How we think about money

[czub]

In a way, you're both right.

With fed funds at near 0% for a long time, most companies were offering 0-2% financing rates or subsidized money factors on leases. Usually, but not always, there was a choice between low/ no interest financing rate or cashback/rebate.

If you had a choice, run the numbers but taking a cash discount would be the prudent way to go. If only the 0% is offered without any cash concessions, take the 0% and the longest term possible.

Those days are gone. If someone is offering a low rate today, you're paying for it dearly by giving up other cash discounts. WACC for OEMs is likely north of 7%.

 

[palmettomoon]

Once again, I never said GM is doing that in any of posts. I don't know why you are hung up on that.

Lowes/HD/Wells Fargo, and others do it every day. They hope you dont pay it off to charge you all that back interest...and I imagine half the people that did it with good intentions in the beginning dont.

I'm not hung up on it man, it's just an example. Nobody is loaning money to anyone at zero percent interest on a steadily depreciating asset like a washing machine or car. The cost of the money is built into the sales agreement whether in price or fees. I guarantee you. It just doesn't make sense and if it doesn't make sense, zero percent loans aren't true. They are a marketing gimmick.

 

[cskiles]

Wealth building starts at a very early age. I see these ads stating, it's never too late. /...I mean, overtime, weekends, night job, whatever when you are young and save. Young folks now want to work a little and play a lot. They will be crying in 30 years. Ends don't meet. Victims. Need more government

I have told both of my sons that if I had to do it over again, the main thing I would do is to purchase a piece of property as early as I could. We've always taught them how to manage their money but it is irrelevant how much money you make if you don't spend/invest it wisely. When I was a young man I looked at my vehicle as an extension of 'me', I've taught my boys to look at their vehicle as utilitarian e.g., they both drive newish Kia's, instead of a Honda or an Infiniti - regardless of which car you buy, they'll get you to the same place....is an additional 20 or 30+% on your car payment worth making the drive a little more comfortable? Luxury and comfort should come over time, I think it is ridiculous when I see a 20 something 'child' driving an 80k truck, let alone a child in high school driving a 60k car, it's just setting them up for failure.

 

[killerv]

I'm not hung up on it man, it's just an example. Nobody is loaning money to anyone at zero percent interest on a steadily depreciating asset like a washing machine or car. The cost of the money is built into the sales agreement whether in price or fees. I guarantee you. It just doesn't make sense and if it doesn't make sense, zero percent loans aren't true. They are a marketing gimmick.

I've never been charged fees on my lowes or hd 0% purchases. That washing machine is 500 bucks whether I pay cash or put it on my lowes card with 0% for 6 months. Now, they may have fees built into that 500 bucks sure, but the folks paying cash are paying them also then.

Heck, even if you put it on the lowes card and take the 5% off instead, just pay it off when you get the bill, you just saved 25 bucks, you'd have paid more if you paid cash instead.

 

[Stampede]

Or, distributed to the ”less fortunate” who never.....planned for their own financial future. They spent it as soon as they got it.

Fixed it for you.

 

[Fatal_Bert]

I'm not hung up on it man, it's just an example. Nobody is loaning money to anyone at zero percent interest on a steadily depreciating asset like a washing machine or car. The cost of the money is built into the sales agreement whether in price or fees. I guarantee you. It just doesn't make sense and if it doesn't make sense, zero percent loans aren't true. They are a marketing gimmick.

Chase will.

I can open a chase account with a 12 thousand dollar limit with 18 months 0 interest.

Buy 12 thousand dollars worth of washing machines, fridges, lawnmowers whatever from home Depot.

Then not pay a dime on it till the day before the 18 months is up and I'd never incur any interest or anything fee.

I'll even get a small percentage back in rewards so it'll actually be cheaper then if I walked into home Depot with cash.

 

[killerv]

I have told both of my sons that if I had to do it over again, the main thing I would do is to purchase a piece of property as early as I could. We've always taught them how to manage their money but it is irrelevant how much money you make if you don't spend/invest it wisely. When I was a young man I looked at my vehicle as an extension of 'me', I've taught my boys to look at their vehicle as utilitarian e.g., they both drive newish Kia's, instead of a Honda or an Infiniti - regardless of which car you buy, they'll get you to the same place....is an additional 20 or 30+% on your car payment worth making the drive a little more comfortable? Luxury and comfort should come over time, I think it is ridiculous when I see a 20 something 'child' driving an 80k truck, let alone a child in high school driving a 60k car, it's just setting them up for failure.

I'm surprised you took a job at honda, honda has always been the smart move for reliability and longevity for the money without the bmw price tag. Shoot, kias are now in the same ballpark with honda, but with those crappy hyandai engines that fail

As far as the last statement, that's a stretch, yes they are spoiled kids out there that dont amount to much but you dont know the inner drive thats in that kid driving that 80k truck, he may turn out doing just fine, just because his parents can afford it, you dont have to judge him for it. You don't know what he or she is capable of. Just because they have a nice vehicle doesnt make them all lazy or any less driven.

 

[cskiles]

I'm surprised you took a job at honda, honda has always been the smart move for reliability and longevity for the money without the bmw price tag. Shoot, kias are now in the same ballpark with honda, but with those crappy hyandai engines that fail

As far as the last statement, that's a stretch, yes they are spoiled kids out there that dont amount to much but you dont know the inner drive thats in that kid driving that 80k truck, he may turn out doing just fine, just because his parents can afford it, you dont have to judge him for it. You don't know what he or she is capable of. Just because they have a nice vehicle doesnt make them all lazy or any less driven.

Wasn't taking a jab at Honda, they're just more expensive cars, great cars, but more expensive (than a KIA).

I don't think it's a stretch at all. Take for example a set of parents that have a lot of money, e.g., live in a million dollar home have a vacation rental home, etc., They take a child and put them in a car that a lot of working class people can't afford, what does this do to set the child's expectations? They get out of college (if they go), purchase a $500,000.00 home and 60 or 70k car on a 40k or 50k salary because that's what they've always had. I would agree that there are many privileged kids that do very well in life whether by personal drive or parental assistance, but I also know and have seen first hand what happens to a privileged child when they lose their parents help/money. Every individual is different, I just don't think it's fair to the child to give them the impression that an expensive lifestyle is their right, IMHO, I think that they need to learn the value of money (and by extension, earning it) first.

 

[killerv]

No bank is loaning 500k towards a house for someone only making 40-50k a year. This isnt 2006 anymore. They are gonna have a rude awakening when they go to get approved.

 

[thevalueman]

I have NO problem with a young person buying a house, and, in fact, they should buy the highest priced house that they can possibly afford!! AND finance it for as long as the lender will allow...this is how you grow wealth....property!!!
work your ass off, paying for it!! It's the American way!! the note will get smaller as you advance in years!!! Sell it, and do the exact same thing again!!! about 3X is the charm, then, sit back, pay it off, and there's you nest egg...AND you get to live in it to boot!!!