Credit iis Overrated (vol. Focus on your bank account)

[foreveryoung]

Originally Posted by RFX45

---

I want a nicer car because I feel that I could afford it. It won't be a crutch in my situation. Again, it is about discipline and responsibilities. I know that I can have a car note and not miss a single meal or eat ramen for a week to afford my next mortgage. Me personally, could I afford to pay cash for a car? Sure but would I? Chances are, no. I can get a good rate because I took care of my credit history and can have low payments. Instead of paying $35k cash on a car, I'd rather get that 2.5% rate pay it in 5 years and save up and put the cash in case of emergency or as an investment. I really would rather have that cash on hand than losing it right away. Like most say here, cars depreciate as soon as you drive them off the lot so if you pay cash that is like throwing away cash right away.

Either way, I could get a nice car and still have some cash in my pocket. Overall, I know I'll be paying more for the car in the long run but I am ok with that and could afford it and take a risk in investing the money while paying the car note. I am smart enough to know that $35k on a car is manageable or else I'll buy a cheaper car and I think that is what people need to learn. Living within their means but that doesn't always necessarily mean just buying things that you can afford with cash because there are ways to utilize credit to your advantage. And OPs post seems like that is what he is trying ti promote, paying cash for everything.That is where responsibility and discipline that hopefully these people learn will kick in. See, buying house these days doesn't just require you to have great credit, everything else like your salary and debt play a big role too. Just because you have a credit score of 800+ doesn't guarantee you can get a $500k loan if you're making $30k a year, especially in this economy. But if you want a $150k house loan even with a $30k a year salary, then that good credit will help you buy that house. With bad credit, it will be very difficult to get that loan. All I am saying is good credit is a necessity and can be very helpful and I think we both agree on that.

To be honest, that sounds exactly like what OP is saying. I've read enough stuff on NT to know that some NTers really do feel that you do not need credit and that cash is the only way to succeed. No one is teaching anyone here to get a cc to every department stores they step foot in but no one should be telling them not to get a cc in their life either.

I know a few people out there that lives paycheck to paycheck and I know a lot of people in this country are the same way and if they paid cash for everything, they will have absolutely nothing saved up. I know someone who literally get paid enough for rent, food and utilities and a few necessities and barely breaks even every month. By using their their cc on groceries/necessities instead of full cash, they can pay it off slowly and save up a few bucks a month and for a rainy day. And yes, she manages to save up money because of this method.


Yea I really think we're really saying the same thing man. That credit if used responsibly can be a good tool. Its a great tool for leverage

However, i dunno if how you suggest to apply it is good advice to give most ppl. Im not sure what your financial situation is, but it sounds like you have some money put away and you can afford credit. But the example you gave of lady that uses credit to help her get thru the month and save money is different. What she really needs to do is increase her income. Using credit is NOT a long term solution to her problem. Thats where the use of credit gets abused. Cuz now she's more than likely dependent on that credit card, which is a scary position

You said it yourself, some situations do call for and require the use of credit. But the fact that we're on a message board changes the type of advice I'd hand out. Yea if most ppl had someone like you to help them thru the credit process its one thing. But dudes come on here, ask if they should lease or finance a new Acura b/c it looks sick, and ppl tell em where to get the cheapest APR at. Again, I think what OP is suggesting is that you avoid using credit and save your money youre gonna be better off. Ppl really seem to take advice given out on here seriously, if they see someone say yea credit is a great tool, theyre gonna go out and get a card and 7,8 times outa 10 its not gonna be used like you say it can be. If we're gonna err on either side of the extreme, i'd say lets tell ppl to avoid it, save up

 

[sundoobie]

Originally Posted by villansfinest

Originally Posted by SunDOOBIE

Checking my Quicken program, I have deposited $575 in cash back bonuses this year just by using my Credit cards 

And which card would this be? All the offers i'm aware of make me think you're spending more than 10K to achieve that?

Sorry for my late response.
To tell you the truth I spent more than 10K this year using my CCs.  However I use my CC to pay all my expenses from car insurance, gas, cable, etc.  The card I use most is Chase Freedom which has 5% cash back on certain items every 3 months from Gasoline, Grocery Stores to Restaurants, Movies, etc and 1% cash back on everything else. Same with Discover card but with Discover Card there is this program called ShopDiscover that gives back 3,5, or sometimes10% cash back when you shop online using Shopdiscover.  

http://www.discovercard.com/customer-service/rewards/browse-all-partners-cb.html

Again you just have to be smart about using your CC.  My motto is if you have a good credit score... take advantage of it. 

Edit... Also if you have good credit.. take advantage of these offers. 

Chase
Chase Freedom[emoji]174[/emoji] Visa - $100 Bonus Cash Back + 0% Intro APR

Earn $100 Bonus Cash Back after you make $500 in purchases in your first 3 months.

https://applynowdc1.chase.com/FlexA...-XJ39jiVcybYjNfGMfzCBiQ&pvid=77c4e8dd7b26fa7b

I opened up a Chase Ink Card for my Business and got $250 cash back after my first purchase.  How is that not a WIN?

