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Voters: 107. You may not vote on this poll
How do you pay?
03-26-2008, 11:22 AM
#71
Dominant Buck
Join Date: Oct 2005
Location:
Posts: 21,043
RE: How do you pay?
Sure you are paying less of an interest rate, but that money you are earning the 10% on is taxable income. So, 10% starts to look like 7% to me.
Also, you are factoring in risk, especially if you lose your job.
Obviously you have made a lifestyle choice of borrowing money, but I think it will slow down your true potential.
My parents make a 6 figure income, but their net worth is really low due to car payments, credit cards etc...
The golden rule is not how much you make, but how much you keep.
I used to think just like GMMAT.
03-26-2008, 11:49 AM
#72
Nontypical Buck
Join Date: Jul 2007
Location: Oklahoma City, OK
Posts: 1,184
RE: How do you pay?
For one, if you put your money in a retirement account it is not liquid without a 10% penalty. Thus, you would lose quite a bit of money toobtain it.Also, you do realize that a roth is post tax dollars, right?
If you have the cash to pay off the note the spread you are making still is not worth it IMHO. BTW, most peoplewho borrow on vehicles don't have that amount of money saved. That is the reason they are borrowing money in the first place.
Bringing up the $300k borrowed by the business man is not a fair comparison. You are talking consumer debt versus venture capital debt. I might also add that 80% of businesses fail, and $300k is really rolling the dice. If you want to build a business I would suggest starting out slow and doing it with cash.
Oh well, agree to disagree.
If you have the cash to pay off the note the spread you are making still is not worth it IMHO. BTW, most peoplewho borrow on vehicles don't have that amount of money saved. That is the reason they are borrowing money in the first place.
Bringing up the $300k borrowed by the business man is not a fair comparison. You are talking consumer debt versus venture capital debt. I might also add that 80% of businesses fail, and $300k is really rolling the dice. If you want to build a business I would suggest starting out slow and doing it with cash.
Oh well, agree to disagree.
03-26-2008, 12:02 PM
#73
Dominant Buck
Join Date: Oct 2005
Location:
Posts: 21,043
RE: How do you pay?
For one, if you put your money in a retirement account it is not liquid without a 10% penalty. Thus, you would lose quite a bit of money toobtain it.Also, you do realize that a roth is post tax dollars, right?
If you have the cash to pay off the note the spread you are making still is not worth it IMHO.
BTW, most peoplewho borrow on vehicles don't have that amount of money saved.
Oh well, agree to disagree.
03-26-2008, 12:04 PM
#74
Nontypical Buck
Join Date: Nov 2005
Location: Mn.
Posts: 3,399
RE: How do you pay?
I just asked the wife why she dosnt pay the 2 credit cards off and all she said was because I dont want too,I said its only 28 hundred and all she said was so,they will be payed off by Oct........
Then the only debt we will have is the new pickup....Every thing else is payed off,including the house...................
I give her my pay checks and she in return gives me money as needed....works well....She takes care off all the bills....and never really gets mad when I buy a big ticket item....now I now why.....
What really shocked me was she had me do the taxes this year(1st time in 11 yrs)and so I got to look at all the differant savings accounts,Roth,checking and it floored me........I didnt realize how much money she has put away....She has done well with out me knowing.....she also said DONT EVEN THINK ABOUT IT...[&o]......
WHAT does that mean...
...dont even think about it...
...
Then the only debt we will have is the new pickup....Every thing else is payed off,including the house...................
I give her my pay checks and she in return gives me money as needed....works well.
...She takes care off all the bills....and never really gets mad when I buy a big ticket item....now I now why.....What really shocked me was she had me do the taxes this year(1st time in 11 yrs)and so I got to look at all the differant savings accounts,Roth,checking and it floored me........I didnt realize how much money she has put away....She has done well with out me knowing.....she also said DONT EVEN THINK ABOUT IT...[&o]......
WHAT does that mean...
...dont even think about it......
03-26-2008, 12:06 PM
#75
Nontypical Buck
Join Date: Jul 2007
Location: England , UK
Posts: 1,089
RE: How do you pay?
