Posted on 03/06/2013 7:02:25 AM PST by Kaslin
I’m focusing on this statement from the article: “We’re almost out of debt, but we still have two small car payments and some credit card debt.”
The payments may be smaller than the minimum payment on the credit card, for all we know, but the loans may be larger than the credit card. If, in fact, they owe $10,000 on the card but only $1.500 on the two cars, I’m all over paying off the cars, regardless. I actually did that even though I had a five digit balance on a card. But I don’t know what the balance is on the car loans, hence my response.
I detest credit card companies so they are the first on my list every time.
All that being said, credit, when used properly, can be a good thing. Problem is, our country (and the credit industry in general) has become like a brewery and customer base that has become a huge industry dependent on everyone drinking like sailors on shore leave.
That is the problem, and it’s gonna leave a mark.
My car loan is 0%. But I still hate the monthly payment!
:-D
Sounds like good logic. Another angle is if things go bad a paid off car insures you have transportation. I did the credit card thing before and only dug myself a huge hole.
Credit cards are higher interest because they are unsecured. The company is trading risk for a higher payoff. So if that risk is realized then they can live with that as well.
I humbly disagree.
Your car note is typically a fixed rate with fixed terms.
Under current law a credit card issuing bank can screw with you sixteen ways from Sunday, changing your rate, terms, and credit limits on basically a whim.
And if that keeps up I fear we are going to be electing a whole lot more Fake White Indians in the future. Given a choice I’d definitely want to get out from under the credit cards first.
The company is trading risk for a higher payoff. So if that risk is realized then they can live with that as well.
Yep. And in that statement is the kernel of why credit card companies are not “all” bad. And those of us that use them to get big discounts, miles or cash, while making the full payment every month, are reaping the benefits of card use. They still make excellent profits from the fees paid by retail outlets.
Also, they are much safer than debit cards. I rarely carry cash any more, and I had a $20 bill just take up space in my wallet for several months once. But, being a prepper, I have cash on hand, if needed. ;-)
Car dealerships aren’t in business to lose money on cars. It may be “low interest” but they will find a way to screw you.
No matter how you slice it, you are buying a car you can’t afford. That’s why you need a loan for it.
Under current law a credit card issuing bank can screw with you sixteen ways from Sunday, changing your rate, terms, and credit limits on basically a whim.
Maybe they are the angler and I am the Bass. They’re wiggling that hook just hoping I’ll stike. ;-)
No matter how you slice it, you are buying a car you can’t afford. That’s why you need a loan for it.
The reason they give low or zero interest loans is that they are still making their required profit on the car at the end of the day, even at that interest rate. That’s really all it is. We all work to earn a living. Car dealers are no different. They can actually be very honest enterprises although I always consider this angle of human nature: The more money that is involved in a transaction, the greater the temptation to be dishonest.
Buy a car you can afford outright.
Expunge credit card debt with Chapter 7 - James Madison knew what he was doing when he added bankruptcy provision into the Constitution. And once that's done, never keep a credit card again.
If every American lived this way we'd be a much happier and more productive society.
IMO credit card companies are bad because they prey on the weak and stupid. Their preferred customer is not the responsible person who pays their bill every month. They want the person who lives on credit. The person who buys groceries and pays their water bill on credit card. Then they push more credit at the person.
When the entirely predictable event happens and the person can’t pay the credit card company start breaking legs (metaphorically speaking).
I’ve worked with a LOT of bankers and credit card companies at the corporate level. As a whole they are they most immoral and unethical people I have ever met. I saw one not pay a vendor for 4 years simply because nobody would agree to use their departments budget.
When our situation improved and we were able to start paying down our debt, I focused first on the high interest debt. The credit cards had about three times the interest rate of the car payment. The mortgage was the lowest interest of all our debts. My husband was smart enough not to assume I had cute little sentimental reasons. We discussed it like two adults.
How on earth are they safer than Debit? With Debit, I can’t spend what I don’t have.
How on earth are they safer than Debit? With Debit, I can’t spend what I don’t have.
I don’t need to go over the particulars. You can imagine the impact if your checking acount is cleared out without your knowledge.
Eventually, everyone I’ve worked with on PCI projects has quit using their debit card for all but getting cash out of the cash machine, and usually even that.
I use a credit card in our modern technological environment as a sort of firewall between me and the financial world. Good stuff goes through but bad stuff coming back hits the firewall.
And going pure cash is simply not practical any more. It’s doable, but I have an acquaintence that has no debt and does everything via cash or checks and has for decades. He can’t get airline tickets. He can’t rent a car. He can go as far as he can drive his car.
The wife and I are taking Dave's Financial Peace University classes at church right now. We have been following many of his principles long before we took the class, or even before we had heard of Dave Ramsey, and have only our mortgage left to pay off. I wasn't sure how much I could really learn from the class, as I thought we were in pretty good shape, financially. However, some of his budgeting ideas, insurance information, etc. has been helpful. Since I think a lot of his advice is aimed at folks horrible at finances, you have to adapt some of what he says.
As an aside, I have found your posts about moving from WA to middle of nowhere KY interesting. I would love to find some land a little off the beaten path. I need to talk the wife into driving farther to work. However, being in East Tennessee, at least I wouldn't have to move across the country to do it.
Wow - now that is amazing. How did you do it? Any advice would be appreciated.
“And going pure cash is simply not practical any more. It’s doable, but I have an acquaintence that has no debt and does everything via cash or checks and has for decades. He can’t get airline tickets. He can’t rent a car. He can go as far as he can drive his car.”
I do everything via cash. I have no debt. I’ve bought bus tickets, rented a car, airline tickets, etc. I’ve got my rent payments set up so that all I have to do is go to the bank and transfer it from one account to another.
I also keep enough for random expenses in one account that is accessable via the debit card. I don’t keep everything in that one account. At most I might be out 100 bucks - it’s just not worth their time.
Generally, yes. But having too much available credit capacity can actually lower your score. Counter-intuitive, yes, but true.
Still, though, the rule of thumb is always try to pay off high-interest debt first, especially if it's revolving debt like credit cards.
I funded my first business with credit cards, and it worked out very well. Many if not most small businesses get funded to some degree in that way.
Mortgage insurance is a bad bet. Buy term life insurance and never mix insurance and investments.
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