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Flaccomania


Joined: 12 Aug 2008
Posts: 22833
Location: Parkville, MD
PostPosted: Fri Nov 16, 2012 3:22 pm    Post subject: Reply with quote

theJ wrote:
Flaccomania wrote:
While it was only a secondary reason for me, it helps to spread out the "hit" over the long term and therefore, in the event of an emergency, it's easier to take care of paying for it.

Say you have $1100 and you drop it on the TV. Great, it's paid for in full, nothing to worry about.

2 weeks later, you lose your job. Your mortgage payment is coming up, no problem, you have the money in an emergency fund.

A month later, still no job. Another mortgage payment coming up. Don't you think that $1040 you have (using my $30/month payment idea) could go a lot longer of a way to helping you than not having it?

I understand your idea about the "risk" portion of it -- but in my opinion, it carries very little risk (if set up properly) and actually helps to quell other risks that are out there by having some extra "cash on hand" in case of big emergencies. I'd rather risk missing a payment on the TV and facing the interest over missing a mortgage payment because I don't have $1000+ to help me in a pinch.

I guess we have different ideas of how to handle money (and i know i'm different than normal.

Before i get my paycheck, at the beginning of every month, every dollar is earmarked for a purpose. I have my 6-month emergency fund, and it's for the purpose of paying bills if i lose my job. If i want to buy an $1100 TV, i save the money every month until i'm ready to buy it. Then i pay in full. I don't worry about taking a "monthly hit" because i've already done it for 6 months. It's over. It's paid for, and it's one less worry on my plate. And by doing it this way, i will never ever once in my life miss a payment, because i financed it 6 months ahead of purchase. I have no wish to finance it another 2 years. I don't need a whole chapter of my life dedicated to paying off a TV.

If for some reason i get laid off and it takes longer than 6 months to find a job, the TV is irrelevant. If i truly need a portion of that money, i'd rather sell possessions than miss payments to do it. At least that way i only have one lender calling me (the mortgage company).

Honestly i wish more people would adopt my approach or way of thinking about it. The 0% financing works for some, but for many it is a huge trap. I'm glad you're responsible with it, but the majority of people aren't. If they were, those deals wouldn't exist.

Anywho, i'll retreat back to my backwards lifestyle. I'm not trying to convince anyone, but if i do i hope it helps you. Learning to manage money in a way that makes sense to you (and helps you build wealth) is one of the most important lessons in life.


Let me guess -- you read those books by that guy, right? I can't remember the name of either, but a co-worker of mine talks to me about it all the time.

I completely agree that it's a great way to go, and ideally I'd like to move towards an mindset of something like that. However, the TV purchase was right after buying the house so sitting back and paying myself for it ahead of time would have pushed back completing the family room that much longer, whereas with this scenario, while it carried more risk, is such a small risk that I felt it was worth it. I don't typically finance too much because I hate the idea of monthly payments -- right now, it's just the TV, house and car I pay for with credit -- and the TV I could very well pay off now, but I don't see much of a point since it's all handled via automation at this point. But maybe after the holidays I may consider it but at the same time, I'm saving to buy a truck (at least a sizeable down payment) so I'd rather put the money towards that for now and keep the finance on the 0%.
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theJ


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PostPosted: Fri Nov 16, 2012 3:40 pm    Post subject: Reply with quote

Flaccomania wrote:
Let me guess -- you read those books by that guy, right? I can't remember the name of either, but a co-worker of mine talks to me about it all the time.

I completely agree that it's a great way to go, and ideally I'd like to move towards an mindset of something like that. However, the TV purchase was right after buying the house so sitting back and paying myself for it ahead of time would have pushed back completing the family room that much longer, whereas with this scenario, while it carried more risk, is such a small risk that I felt it was worth it. I don't typically finance too much because I hate the idea of monthly payments -- right now, it's just the TV, house and car I pay for with credit -- and the TV I could very well pay off now, but I don't see much of a point since it's all handled via automation at this point. But maybe after the holidays I may consider it but at the same time, I'm saving to buy a truck (at least a sizeable down payment) so I'd rather put the money towards that for now and keep the finance on the 0%.


Ramsey. No i don't read the books. I listen to his radio show for the kicks, and i do most of the things he talks about. But not because he says so. I'll admit i've gotten a few ideas from his program. But i form my own beliefs (part of being a skeptical engineer). Personal finance and economics are something i'm passionate about. In my spare time i create spreadsheets to analyze my finances and forecast my future wealth. I follow mutual funds that i don't plan on owning for another 2-3 years at least.

So yeah, i'm geeky/nerdy about it.

