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 virus1824
Mr Mushroom
 
Registered: 09/25/05
Posts: 1,741
Loc: Europe
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 are there people who are not in debt or/and do not take loans? 
#10300906 - 05/07/09 07:24 AM (4 years, 1 month ago) |
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Everytime i see a commercial on television, i see the example of people getting a loan to pay for a new kitchen, wife, car or whatever.
There is alot of those commercials out there and the examples shown are probably the reasons most people take loans in the first place.
I just dont get it. loans cost money, missing a down payment usually results in a extra fine. and u get gagged for several years at least. doesn't anyone save money to buy shit?
I live a very satisfying life. although my car looks like shit. though i only payed 1000 for it. Hey it drives right. i get my clothes from the market. i get the cheapest vodka,beer i can find Alcohol=alcohol imho. if i buy dr00gz i do it wholesale.
I have a no debt. no mortgage and a bank account with alot in it. all money i earned myself, no gambling just working my ass off.
Why would anyone prefer a loan over saving for half a year? i just don't get the mindset. its not hard. why get a loan for a car of 7000 bucks. i mean seriously why do people buy shit like a new kitchen which they cant afford in the first place?
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A weekend wasted is never a wasted weekend
Edited by virus1824 (05/07/09 08:05 AM)
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badchad
Mad Scientist
Registered: 03/02/05
Posts: 9,217
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Re: are there people who are not in debt or/and do not take loans? [Re: virus1824]
#10301026 - 05/07/09 08:13 AM (4 years, 1 month ago) |
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Because some things cannot be saved for in a reasonable amount of time. A decent house around the area I live in is 300-400k. Not something you'll save for. Some would say the same for a car.
If managed correctly, debt is a very useful tool.
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...the whole experience is (and is as) a profound piece of knowledge. It is an indellible experience; it is forever known. I have known myself in a way I doubt I would have ever occurred except as it did.
Smith, P. Bull. Menninger Clinic (1959) 23:20-27; p. 27.
...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.
Osmond, H. Annals, NY Acad Science (1957) 66:418-434; p.436
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virus1824
Mr Mushroom
Registered: 09/25/05
Posts: 1,741
Loc: Europe
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Re: are there people who are not in debt or/and do not take loans? [Re: badchad]
#10301034 - 05/07/09 08:17 AM (4 years, 1 month ago) |
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Quote:
If managed correctly, debt is a very useful tool.
Could you elaborate on that? i do not see the usefulness since eventually you do have to pay more than when you just saved your money.
I agree on the fact a loan on a house is reasonable. Although its really madness what a house costs these days. you would have to work your entire life and still not being able to pay it off.
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A weekend wasted is never a wasted weekend
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badchad
Mad Scientist
Registered: 03/02/05
Posts: 9,217
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Re: are there people who are not in debt or/and do not take loans? [Re: virus1824]
#10301059 - 05/07/09 08:29 AM (4 years, 1 month ago) |
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One example is a house. I buy a house with a 30-year mortgage. Yes, I pay a lot in interest. In 30 years though, I own the house plus appreciation. You rent for 30 years. In 30 years, you have nothing. The same model could apply to anything that appreciates in value.
Another example: My car breaks down. I need a car to get to work. If I do not work, i get fired. I cannot buy another car outright. I take out a loan and pay $200/month for a car.
I could have bought a cheaper, junk car. But the chances of it breaking down are greatly increased. This would result in more money to fix the car and lost wages while waiting for it to be fixed. In the long run, its equivalent (or possibly cheaper) to take a loan out on the car.
Yet another example: I want to start a business. I take out a loan for startup costs. I get the business going and make money. I couldn't have done it without a loan.
Another example: I want to go to medical school. It costs 150k for 4 years. I take a loan and go to school landing me a better job.
There are plenty of situations where getting money immediately is worth paying the interest on a loan. Both financially, and for personal satisfaction. If used properly, loans and credit are great.
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...the whole experience is (and is as) a profound piece of knowledge. It is an indellible experience; it is forever known. I have known myself in a way I doubt I would have ever occurred except as it did.
Smith, P. Bull. Menninger Clinic (1959) 23:20-27; p. 27.