 

[rfx45]

Originally Posted by crcballer55

Originally Posted by finnns2003

Having available credit is important, for emergency purposes. I don't recommend utilizing it frequently or regularly.

Racking up debt in emergencies is the worst time to utilize it.  People who use their credit card in emergencies are those who aren't properly prepared with an emergency fund.  Most "emergencies" can be avoided with a properly funded emergency fund of 3-6 months.

Not always true. A death in the family w/o life insurance can easily crawl up to $10k. How many people in the world, especially those who live paycheck to paycheck can save up that much in 4-5 years? 
Another scenario. If you don't make much but need a car and you buy on cash, let's say $5k. For that price, the car will be old and out of warranty. If that is all you have saved up and use it all on  the car and it breaks down, then that is a few hundreds to thousands to fix. If you have no credit or cash left, then you're screwed. 

Like I said, not everyone can stash a percentage of their income to their savings and paying cash all the time isn't always an option. A lot of people are getting fired these days and finding a job right away out of college is difficult and a lot of families are living paycheck to paycheck and some even have double jobs. These people need to be smart and use their credit and cash efficiently. 

Plus even to those who can afford to pay cash for everything, why not get a card with great rewards like AMEX (as someone mentioned earlier) and just pay it off every month and accumulate those rewards? Not only that but AMEX also provides warranties on some purchases made such as some electronics and even high-end watches.

 

[rfx45]

Originally Posted by CrimsonCloudAttire

3. �Hmmm....Free cars. �Hmm. �Well, I know my credit is stellar and I'm eligible for the best rates available. �You know...those teaser rates that you hear on the commercial and then get to the lot to realize you're not approved for...0.0%, 0.9%, 1.9%...Yeah, I can get those. �So with interest rates like that, it doesn't pay for me to pay off my car. �I can use whatever money I would've spent paying it down and buy an investment that will more than cover the measley interest rate im paying on my car.

Funny you mention these because I was reading this article:  http://autos.yahoo.com/news/best-new-car-deals-for-october.html and the 2011 Cadillac CTS Sportwagon for 0% interest for 60 months/5 years and I though that is insane. It's practically like paying cash. I've only seen 0% interest for 36 months the most but 60 months is a pretty damn good incentive if this the car you are considering.

http://autos.yahoo.com/cadillac/cts...uZm98ZmVhdHVyZWRhcnRpY2xlcwRwdANzdG9yeXBhZ2U-

http://autos.yahoo.com/cadillac/cts...uZm98ZmVhdHVyZWRhcnRpY2xlcwRwdANzdG9yeXBhZ2U-2011 Cadillac CTS Sport Wagon

Deal: $3,000 cash or 0.0 percent financing to 60 months, 1.9 to 72 months. The station wagon rendition of the popular midsize Cadillac CTSdelivers a winning combination of luxury, sportiness and practicality. It comes with rear- or all-wheel-drive, automatic or manual transmissions and offers a choice of V6 engines. The top CTS-V wagon version is costly at around $63,000, but is a true guilty pleasure with a 556-horsepower 6.2-liter supercharged V8 engine that blows away every car in this list. Entertaining options include a rear seat DVD array and a navigation system with real-time traffic and weather reports, a hard-drive for digital media storage and a TiVo-like function that allows users to pause and rewind live radio broadcasts for instant replays or to put the action on hold while answering a phone call.

 

[sniper]

Originally Posted by crcballer55

Originally Posted by sniper

 at thinking "Cash is King"...
Please don't suggest that people entering the "credit-world" cease before they even start. You'd be setting them up for an assortment of hardships later on in life...

Because the 70% of people who don't pay off their debt each month are better off because of it?

I'm not debating that there isn't a significant amount of people that are currently in debt. Despite that, I'll bite. I'm not sure of your sources, but your % is about double the actual statistic regardless if you're referring to people with frequent late payments or just an overall bad credit score. I was trying to rationalize that you shouldn't suggest that newcomers avoid attaining credit, in general, as that would be the demise of an advantageous asset. Debt is a result of many circumstances varying from improper use, sustainable life/health, etc. so I can't generalize everyone. However, credit itself is not a bad thing...

 

[crcballer55]

Originally Posted by RFX45

Originally Posted by crcballer55

Originally Posted by finnns2003

Having available credit is important, for emergency purposes. I don't recommend utilizing it frequently or regularly.

Racking up debt in emergencies is the worst time to utilize it.  People who use their credit card in emergencies are those who aren't properly prepared with an emergency fund.  Most "emergencies" can be avoided with a properly funded emergency fund of 3-6 months.

Not always true. A death in the family w/o life insurance can easily crawl up to $10k. How many people in the world, especially those who live paycheck to paycheck can save up that much in 4-5 years? 
Another scenario. If you don't make much but need a car and you buy on cash, let's say $5k. For that price, the car will be old and out of warranty. If that is all you have saved up and use it all on  the car and it breaks down, then that is a few hundreds to thousands to fix. If you have no credit or cash left, then you're screwed. 

