I wouldnt have paid cash for my Lightning with out Dave so bash if you must.
I agree with you 100000 times over on vehicles pissing money down the drain, but property held for several years is a far different story. This is coming from a 20 year old that bought his first property (an owner occupied duplex in the peak of the 07 bubble) I still Own that property several primary homes later and it has served me very well.See above. Again, ignores risk, depreciation and tax ramifications. Always better to pay cash for throw-away consumables. Always. No conversations in finance rooms, no discussions about add-ons, no service contracts, no insurance riders, no title issues. Life is so much simpler when one delays gratification that one time up front. Even when the math works marginally as you say, even if it can be done with locked-in yields on both sides of the ledger, the transaction hassle for a few hundred or even a thousand bucks isn't worth the brain damage in my view. I once saved $1k in a special rebate on a Ford truck for taking the low-interest financing deal, and paid off the loan a week later, just to get the $1k price cut. By the time I did all the paperwork, had the credit check blip, wrote the checks, added and withdrew the lien info on my insurance and the title, it simply wasn't worth the time on a per-hour basis. Far better to just pay $1k more and walk away free of hassle. These deals, like the 90-days-same-as cash furniture, TV, appliance, etc. arrangements are intentional financial traps, set by retailers for fees from lenders who EXPECT a significant portion of "borrowers" to fall into their lair and end up with 8% car loans 18%+ consumer loans instead of paying off the balances.
There's a term of art in consumer marketing - the "masses are asses" - it is amazing what you can get away with because people are simply uneducated about how to manage money. It has become part of the American way to have a car payment and a mortgage. 100 years ago NEITHER existed. Yet both are now accepted as a routine thing, with no questioning or understanding that doing either almost always leaves you with less money at the end of your life. Yes, in the case of home mortgages, timing is everything, and there have been periods, even long periods, where leverage created value for mortgage borrowers, but we now know how that can end up too. But cars are not real estate, will be worth less next year than this, ad infinitum.
To satisfy my own curiosity I looked this up, this is from Encyclopedia.com:
I agree with your principles, but I wouldn’t say suckers. It is just that we either can’t, don’t or won’t think critically about the issue. I didn’t understand the issue until I got my first (and last!) home loan. I was taught a mortgage was “good” debt and to be honest I believed without really thinking critically about it. After I made my first payment I looked at the statement and recognized that the $760 payment I made (yes, this was a while ago) had only reduced my debt by a couple of dollars. I literally called the bank assuming there must’ve been an error. They sent me an amortization table and my mind was suddenly awakened. I started crunching numbers and realized that I was signed up to pay about twice the price of my home to the bank! How could this be possible? Why would anyone teach us that this was good? Within three years we sold that house and never borrowed money again. I do use a credit card for convenience sometimes, but it is paid off every month without fail. As my savings and assets grew I watched my credit score go down. That made it clear to me that lenders weren’t really judging the borrowers on if they could or would payoff the debt, but on if they had a history of making regular payments to the lender. There is a subtle difference and it is worth considering with a critical mind.See above. Again, ignores risk, depreciation and tax ramifications. Always better to pay cash for throw-away consumables. Always. No conversations in finance rooms, no discussions about add-ons, no service contracts, no insurance riders, no title issues. Life is so much simpler when one delays gratification that one time up front. Even when the math works marginally as you say, even if it can be done with locked-in yields on both sides of the ledger, the transaction hassle for a few hundred or even a thousand bucks isn't worth the brain damage in my view. I once saved $1k in a special rebate on a Ford truck for taking the low-interest financing deal, and paid off the loan a week later, just to get the $1k price cut. By the time I did all the paperwork, had the credit check blip, wrote the checks, added and withdrew the lien info on my insurance and the title, it simply wasn't worth the time on a per-hour basis. Far better to just pay $1k more and walk away free of hassle. These deals, like the 90-days-same-as cash furniture, TV, appliance, etc. arrangements are intentional financial traps, set by retailers for fees from lenders who EXPECT a significant portion of "borrowers" to fall into their lair and end up with 8% car loans 18%+ consumer loans instead of paying off the balances.
There's a term of art in consumer marketing - the "masses are asses" - it is amazing what you can get away with because people are simply uneducated about how to manage money. It has become part of the American way to have a car payment and a mortgage. 100 years ago NEITHER existed. Yet both are now accepted as a routine thing, with no questioning or understanding that doing either almost always leaves you with less money at the end of your life. Yes, in the case of home mortgages, timing is everything, and there have been periods, even long periods, where leverage created value for mortgage borrowers, but we now know how that can end up too. But cars are not real estate, will be worth less next year than this, ad infinitum.
I started my 1st bike shop with a credit card. Had enough cash to do the up fit but all my inventory was on credit or floor planning. 1 year in my landlord asked if I wanted to buy the building. He owner financed 100%. I had it paid off in 5 years. Made 5x on it 18 years later. Ran that business for 22 years. Opened 3 others over that time.
