.

[Eug]

Originally Posted by RAILhead 

Yes, but it's a statistical fact that most people are Scenario A types, not B types, thus many of us do our best to keep people from ever having to decide which type to be in the first place.

Originally Posted by wallinbl 

Debt is what got you into that position. Just because another form of debt helps lessen the problem you created with debt, doesn't suddenly make debt good. You're just talking about how "bad" in your examples. It's all bad.

It's this holier than thou attitude which helps noone.

If they ask, I give people advice on ways they can lessen their debt load. If they chose to take it then great, I've helped someone. If they don't, then we'll that's their problem. At least I tried, instead of just telling them they're idiots.

Originally Posted by wallinbl 

Because people are impulsive and irresponsible. I can say this because I've been there - I'm not trying to be better than anyone or demeaning.

To be frank, you sound like an ex-smoker acquaintance of mine. Mention smoking and he'd go into a rant and call smokers (even ones trying to stop) idiots etc. Yeah, smoking is stupid, but I don't see how ranting and raving about how stupid smokers are helps anything. (And no, I don't smoke.)

[wallinbl]

Originally Posted by Eug 

It's this holier than thou attitude which helps noone.

If they ask, I give people advice on ways they can lessen their debt load. If they chose to take it then great, I've helped someone. If they don't, then we'll that's their problem. At least I tried, instead of just telling them they're idiots.

It's only "good" in the context of already being in worse debt. On it's own, it is bad. You shouldn't spend money you don't have.

It's not about being holier. It's about the fact that it's dangerous. The fact that it is dangerous is exactly how the creditors profit. They're tempting people as much as they can because they know they'll get people to trip up and that's how they make money.

[Eug]

Originally Posted by wallinbl 

It's only "good" in the context of already being in worse debt. On it's own, it is bad. You shouldn't spend money you don't have.

It's not about being holier. It's about the fact that it's dangerous. The fact that it is dangerous is exactly how the creditors profit. They're tempting people as much as they can because they know they'll get people to trip up and that's how they make money.

So what's your advice to a friend with credit card debt and high interest rates?

"Go away, cuz yer stoopid!!1"???

[RAILhead]

Uhh, you must not remember from my other posts that I am a financial planner, so the only holier-than-thou attitude you're picking up is the one you're fabricating.

To answer your question, step 1 is to stop borrowing money. Period. End of story.

Second, they need to save up a load of cash while paying minimums on everything else. This should be around $1000 to cover any emergencies so that if one occurs, they don't add it to their total debt. While doing this, I have no problems counseling people to ask for interest rate drops or moving balances to a low interest card.

Third, you simply pay off your debt, using every penny you can muster. Intensity in this step, coupled with no m ore borrowing, allows you to pay off huge debts in short-order.

The key, though, is that a person has to get step 1 through their thick skull.

[Eug]

Originally Posted by RAILhead 

Uhh, you must not remember from my other posts that I am a financial planner, so the only holier-than-thou attitude you're picking up is the one you're fabricating.

To answer your question, step 1 is to stop borrowing money. Period. End of story.

Second, they need to save up a load of cash while paying minimums on everything else. This should be around $1000 to cover any emergencies so that if one occurs, they don't add it to their total debt. While doing this, I have no problems counseling people to ask for interest rate drops or moving balances to a low interest card.

Third, you simply pay off your debt, using every penny you can muster. Intensity in this step, coupled with no m ore borrowing, allows you to pay off huge debts in short-order.

The key, though, is that a person has to get step 1 through their thick skull.

I agree. So why didn't you say that in the first place?

The problem is that many credit card companies will simply not negotiate on their interest rates. One solution to this is to get a line of credit for the amount owing. If necessary, one can even reduce the credit available on those credit cards. ie. Pay off the high interest store credit cards with the line of credit, and then tear up the credit cards.

[RAILhead]

Originally Posted by Eug 

I agree. So why didn't you say that in the first place?

Because that's a band-aid, not a solution -- and not the point?

[Eug]

Originally Posted by RAILhead 

Because that's a band-aid, not a solution -- and not the point?

It's a means to an end. And it's what you advise your own clients...

I thus find it ironic you criticize others for telling people the same thing.

[peeb]

As almost everyone else has said, don't borrow money to pay for depreciating items.

[MacosNerd]

Originally Posted by peeb 

As almost everyone else has said, don't borrow money to pay for depreciating items.

cars, (even houses), planes, boats, all assets depreciate. I don't know too many people who pay cash for them.

I think if the terms are conducive, there's no problem with using credit. on items that depreciate quickly like computers.

Cars and other items big ticket items, credit is almost a necessity

for instance, I purchased a new living room set a while ago. The company gave me credit terms of 0 interest for 12 months. As long as I made sure the balance was paid in full before that I'd not be charged interest. So from that perspective it makes more sense to do that since I'll be able to use the remaining funds to accrue interest in my savings account over the subsequent time - which is what I did. I then paid off the balance on month 11.

[peeb]

Houses do not usually depreciate in the long term, and are about the only thing that I can think of that usually needs financing. Nobody should be borrowing money to buy a plane, boat or house. The situation you are talking about with your living room set it seems that you had the money to pay for it, and figured you could borrow at zero interest - that's fine if you are sure you can pay it off - what I should have said is don't spend money you don't have and pay interest for depreciating items.

[Eug]

Originally Posted by peeb 

Houses do not usually depreciate in the long term, and are about the only thing that I can think of that usually needs financing. Nobody should be borrowing money to buy a plane, boat or house. The situation you are talking about with your living room set it seems that you had the money to pay for it, and figured you could borrow at zero interest - that's fine if you are sure you can pay it off - what I should have said is don't spend money you don't have and pay interest for depreciating items.

Eh?

[peeb]

Originally Posted by Eug 

Eh?

Houses do not usually depreciate in the long term, and are about the only thing that I can think of that usually needs financing. Nobody should be borrowing money to buy a plane, boat or car. The situation you are talking about with your living room set it seems that you had the money to pay for it, and figured you could borrow at zero interest - that's fine if you are sure you can pay it off - what I should have said is don't spend money you don't have and pay interest for depreciating items.

Thanks - fixed that typo!

The special case of having money you are banking at higher interest that the financing (for example 0% financing), as long as it is not causing you to spend beyond your means, is the only time aside from real estate when you should borrow money to buy something.

[BRussell]

Originally Posted by MacosNerd 

cars, (even houses), planes, boats, all assets depreciate. I don't know too many people who pay cash for them.

That's why so many people have such a problem with consumer debt right now. Times have changed, we've become more materialistic, and more people buy more stuff on credit than they should. It's our standards that have changed, not the basic principles of personal finance.

[Eug]

I actually leased a car last time around.

(However, I leased it because I got a tax break through work for it.)

I generally agree one should prefer not financing a car, but for many cars are a necessity, so one might have to finance to get a half-decent car. (I really hate the idea of getting an el cheapo car with no warranty, when it's your main mode of transportation.)

I agree with the others though that say that many people buy too much car for their real needs, just cuz it's fast and cool looking or whatever. I knew a lawyer who could not afford to keep both his condo mortgage and his Porsche after he lost his job... so he sold the condo.