Tag Archives: Til Debt Do US Part

Financial Freedom, Wealth

America is the land of loans

Gallery Leave a comment
Approved, Finance, Business, Loan

Worry is the interest paid to those who borrow trouble. – George Washington

Finance it! That should be slapped on bumper stickers across the country. 

There are now loans for just about anything you can think of. Whatever your heart desires, you can finance. Almost.

My father would say that people need to learn discipline as they want to do every whimsical little thing that comes to mind and this can cause trouble in your life.

I learned at a young age that trying to get your little hands on everything you crave is a gateway to higher levels of debt and spending.

It starts with one video game and then balloons to buying the console, accessories, new games every other week, and monthly subscriptions to gaming magazines. That quickly escalates to $1,000 iPhones, $2,000 MacBook’s and flying first class everywhere. Even if it is drivable and only a few states away.

How is all this lifestyle creep paid for?

With plastic.

After working at a federal credit union, I got the inside peek behind the financial curtain into many strangers lives.  

Some people are clinging to their middle-class status like the ones they had in their childhood upbringing, while others are dangling over the financial edge and many more have fallen over the financial precipice completely.

Financial institutions knowing this fact, as wages have been stagnating since about 1979, are all too eager to fill that gap in earnings with loans.

Let’s find out what type of debt is out there awaiting consumers that are not financially savvy enough to avoid them or are left with few alternatives to avoid them in the first place.

NO CASH, NO PROBLEM

Quick to borrow is always slow to pay. – Proverb

How many times have you heard commercials that say your job is your credit? Get real. Your credit is your credit.

Miss enough payments and that job means nothing. They will repossess anything.

I saw this up close and personal at the credit union. I saw cars getting repossessed, families stressed out and on the edge of a financial cliff, and those with bad credit had it the worst of the lot.

Is your credit score too low or in the 500’s? Forget about it. Either you will not be able to borrow or it will be at interest rates so high you will be paying off that sweater you bought for your kid’s 3rd birthday when your kid goes off to college.

Do not be fooled into thinking companies are being so nice to give you this product for low monthly payments. That low monthly payment of $42 over 24 months is still over $1,000!

If you must borrow, get those scores up. That way you pay less interest.

IS IT FOR SALE?

Of course, it is! Everything is for sale. And its pricey too.

“A business that makes nothing but money is a poor business.” – Henry Ford

They will let you subscribe to just about anything, for a fee. Much unlike this blog, which you can subscribe to for free, you have to pay for anything you deem necessary or desired for your life.

Just because it is for sale does not mean you are not shelling out big bucks for it. Case in point, if an item is on sale for 25%, then you still have to pay 75% to take the item home with you.

I say skip the for sale signs and racks and focus on only buying quality products that you need and truly want, but that you can actually afford.

BUY NOW, PAY LATER

As an individual who undertakes to live by borrowing, soon finds his original means devoured by interest, and next to no one left to borrow from – so must it be with a government. – Abraham Lincoln

This is what I feel is the old bait and switch. Sure, you can finance it now and pay later, but later is going to be a long time and it’s going to cost you…A lot.

I say avoid paying interest and forever and a day.

Read my posts on savings or get my eBook on crushing debt and saving $10,000 every single year to see how you can save and start paying cash.

LOANS FOR EVERYTHING

No one ever went broke underestimating the taste of the American public. – H. L. Mencken

Over the years, I have started noticing more and more that not only is everything for sale, but it is able to be financed.

What has been really glaring has been the new loans that have crept up and put out in the main stream for the last 10-15 years.

What loans am I talking about?

  • Holiday Loans (for Christmas Presents)
  • Vacation Loans (finance that cruise)
  • Internship Loans (finance additional training along with college tuition)
  • Summer Loans (for the gap between Fall and Spring college semester)
  • Care Credit (healthcare financing)
  • Hurricane Loans (National Disaster Loans)
  • Government Assistance Loans (Government shutdown loans)

That’s right. If you have never heard of some of these loans listed above, that is because they are not often advertised except during certain economic times or periods or places such as college campuses or certain banks.

Do you really want to finance Christmas?

You take out a loan for $1200. You have 12 months to pay it back with interest.  The time you were supposed to be saving (the previous 11 months) you were repaying this loan. That leaves you for no funds for the following Christmas. You go to the bank and they say, “we have this loan that could help you out.” Just skip it.

Better yet, have the family pull names out of a hat and just buy a gift for that one person.  Save a fortune. Your bank account will thank you.

The ones that really get me steaming are the National Disaster and Government assistance loans. People are in a vulnerable position and you want them to go into debt! More debt! Really?!!

No one plans for national disasters. You can plan your finances, but some things are not all foreseen.

For instance, some people lost their homes during the most recent hurricanes in Puerto Rico and Texas. The insurance companies were saying they had to pay a deductible to get their home rebuilt. This was to the tune of $5,000! Most people don’t just have that type of money laying around.

Borrowing will only put you deeper into debt and unable to save when an emergency like this happens.

The worst by far is government assistance loans for the government shutdown. Folks would not need a loan if they could save. Now, you want more of their money, which they don’t even have? What sense does that make.

I say focus on building up the rainy day fund so you are not caught out in the financial rain without a savings umbrella.

HOW MUCH IS THAT LEXUS IN THE WINDOW?

“A business that tries to save money by not advertising, is like a man who tries to save time by stopping his watch.” – Henry Ford

It’s all about advertising.

That’s why so many people are pulling up in Target parking lots wearing Gucci boots, carrying a Louis Vuitton purse, all the while texting on an iPhone on to buy $10 socks that are marked down and dare I say it On Sale.

