Besides your mortgage, Do you finance anything?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Topic Author
snyder66
Posts: 1055
Joined: Tue Feb 02, 2010 11:46 am

Besides your mortgage, Do you finance anything?

Post by snyder66 »

This isn't really a pool. I'm just wondering how many people pay cash for everything and how many take out loans.
NoVa Lurker
Posts: 690
Joined: Tue Jan 18, 2011 10:14 am

Post by NoVa Lurker »

We use a credit card but pay it off in full monthly.

Other than that, no.
User avatar
pteam
Posts: 419
Joined: Wed Mar 17, 2010 2:27 am

Post by pteam »

You should charge as much of your monthly expenses on an unlimited cash back credit card and pay it off in full every month. The fat wallet forums are famous for this. There are some 5% cash back cards out there right now.
User avatar
FlyHi
Posts: 169
Joined: Thu Mar 24, 2011 11:32 am

Post by FlyHi »

I either pay cash or use my debit card which is the same as writing a check.
On any large purchases I use a credit card just in case I have a problem with what I bought and I want to stop payment.
“If you want to feel rich, just count the things you have that money can't buy”
hicabob
Posts: 3796
Joined: Fri May 27, 2011 5:35 pm
Location: cruz

Post by hicabob »

no debt at all here - cc's paid in full each month - mortgage paid off after 2000 stock runup - my best diversification timing ever!
Topic Author
snyder66
Posts: 1055
Joined: Tue Feb 02, 2010 11:46 am

Post by snyder66 »

I guess what I meant is, Do you take out loans for anything? Cars, etc.
epilnk
Posts: 2717
Joined: Wed Apr 18, 2007 7:05 pm

Post by epilnk »

I took out a loan for college - I couldn't have gone to college otherwise - but I saved to pay cash for my first (used) car then paid off that loan. I consider the credit cards to be cash equivalents since we've never paid a dime in interest. So while I'm not opposed to taking out loans I wouldn't use them to finance an optional item, like a car whose price exceded my available cash.
User avatar
Random Musings
Posts: 6772
Joined: Thu Feb 22, 2007 3:24 pm
Location: Pennsylvania

Post by Random Musings »

If I can get a 0% or 0.9% ish loan - I'm all for that.

RM
User avatar
Jerilynn
Posts: 1929
Joined: Tue Sep 06, 2011 12:49 pm
Location: USA, Earth

Post by Jerilynn »

snyder66 wrote:I guess what I meant is, Do you take out loans for anything? Cars, etc.
I personally don't. You certainly can't invest the money and make the same % as a car loan.

I've paid cash for my last several cars.

If I need to buy major household appliances or something like that, I just pay cash.
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)
User avatar
Jerilynn
Posts: 1929
Joined: Tue Sep 06, 2011 12:49 pm
Location: USA, Earth

Post by Jerilynn »

Random Musings wrote:If I can get a 0% or 0.9% ish loan - I'm all for that.

RM
Many times you have a choice of either very low interest rates OR cash back. It's normally better to take the cash back option and not finance the vehicle.
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)
Sam I Am
Posts: 2062
Joined: Tue Feb 20, 2007 6:58 pm

Post by Sam I Am »

Message deleted.
Last edited by Sam I Am on Wed Oct 09, 2013 5:37 pm, edited 1 time in total.
User avatar
bearwolf
Posts: 1718
Joined: Sun May 18, 2008 12:34 am
Location: Oklahoma

Re: Besides your mortgage, Do you finance anything?

Post by bearwolf »

snyder66 wrote:This isn't really a pool. I'm just wondering how many people pay cash for everything and how many take out loans.
I was able to get $2000 off of the price of my car by taking out a Ford Motor Credit loan. They wouldn't give me a better deal on the car if I paid cash. I took the loan and the $2000 and paid off the loan the next month. Does that count as financing?

BearWolf
User avatar
prudent
Moderator
Posts: 9085
Joined: Fri May 20, 2011 2:50 pm

Post by prudent »

I financed cars up until I was able to pay cash. I do not borrow for anything since we paid our house off (but it's always a possibility that a day may come when I have no choice). I don't buy new cars so 0% isn't an option for me.