Like I said, not everyone can stash a percentage of their income to their savings and paying cash all the time isn't always an option. A lot of people are getting fired these days and finding a job right away out of college is difficult and a lot of families are living paycheck to paycheck and some even have double jobs. These people need to be smart and use their credit and cash efficiently. 

Plus even to those who can afford to pay cash for everything, why not get a card with great rewards like AMEX (as someone mentioned earlier) and just pay it off every month and accumulate those rewards? Not only that but AMEX also provides warranties on some purchases made such as some electronics and even high-end watches.

There is no reason to not get a term life insurance policy.  They're dirt cheap and will easily cover the death benefits as well as replace your income for your beneficiaries.  A 20 year policy for $500K can be had for under $30/mo.

Again, going back to the credit card.  I used to use my AMEX to get 3% back on my purchases.  I am very frugal in my spending and bought into the belief that you're actually making money off of the bank's money by doing so.  I have been using cash for several months now and have seen a significant decrease in my spending on necessities (food, household needs, etc.) because cash hurts to spend.  It's been proven that you spend until it hurts and your brain registers more pain when you pay with cash http://webuser.bus.umich.edu/srick/CMU Homepage Stories 1-15-07.pdf.  I have had several other friends start using cash too and they have all started spending less too.

Yes, your credit card might provide an extended warranty on your electronics, but that is also built into the cost of using the card.  Most likely it's from increasing the fees to the merchant who then passes the price onto you.  I have not had enough problems with my electronics to warrant an implied guarantee.  If you want a warranty on your electronics, shop at CostCo.  Then you're good for over a year after you purchased it.

Lastly, I meet very few people living paycheck-to-paycheck who aren't sending a significant portion to creditors (cards, cars, etc.).  The people I have seen could live a very comfortable life if it weren't for the $500+ going to their payments.  At that rate, you can easily save up a $10K emergency fund in less than 2 years.  However, most people don't keep a budget and spend whatever extra is in the bank account.

 

[Mark Antony]

I think this thread is one of the better "credit" threads we've had due to the differing viewpoints, they all collaborate and make one good advice thread. Pretty much how to stay out of debt and use credit effectively.

 

[rfx45]

Originally Posted by crcballer55

There is no reason to not get a term life insurance policy.  They're dirt cheap and will easily cover the death benefits as well as replace your income for your beneficiaries.  A 20 year policy for $500K can be had for under $30/mo.

See, that is the kind of advice you should be giving instead of saying "no credit!" all the time. Get people to invest in their retirement and life insurance early in life. I have both by the time I was 18, been working since 16. How many people has one by the time they're 30? So I think it is better to advice people with things like this than just saying "you aren't a millionaire because you have car payments."

Originally Posted by crcballer55

Again, going back to the credit card.  I used to use my AMEX to get 3% back on my purchases.  I am very frugal in my spending and bought into the belief that you're actually making money off of the bank's money by doing so.  I have been using cash for several months now and have seen a significant decrease in my spending on necessities (food, household needs, etc.) because cash hurts to spend.  It's been proven that you spend until it hurts and your brain registers more pain when you pay with cash http://webuser.bus.umich.edu/srick/CMU Homepage Stories 1-15-07.pdf.  I have had several other friends start using cash too and they have all started spending less too.

Again, this advice seems better if you suggest to make it a good habit and control spending. It isn't easy but if advised at an early age or before it is too late, then it can be prevented. Again, I am not knocking using cash when you can but you can't go to the extreme of using cash all the time and w/o using credit. It's just not good. I've had a credit card for about 10+ years now and I've been good but you what it says on my credit report when I need a loan? "Length of credit history is too short." Just imagine what they consider long, 20 years? So it isn't a bad idea to start early but be practical and responsible. 

Originally Posted by crcballer55

Yes, your credit card might provide an extended warranty on your electronics, but that is also built into the cost of using the card.  Most likely it's from increasing the fees to the merchant who then passes the price onto you.  I have not had enough problems with my electronics to warrant an implied guarantee.  If you want a warranty on your electronics, shop at CostCo.  Then you're good for over a year after you purchased it.

It's BS that the merchant passes the fees to the consumer since you'll pay the same amount whether you pay cash or credit. I've only seen gas stations that give a discount if paying cash instead of credit and in that case I'll gladly do it. Costco doesn't sell everything and doesn't offer the best price. If a TV is $$2k at Costco and only $1500 at Best Buy and I can have the same warranty or better by using AMEX, isn't it an easy choice to go with AMEX? I've also read several situations of people buying watches, $5k+, which Costco has a terrible selection in-store, that got replaced even after the warranty expired by simply paying with AMEX. By the way, the AMEX I have doesn't have an annual fee so if I use it and pay it all off monthly, I get the rewards w/o any extra cost. 

