Enjoying Debt?

[VanLifeCrisis]

Im trying to understand the reasoning here.&nbsp; This woman I work with is just about to pay off her fairly new jeep.&nbsp; Looks like a great truck to me.&nbsp; Shes always claiming she is broke, because her car payment and high insurance.&nbsp; Well she tells me she is planning to get a new car or maybe a pickup, when she has hers paid off soon.&nbsp; This blows my mind, and I suggested to her to maybe wait and save up some money first.&nbsp; Why take on more debt, I'd be glad to be free from that car payment. Paying off the car is like the goal...not paying a car payment. &nbsp; She responded that she has always had a car payment since she was old enough to drive.&nbsp; It was like she felt obligated to have a car payment, or it was abnormal for her to live without it.&nbsp; <br /><br />I almost think she enjoys being in debt.&nbsp; Or rather, she enjoys having the crutch of saying "oh poor me, im so broke with this car payment..".&nbsp; Then again i guess it isnt surprising considering shes like 28 and living at home still...<br /><br /><br />The biggest joke is she just gets done paying this jeep off and then she is gonna sell it back to those same people as a 'trade in' for less than 10 percent of what she just paid them for it.&nbsp;

 

[stude53]

<span style="color: #008000;"><strong><span style="font-family: arial,helvetica,sans-serif; font-size: medium;">As Forrest Gump said, "Stupid is as stupid does" <br /><br />Heres your sign.<br /><br />Bob</span></strong></span>

 

[oldsoul]

Generally speaking.... a vehicle is the worst investment of all time. The thing is worth 15% less as soon as it leaves the parking lot. I buy junkers and fix em up. But i realize not everyone is a mechanic, but that being said how much of those huge payments is just vanity and how much is actual need? On a side note a friend of mine has a $1200 monthly payment on huge jacked up ford truck with all the bells and whistles. Each to their own but i can think of better places for that money.

 

[sl1966]

It's all about keepin' up with the Jones' for some people.<br /><br /><br />

 

[dragonflyinthesky]

Took a loan out on a car once. Never again. Was going thru a mid life crazy period and it was a bright red little sportscar that made me happy for a while so I guess it was worth it. Better than anti depressents and a shrink.

 

[Pikachu711]

I'll echo what Oldsoul mentions about buying a car. The moment a car leaves the lot it instantly drops 15-20% in value. Over the next 5 years it dramatically decreases in value. Even moreso if it's a "Slease."

Over the next 5 years (much like some homes today) you eventually will be "upside down" on your car. You'll wind up owing more than the car is actually worth. Add to that the costs affiliated with car ownership. The only way you should be buying a new car is if you're paying cash for it. That's it! No other way.

You shouldn't be buying a car if the only two quesions you have when you walk into the showroom are:

(1) How much is the down payment?
(2) How much are the monthly payments?

This is the formula for paying a great deal more than the sticker price of that particular vehicle. This is a BAD deal!

Also, keep in mind the minute you finance thru (pick your favorite major car finance company here!) they sell the financing to another finance company. This approximately makes an additional $1,600.00 profit per financed car the dealer sells. This is very good for the dealer, not a good deal for the consumer.

Just a thought!

 

[VanLifeCrisis]

Yeah it almost seems a better idea to hold out, putting that payment away, then go buy a gently used newer-ish vehicle flat out.&nbsp; I will admit, there have been times ive stood there waiting for a jump or a ride, or listened to the warning bell drive me mad on my crappy minivan, and thought it would be nice to have a car that just went.&nbsp; But then i start thinking about all the horrible things that could go wrong and how much id be losing out on the deal and come to my senses.&nbsp; <img src="/images/boards/smilies/rofl.gif" border="0" align="absmiddle"> <br /><br />Maybe if my business or well paying job necessitated a very reliable vehicle and lots of travel I would feel justified buying something with payments (like a rural postal worker, who must have a 4 year or newer 4x4 with rear doors).

 

[Seraphim]

Debt - per se- is not a bad thing; it depends on how one uses it. The original use for debt was to gain capital for investment purposes. It also permits us to acquire necessities we could not otherwise afford, at times. One might need a car to work, but not have the cash available. It also permits us, in good times, to acquire things other than needs , if used responsibly. Things CAN be the basis for happiness: our vehicles permit us a lifestyle that we enjoy and, perhaps, keeps us sane. Without the vehicle, we would not be happy; or AS happy.

The key phrase is responsible use.