See my post on Name Brand Labels

I see more folks driving luxury vehicles now than I have ever seen in my life.

What happened to just needing to get from Point A to B?

Please do not let the smell of new leather cause you to have empty pockets. No car or gadget is worth going into debt over. Or worse yet, going broke.

On one television show, I saw a mother of two young kids trying to see if she could come up with the rationale to finance a $100,000 car! Do not do that. It is not worth it.

See my post on 3 Money Lessons from Til Debt Do Us Part

JUST SIGN HERE

Sell to the masses, eat with the classes. – Henry Ford

It has been often stated, if you sell to the classes, you’ll dine with the masses. But if you’ll sell to the masses, you’ll dine with the classes.

Another spin on this quote is this one here.

Sell to the masses, eat with the classes. Sell the classes, go belly up!” – John F. Savage

It is said the majority of people rent this world from a minority of people. That is how it goes. Unless you change the status quo. Become an owner. Keep more of your money and always invest.

They make it all too easy for you to sign on the dotted line and then have to fork over 25% of your paycheck just to pay for your items.

I want to pay for the item, get it handed to me, then transaction over. Installments suck!

I say save for what you want.

Not sure where to start.

Just start small. Even saving $5 a week just to get in the habit of saving is better than doing nothing and having no savings at all.

So, please do not sign on the dotted line. Do everything you can to save. It will be your safety net should real disaster strike because when it does it’s like lightning. It usually strikes fast and more than once.

Play good defense and save. Surround your financial house with savings. Do not get tackled because you left your wallet open, figuratively speaking.

Plan your money smart and be safer financially.

Automobiles, Financial Freedom

Outrageous Loan Terms for Porsche that even the Rich can’t Justify

Gallery 2 Comments

Want to finance an exotic car? No sweat. It will only cost you $157,944.33.

That amount is based on a Porsche that costs $144,750 with loan terms of 144 months, with a 3.3% interest rate, and $14,475 down payment.

Yes, you read that right. Financing for 144 months is the equivalent of 12 years! Just ridiculous.

Especially, considering that a car depreciates in value the minute you take it off the lot.

For example, a $100k BMW 6 Series after five years will likely only be worth $40,000 in resale value. Therefore, over that time period you have paid over $70k. You would still owe approximately the same amount as the current resale value and it would be worth even less in a few more years.

What made me look into this was listening to talk on a radio show I heard about being able to finance a $100k Porsche over 8 years. I was like that can’t be real. Oh, but it is. The people on the radio said that people were doing it and taking out these loans. I was like that’s insane. You can buy houses in different countries all over the world or in certain parts of the United States for that.

If you are so set on having an exotic vehicle, then I think the best course of action is paying cash in the form of a cashier’s check. If you have to finance a $100k car, then that sounds like a red flag that you can’t afford it. Instead of spending $100k on a car, why not invest it? Over a period of 12 years with a 7% ROI you could have $272,641 in your 401(k). Even without investing another dime, you could be a millionaire in about 20 years. Is that car worth a million dollars? I don’t think so.

Who are these people that want to finance a $100k car? The only one I have ever seen was on a Canadian television show called Til Debt Do Us Part hosted by finance writer Gail Vaz-Oxlade. In one episode, a married couple had accumulated a significant amount of debt, but what made this episode stand out was the fact that the wife wanted a very fancy car and was thinking of financing over $100k to get it. Mind you, the couple had kids and debt, so where was this money coming from?

Here is a sample of how the show went on to explain to viewers how people are spending and where the money comes from: credit. If you want to order Gail Vaz-Oxlade or other financial books, then look to the side or go to the top of my blog page and click the Amazon banner link.

Who are these companies that are likely to finance these amounts? BMW Financial, Audi Financial, Porsche Financial, and the like. See the screen shot.

And not only do these companies allow you to finance, but expect a down payment on cars with six-figure price tags.

I have had my car for more than a decade. Actually, it has been 15 years. My car has been very reliable. Once I paid it off I decided I did not want another car note.  That was almost 10 years ago. Here is a snapshot below of my last payment. It may become my screensaver.

I have been able to do so much without having that payment hanging over my head. I decided to start paying off my credit card debt, invest more, get Lasik, join a gym, and get another degree. Basically, I invested in myself. I do not regret not purchasing a new car for one second.

Here is my take on it. Why stretch yourself financially, for a car you desire? Ask yourself if you would still be willing to do that, if the most popular car in the world among the money elite was a Honda? Financially savvy folks know that a fancy set of wheels is pricey in more ways than one.

I was told that a rapper was discussing online about owning a Bugatti or some other luxury vehicle that has three radiators. If one goes down, it costs $90k to replace. Gulp! That’s a hard pill or repair bill to swallow.

I heard an NBA player say that he knew people that would buy Bentley’s, but then would stop driving them because they were not meant for everyday driving. The wear and tear was ridiculous.  Owners were shelling out tens of thousands of dollars on maintenance. Don’t believe me. I read an article by Forbes about unreliable luxury cars.  Apparently, I am not the only one who has noticed that every luxury car that glitters isn’t gold, but merely sold to those willing to fork over their hard earned cash.

That means you basically are driving a house on wheels for the amount you paid. Then after all that, still have to worry about thousands of dollars in repairs. And since this isn’t your run of the mill car, you have to go to specific repair shops. Usually, this means repeated trips to the dealership. Who has time for that?

Luxury cars seem not only to come with a high price tag, but also lots of headaches. I say this: if you can afford the monthly payments, maintenance, and can hire a mechanic or chauffeur to repair or take your car in for service at a moment’s notice, then you can get the car. If not, you’re better off sticking to something you can take to Jiffy Lube.