Originally Posted by crcballer55

Lastly, I meet very few people living paycheck-to-paycheck who aren't sending a significant portion to creditors (cards, cars, etc.).  The people I have seen could live a very comfortable life if it weren't for the $500+ going to their payments.  At that rate, you can easily save up a $10K emergency fund in less than 2 years.  However, most people don't keep a budget and spend whatever extra is in the bank account.

To save $10k in 2 years the person has to save $416.67 a month, to most who lives paycheck to paycheck or close to it, that is a lot. Then there are also a lot of people with different situations, people with child support, student loans, etc... Minimum wage in LA is $8.75 and the cost of living here is pretty high. At minimum wage, that is about $1520 a month before taxes? If you live alone, rent will probably cost half that. Then factor in food, car (almost necessary in LA), insurance, utilities, etc... A person who makes minimum wage ( I know a handful who gets paid minimum because of the bad economy) cannot afford to save $400 a month especially if they pay everything with cash. Again I am not dismissing the other side of the coin that in the end you'd owe more if you use your credit cards for purchases, you certainly will but to manage to stash a few extra bucks as savings, you'd have to utilize it somehow. Pay a CC for groceries, $100-$200, then pay that off monthly ~$20 a month. Then you can save that $80-$150 you save by using the CC. Again, in the end you'd eventually pay a little more but at least you have a few bucks saved up.
And you said it yourself, people do not budget and spend what is in the bank account anyways, which would be cash as well. So it seems more necessary to educated about being responsible than anything else.

 

[crcballer55]

Originally Posted by RFX45

Originally Posted by crcballer55

There is no reason to not get a term life insurance policy.  They're dirt cheap and will easily cover the death benefits as well as replace your income for your beneficiaries.  A 20 year policy for $500K can be had for under $30/mo.

See, that is the kind of advice you should be giving instead of saying "no credit!" all the time. Get people to invest in their retirement and life insurance early in life. I have both by the time I was 18, been working since 16. How many people has one by the time they're 30? So I think it is better to advice people with things like this than just saying "you aren't a millionaire because you have car payments."

Originally Posted by crcballer55

Again, going back to the credit card.  I used to use my AMEX to get 3% back on my purchases.  I am very frugal in my spending and bought into the belief that you're actually making money off of the bank's money by doing so.  I have been using cash for several months now and have seen a significant decrease in my spending on necessities (food, household needs, etc.) because cash hurts to spend.  It's been proven that you spend until it hurts and your brain registers more pain when you pay with cash http://webuser.bus.umich.edu/srick/CMU Homepage Stories 1-15-07.pdf.  I have had several other friends start using cash too and they have all started spending less too.

Again, this advice seems better if you suggest to make it a good habit and control spending. It isn't easy but if advised at an early age or before it is too late, then it can be prevented. Again, I am not knocking using cash when you can but you can't go to the extreme of using cash all the time and w/o using credit. It's just not good. I've had a credit card for about 10+ years now and I've been good but you what it says on my credit report when I need a loan? "Length of credit history is too short." Just imagine what they consider long, 20 years? So it isn't a bad idea to start early but be practical and responsible. 

Originally Posted by crcballer55

Yes, your credit card might provide an extended warranty on your electronics, but that is also built into the cost of using the card.  Most likely it's from increasing the fees to the merchant who then passes the price onto you.  I have not had enough problems with my electronics to warrant an implied guarantee.  If you want a warranty on your electronics, shop at CostCo.  Then you're good for over a year after you purchased it.

It's BS that the merchant passes the fees to the consumer since you'll pay the same amount whether you pay cash or credit. I've only seen gas stations that give a discount if paying cash instead of credit and in that case I'll gladly do it. Costco doesn't sell everything and doesn't offer the best price. If a TV is $$2k at Costco and only $1500 at Best Buy and I can have the same warranty or better by using AMEX, isn't it an easy choice to go with AMEX? I've also read several situations of people buying watches, $5k+, which Costco has a terrible selection in-store, that got replaced even after the warranty expired by simply paying with AMEX. By the way, the AMEX I have doesn't have an annual fee so if I use it and pay it all off monthly, I get the rewards w/o any extra cost. 

Originally Posted by crcballer55

Lastly, I meet very few people living paycheck-to-paycheck who aren't sending a significant portion to creditors (cards, cars, etc.).  The people I have seen could live a very comfortable life if it weren't for the $500+ going to their payments.  At that rate, you can easily save up a $10K emergency fund in less than 2 years.  However, most people don't keep a budget and spend whatever extra is in the bank account.