...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.
Osmond, H. Annals, NY Acad Science (1957) 66:418-434; p.436
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virus1824
Mr Mushroom
Registered: 09/25/05
Posts: 1,741
Loc: Europe
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Re: are there people who are not in debt or/and do not take loans? [Re: badchad]
#10301098 - 05/07/09 08:46 AM (4 years, 1 month ago) |
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Quote:
Another example: My car breaks down. I need a car to get to work. If I do not work, i get fired. I cannot buy another car outright. I take out a loan and pay $200/month for a car.
I could have bought a cheaper, junk car. But the chances of it breaking down are greatly increased. This would result in more money to fix the car and lost wages while waiting for it to be fixed. In the long run, its equivalent (or possibly cheaper) to take a loan out on the car.
All cars can break down, the older cheaper junk cars are usually far cheaper to repair than new models. of course this depends on the actual car itself and if there are spare parts available. my car is from 1992 never refused service once. repairs are very inexpensive. most new models its near impossible to change even the lights yourself. so thats debatable.
Quote:
One example is a house. I buy a house with a 30-year mortgage. Yes, I pay a lot in interest. In 30 years though, I own the house plus appreciation. You rent for 30 years. In 30 years, you have nothing. The same model could apply to anything that appreciates in value.
The appreciation is only valid if the house always increases in value over time. of course quite risky. imho rental is more cost effective since when something breaks down. you don't have to pay for it. to give one example.
Quote:
Yet another example: I want to start a business. I take out a loan for start up costs. I get the business going and make money. I couldn't have done it without a loan.
Why would you take up a loan for start up cost, instead of working for a year? to get like 5000 start capita. If your business doesn't work out your not forced into high debt... because you just spend your own money? instead of money do did not have in the first place.
Quote:
Another example: I want to go to medical school. It costs 150k for 4 years. I take a loan and go to school landing me a better job.
Even with a loan.. isn't that big a debt a chain for the rest of your life?
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A weekend wasted is never a wasted weekend
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badchad
Mad Scientist
Registered: 03/02/05
Posts: 9,217
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Re: are there people who are not in debt or/and do not take loans? [Re: virus1824]
#10301205 - 05/07/09 09:31 AM (4 years, 1 month ago) |
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Every situation is unique. To put it simply: The basic premise of a loan is to pay an amount of interest for immediate gratification.
In some cases this makes a lot of financial sense. In some cases, this may provide you something that would be impossible to save up for, or, it would take you an excessively long time to save up for.
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...the whole experience is (and is as) a profound piece of knowledge. It is an indellible experience; it is forever known. I have known myself in a way I doubt I would have ever occurred except as it did.
Smith, P. Bull. Menninger Clinic (1959) 23:20-27; p. 27.
...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.
Osmond, H. Annals, NY Acad Science (1957) 66:418-434; p.436
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 Waking_Eyes
Stranger
Registered: 08/23/08
Posts: 57
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Re: are there people who are not in debt or/and do not take loans? [Re: badchad]
#10302401 - 05/07/09 02:57 PM (4 years, 1 month ago) |
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I've got a car loan. Once I'm done this one, I am NEVER getting another one. I kinda got lucky though in the sense that I don't give a shit about a nice house as long as it keeps the rain off my head. I don't give a shit about a nice kitchen as long as I can cook. And I could not ever spend the rest of my life with someone who wants all those pointless things that we're brainwashed to believe we need.
Gimme a garden and a library and I'm a happy man.
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Stonehenge
enthusiast
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Re: are there people who are not in debt or/and do not take loans? [Re: Waking_Eyes]
#10302953 - 05/07/09 04:49 PM (4 years, 1 month ago) |
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I think you both have valid points. I tend to be the one who pays cash for everything and owe no one. I have no debts at this time. But, real estate is one thing that makes sense to buy on credit. I'd wait another year for the re market to bottom out but there are many benefits from home ownership. For one thing, you can deduct the interest and property taxes you pay on your income tax. Of course then you have to itemize and lose the standard deduction. You get a place to live in which is worth money on the open market. Then you get long term appreciation. You can not show me a 20 year period in history in which home prices have not risen. And finally, you get the pride of ownership and the fact that no jerk off land lord is going to come in when you're away or give you rules you must abide by.