I do not want to be in debt for anything, although I understand that for others it is a strategy.
i<3Investing
Posts: 161
Joined: Tue Jun 29, 2010 7:29 pm

Post by i<3Investing »

I have a college loan. Probably be looking for an investment property loan at some point in the future.

Everything else is cash or CC which is paid off each month.
User avatar
HomerJ
Posts: 21282
Joined: Fri Jun 06, 2008 12:50 pm

Post by HomerJ »

snyder66 wrote:I guess what I meant is, Do you take out loans for anything? Cars, etc.
Nope... Mortgage is my only debt (And I'm hoping to have that paid off in 3-4 years)
User avatar
Jerilynn
Posts: 1929
Joined: Tue Sep 06, 2011 12:49 pm
Location: USA, Earth

Post by Jerilynn »

i<3Investing wrote:I have a college loan. Probably be looking for an investment property loan at some point in the future.

Everything else is cash or CC which is paid off each month.
I'm not sure how wise it would be to get an investment property loan nowadays.
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)
User avatar
Random Musings
Posts: 6772
Joined: Thu Feb 22, 2007 3:24 pm
Location: Pennsylvania

Post by Random Musings »

Jerilynn wrote:
Random Musings wrote:If I can get a 0% or 0.9% ish loan - I'm all for that.

RM
Many times you have a choice of either very low interest rates OR cash back. It's normally better to take the cash back option and not finance the vehicle.
If a cash back option is available, I'd analyze that too. Last time I did purchase a car, I took the cash back option.

RM
epilnk
Posts: 2717
Joined: Wed Apr 18, 2007 7:05 pm

Re: Besides your mortgage, Do you finance anything?

Post by epilnk »

snyder66 wrote:This isn't really a pool. I'm just wondering how many people pay cash for everything and how many take out loans.
Oh right, the pool. No, we paid cash for that too. Though if we hadn't put in a pool we probably would have dropped that cash into the mortgage prepayment, and I suppose you could consider delaying the mortgage payoff another couple of years to be the same as taking out a loan.
User avatar
DiscoBunny1979
Posts: 2054
Joined: Sun Oct 21, 2007 10:59 am

Post by DiscoBunny1979 »

0% financing at Home Depot, Lowes for Refrigerators, Washer/Dryer, or other big ticket purchases. Nothing wrong with a year at 0% as long as you budget and pay it off before interest kicks in.

In the past I've even used purchase checks against VISA cards to get a 0% loan for 1 year to finance a fencing project. Purchase checks usually have no fees, whereas all other types of checks do. But that also is changing.
MWCA
Posts: 2820
Joined: Fri Nov 30, 2007 3:21 pm
Location: A wonderful place

Post by MWCA »

No debt. Don't like it. However, with mortgages this low I wouldn't mind.
We are all worms. But I believe that I am a glow-worm.
User avatar
Dan-in-Virginia
Posts: 841
Joined: Sat Apr 16, 2011 5:33 am
Location: Virginia

Post by Dan-in-Virginia »

My vacation to Disney World. I knew it was going to be a beast, but my daughter will only be 9 once. It will take us about 9-10 months to pay it off.

Next year, we'll do things like go camping.

I have a separate income stream going to a house down payment which I won't touch for anything.
Madd Hatter
Posts: 160
Joined: Mon Jul 07, 2008 10:15 pm

Post by Madd Hatter »

I play moderately extensive credit card games while paying the issuers not one cent in interest/profit, but otherwise, no.

Wife brought $65k in student loans to the marriage, getting that down to $45k and then re-consolidated to 2.65% so I don't have to let it eat at me was a blast.

I financed my first three cars (clueless kid...a tad more excusable than clueless adults I suppose?), paid all those loans off early. Fourth car was a $6k used family sedan paid in cash. If I ever replace it, paying with cash.