To save $10k in 2 years the person has to save $416.67 a month, to most who lives paycheck to paycheck or close to it, that is a lot. Then there are also a lot of people with different situations, people with child support, student loans, etc... Minimum wage in LA is $8.75 and the cost of living here is pretty high. At minimum wage, that is about $1520 a month before taxes? If you live alone, rent will probably cost half that. Then factor in food, car (almost necessary in LA), insurance, utilities, etc... A person who makes minimum wage ( I know a handful who gets paid minimum because of the bad economy) cannot afford to save $400 a month especially if they pay everything with cash. Again I am not dismissing the other side of the coin that in the end you'd owe more if you use your credit cards for purchases, you certainly will but to manage to stash a few extra bucks as savings, you'd have to utilize it somehow. Pay a CC for groceries, $100-$200, then pay that off monthly ~$20 a month. Then you can save that $80-$150 you save by using the CC. Again, in the end you'd eventually pay a little more but at least you have a few bucks saved up.
And you said it yourself, people do not budget and spend what is in the bank account anyways, which would be cash as well. So it seems more necessary to educated about being responsible than anything else.

I'm glad we can agree on most points here.  The point of this post is to basically reevaluate the financial advise most of us have been bombarded with for our entire lives.  Much of this being that credit should be our safety net.  However, this is only because most people fail to plan for the inevitable and there are far cheaper ways to live that will benefit you much more in the long run.

Once again, regarding those living "paycheck-to-paycheck", I have met very few that do so without having to pay a significant portion of their income towards debt repayment.  The typical car payment is a little less than $500/mo.  In addition, now days, most people have student loan repayments that range in that neighborhood as well.  By avoiding both of those you can live a pretty good lifestyle.  I live in Orange County, which is even more expensive than L.A. so I understand the pressure to maintain a certain lifestyle and the cost of living in So. Cal.  However, in order to overcome that, you must be disciplined and realize that most people who are driving the bimmer with the $1000 watch don't have a dime to their name and are deeply in debt.

Someone making minimum wage here likely won't be able to save up anything.  But minimum wage jobs aren't meant to be a career.  They're base jobs that give you basic skills to move up to the next step.  If someone is stuck there, it is likely their decision.  A business is pretty easy to start and can earn a lot more than a minimum wage job can provide.

 

[utvol23]

there is something to be said by not having payments. There is a sense of freedom and lack of worry that comes with it. If you lose your job you don't have to worry about your car payment, your cc payment etc etc  I can't see not having payments as ever being a bad thing because $#&5 HAPPENS and the less you have to worry about the better.

also most people do not handle credit responsibly thus they should not be using it. Esp credit cards! Millions of people have been forced into bankruptcy because they thought they were responsible enough to use a CC and thought they were getting over because they got some points or cash back.

I don't think you should never use credit or loans but only in limited circumstances. I borrowed tons of money for med school or I can see getting a home loan for something you can afford but not a 500k home making 40k. Not all education debt is appropriate either borrowing 100k to major in basket weaving would be foolish. The amt you borrowed should be easily be able to be paid back in a few yrs with your salary and a real salary not a bogus projected salary that only 1% of people who have that degree are making

 

[rfx45]

Originally Posted by crcballer55

Someone making minimum wage here likely won't be able to save up anything.  But minimum wage jobs aren't meant to be a career.  They're base jobs that give you basic skills to move up to the next step.  If someone is stuck there, it is likely their decision.  A business is pretty easy to start and can earn a lot more than a minimum wage job can provide.

I agree but the people I know getting paid minimum is just having  hard time finding work. I know a guy who couldn't find a job for 6 months, luckily his parents managed to help him out but he even had getting hired at a minimum wage job at Target for some reason. It's not settling at all, they are just stuck at the moment. They'll be able to move on but in this economy, no one knows when that will be. So they try to save up as much as they can. 

You can't even say a business is easy to start because w/o credit you won't get a loan for capital and you won't even be able to get started. Not only that but you need a great idea and an even better business plan to be successful and make a profit. You need networking, which some doesn't utilize well. Honestly, if a business is easy to start then everyone would be doing it. It isn't easy as you make it out to be. I'm not sure where you get that idea from to be honest. Not everyone can open up a tea stand and turn it into a Teavana franchise and start going for that billion. Very few people has the capacity to pull off businesses like that.

 

[reigndrop]

AMEX Plat > cash. Love the rewards and services. Learn to manage your credit and reap the benefits of CCs.

 

[hollywood james 6]

The people who are saying you need a credit card to do purchases is dumb. Go ahead and earn that $50 in rewards, how much did you spend to get that? The interest rate for return is horrible.

And it's only a tool when you float your money around. Too risky for me considering how many people are unemployed or have a health risk pop up. As for a home, you're going to be living with mom for a few years saving if you want to pay in cash. And you probably aren't enjoying life. But I can see saving up for everything else.

The key is to invest. The more money you owe someone else, the less you can invest. I would rather be able to put $2k to $3k each year in stocks at the least. Compound interest homies. Even if stocks seem to be doing poorly, that's more shares I have for when the wave goes back up. It also keeps thing simpler when you don't owe a bunch of people.

I know this for a fact because even in my 401k that I've started last year, the money has doubled. Granted this is with employer contributions, but still. Doubled.