Buying a car is not so cut and dried. I have a 12 year old clunker myself. It's 4 cylinder and gets great mileage. I may buy a new car this year but only because obama is giving us a tax break on it. It will be a cash purchase if I do it.
People waste huge amounts of money every year on junk. They order out instead of cooking at home and lose thousands a year that way. They buy stuff they don't need and put it on the card at huge rates of interest. Banks can borrow now for almost nothing but they lend it to you at rates up to 27% or higher. No stories in the paper about this little rip off.
Brown bag it, save your money and only buy what you need with cash. Use the credit card for purchases you plan to pay off at the end of the month. Invest your savings and when retirement comes around, you will laugh about whether social sec will pay off or not.
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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)
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Silversoul
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Re: are there people who are not in debt or/and do not take loans? [Re: virus1824]
#10303688 - 05/07/09 07:34 PM (4 years, 1 month ago) |
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I'm only in debt to my parents. However, there was a period of several months where I wasn't able to pay off my full credit card balance. Fucking compound interest sucks so bad.
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automan
blasted chipmunk
Registered: 09/18/03
Posts: 6,819
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Re: are there people who are not in debt or/and do not take loans? [Re: badchad]
#10305423 - 05/08/09 12:46 AM (4 years, 1 month ago) |
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Quote:
badchad said:
One example is a house. I buy a house with a 30-year mortgage. Yes, I pay a lot in interest. In 30 years though, I own the house plus appreciation. You rent for 30 years. In 30 years, you have nothing. The same model could apply to anything that appreciates in value.
Another example: My car breaks down. I need a car to get to work. If I do not work, i get fired. I cannot buy another car outright. I take out a loan and pay $200/month for a car.
I could have bought a cheaper, junk car. But the chances of it breaking down are greatly increased. This would result in more money to fix the car and lost wages while waiting for it to be fixed. In the long run, its equivalent (or possibly cheaper) to take a loan out on the car.
Yet another example: I want to start a business. I take out a loan for startup costs. I get the business going and make money. I couldn't have done it without a loan.
Another example: I want to go to medical school. It costs 150k for 4 years. I take a loan and go to school landing me a better job.
There are plenty of situations where getting money immediately is worth paying the interest on a loan. Both financially, and for personal satisfaction. If used properly, loans and credit are great.
I own a car. I own 2 businesses. In the next 5 years, I will own a house. I have done all this without debt. It isn't easy. Sometimes it downright sucks, but it is doable. i have never owned a credit card, taken out a bank loan, etc.
If I can do it, you can do it too. There was a time in our not too distant past where everyone did business like this. It's a shame those times have past for the most part.
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No, no, you're not thinking, you're just being logical. ~ Niels Bohr
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DieCommie
El Guapo
Registered: 12/11/03
Posts: 25,374
Loc: Street of Dreams
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Re: are there people who are not in debt or/and do not take loans? [Re: automan]
#10305901 - 05/08/09 02:32 AM (4 years, 1 month ago) |
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Its not a question of if it can be done without debt, its a question of if it should be done without debt. Intelligently taking on debt against things that appreciate can net you more in the end than waiting and paying for it outright. You just have to be smart about what to borrow against.
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virus1824
Mr Mushroom
Registered: 09/25/05
Posts: 1,741
Loc: Europe
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Re: are there people who are not in debt or/and do not take loans? [Re: DieCommie]
#10306163 - 05/08/09 03:47 AM (4 years, 1 month ago) |
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Quote:
Intelligently taking on debt against things that appreciate can net you more in the end than waiting and paying for it outright.
I call it more gambling, like i said before appreciation is only valid if the item/asset always keeps increasing in value. which may not always be the case. but it could work out just as well indeed.
Quote:
If I can do it, you can do it too. There was a time in our not too distant past where everyone did business like this. It's a shame those times have past for the most part.
Yes its a shame indeed. nowadays the people who look poor are usually wealthier than the people who look rich. but are actually very poor, cause to afford there lifestyle they are in high debt.
Quote:
real estate is one thing that makes sense to buy on credit.
