6 ms·

Our credit card driven culture could certainly use his advice on avoiding debt.

by vlunkr 11y ago

iagooar 11y ago
I took a credit once, for buying a car, and will never do it again. Although I never had problems with paying the money back, I was paying a lot more money back to the bank, so when I finished paying the credit off, the car was worth half of the price I bought it, almost having paid double the price because of the credit interests. But the worst part was that it didn't feel right. So now my policy is to never buy anything with money that I don't have (yet). It makes you feel so much better, you feel a truly free person. I don't own my apartment, true, and the money I spend each month on rent could bring me closer to owning one, but I just don't see the point of it. But buying stuff for money you actually have makes your decisions so much better and closer to what you can really afford. Also, there is another component to buying stuff with money you actually have. Recently, I decided to buy a scooter. Not a big "deal", but I didn't want to just spend any savings on it that I have so far, so I put aside money from some freelancing outside my daily job, sold some unused furniture and electronics, and only had to pay around 25% of the price of the scooter from my account. It felt so good, it felt like I deserved it, because I planned for it in advance and didn't have to "compromise" my savings. On the other hand, when I took the loan for the car, I felt bad, I almost felt miserable, as if I was doing something wrong. I can't imagine buying a house for someone else's money. You must feel like a slave.
- ams6110 11y ago
  You can make some argument for paying for something over time if you are going to use it over time. A house, or a car, could fall into that category. However a big difference is that a house is an asset which normally appreciates in value, while a car is an expense which depreciates. Buying something on credit that will depreciate (or worse, is a consumable) is something to be very cautious about.
- carlosnunez 11y ago
  Here's the biggest reason why I don't mind taking out a loan on a car, one of the most aggressive and most expensive depreciating assets out there: Comfort. Immense comfort. I spend a lot of time in my car. I enjoy the car that I have now (a 2012 Honda Accord EX-L), but the only reason why I didn't take out a lease on something more expensive (like a 535i or an E-class) is because we're planning to move very soon and driving a luxury car in NYC makes no damn sense unless you are flush with money and can afford the inevitable body work. When I went to Austin a few months ago, I decided to rent a BMW Z4. It was amazing. An absolute pleasure to drive. It wasn't the speed that did it in for me, though. It was the sheer comfort of everything. Volume knobs? They're RIGHT THERE. You don't even need to move your forearm. The seats? Plushy and comfortable (unlike my Accord; everything is great, but those seats are terrible). Cruise control that actually works on downhills and actually slows down? Not a problem. Me paying a few hundred dollars per month to not drive something much cheaper (and, likely, not as nice/comfortable) doesn't bother me at all. It's a debt, and debt sucks, but driving a low-grade econobox for a few years while I save up for something that will be worth 30% less than what I bought it for the minute I drive it out is much worse (for me). (Same goes for my future house or apartment.) That being said, building up my emergency spend and clearing up some debt that I've amassed is next on my priority list after moving.
  - switch007 11y ago
    BMW fan here! (To an extent). BMWs have their flaws (buy a 15+ year old E46, I dare you), but damn, it feels much more like they thought things through. Nothing in the interior of my E46 annoyed me. I've driven the F30 as hire cars many times and love it. However, I drove a 2015 Mercedes E-class for 3 days last week...: - The parking brake is a PEDAL and the release is a totally separate lever. - The button to disable auto start-stop is labelled "Eco" rather than a more standard VW/BMW "A" icon in a circular arrow. - The gear selector is a weird stalk (drive is down, reverse is up, and park is a separate button you push inwards?!). - The cruise-control always stayed -1km below what is set. - The gearbox mode selection cycle in the order: Eco->Sport->Manual, i.e. in eco, you need to cycle to get to manual rather than being able to select it directly. Also, flipping up a gear with the paddle DOESN'T put it in to manual mode. - The cruise control stalk is complicated and had an LED, which is out of view. - No button on steering wheel to directly change radio station. - You need to dig the brake pedal to enable the auto-hold. - To wash the windscreen, you need to push inwards a small button on a stalk to the second level! The first level activates the wipers without water. I dry-wiped the windscreen a few times before realising. But apart from all that, it was a nice drive.
- icebraining 11y ago
  Have you considered that your personal feelings are preventing you from taking what can actually be a good economical decision? For example, imagine you had taken a loan to buy the scooter, then used the money put aside to pay the installments instead. You might have paid somewhat more for the scooter, but on the other hand, you could actually own the scooter earlier, which might even save you money in the end (for example, if you drove a car instead and therefore spent more in gas and such). Buying a house is similar; the "point" is that you end up saving money, since you stop paying for it, but never stop paying rent. Also, there are incentives (such as tax breaks) that make it cheaper still. Does it mean that you have an extra obligation "tying" you? Sure. But that doesn't mean it's always a bad choice.
- tomohawk 11y ago
  Borrowing money for a depreciating asset doesn't make much sense in any case. It's not just the extra cost, but additional exposure to risk. Life sometimes throws curve balls, and being leveraged can make the consequences much steeper.
OneOneOneOne 11y ago
Debt breeds debt it seems.
99_00 11y ago
Debt comes in all shapes and forms. Credit cards being one of the worst deals for consumers. Some of the other forms of debt can be very helpful. If you don't understand it, then yes, you should avoid it. But if you do understand it, you can use it to help yourself.