 

[hollywood james 6]

Originally Posted by RFX45

Originally Posted by CrimsonCloudAttire

3. �Hmmm....Free cars. �Hmm. �Well, I know my credit is stellar and I'm eligible for the best rates available. �You know...those teaser rates that you hear on the commercial and then get to the lot to realize you're not approved for...0.0%, 0.9%, 1.9%...Yeah, I can get those. �So with interest rates like that, it doesn't pay for me to pay off my car. �I can use whatever money I would've spent paying it down and buy an investment that will more than cover the measley interest rate im paying on my car.

Funny you mention these because I was reading this article:  http://autos.yahoo.com/news/best-new-car-deals-for-october.html and the 2011 Cadillac CTS Sportwagon for 0% interest for 60 months/5 years and I though that is insane. It's practically like paying cash. I've only seen 0% interest for 36 months the most but 60 months is a pretty damn good incentive if this the car you are considering.

http://autos.yahoo.com/cadillac/cts...uZm98ZmVhdHVyZWRhcnRpY2xlcwRwdANzdG9yeXBhZ2U-

http://autos.yahoo.com/cadillac/cts...uZm98ZmVhdHVyZWRhcnRpY2xlcwRwdANzdG9yeXBhZ2U-2011 Cadillac CTS Sport Wagon

Deal: $3,000 cash or 0.0 percent financing to 60 months, 1.9 to 72 months. The station wagon rendition of the popular midsize Cadillac CTSdelivers a winning combination of luxury, sportiness and practicality. It comes with rear- or all-wheel-drive, automatic or manual transmissions and offers a choice of V6 engines. The top CTS-V wagon version is costly at around $63,000, but is a true guilty pleasure with a 556-horsepower 6.2-liter supercharged V8 engine that blows away every car in this list. Entertaining options include a rear seat DVD array and a navigation system with real-time traffic and weather reports, a hard-drive for digital media storage and a TiVo-like function that allows users to pause and rewind live radio broadcasts for instant replays or to put the action on hold while answering a phone call.


The depreciation on that is stupid. You're expected to lose over $25k within 5 years on that deal. Not to mention a higher insurance cost. It doesn't seem smart. You'll be carrying around a $900 monthly payment for 5 years. Where is the winning?

http://autos.aol.com/cars...ac-CTS-2011/cost-to-own/


Again, the idea isn't that credit cards and debt is horrible for everyone, mathematically it's just ******ed. However, people shall do what they want with their money. It's not about how much it costs now, it's how much it's costing you in the future. Because chances are, you're going to be here tomorrow. And tomorrow's tomorrow.

 

[crimsoncloudattire]

Originally Posted by Hollywood James 6

The people who are saying you need a credit card to do purchases is dumb. Go ahead and earn that $50 in rewards, how much did you spend to get that? The interest rate for return is horrible.

1. I don't think anybody is saying you need a credit card to make purchases.  Those of use who are advocates are just saying its a smart move.
2. The rate of return argument is silly, because technically the rate of return is infinity.  How so?  Well, the whole idea behind cash-back cards is that you get paid for spending money that you would have spent anyway.  So, viewed in that perspective, the return I receive on my credit cards ($500-600 annually) isn't technically costing me a thing since it is money I was going to spend anyway.  So my rate of return on cash spent may only be 2%, but my rate of return on cash invested is infinity since I gain $500 and don't invest any funds to get it.

 

[hollywood james 6]

Originally Posted by CrimsonCloudAttire

Originally Posted by Hollywood James 6

The people who are saying you need a credit card to do purchases is dumb. Go ahead and earn that $50 in rewards, how much did you spend to get that? The interest rate for return is horrible.

1. I don't think anybody is saying you need a credit card to make purchases.  Those of use who are advocates are just saying its a smart move.
2. The rate of return argument is silly, because technically the rate of return is infinity.  How so?  Well, the whole idea behind cash-back cards is that you get paid for spending money that you would have spent anyway.  So, viewed in that perspective, the return I receive on my credit cards ($500-600 annually) isn't technically costing me a thing since it is money I was going to spend anyway.  So my rate of return on cash spent may only be 2%, but my rate of return on cash invested is infinity since I gain $500 and don't invest any funds to get it.

Fair enough, but it's not required to live a financially stable life. And I still think you're going to be more at ease consciously paying via cash since it's gone and done with. You won't have to pay the same bill twice. You can get a home without a credit score, it's called a down payment. And chances are you will qualify for a first time home buyers loan which is geared towards people with little to no credit.

 

[rfx45]

Originally Posted by Hollywood James 6

Originally Posted by RFX45

Originally Posted by CrimsonCloudAttire


3. �Hmmm....Free cars. �Hmm. �Well, I know my credit is stellar and I'm eligible for the best rates available. �You know...those teaser rates that you hear on the commercial and then get to the lot to realize you're not approved for...0.0%, 0.9%, 1.9%...Yeah, I can get those. �So with interest rates like that, it doesn't pay for me to pay off my car. �I can use whatever money I would've spent paying it down and buy an investment that will more than cover the measley interest rate im paying on my car.