Never going to finance anything again unless it's another house.
chaz
Posts: 13604
Joined: Tue Feb 27, 2007 1:44 pm

Post by chaz »

I pay cash for everything.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Post by retiredjg »

When I was first starting out in the 70's I took loans from the Bank of Mom and Dad for my first car and to get started in an apartment. Think I did a loan for 1 more car after that and then learned the "pay my car note before buying the car" method.

I doubt I would finance anything now (other than the mortgage) unless it was a 0% or maybe 1% loan.

There's much to be said for not buying stuff till you can afford it (unless the stuff is a true necessity like a car to get to work). The nicer TV or computer can just wait.
User avatar
Leif
Posts: 3705
Joined: Wed Sep 19, 2007 4:15 pm

Re: Besides your mortgage, Do you finance anything?

Post by Leif »

bearwolf wrote:
snyder66 wrote:This isn't really a pool. I'm just wondering how many people pay cash for everything and how many take out loans.
I was able to get $2000 off of the price of my car by taking out a Ford Motor Credit loan. They wouldn't give me a better deal on the car if I paid cash. I took the loan and the $2000 and paid off the loan the next month. Does that count as financing?

BearWolf
I always pay cash for the car. However, next time I'll ask about a discount for loan and pay-off as you did. I assumed you either negotiate a discounted loan rate or the equivalent in a cash discount.
User avatar
TomatoTomahto
Posts: 17158
Joined: Mon Apr 11, 2011 1:48 pm

Post by TomatoTomahto »

snyder66 wrote:I guess what I meant is, Do you take out loans for anything? Cars, etc.
Funny you should ask. We have always paid cash for cars, but we will be buying one shortly and might consider taking out a loan (and paying it back in February when we get a lot of bonus money). We have more than enough in taxable accounts, so we might also just cash in the necessary amount. I need to see if I'm going to incur capital gains taxes.

So, the answer to OP is generally not, but I might take out a car loan for the first time in around 40 years.

EDITED TO ADD: I should have said, also, that I would not take out a loan unless it was sure to be repaid in a matter of months (at most). At 0%, maybe for longer. BUT, even at 0%, it just feels so good to not owe anyone money that I might bypass the loan.
Winthorpe
Posts: 339
Joined: Mon Apr 13, 2009 12:29 am

Post by Winthorpe »

Other than mortgage... no. I will never finance anything, unless it involves me strategically profiting from the lender (eg. interest free loan for 36 months, or whatever. Then I will pay in full before that expires.)
User avatar
Sammy_M
Posts: 1935
Joined: Sun Nov 25, 2007 7:30 am

Post by Sammy_M »

I take any loan available >10K where the after-tax interest rate is less than the after-tax risk-free investment return with comparable duration. Presently that only includes my mortgage, a student loan, and a credit card which is at 0% for another 10 months.
User avatar
Sammy_M
Posts: 1935
Joined: Sun Nov 25, 2007 7:30 am

Post by Sammy_M »

Jerilynn wrote:
i<3Investing wrote:I have a college loan. Probably be looking for an investment property loan at some point in the future.

Everything else is cash or CC which is paid off each month.
I'm not sure how wise it would be to get an investment property loan nowadays.
Agreed. I recently used a combination of a 401K loan and a HELOC instead. Only the 401K loan remains.
User avatar
FabLab
Posts: 1127
Joined: Mon Oct 18, 2010 12:15 pm

Post by FabLab »

NoVa Lurker wrote:We use a credit card but pay it off in full monthly.

Other than that, no.
Same
The fundamental things apply as time goes by -- Herman Hupfeld
User avatar
Littlefinger
Posts: 66
Joined: Tue Aug 02, 2011 11:25 am

Post by Littlefinger »

Just the mortgage, nine more years...
Van
Posts: 1007
Joined: Wed Oct 27, 2010 9:24 am

Post by Van »

I finance nothing.

