How in debt are you with your Tacoma?

Wish I could like this more than once lol @ChadsPride

 

Courtesy of @PapaBear

 

haha nice!

 

thanks

 

Just checked the statement a couple days ago and just $8k principal left. I had lots of plans in the beginning but going to wait until it's paid off to really start looking at financing any crazy upgrades.

 

That's about the one exception, as you have substantial equity in your home, especially with the ridiculous housing bubbles we are experiencing currently. Your cell phone contract example is absurd.

 

Why is it absurd? It's debt. Plain and simple you take on a lower initial cost in exchange for a debt through contract that is nullified when your term ends. Actually, in Canada now, they even have to list what part of your bill goes into the phone payment in effect finally showing the truth that it's a loan for a phone.

You either pay more per month on a phone your pay ahead, or a lower rate on a phone you sign to a contract. It's debt my friend. You only get out of it when your term is up or you pay off the balance.

 

Maybe I'm confused by your example. Are you saying that paying x dollars per month for a data plan is debt? Or are you using an example where a person is paying monthly on a shiny new iPhone Behemoth X along with their plan? Because again, if I can't afford to buy the phone outright I don't buy the phone. I'll use a shitty old flip phone until I save enough for the new one.

You cannot sit here and tell me - with the exception of a house loan (and only because almost no one can ever pay cash for a house) - that it isn't a much better idea to save your money and pay cash for anything rather than using a loan. Pay the cost with cash, or pay the cost plus x% of the loan value over 5 to 10 years. The math is really simple.

 

What ‘small businesses’ and I hurting with a cashback and United Airline new card?

Rewards kill small businesses is a very broad statement, and untrue at that. Point and cash back I warn on big purchases on credit cards often fund my ‘dinner nights’ and local small restaurants.. which helps business growth.
Earning miles and flight/hotel rewards are profitable when we spend cash out visiting areas on the local economy.

 

Ok, let's back up, your statement was:

Which indicates that a cell phone contract is not debt. Clearly, as I've explained here:

If you sign a contract in order to pay less per month for a phone while paying more in your plan, you in effect have acquired debt. No, it's not clear as day debt like a credit card, but in effect cell phone companies entice their customers to sign contracts by offering cheaper initial phone prices on plans that cost more per month over a bring your own phone arrangement. Basically you pay less initially for a phone and then the company makes up the difference on your bill whether or not you financed the phone unless you paid the full amount of the phone, usually over $600, upfront.

As for the whole buy now pay interest or buy later from savings... I'm not going to have an argument or discussion on here about it. There's a big difference between someone buying a reliable vehicle for work at a low interest rate and the credit card issues that many people face because they confused a pile of wants with needs. Do you judge people who take out loans to fix up their homes rather than pay more in a mortgage for a newer home? How about people who are fresh out of school but need thousands of dollars in professional clothes and other work related expenses? Again, this isn't an argument I would suggest you can paint with a wide brush.

 

Rather than go through the process which I have lived in the past with a small business perhaps a third party source is in order:

http://www.huffingtonpost.ca/dan-kelly/small-business-credit-card_b_1682505.html

It's as simple as a place like Wal-Mart forcing their card processor to accept a lower fee than the small store next door or as complicated as a small Agricultural outlet paying 3% for processing while the next door neighbor, who is part of a larger chain, pays 2.5% due to their volume of business. Smaller outlets are starting off behind the ball because they pay more in fees, regardless of your purchasing decisions. It gets worse with the fact that premium cards can charge premium fees that larger companies can actually avoid through deals with their card processor. Trust me, small restaurants would refuse credit cards if they could afford to force customers to go all cash. Just ask any restaurant owner what his fees cost him a month.

BTW I'm not judging you for using a rewards card. I'm simply pointing out that rewards cards have a negative effect on small business which has been well discussed by several economists.

 

stoked to post here because i have only 5 more payments on my '12!!! i owe about $2,500.

now if you look at my credit cards where i financed a supercharger and all kinds of group buys the total goes up about $10,000. it's a brutal cycle.

 

I will be over 44K (Cnd) in debt, once I buy my new Taco.

Dealerships here are charging 4.59% interest on financing. I can get it for less than 3% on my line of credit.

 

Home owners line of credit I assume then, since that sort of rate is usually tied to the mortgage rates? Just remember that most of those have to have a variable rate and the BOC has hinted that they aren't done raising interest rates yet. You could end up over 4.59% in the next few years unless you pay it off quickly. Just a thought.

 

Ok, at least now we're on the same page. I thought you were saying that signing a plan contract with a cell phone company was debt, which is absolutely not true. You're including a new phone into that equation, so now I understand you.

To answer your question, then, no, I have never signed a contract including a new phone that I pay for monthly. I plan and save money to pay for my vacations, my ski resort passes, my truck upgrades. I paid cash for my truck - no, it wasn't new, but I didn't NEED a new truck. And now I'm saving my money little by little for the day that this truck dies (or is murdered like my Forester was RIP).

When I buy a house, yes, I will use a house loan. I don't and I won't have 500k in cash to buy a house, like 98% of everyone else. But with a house I'm getting appreciating equity, which isn't the case for anything else people generally use credit for, including (to bring it back full circle) a brand new vehicle.

 

Don't rely on equity in your home though to exceed your credit costs though. That cycle is likely going to end with our generation since homes are reaching values that are not affordable with an average family income. Not unless North America is heading for multigenerational mortgages like Europe has where they actually issues mortgages for +40 years, which opens up a whole new discussion about what is owning and what is renting. I'm not fighting your viewpoint though and I understand what you are trying to do. What I am doing is advocating that the idea you can call someone stupid on the internet for getting credit for uses other than a house is a bit silly at the least.

 

$0.

I have never ever had a car loan. They have all been paid for. I have no plans to have a car loan ever.

I have a little debt on my credit card, which is the extent of my debt.

 

You're right. I am giving our current bubble less than 10 years to bust again. Housing prices will drop again which is when I plan to buy, because currently it's absolutely ridiculous. Young people continue to take it on the nose for the older generation.

But to your other point, I don't mean to call anyone stupid, but we really need to change our philosophy on spending and credit in North America at least. The conversation has to start somewhere, or we are going to raise a generation of kids enslaved to credit card and student loan companies.

 

You see, that's a good debt discussion. Much better than the dick waving a couple of pages ago.

Student loans are a US problem mostly. In Canada we capped the rates a school can charge for tuition. Average student debt here is still low. I'm not sure how the US is going to fix that after the fact the money was spent.