Nissan 370Z Forum - View Single Post

scottIN · 06-21-2016, 06:39 AM

I follow the Dave Ramsey plan - no debt except for your house on a (max) 15 year loan. No credit cards - cash (or debit card) for everything.

I know a lot of posters said 'But I get X% cash back!' Well, the problem with that is that every study shows you spend more money using a credit card vs. a debit card. So to get your couple hundred dollars at the end of the year, it's probably cost you thousands. And as Dave says, he's never had a millionaire tell him 'Wow! Getting that cash back is what made me a millionaire!'.

Another thing that came up in here was 0% financing then investing the cash you would have paid. That works until it stops working. Let's say you did that on a zero down car. Two months later, the economy tanks, the market crashes, your investment is worth 50% of what it once was, and you lose your job. Oh - and you're upside down $5K in your car already. You can't make the payments or sell the car. Trying to arbitrage 0% / investing doesn't factor in risk. If you don't believe there is any risk, you should go borrow as much money as you can on your house, your cars - whatever - and put it into the market.

A year ago, my GF and I were doing ok - no problem making payments, went on vacations, went out all the time. But we had huge payments - mostly the cars. Doing the debt snowball, we're down to just one payment and paying it off @ $5K / mo. When we're done in a couple of months, you know where that $5K goes? In my pocket! So let's say I want a new(er) car. I can now save $20K in 4 months, add that to my paid off car, and have $45K for something new. And still no payments. We're already planning a vacation to Costa Rica for New Year's. Know how long we have to save up for it? One week. Because our only payment will be our house ($800 on a 15 year fixed).

I've sort of become a Dave Ramsey evangelist. When you understand what debt does to you, it all makes sense. Did you know that debt is the most heavily marketed product? Why? That's how car dealers, furniture stores, banks and so many others make their money. My banker has 3 Porsches. My debt paid for those. I understand that now.

06-21-2016, 06:39 AM	#57 (permalink)
scottIN Track Member Join Date: Aug 2011 Location: New Castle, Indiana Posts: 764 Drives: '12 370Z Rep Power: 55	I follow the Dave Ramsey plan - no debt except for your house on a (max) 15 year loan. No credit cards - cash (or debit card) for everything. I know a lot of posters said 'But I get X% cash back!' Well, the problem with that is that every study shows you spend more money using a credit card vs. a debit card. So to get your couple hundred dollars at the end of the year, it's probably cost you thousands. And as Dave says, he's never had a millionaire tell him 'Wow! Getting that cash back is what made me a millionaire!'. Another thing that came up in here was 0% financing then investing the cash you would have paid. That works until it stops working. Let's say you did that on a zero down car. Two months later, the economy tanks, the market crashes, your investment is worth 50% of what it once was, and you lose your job. Oh - and you're upside down $5K in your car already. You can't make the payments or sell the car. Trying to arbitrage 0% / investing doesn't factor in risk. If you don't believe there is any risk, you should go borrow as much money as you can on your house, your cars - whatever - and put it into the market. A year ago, my GF and I were doing ok - no problem making payments, went on vacations, went out all the time. But we had huge payments - mostly the cars. Doing the debt snowball, we're down to just one payment and paying it off @ $5K / mo. When we're done in a couple of months, you know where that $5K goes? In my pocket! So let's say I want a new(er) car. I can now save $20K in 4 months, add that to my paid off car, and have $45K for something new. And still no payments. We're already planning a vacation to Costa Rica for New Year's. Know how long we have to save up for it? One week. Because our only payment will be our house ($800 on a 15 year fixed). I've sort of become a Dave Ramsey evangelist. When you understand what debt does to you, it all makes sense. Did you know that debt is the most heavily marketed product? Why? That's how car dealers, furniture stores, banks and so many others make their money. My banker has 3 Porsches. My debt paid for those. I understand that now.