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- Dec 20, 2010
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