In any case, i'm not saying you're doing anything wrong. Just giving you another way to think about it. I can see you're not dumb with your money by any means. Ramsey would say financing anything is a crime, but i don't necessarily agree. For someone who lives below their means, it probably won't affect retirement too much. I prefer not to do those things, but it doesn't mean it can't be helpful to some.
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Flaccomania


Joined: 12 Aug 2008
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Location: Parkville, MD
PostPosted: Fri Nov 16, 2012 3:50 pm    Post subject: Reply with quote

theJ wrote:
Flaccomania wrote:
Let me guess -- you read those books by that guy, right? I can't remember the name of either, but a co-worker of mine talks to me about it all the time.

I completely agree that it's a great way to go, and ideally I'd like to move towards an mindset of something like that. However, the TV purchase was right after buying the house so sitting back and paying myself for it ahead of time would have pushed back completing the family room that much longer, whereas with this scenario, while it carried more risk, is such a small risk that I felt it was worth it. I don't typically finance too much because I hate the idea of monthly payments -- right now, it's just the TV, house and car I pay for with credit -- and the TV I could very well pay off now, but I don't see much of a point since it's all handled via automation at this point. But maybe after the holidays I may consider it but at the same time, I'm saving to buy a truck (at least a sizeable down payment) so I'd rather put the money towards that for now and keep the finance on the 0%.


Ramsey. No i don't read the books. I listen to his radio show for the kicks, and i do most of the things he talks about. But not because he says so. I'll admit i've gotten a few ideas from his program. But i form my own beliefs (part of being a skeptical engineer). Personal finance and economics are something i'm passionate about. In my spare time i create spreadsheets to analyze my finances and forecast my future wealth. I follow mutual funds that i don't plan on owning for another 2-3 years at least.

So yeah, i'm geeky/nerdy about it.

In any case, i'm not saying you're doing anything wrong. Just giving you another way to think about it. I can see you're not dumb with your money by any means. Ramsey would say financing anything is a crime, but i don't necessarily agree. For someone who lives below their means, it probably won't affect retirement too much. I prefer not to do those things, but it doesn't mean it can't be helpful to some.


No doubt, and I'm with you on most. But the 0%, to me, is a low risk, high reward type thing. The things I get out of not putting out $1100 up front is greater than the risk of not being able to meet a $30 monthly payment. And in the event that something goes wrong, I do have the money set aside to take care of it. But, in the mean time while my job continues to be steady (lets hope sequestration doesn't kill our field), that money is able to be used for other things and then paid back to myself. If there were any sort of interest on it, or if there were really any sort of decent risk that I'd miss a payment, I'd pay it all off at once. However, with Bank of America's online bill pay stuff being very much guaranteed, being ahead on payments, and paying in plenty of time to avoid even the potential of the mail being late, there's very minimal risk. And like I said, in the event something catastrophic occurs and the interest balloons up, I pay it off right away. Kind of a TVM type outlook I guess you could say -- $1100 now is worth more to me than $1100 in 3 years (though without the investing portion being factored in).
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49ersfan


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PostPosted: Sat Nov 17, 2012 2:42 am    Post subject: Reply with quote

I don't even have a credit card and probably wouldn't get one, as i don't spend outside my means at all. I use cash and sometimes debit if i don't have my cash on me.

However, i realize that in the future, i'll need a good credit score for bigger loans- mortgage, maybe a car loan, etc. If/when I do get a credit card, i'll use it for small payments that aren't big and that i absolutely can pay off at the end of the month- groceries, the movies, fast food, bus tickets, low dollar shopping amounts, etc.
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theJ


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PostPosted: Sat Nov 17, 2012 11:12 am    Post subject: Reply with quote

49ersfan wrote:
I don't even have a credit card and probably wouldn't get one, as i don't spend outside my means at all. I use cash and sometimes debit if i don't have my cash on me.

However, i realize that in the future, i'll need a good credit score for bigger loans- mortgage, maybe a car loan, etc. If/when I do get a credit card, i'll use it for small payments that aren't big and that i absolutely can pay off at the end of the month- groceries, the movies, fast food, bus tickets, low dollar shopping amounts, etc.

Having a credit score certainly makes it easier to get a mortgage. But you can get a mortgage without one. You just have to be manually underwritten. I won't lie though, it sounds like a pain, and not all banks/mortgage companies do it.
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snkhd09


Joined: 14 Jan 2009
Posts: 770
Location: Tampa Bay
PostPosted: Sun Nov 18, 2012 4:40 pm    Post subject: Reply with quote

49ersfan wrote:
I don't even have a credit card and probably wouldn't get one, as i don't spend outside my means at all. I use cash and sometimes debit if i don't have my cash on me.

However, i realize that in the future, i'll need a good credit score for bigger loans- mortgage, maybe a car loan, etc. If/when I do get a credit card, i'll use it for small payments that aren't big and that i absolutely can pay off at the end of the month- groceries, the movies, fast food, bus tickets, low dollar shopping amounts, etc.

If you're fiscally responsible, then you definitely should get a CC. I've gotten a total of $200 in rewards from my CC and have incurred less than $5 on fees and interest.
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