 

[McBe]

<p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="color: black; font-family: Verdana; font-size: 6.5pt;">[<span style="font-size: x-small;">QUOTE/]She responded that she has always had a car payment since she was old enough to drive. It was like she felt obligated to have a car payment, or it was abnormal for her to live without it.&nbsp;&nbsp;I almost think she enjoys being in debt. [/quote]</span></span></p><p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="color: black; font-family: Verdana; font-size: 6.5pt;">&nbsp;</span></p><p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="color: black; font-family: Verdana; font-size: 6.5pt;">&nbsp;</span></p><p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-size: medium;"><span style="font-family: Times New Roman;">It&rsquo;s a consciousness thing.<span style="mso-spacerun: yes;">&nbsp; </span>Many of us roll around in our own little thought patterns about things until we pull out some how.<span style="mso-spacerun: yes;">&nbsp; </span>Maybe we read a book or talk to someone about doing things in a different way.<span style="mso-spacerun: yes;">&nbsp; </span></span></span></p><p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-family: Times New Roman; font-size: medium;">&nbsp;</span></p><p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-size: medium;"><span style="font-family: Times New Roman;"><span style="mso-spacerun: yes;">&nbsp;</span>At some point your co-worker might want to get a place of her own and figure out that if she didn&rsquo;t have the car payment she could do it.<span style="mso-spacerun: yes;">&nbsp; </span>I used to be afraid of letting my cars get old too until I observed that most of my friends were driving beaters and got around just fine.<span style="mso-spacerun: yes;">&nbsp; </span><span style="mso-spacerun: yes;">&nbsp;</span><span style="mso-spacerun: yes;">&nbsp;</span>Now I drive a 20-year-old &ldquo;beater&rdquo; too that runs great.<span style="mso-spacerun: yes;">&nbsp; </span></span></span></p><p class="MsoNormal" style="margin: 0in 0in 0pt;"><span style="font-family: Times New Roman; font-size: medium;">&nbsp;</span></p>

 

[mockturtle]

Like most of you, I buy used vehicles I can afford rather than new ones I'd have to buy on time.&nbsp;

 

[jonsun]

If we couldn't go into debt we'd be a continent of homeless serfs. Debt is fundemental to capitalism. van living on the otherhand is destructive to society. If everyone did this we'd enter a new dark ages.

 

[Seraphim]

I'd argue that consumerism is fundamental to capitalism, but not necessarily debt.

 

[VanLifeCrisis]

<span id="post_message_1275767691">Debt is fundemental to capitalism. van living on the otherhand is destructive to society. If everyone did this we'd enter a new dark ages.

</span><br /><br />I don't think you need debt to be a strong society.&nbsp; If debt was never an option, people would just have to save up to acquire that which they wanted but couldn't immediately afford.&nbsp; You also don't necessarily need a 1,000,000 house, and if loans weren't an option, a lot of homes wouldn't be as expensive as they are.&nbsp; They create and price houses (and property) knowing that someone will be mortgaging it.&nbsp; The price of things would be a lot lower now if we didn't run off&nbsp; a debt based financial system.<br /><br />Think about it, if people had to save up for a house then they would want a 20k house.&nbsp; The guy who makes and sells a house for that is gonna sell those houses, someone making a 1,000,000 house is gonna be sitting on it forever.&nbsp; Rental market would become stronger as well, sure, but that's happening now anyway (as people aren't able to get loans these days anyway, or defaulted on their big old mortgage....).<br /><br /><br />This is all theoretical though, it is too late to go back and change it systemically (though individually you can avoid some of it).&nbsp; Too much money flowing through to many hands that would rather see the world destroyed than give up that money and power.&nbsp; Too much money made from taxes, inflation, loans and code enforcement.

 

[josephusminimus]

Buying a car on time instead of paying cash isn't just the payments.&nbsp; There's the hidden charge of the lender requiring you to buy collision insurance - betting a rich man you're going to wreck the vehicle, him betting you won't - which runs up the cost far above what you'd have paid if you'd bought something you could just carry required liability insurance.

 

[VanLifeCrisis]

Yeah i mentioned that to her, and she quickly reassured me that when she pays off her vehicle, there is no way she will get rid of full coverage.&nbsp; I said "What about when the vehicle is only worth like a grand or less??"&nbsp; Nope, not ever.&nbsp; *face palm*&nbsp; Good luck with that, after a vehicle is so old they will only insure it with liability...

 

[josephusminimus]

Yeah i mentioned that to her, and she quickly reassured me that when she pays off her vehicle, there is no way she will get rid of full coverage.&nbsp; I said "What about when the vehicle is only worth like a grand or less??"&nbsp; Nope, not ever.&nbsp; *face palm*&nbsp; Good luck with that, after a vehicle is so old they will only insure it with liability...

<br /><br />Some people just find themselves attracted to guiding themselves through&nbsp;life on autopilot.&nbsp; No point puzzling overmuch about why the autopilot takes them where it does.&nbsp;

 

[Seraphim]

"This is all theoretical though, it is too late to go back and change it systemically (though individually you can avoid some of it).  Too much money flowing through to many hands that would rather see the world destroyed than give up that money and power.  Too much money made from taxes, inflation, loans and code enforcement."

Good post DG. There's is still an older culture which avoids - as much as possible - excess debt. A mechanic friend of mine has never had a credit card. He bought land with cash, and borrowed the minimum necessary to build a house, doing as much work as he could. Paid off the house in five years.

I think the biggest devil in the the home market was the perpetuated myth that house was the best investment people could make., and they should buy the most house they could afford. It became a mantra for real estate agents to tell customers, and the customers bought into it.

There is much current consumers can do to maximize their income. Discipline is the key.