As much sense as its impossible to do otherwise.
its good to read about other peoples experiences with this. Although i do think some people miss, that loaning is always more expensive than any other form of paying.
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A weekend wasted is never a wasted weekend
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LayYouIn
Taurus
Registered: 09/28/06
Posts: 4,402
Loc: Organ
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Re: are there people who are not in debt or/and do not take loans? [Re: virus1824]
#10306233 - 05/08/09 04:20 AM (4 years, 1 month ago) |
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Me. I owe no one anything. Im currently saving up for a new car.
Im also like you, i've worked for it all. I also have PMs.
Better to push your wealth, than to pull your debt.
The only bad thing, is that i have no credit score. Which isn't a problem until i want to buy a house(unless i invest correctly).
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badchad
Mad Scientist
Registered: 03/02/05
Posts: 9,217
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Re: are there people who are not in debt or/and do not take loans? [Re: automan]
#10307163 - 05/08/09 10:37 AM (4 years, 1 month ago) |
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Quote:
automan said:
I own a car. I own 2 businesses. In the next 5 years, I will own a house. I have done all this without debt. It isn't easy. Sometimes it downright sucks, but it is doable.
You have to take into account how much are the businesses and house are going to be valued at in total.
Like I said, in my area, a decent "average" house is 400k. Its not practical to save up 400k in liquid assets to purchase something like that. This is a general measure of cost of living as well, so if you rent while saving for a house, rent is going to be about 1,500/month.
But hey, if you can manage to pay a rent of nearly 1k/month AND save up another 400k to pay for a house outright, then let me know your secret. I'd love to go into business with you.
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...the whole experience is (and is as) a profound piece of knowledge. It is an indellible experience; it is forever known. I have known myself in a way I doubt I would have ever occurred except as it did.
Smith, P. Bull. Menninger Clinic (1959) 23:20-27; p. 27.
...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.
Osmond, H. Annals, NY Acad Science (1957) 66:418-434; p.436
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Redstorm
Prince of Bugs
Registered: 10/08/02
Posts: 44,173
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Re: are there people who are not in debt or/and do not take loans? [Re: badchad]
#10307644 - 05/08/09 01:10 PM (4 years, 1 month ago) |
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I have some debt and credit cards but all are used strategically. I have subsidized student loans that I took for investment money, which works great since subsidized loans don't charge interest while I'm in school. Even if I have it sitting in a high yield checking account, that money is making me money without me doing anything. Also, I expect that the jobs I am looking after after my master's program is over will offer student loan repayment.
I have two credit cards, as well. The first is a rewards card and is used for 99% of my purchases. I've accumulated almost $1,000 of rewards cash in it over a year and a half and pay the balance completely every month. The second card has no interest on purchases until into 2011, which means it is essentially an interest-free loan. I use this card for bigger, more out of the ordinary purchases and pay the minimum every month until the interest charges will start and I'll pay the balance in full.
So, I suppose in summary, loans are not necessarily bad. They are a tool, and like any tool, they can be misused. I'm a very young person and have a credit score better than most people twice my age because I have been using intelligent debt practices for a long time.
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automan
blasted chipmunk
Registered: 09/18/03
Posts: 6,819
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Re: are there people who are not in debt or/and do not take loans? [Re: badchad]
#10309149 - 05/08/09 07:00 PM (4 years, 1 month ago) |
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Quote:
badchad said:
But hey, if you can manage to pay a rent of nearly 1k/month AND save up another 400k to pay for a house outright, then let me know your secret. I'd love to go into business with you.
I wouldnt be able to spend $400k on a house in the next 5 years. Right now we pay over a grand a month in rent. I would be willing to spend up to $250k on a house in 5 years. We could do $400k in 8 years, but I would rather get a decent little house for $250k, then save up for property in Belize on the Caribbean Coast (which I would like to have in the next 10 years.)