I charge on my MasterCard, but I pay it off every month. No interest. No annual fee.
User avatar
krantcents
Posts: 74
Joined: Mon Dec 20, 2010 4:15 pm
Location: Los Angeles, CA
Contact:

Post by krantcents »

Currently, I do not have anything to finance, but I would under the right circumstances. A very low rate and no penalty for paying it off early.
User avatar
dave66
Posts: 328
Joined: Mon Sep 05, 2011 5:38 am

Post by dave66 »

I don't ever intend to use a credit card again as long as I live, unless I'm dying. Financed cars, but my last three were zero percent. I figure, why hand over all that money when it really doesn't make a difference. I can do other stuff with it. I would never lease though.
User avatar
BTDT
Posts: 783
Joined: Sun Aug 29, 2010 10:40 am
Location: Grand Lake OK

Post by BTDT »

I put almost everything on a rewards credit card each month , but also pay off everything before interest is due.

House, cars, and everything is paid for. No debt feels good, and using a credit card makes for easy tracking of expenses
If past history was all that is needed to play the game of money, the richest people would be librarians.
scrabbler1
Posts: 2798
Joined: Fri Nov 20, 2009 1:39 pm

Post by scrabbler1 »

The 3 cars I have bought in my adult life I paid for in cash. I paid off my mortgage in 9 years. I paid off my student loans in 2 years after I graduated from college. I rarely use my credit cards (only twice in 2011) and always pay them in full. I have no interest (no pun intended) for any of those cash-back deals for credit cards - I charge so little on them.
User avatar
Opponent Process
Posts: 5157
Joined: Tue Sep 18, 2007 9:19 pm

Re: Besides your mortgage, Do you finance anything?

Post by Opponent Process »

I had to borrow for college because I was 18 and didn't have any money at the time because I'd been in school my whole life. stupid truancy laws.

now I pay for everything (I mean for my wife) only after I've saved up. I made us save up before buying her iPhone, her Kindle, everything, even the fun stuff she deserves (apparently people buy these things because they deserve them-I don't exactly know what that means). her friends give her a hard time and think I'm too restrictive but she thinks her (low) six-figure net worth is pretty cool, considering her (our) upbringing. she's had a few friends stop speaking to her after she told them how she paid off all her credit card debt. I don't think she ever thought she'd be in this financial position, a position of strength. when you try to own everything and minimize debt, that's pretty cool, that you can have nice things (you deserve) but still retain a lot of personal financial strength. it's just a matter of not putting the cart before the horse.
snyder66 wrote:This isn't really a pool.
I think the Bogleheads represent a pretty special gene pool.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37
User avatar
Toons
Posts: 14467
Joined: Fri Nov 21, 2008 9:20 am
Location: Hills of Tennessee

Post by Toons »

Cash for everything :D
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
MnD
Posts: 5195
Joined: Mon Jan 14, 2008 11:41 am

Post by MnD »

Nope. Everything possible on cash-back cards set to auto-pay in full monthly. Used to do Home Depot 12 months 0% and no payments, but thanks to the credit card reform act, you now have to make minimum monthly payments so nixed that due to the PITA factor.
User avatar
Tortoise
Posts: 367
Joined: Sat Aug 08, 2009 3:24 am
Location: San Jose

Post by Tortoise »

Fresh out of college, I couldn't get a credit card because I had no credit. So I financed a new motorcycle. I paid it off in a couple of months. I was then able to get a shiny new credit card. I have never carried a credit card balance, though.

Other than a mortgage, which is paid off, I haven't financed anything else.
"Always do right. This will gratify some people, and astonish the rest." --Mark Twain
User avatar
FrugalInvestor
Posts: 6214
Joined: Thu Nov 06, 2008 11:20 pm

Post by FrugalInvestor »

I started out financing cars. Then I financed my home and autos. Then I financed only my home. And now I finance nothing.