If i buy over here in the UK , i use Cash . If i'm ordering from States , PayPal if they accept ... ain't that right MeanV.
I got no debts , but my mortgage and plan on keeping it that way . I don't have a credit card and don't plan on getting one either , i'd go crazy with it.
.I got no debts , but my mortgage and plan on keeping it that way . I don't have a credit card and don't plan on getting one either , i'd go crazy with it
.
03-26-2008, 12:26 PM
#78
Nontypical Buck
Join Date: Jul 2007
Location: Oklahoma City, OK
Posts: 1,184
RE: How do you pay?
ORIGINAL: GMMAT
The penalty for early witdrawl is higher than 10%.....but that's netiher here nor there. If I were worried about having to tap into it.....I wouldn't borrow against it.You're planning (in your worst case scenario) against a catastrophic loss....and not a temporary setback (such as a job loss). Yes....a Roth is post going in.....but not coming out.
Again...your decision. Not saying on'e wrong or right for everyone. You have to weigh your own wants and needs against your abilities to pay for both.....and also the risks you're willing to take......THEN make a fiscally responsible decision about your $$. We just disagree, some. No biggie! You sound like you weigh your situation responsibly. Commendable. We don't take debt lightly.
Conceded. Each individual is different.
And a wonderful discussion!
For one, if you put your money in a retirement account it is not liquid without a 10% penalty. Thus, you would lose quite a bit of money toobtain it.Also, you do realize that a roth is post tax dollars, right?
If you have the cash to pay off the note the spread you are making still is not worth it IMHO.
BTW, most peoplewho borrow on vehicles don't have that amount of money saved.
Oh well, agree to disagree.
Anyways, yes great discussion. Hey, at least you are paying attention to your money. We disagree on some issues, but for the most part we both agree to spend wisely and have a plan.
03-26-2008, 12:30 PM
#79
Giant Nontypical
Join Date: Feb 2003
Location:
Posts: 7,571
RE: How do you pay?
ORIGINAL: robbcayman
Let's take your example of earning 10% while paying 5% on a vehicle. Sure you are paying less of an interest rate, but that money you are earning the 10% on is taxable income. So, 10% starts to look like 7% to me. Also, you are factoring in risk, especially if you lose your job.
What I have done is paid cash for all of my vehicles and I pay $500 into mutual funds each month. I am averaging 12% and every 6-8 years I tap into it and buy another car. So essentially I am doing what you are talking about, but my spread is larger because I am not paying a dealer/bank 5% interest.
Also, even if someone wants to check my credit score it isawesome. Just pay your house payment on time or early and you will have a high credit score. You don't need a credit card or a car payment to build good credit.
Obviously you have made a lifestyle choice of borrowing money, but I think it will slow down your true potential. I have just seen far too many people win with money who refuse to borrow it. My parents make a 6 figure income, but their net worth is really low due to car payments, credit cards etc...
The golden rule is not how much you make, but how much you keep.
PS: Yes Dave Ramsey inspired me 5 years ago and it has been the biggest blessing of my life. I used to think just like GMMAT.
Let's take your example of earning 10% while paying 5% on a vehicle. Sure you are paying less of an interest rate, but that money you are earning the 10% on is taxable income. So, 10% starts to look like 7% to me. Also, you are factoring in risk, especially if you lose your job.
What I have done is paid cash for all of my vehicles and I pay $500 into mutual funds each month. I am averaging 12% and every 6-8 years I tap into it and buy another car. So essentially I am doing what you are talking about, but my spread is larger because I am not paying a dealer/bank 5% interest.
Also, even if someone wants to check my credit score it isawesome. Just pay your house payment on time or early and you will have a high credit score. You don't need a credit card or a car payment to build good credit.
Obviously you have made a lifestyle choice of borrowing money, but I think it will slow down your true potential. I have just seen far too many people win with money who refuse to borrow it. My parents make a 6 figure income, but their net worth is really low due to car payments, credit cards etc...
The golden rule is not how much you make, but how much you keep.
PS: Yes Dave Ramsey inspired me 5 years ago and it has been the biggest blessing of my life. I used to think just like GMMAT.
I liked your post Robby
.