Our credit card driven culture could certainly use his advice on avoiding debt.

by vlunkr 11y ago

Our credit card driven culture could certainly use his advice on avoiding debt.

I took a credit once, for buying a car, and will never do it again. Although I never had problems with paying the money back, I was paying a lot more money back to the bank, so when I finished paying the credit off, the car was worth half of the price I bought it, almost having paid double the price because of the credit interests. But the worst part was that it didn't feel right. So now my policy is to never buy anything with money that I don't have (yet). It makes you feel so much better, you feel a truly free person. I don't own my apartment, true, and the money I spend each month on rent could bring me closer to owning one, but I just don't see the point of it. But buying stuff for money you actually have makes your decisions so much better and closer to what you can really afford. Also, there is another component to buying stuff with money you actually have. Recently, I decided to buy a scooter. Not a big "deal", but I didn't want to just spend any savings on it that I have so far, so I put aside money from some freelancing outside my daily job, sold some unused furniture and electronics, and only had to pay around 25% of the price of the scooter from my account. It felt so good, it felt like I deserved it, because I planned for it in advance and didn't have to "compromise" my savings. On the other hand, when I took the loan for the car, I felt bad, I almost felt miserable, as if I was doing something wrong. I can't imagine buying a house for someone else's money. You must feel like a slave.

ams6110 11y ago
You can make some argument for paying for something over time if you are going to use it over time. A house, or a car, could fall into that category. However a big difference is that a house is an asset which normally appreciates in value, while a car is an expense which depreciates. Buying something on credit that will depreciate (or worse, is a consumable) is something to be very cautious about.
carlosnunez 11y ago
Here's the biggest reason why I don't mind taking out a loan on a car, one of the most aggressive and most expensive depreciating assets out there: Comfort. Immense comfort. I spend a lot of time in my car. I enjoy the car that I have now (a 2012 Honda Accord EX-L), but the only reason why I didn't take out a lease on something more expensive (like a 535i or an E-class) is because we're planning to move very soon and driving a luxury car in NYC makes no damn sense unless you are flush with money and can afford the inevitable body work. When I went to Austin a few months ago, I decided to rent a BMW Z4. It was amazing. An absolute pleasure to drive. It wasn't the speed that did it in for me, though. It was the sheer comfort of everything. Volume knobs? They're RIGHT THERE. You don't even need to move your forearm. The seats? Plushy and comfortable (unlike my Accord; everything is great, but those seats are terrible). Cruise control that actually works on downhills and actually slows down? Not a problem. Me paying a few hundred dollars per month to not drive something much cheaper (and, likely, not as nice/comfortable) doesn't bother me at all. It's a debt, and debt sucks, but driving a low-grade econobox for a few years while I save up for something that will be worth 30% less than what I bought it for the minute I drive it out is much worse (for me). (Same goes for my future house or apartment.) That being said, building up my emergency spend and clearing up some debt that I've amassed is next on my priority list after moving.
- switch007 11y ago
  BMW fan here! (To an extent). BMWs have their flaws (buy a 15+ year old E46, I dare you), but damn, it feels much more like they thought things through. Nothing in the interior of my E46 annoyed me. I've driven the F30 as hire cars many times and love it. However, I drove a 2015 Mercedes E-class for 3 days last week...: - The parking brake is a PEDAL and the release is a totally separate lever. - The button to disable auto start-stop is labelled "Eco" rather than a more standard VW/BMW "A" icon in a circular arrow. - The gear selector is a weird stalk (drive is down, reverse is up, and park is a separate button you push inwards?!). - The cruise-control always stayed -1km below what is set. - The gearbox mode selection cycle in the order: Eco->Sport->Manual, i.e. in eco, you need to cycle to get to manual rather than being able to select it directly. Also, flipping up a gear with the paddle DOESN'T put it in to manual mode. - The cruise control stalk is complicated and had an LED, which is out of view. - No button on steering wheel to directly change radio station. - You need to dig the brake pedal to enable the auto-hold. - To wash the windscreen, you need to push inwards a small button on a stalk to the second level! The first level activates the wipers without water. I dry-wiped the windscreen a few times before realising. But apart from all that, it was a nice drive.
icebraining 11y ago
Have you considered that your personal feelings are preventing you from taking what can actually be a good economical decision? For example, imagine you had taken a loan to buy the scooter, then used the money put aside to pay the installments instead. You might have paid somewhat more for the scooter, but on the other hand, you could actually own the scooter earlier, which might even save you money in the end (for example, if you drove a car instead and therefore spent more in gas and such). Buying a house is similar; the "point" is that you end up saving money, since you stop paying for it, but never stop paying rent. Also, there are incentives (such as tax breaks) that make it cheaper still. Does it mean that you have an extra obligation "tying" you? Sure. But that doesn't mean it's always a bad choice.
tomohawk 11y ago
Borrowing money for a depreciating asset doesn't make much sense in any case. It's not just the extra cost, but additional exposure to risk. Life sometimes throws curve balls, and being leveraged can make the consequences much steeper.

OneOneOneOne 11y ago

Debt breeds debt it seems.

99_00 11y ago

Debt comes in all shapes and forms. Credit cards being one of the worst deals for consumers. Some of the other forms of debt can be very helpful. If you don't understand it, then yes, you should avoid it. But if you do understand it, you can use it to help yourself.