Very well said. Also, a sweet deal on the F250 especially being a CC King Ranch. I typically have used HELOC to make big purchases so the interest is tax deductible, until earlier this year when I bought a new vehicle (Hyundai) and the interest rate was 2.99% with a $1500 rebate if choosing financing.
a64armt wrote:
I have never been blessed enough with the ability to buy a new vehicle (that I want) for cash unless I wipe out my savings. This is probably because I am like most Americans and want more than I truly need (like owning an RV). However, this is America, the land of capitalism, easy credit and among other things, the pursuit of happiness (which is a right).
Our current truck is 2008 F250 6.4 diesel CC King Ranch. I was lucky enough to be looking for a truck when big trucks took a hit in the market in 2008 and picked up the truck new from a dealer in TX for $36k. It stickered for $58k. I put down $20k and financed about $18k (taxes), my payments were just under $400 for 48 months. We paid the truck off about 18 months early.
Now I am at an impasse. We are looking for a 5th wheel. Many models and brands we like are too much for my F250. I have already spent $700 on air bags and a compressor and will drop another $700 on sway bars, to make it slightly better at handling 2500 lbs of pin weight, but it will never as capable as a DRW 350 or 450. However, to replace what I currently have would run me about $60k easily. Even if I trade in my 08 F250 I am only looking at maybe (if lucky) $25k trade in, so that means another $35k (plus taxes) in a new truck. I do not want another large payment, especially when our truck will handle our occasional towing duties. I just need to be conservative with a 5th wheel.
I do not fault or condemn those who finance large ticket items. It is much better than financing that tank of gas at 20% annual interest rate. Our credit system is what makes our world and economy go around. Without credit, manufacturers would not need to produce as much as they do and our labor market would probably be a lot smaller than it is. Without credit, young families might not be able to spend weekends at a campground. Couples might have to wait until they are in their 50’s and the kids are long gone before they could afford that truck and RV.
I financed a 25ft boat 10 years ago and our family have some wonderful memories from our times on the boat. We never had a problem making a payment and the boat was paid off early. Sure, I could have saved that money and bought a boat cash when I saved enough, but that would have been many years later. However, we no longer live near the water, my daughter is 16 (we sold the boat last spring), I will take the memories. I have never heard a person say “I am glad, my parents saved and paid cash for everything when I was a kid, I was much happier sitting at home on the couch rather than going camping (boating, Disney, etc)”. And yes, I still managed to put a sizeable amount into my 401k from every paycheck. However, we didn’t have credit card debt, a large car payment or a large house payment. Additionally, my 401K has done very well over the years, even after that drop in 2008.
While this is rhetorical, I will still state that people need to live within their means. My opinion, if you are not having problems paying your current bills, are putting money away for retirement or savings and have disposable cash, then don’t be afraid to buy big ticket items on credit if your terms are reasonable and manageable within your household budget. There are some that say “if you can’t pay cash, then you don’t need it”, and that is fine, they are entitled to their opinion and I am sure their history, character and culture are factors in that opinion (There are also those who say my SRW ¾ ton truck is overweight with a full tank of fuel). I for one say that credit is a wonderful thing. Look at the jobs created at the auto or RV factory when someone takes out a loan and buys a big ticket item. You are always going to have those who overdo credit and abuse it. You are going to have those who encounter rough times in their lives financially and default, but if managed correctly credit can do wonderful things for people and families.
I will get off my soap box but please don’t condemn a person for buying something on credit when you know very little about them or their financial situation.
OJ