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No, no, you're not thinking, you're just being logical. ~ Niels Bohr
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Stonehenge
enthusiast
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Re: are there people who are not in debt or/and do not take loans? [Re: automan]
#10309353 - 05/08/09 07:52 PM (4 years, 1 month ago) |
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I'm going into real estate myself but not until it levels out. All this happy talk in the papers is worth about a nickle, if you have five cents to start with. When prices level out, then I will do some serious looking. I'll start looking around when it seems prices are slowing down their dive. By the time the word is out that real estate is going up, everyone will be jumping on board. I want to already be in at that time. Which means I'll probably have to buy just before the bottom. But there are so many deals out there that you can make money right now. It's just that if I buy now and it goes down another 20% in the next year, I'll feel like a fool. The good deal won't do me any good unless i flip it right away.
I'll go to auctions, I'll talk to the re owned guys at the bank, study a few properties, kick a few tires and so on. I'll probably start doing that this year with no real intention of buying anything. But that gets me close to the pulse of the market and if the right property comes along, I buy.
You don't have to save 400k to but a house worth 400k. First of all, those 400k houses are going now for about 200. And if you find one at a distress sale, you might get it for 150 or less. OK, lets say you have your heart set on a house going for 400k. Lets assume it was 700 or more back in '05. You just have to get financed by a bank. This does require a credit history going back at least a few years.
Another way to do it is to deal directly with a motivated seller. Someone who is facing foreclosure is not going to dicker around with you. Talk to the bank who holds the mortgage and go from there. You may be able to assume the mortgage. Or if you find a home paid for being sold by the owner, offer some money down and so much a month. Make an offer per week and someone will say yes. If you are lucky the payments will only be a little more than rent.
Another option is rent to own. Lock in a price, get it in writing and away you go. Make sure you do a title search before hand so you don't get hit with any nasty surprises. That goes for any purchase. You can look up most of the stuff down at the courthouse and before closing you pay for a legal search.
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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)
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kibantik
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Re: are there people who are not in debt or/and do not take loans? [Re: Stonehenge]
#10313750 - 05/09/09 07:30 PM (4 years, 1 month ago) |
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As a recent college graduate, I have incurred a little bit of debt.
About $7,000 in student loans, and $2000 in credit card debt.
I don't think it will be too difficult to pay off, but I wouldn't mind any advice. 
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automan
blasted chipmunk
Registered: 09/18/03
Posts: 6,819
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Re: are there people who are not in debt or/and do not take loans? [Re: kibantik]
#10316554 - 05/10/09 12:32 PM (4 years, 1 month ago) |
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Write down all your bills from smallest to largest. Attack the smallest while making minimum payments on everything else. You will quickly pay off the smallest. Then attack the next largest one paying everything you were paying towards your previous bill + what you are paying on this one until you pay it off. Repeat.
Some people would say pay off the highest interest first, and that makes financial sense, but the satisfaction of accomplishment as you get to mark bills off you list will keep you motivated to keep at it.
This advice doesn't come from me. I have never paid an interest payment. It comes from a guy I used to listen to on the radio 10 or 15 years ago named Dave Ramsey. I tend to agree with his logic, though.
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No, no, you're not thinking, you're just being logical. ~ Niels Bohr
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DieCommie
El Guapo
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Posts: 25,374
Loc: Street of Dreams
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Re: are there people who are not in debt or/and do not take loans? [Re: automan]
#10317214 - 05/10/09 03:39 PM (4 years, 1 month ago) |
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Quote:
Dave Ramsey
 I used to listen to him 10 years ago too, when I was a pizza driver.
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Stonehenge
enthusiast
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Re: are there people who are not in debt or/and do not take loans? [Re: DieCommie]
#10317542 - 05/10/09 05:17 PM (4 years, 1 month ago) |
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So if you have a zero interest until '10 loan you should pay that ahead of your 29% credit card bill? I don't think so, pay off the ones that are costing you the most. Another advantage of paying off credit card balances is that you get your grace period back. When you charge something you will have 30 to 45 days to pay it with no interest or charges.
If you had a balance on a card and they jack up the interest way high, you can usually keep your old rate on the balance if you protest it and do not charge anything more on the card. Then get a new card with benefits. Some people just keep getting new cards with zero interest or low rates for a period of time and pay off the high interest rates on the old cards. Best long term strategy is to pay them all off and only spend what you have on hand. Mortgage payments should be the last thing you pay. Refi if it's too high.
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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)
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