Funny you mention these because I was reading this article:  http://autos.yahoo.com/news/best-new-car-deals-for-october.html and the 2011 Cadillac CTS Sportwagon for 0% interest for 60 months/5 years and I though that is insane. It's practically like paying cash. I've only seen 0% interest for 36 months the most but 60 months is a pretty damn good incentive if this the car you are considering.

http://autos.yahoo.com/cadillac/cts...uZm98ZmVhdHVyZWRhcnRpY2xlcwRwdANzdG9yeXBhZ2U-

http://autos.yahoo.com/cadillac/cts...uZm98ZmVhdHVyZWRhcnRpY2xlcwRwdANzdG9yeXBhZ2U-2011 Cadillac CTS Sport Wagon

The depreciation on that is stupid. You're expected to lose over $25k within 5 years on that deal. Not to mention a higher insurance cost. It doesn't seem smart. You'll be carrying around a $900 monthly payment for 5 years. Where is the winning?

http://autos.aol.com/cars...ac-CTS-2011/cost-to-own/

I am not saying to go out and buy it as soon as you can. I was just pointing it out for people who wants to buy new. Yeah it will depreciate but for those who buys cars to own and there are plenty of those then depreciation isn't something that should affect the purchase. Obviously I wouldn't suggest buying the car if the $900 monthly is going to hurt your wallet. Buy it if it is a car you are looking at and can comfortably live with, then that is a good deal. If  I were looking for a car and that is specifically a car I wanted or was considering, then I don't see why I would pass up such a good deal.

Everyone always says buy a used car but not everyone is going to want that. I am not saying everyone should buy new but if some wants to buy new then let them buy new and hopefully it is because they can afford it.

I am still getting a sense that people are still looking at this as merely black or white but that isn't real life, there is a grey area and at times it is better to . It isn't just about using cash only or using credit cards only, it's about utilizing both responsibly. Like that Cadillac, it should be common sense that you shouldn't be buying a $38k car if you make less than that annually. But instead of going on one side we should promote how to use and utilize cash and credit and learn to live within their means.

 

[crcballer55]

Originally Posted by RFX45

Originally Posted by crcballer55

Someone making minimum wage here likely won't be able to save up anything.  But minimum wage jobs aren't meant to be a career.  They're base jobs that give you basic skills to move up to the next step.  If someone is stuck there, it is likely their decision.  A business is pretty easy to start and can earn a lot more than a minimum wage job can provide.

I agree but the people I know getting paid minimum is just having  hard time finding work. I know a guy who couldn't find a job for 6 months, luckily his parents managed to help him out but he even had getting hired at a minimum wage job at Target for some reason. It's not settling at all, they are just stuck at the moment. They'll be able to move on but in this economy, no one knows when that will be. So they try to save up as much as they can. 

You can't even say a business is easy to start because w/o credit you won't get a loan for capital and you won't even be able to get started. Not only that but you need a great idea and an even better business plan to be successful and make a profit. You need networking, which some doesn't utilize well. Honestly, if a business is easy to start then everyone would be doing it. It isn't easy as you make it out to be. I'm not sure where you get that idea from to be honest. Not everyone can open up a tea stand and turn it into a Teavana franchise and start going for that billion. Very few people has the capacity to pull off businesses like that.
Believe it or not, you can get a lot of businesses up and running for under a couple hundred in startup money.  Look up "low cost business ideas" and you'll see.  Window washing and mowing lawns can be fairly lucrative if you're willing to do a lot of legwork ahead of time.  You don't have to buy a franchise for $100K to get started.  The reason most people don't start their own business is because of security and the risk of failure and the time it takes to invest into a new venture.

 

[pharelfor3]

If only I didnt ruin my credit when I was younger, i'd be in a much better spot. Still plan on owning my condo by 33. Got a solid 4 years so we'll see.

 

[finnns2003]

Originally Posted by reigndrop

AMEX Plat > cash. Love the rewards and services. Learn to manage your credit and reap the benefits of CCs.

Bingo. I pile MR points and enjoy spending them on stuff I want.

 

[nocomment6]

It really depends, if you use credits well then you shouldn't have any problems. Mortgage is different, in certain circumstances it's inevitable however by thinking ahead you can help yourself...

 

[rfx45]

crcballer55 wrote:
Believe it or not, you can get a lot of businesses up and running for under a couple hundred in startup money.  Look up "low cost business ideas" and you'll see.  Window washing and mowing lawns can be fairly lucrative if you're willing to do a lot of legwork ahead of time.  You don't have to buy a franchise for $100K to get started.  The reason most people don't start their own business is because of security and the risk of failure and the time it takes to invest into a new venture.


Do you really believe a window washing or mowing lawns as a legitimate business that can earn enough money to survive on? Get real man, a college grad isn't going to start a business like that. In LA alone there are countless illegal immigrants who would mow lawns for very cheap and I doubt anyone can compete with their prices. Some cost like $20 a month. And window washing business, are you serious? Come on man. How can it be lucrative? Unless you hire all the homeless guys, pay them a buck an hour and charge $5 for every single windows washed. I would have believed you if you said a home service car wash but window washing. 