We put everything on credit cards for the rewards but pay them off every month. I have never paid a credit card finance charge in my lifetime.
Have a plan, stay the course and simplify. Then ignore the noise!
bogleviewer
Posts: 349
Joined: Thu Aug 25, 2011 11:01 pm

Post by bogleviewer »

only mortgage

all cc's are used for cashback/rewards and paid in full each month automatically
travellight
Posts: 2892
Joined: Tue Aug 12, 2008 5:52 pm
Location: San Diego

Post by travellight »

Yes, other than mortgage on my primary residence, I did a cash out refi on my paid off second home to buy investment property. Now, I am in the midst of an investment property loan. It is only 3.875% for a 15 year fixed which is crazy for an investment loan.

Can you tell I want to take advantage of this lowest mortgage rates and low housing prices sweet spot?

I buy cash for cars and use credit cards paid off in full monthly for everything else.
User avatar
Steelersfan
Posts: 4129
Joined: Thu Jun 19, 2008 8:47 pm

Post by Steelersfan »

The last loan (besides a mortgage) was 15 years ago for some kitchen improvements and that was only because they offered two years same as cash.

Of course we paid in off right on time, two years later. I think it helped our credit rating as bonus.

No debt at all now since the last mortgage was paid off except credit cards that are paid off every month. I intend on keeping it that way.
Wolkenspiel
Posts: 558
Joined: Wed Sep 30, 2009 7:45 am

Post by Wolkenspiel »

Jerilynn wrote:
snyder66 wrote:I guess what I meant is, Do you take out loans for anything? Cars, etc.
I personally don't. You certainly can't invest the money and make the same % as a car loan.
My credit union offers 2.49%, 84 months car loans. It doesn't appear impossible to "make the same %" nearly risk-less. If one wanted to make a bet on moderate (or higher) inflation, this would be quite rational. I think the bigger question is whether the loan would be used for moderate leverage or to buy a much fancier car than needed.
Bob's not my name
Posts: 7417
Joined: Sun Nov 15, 2009 8:24 am

Post by Bob's not my name »

Wolkenspiel wrote:My credit union offers 2.49%, 84 months car loans. It doesn't appear impossible to "make the same %" nearly risk-less.
I'm not saying it's dumb to borrow at 2.49%, but how would you make 2.49% after federal and state income taxes on a ladder of riskless vehicles with maturities ranging from 1 month to 84 months?
User avatar
zzcooper123
Posts: 539
Joined: Sat Oct 13, 2007 5:55 pm

Post by zzcooper123 »

Recently paid off a vehicle which I had financed through Honda Motors at 0.9%. The monthly payments kinda bugged me tho, even when I knew it was a good deal.
Busting Myths
Posts: 353
Joined: Sun Oct 24, 2010 4:04 pm
Location: So Cal

Post by Busting Myths »

Bob's not my name wrote:
Wolkenspiel wrote:My credit union offers 2.49%, 84 months car loans. It doesn't appear impossible to "make the same %" nearly risk-less.
I'm not saying it's dumb to borrow at 2.49%, but how would you make 2.49% after federal and state income taxes on a ladder of riskless vehicles with maturities ranging from 1 month to 84 months?
Financed my vw gti @ 1.9% for 60 months and I get 3% interest from a rewards checking account. After fed and state it is about a .25% spread but i also maintain higher liquidity in case a new business/investment opportunity comes along.
Bob's not my name
Posts: 7417
Joined: Sun Nov 15, 2009 8:24 am

Post by Bob's not my name »

That's reasonable, and I understand the liquidity argument, but you're not beating 2.49% after taxes.
Dandy
Posts: 6701
Joined: Sun Apr 25, 2010 7:42 pm

Post by Dandy »

I try to manage my expenses by using my target investment drawdown e.g. each month I get a pension and take $x from savings for that month's expenses. When I have a large purchase e.g. a vacation, that I can't pay off with that month's income I use my home equity line (2.74%). I then use my regular checking to pay down that loan. (This wouldn't necessarily be my approach if interest rates were high)

This may not be the most cost effective approach but it keeps me focused on using my monthly income to live on rather than dipping into my other savings every time I have a big bill. Usually, I pay off the loan in a few months and it does not grow. This forces me to cut back somewhat on decretionary expenses until the loan is paid off. It works for me.
Post Reply