4 ms·

Good luck buying a house or a car with cash. I know he's specifically referring to things on the internet, but, I'm sure, Stallman being Stallman, he would say

Good luck buying a house or a car with cash. I know he's specifically referring to things on the internet, but, I'm sure, Stallman being Stallman, he would say you should follow this rule offline as well.

tomohawk 9y ago
Why would you borrow money to get a car? It's a depreciating asset. If you have to borrow money to get a car, you're buying too much car. A house, you probably will need leverage for, but at least there's a reasonable chance it will appreciate in value.
- watersb 9y ago
  Most people I know need a car to get to their job. I stopped using a car to do so 20 years ago, but I had to leave Silicon Valley to do so. My friends who stayed -- car payment and all -- now have far more money than I do. But I was much happier than I would have been, stuck in traffic. It's not for everyone.
- DoubleCribble 9y ago
  If you have the cash and can invest it better (net taxes and fees) than what the cost of the loan is, why not? If you are fortunate enough to qualify for a very low interest loan (usually on a new car), even a very reasonable growth rate on your investments can be sufficient to effectively pay for a couple car payments on the loan each year.
  - tomohawk 9y ago
    Lets say you own a car 100%. Would you say it is wise to take out a loan on that car to play the stock market? That's the same thing as what your are saying. What if the market goes south? What if your lose your job? Debt represents risk that makes all of these other setbacks worse. It's better to get that off your back, then invest. If you have car debt, you should first pay that off, then play the stock market with your surplus money.
    - DoubleCribble 9y ago
      Honestly, that depends on the interest rate spread. If I could get the same terms as a new car (let's say 1.9% on 60 months) during a boom economy/post-crash correction, I just might. Of course, you're never going to see that rate offered on a re-fi for a used car so this is purely hypothetical but as the saying goes, fortune favors the bold.
- pmiller2 9y ago
  Taking out a loan to buy a car can be worth it, if you get an extremely low interest rate. However, for that to happen, you need to be buying a new car with a top credit score. In that case, you're probably still better off paying cash, but taking a loan can smooth out cash flow a bit. But, if that's the reason you're taking the loan, you should already be able to buy the car in cash. That's in a perfect world. In the real world, where people aren't perfectly rational agents, people take out car loans all the time. One can argue that the major US automakers are essentially finance companies these days.
gaius 9y ago
Good luck buying a house or a car with cash. Not an issue for Stallman with his grant from the MacArthur foundation. But much of his advice comes from generalisation of his near-unique circumstances.
teddyh 9y ago
Both a car and a house has a registered owner, so Stallman would most likely have no issue paying for both without insisting on cash. The issue, as he explains, is one of tying the purchase to your identity. If it can be avoided, you should use cash. If you have to otherwise identify yourself for other reasons (like when buying an airline ticket, or when buying something which inherently identifies you, like paying for the stallman.org domain), there is no question of avoiding identification, and insisting on cash would be pointless.

tomohawk 9y ago

Why would you borrow money to get a car? It's a depreciating asset. If you have to borrow money to get a car, you're buying too much car. A house, you probably will need leverage for, but at least there's a reasonable chance it will appreciate in value.

watersb 9y ago
Most people I know need a car to get to their job. I stopped using a car to do so 20 years ago, but I had to leave Silicon Valley to do so. My friends who stayed -- car payment and all -- now have far more money than I do. But I was much happier than I would have been, stuck in traffic. It's not for everyone.
DoubleCribble 9y ago
If you have the cash and can invest it better (net taxes and fees) than what the cost of the loan is, why not? If you are fortunate enough to qualify for a very low interest loan (usually on a new car), even a very reasonable growth rate on your investments can be sufficient to effectively pay for a couple car payments on the loan each year.
- tomohawk 9y ago
  Lets say you own a car 100%. Would you say it is wise to take out a loan on that car to play the stock market? That's the same thing as what your are saying. What if the market goes south? What if your lose your job? Debt represents risk that makes all of these other setbacks worse. It's better to get that off your back, then invest. If you have car debt, you should first pay that off, then play the stock market with your surplus money.
  - DoubleCribble 9y ago
    Honestly, that depends on the interest rate spread. If I could get the same terms as a new car (let's say 1.9% on 60 months) during a boom economy/post-crash correction, I just might. Of course, you're never going to see that rate offered on a re-fi for a used car so this is purely hypothetical but as the saying goes, fortune favors the bold.
pmiller2 9y ago
Taking out a loan to buy a car can be worth it, if you get an extremely low interest rate. However, for that to happen, you need to be buying a new car with a top credit score. In that case, you're probably still better off paying cash, but taking a loan can smooth out cash flow a bit. But, if that's the reason you're taking the loan, you should already be able to buy the car in cash. That's in a perfect world. In the real world, where people aren't perfectly rational agents, people take out car loans all the time. One can argue that the major US automakers are essentially finance companies these days.

gaius 9y ago

Good luck buying a house or a car with cash. Not an issue for Stallman with his grant from the MacArthur foundation. But much of his advice comes from generalisation of his near-unique circumstances.

teddyh 9y ago

Both a car and a house has a registered owner, so Stallman would most likely have no issue paying for both without insisting on cash. The issue, as he explains, is one of tying the purchase to your identity. If it can be avoided, you should use cash. If you have to otherwise identify yourself for other reasons (like when buying an airline ticket, or when buying something which inherently identifies you, like paying for the stallman.org domain), there is no question of avoiding identification, and insisting on cash would be pointless.