Gdetrailer wrote:clubhouse wrote:
Let me also add that I have moved into the cash only camp. In 2011 I was like most folks, and thought of credit as a tool. Shortly after our first TT purchase I started subscribing to the Dave Ramsey plan and gave up using credit.
Our investments money is separate from lifestyle/recreation purchases, so I don't do the math at ~8+% investment return vs. ~3-4% interest charge. What we do now is actively make monthly payments to our own money market for the future purchase of cars, TT, vacations, etc.
At first there is a delay in making purchases since we don' t use debt. However we looked at what a typical car payment is, $450, plus a second payment like TT/Boat/CC what ever at $350, and stated paying that to our self on top of regular retirement and investment savings.
So as you can see I f you get serious about getting out of debt, it takes the average household 24-36 months, then start making an $800 payment to yourself in no time at all you can purchase anything you want with cash. Another funny thing happens too, buying new is less important then finding the guy who bought new one or two years earlier then lost the desire or ability to keep the item and you buy it from them at a deep discount. You pay half of a new price on 2 yr old item and then all of a sudden who cares about warranty, you saved so much you can pay cash for any service you can't self perform.
This is just a different way to think about money and use it. Anyone can do it if they want, but it does take some discipline. For us, we were fortunate to have manageable debt levels when we decided to change our attitude, so it took about 17mths to get out from under it, and it was absolutely worth it for us and our future.
FINALLY, someone who ALSO GETS "IT"!
While I have never read his books or have been at a Dave Ramsey gig from what I have heard MANY of the things he says to do is pretty darn close to what I already do.. And I didn't have to buy a book.. It was things I learned BACK IN HIGH SCHOOL IN MY ECONOMICS 101 class..
Granted, there ARE some purchases where all cash may not be "viable" so credit which is USED WISELY ONLY FOR NEEDED things like a HOME or BASIC TRANSPORTATION can be a good thing.
For the most part unless you are "full timing" or buying a $100K + Motor Home, you SHOULD NOT "justify" or "rationalize" the use of credit by comparing it to your "investment gains".
If the folks who justify a loan as less loss of investments are so wise with your "investments" then you SHOULD understand that you SHOULD also have some "liquid assets" set aside in order to cover things like job loss, under employment, or even paying for home and auto repairs when those emergencies happen..
When I WANT something like a RV then I put some money into a "bucket" so to speak FOR that item.
YES, it DOES take some time, but to me, not having that monthly payment coming out of my account year round for that big hulking RV in my backyard was totally worth the time..
I do a lot more with the little bit of income I have since I am not paying $50, $100, $200, or even $1000 in interest per month for a loan.. I put more money into MY OWN "pocket" instead of the very rich bank manager's pocket..
Most folks get wrapped up in what the monthly payment is, no care in the world in how much interest they will pay and that is a dangerous game to play.. People tend to forget about the interest until they find themselves in a bad spot like the NEED to SELL something and you still "owe" on it..
The depreciation on a RV STARTS the moment you put the ink on the sales agreement.. Adding the interest ON TOP of the depreciation makes matters even worse if you have to sell off BEFORE you pay it off..
The reason for that is MOST of the interest you will be paying on the loan is IN THE BEGINNING OF THE LOAN!!!
It isn't until you reach 2/3 of the loan payoff amount where the interest being paid drops to a very small amount per payment.. Your loan EATS YOU ALIVE in interest UP FRONT.
My way of conducting personal finance isn't for everyone, I get that and it doesn't bother me that many folks disagree. From the Baby Boom to the current generation credit has been fast and easy which removed requirements to sacrifice and delay pleasure in order to get what you want. Turing the clock back on that may never happen again. I take pleasure in the fact that my last debt, which is my mortgage, will be paid off by the time I am 45 (6 more years).
Being 100% debt free at 45, having kids college accounts funded in full before they finish high school, and being finically independent well before traditional retirement age is far more important to me than having the newest and nicest toys now.
I am pretty sure my kids will be better off finishing school debt free than riding in brand new cars or camping in the nicest RVs.
clubhouse wrote:
Let me also add that I have moved into the cash only camp. In 2011 I was like most folks, and thought of credit as a tool. Shortly after our first TT purchase I started subscribing to the Dave Ramsey plan and gave up using credit.
Our investments money is separate from lifestyle/recreation purchases, so I don't do the math at ~8+% investment return vs. ~3-4% interest charge. What we do now is actively make monthly payments to our own money market for the future purchase of cars, TT, vacations, etc.
At first there is a delay in making purchases since we don' t use debt. However we looked at what a typical car payment is, $450, plus a second payment like TT/Boat/CC what ever at $350, and stated paying that to our self on top of regular retirement and investment savings.
So as you can see I f you get serious about getting out of debt, it takes the average household 24-36 months, then start making an $800 payment to yourself in no time at all you can purchase anything you want with cash. Another funny thing happens too, buying new is less important then finding the guy who bought new one or two years earlier then lost the desire or ability to keep the item and you buy it from them at a deep discount. You pay half of a new price on 2 yr old item and then all of a sudden who cares about warranty, you saved so much you can pay cash for any service you can't self perform.
This is just a different way to think about money and use it. Anyone can do it if they want, but it does take some discipline. For us, we were fortunate to have manageable debt levels when we decided to change our attitude, so it took about 17mths to get out from under it, and it was absolutely worth it for us and our future.
FINALLY, someone who ALSO GETS "IT"!
While I have never read his books or have been at a Dave Ramsey gig from what I have heard MANY of the things he says to do is pretty darn close to what I already do.. And I didn't have to buy a book.. It was things I learned BACK IN HIGH SCHOOL IN MY ECONOMICS 101 class..
Granted, there ARE some purchases where all cash may not be "viable" so credit which is USED WISELY ONLY FOR NEEDED things like a HOME or BASIC TRANSPORTATION can be a good thing.
For the most part unless you are "full timing" or buying a $100K + Motor Home, you SHOULD NOT "justify" or "rationalize" the use of credit by comparing it to your "investment gains".
If the folks who justify a loan as less loss of investments are so wise with your "investments" then you SHOULD understand that you SHOULD also have some "liquid assets" set aside in order to cover things like job loss, under employment, or even paying for home and auto repairs when those emergencies happen..
When I WANT something like a RV then I put some money into a "bucket" so to speak FOR that item.
YES, it DOES take some time, but to me, not having that monthly payment coming out of my account year round for that big hulking RV in my backyard was totally worth the time..
I do a lot more with the little bit of income I have since I am not paying $50, $100, $200, or even $1000 in interest per month for a loan.. I put more money into MY OWN "pocket" instead of the very rich bank manager's pocket..
Most folks get wrapped up in what the monthly payment is, no care in the world in how much interest they will pay and that is a dangerous game to play.. People tend to forget about the interest until they find themselves in a bad spot like the NEED to SELL something and you still "owe" on it..
The depreciation on a RV STARTS the moment you put the ink on the sales agreement.. Adding the interest ON TOP of the depreciation makes matters even worse if you have to sell off BEFORE you pay it off..
The reason for that is MOST of the interest you will be paying on the loan is IN THE BEGINNING OF THE LOAN!!!
It isn't until you reach 2/3 of the loan payoff amount where the interest being paid drops to a very small amount per payment.. Your loan EATS YOU ALIVE in interest UP FRONT.
