Here's to beating a dead horse ... :kk:
My wife and I made a decision never to borrow money for the purchase of depreciating assets (cars, bikes, boats etc). It was a difficult decision and an extremely humiliating experience. We shared a 20 year old Toyota for two years before we saved the cash to buy our cars outright. We bought as much home as we could afford (we even rented a room out) and since we had no car payments or credit card debt, we could buy more house. The only credit cards we have are used to keep our FICO scores respectable. We pay them off each month. The home is worth well over what we bought if for in 99’ and I now have three bikes in the stable. We shop at the warehouse stores, baggin our own groceries instead of “spreading the wealth” to pay disproportionately high wages for menial tasks (and politically motivated agendas). Our food bill at WinCo is HALF the bill it was at Albertsons!
I manage money for a living but started out in the business doing financial planning for the average Joe. The concept of borrowing (leveraging) money to buy appreciating assets versus depreciating assets is a basic one. For most of us, it defines the battle between deferred versus immediate gratification. Without intending to offend anyone … it’s a battle between the child and the adult within us.
Crazyman, you don’t have to be rich to pay cash for vehicles. You can do it on even a modest income. It’s more an issue of getting ahead of the financial curve. Here’s why: If you can afford to make the payments on a Rocket, then take comfort in the fact that it is cheaper to save for one. You benefit in two ways: You don’t have to pay interest to the bank for the loan, AND you get interest on your money while you’re saving. The only drawback is you can’t have it right now. It does take a few years to get ahead of the financial curve, but once you do, there’s no looking back. Just remember to keep saving money for your next bike instead of paying interest on the one you’re riding today. Same rule for cars. It's a practice that will save you many thousands of dollars over the years. It's also a simple formula for permanently keeping the banks out of your pocket.
… my two cents.