 

 

[mojodmonky1]

^ I agree with 99% of the stuff that RFX has said in this thread, except this last post.

My pops runs a legitimate business of "mowing lawns", as does my uncle, and a cousin (all have their own biz). While it is hard work, you CAN make a living off of it. Uncles been doing it for the last 20+ years and has been fairly successful with it. My dad just recently got into it after he quit his last business. Its a fairly low investment business (can get in for $100K or less) and as long as you work hard, you can see decent returns off of it.

but this is an entirely different conversation.

 

[rfx45]

Mojodmonky1 wrote:
My pops runs a legitimate business of "mowing lawns", as does my uncle, and a cousin (all have their own biz). While it is hard work, you CAN make a living off of it. Uncles been doing it for the last 20+ years and has been fairly successful with it. My dad just recently got into it after he quit his last business. Its a fairly low investment business (can get in for $100K or less) and as long as you work hard, you can see decent returns off of it.

but this is an entirely different conversation.

You say it is a fairly low investment at $100k? crcballer was talking about it like you need $100 to start a business. 
Like you said, your uncles been doing it for 20+ years. He must be one of the first and was able to capitalize on new and growing neighborhoods and manged to gather enough clients to be trusted. Your dad and cousin probably got good advice from your uncle who has been doing it for 2 decades, enough that they were able to succeed in it as well.  But now I just do not see it being as lucrative. Just an example, there are literally 5 different people/"company" moving lawns in my neighborhood alone, 5 different people competing against each other. Hypothetically, if I am right out of college and this is a business venture I would consider, I'd be hard pressed to compete with that. I'd have to look for a different location and starts networking, etc... Again, out of college with only a few hundred dollars in the bank and since I used mainly cash I have no credit history so I am stuck with what I have, how long before I run out? Keep in mind this part of the discussion was about this statement?

A business is pretty easy to start and can earn a lot more than a minimum wage job can provide.

Now I am not going to act like I'm an expert in this particular field and I certainly don't want to discourage anyone from giving it a shot if they like to but the way crcballer put it, he makes it sound like anyone can just pick up a lawn mower and live off of it. I am simply saying it isn't as easy as that and that everyone's situation is different. A person just out of college with a few hundred bucks on their bank w/ barely any experience isn't going to be able to pull it off, especially if they have no credit history. I would love to say that you simply have to work hard to get where you are going but that isn't true. You need to be smart about it too and have some luck as well and adapt your talents and skills to your venture. 

 

[mojodmonky1]

Originally Posted by RFX45

Mojodmonky1 wrote:
My pops runs a legitimate business of "mowing lawns", as does my uncle, and a cousin (all have their own biz). While it is hard work, you CAN make a living off of it. Uncles been doing it for the last 20+ years and has been fairly successful with it. My dad just recently got into it after he quit his last business. Its a fairly low investment business (can get in for $100K or less) and as long as you work hard, you can see decent returns off of it.

but this is an entirely different conversation.

You say it is a fairly low investment at $100k? crcballer was talking about it like you need $100 to start a business. 
Like you said, your uncles been doing it for 20+ years. He must be one of the first and was able to capitalize on new and growing neighborhoods and manged to gather enough clients to be trusted. Your dad and cousin probably got good advice from your uncle who has been doing it for 2 decades, enough that they were able to succeed in it as well.  But now I just do not see it being as lucrative. Just an example, there are literally 5 different people/"company" moving lawns in my neighborhood alone, 5 different people competing against each other. Hypothetically, if I am right out of college and this is a business venture I would consider, I'd be hard pressed to compete with that. I'd have to look for a different location and starts networking, etc... Again, out of college with only a few hundred dollars in the bank and since I used mainly cash I have no credit history so I am stuck with what I have, how long before I run out? Keep in mind this part of the discussion was about this statement?
  
Given the terms set by crcballer, making decent money starting up a lawncare business would be EXTREMELY difficult.  The startup capital is necessary to purchase accounts and equipment (purchasing accounts will cost 80-90% of that $100K). 

Like you said, there are probably 5 different lawn mowing companies in your neighborhood alone.  I can virtually guarantee that the accounts/houses being worked by those 5 companies were all bought/sold/traded at some time.  Thats how that business works.  Not trying to sound racist, but no one really knows who it is that mows their lawn for them right?  They look out the window and see random mexican guy and assume he was either a) the same dude from last week or b) different dude who works for the same company.  The homeowner gets an invoice once a month and will mail a check or even drop cash, and that is that.  There is very little margin in that business to begin with.  It is a volume based business.  If you dont already have the existing accounts, the chances of you going door to door and convincing 100 different homeowners in a neighborhood to ditch their current lawnmower and hire you instead is... well... slim to none.  Thats why you buy accounts off of your competitors (or those who are retiring or going out of business).

College guy with a truck, a leafblower, a lawnmower, and a couple hundy in his pocket will not be able to compete with that.