Discussion in 'Audio Hardware' started by Uri Cohen, Dec 6, 2017.
I wish I could say that for my whole life. You're a paragon of fortitude.
I'm fine with 0% but I haven't used it in quite awhile. I usually get tired of making the payments before it runs out and pay it off early. It took me a long time to get to be completely debt free except the house except the house and the house will be paid this month! Pay as you go should be the goal, and credit is a tool in the arsenal to use to get there.
I've had the means to use cash to buy my last few purchases but that would mean taking it from investments that are currently crushing it. I definitely take advantage of interest free credit offers. My credit score is also currently sitting at around 810 so I can pretty much finance what I want and pay it off before any interest accrues. I wouldn't have a decent credit score and high limits unless I did do this.
If I don't have the cash I use Pay Pal credit. 6 months - no interest.
Works well for me.
If the money you’ve got in the bank was earmarked specifically for a particular purchase, either saved deliberately for a particular purchase or set aside for a particular purchase from other income, then it’s disposable income that you’ve created specifically for the purpose. That’s the best thing to do, and the discussion of debt is irrelevant in that case. If that’s what you’ve done, make that clear to others in this thread because it’s very smart, it shows great planning and organization, and it’s also about the best possible way to make audio component purchases! If that’s the case, others could model their behavior in the exact same way if possible.
For people who are not doing that, I run into this kind of thinking quite commonly in my business. For a fact, if someone is purchasing something that isn’t paid in full at the point of purchase, then he’s taking on debt - an obligation to pay for a purchase over time. Just because there’s no interest associated with a debt doesn’t meant it’s not debt. Any financial commitment paid over time is debt - it’s considered a liability. The other reality is that if you have money in the bank to cover the debt, then that money is effectively tied up to some degree in order to offset the debt being paid over time. You can’t have your own money and somebody else’s money (in the form of goods you’ve received) at the same time, because the payments you make over time use your own money not someone else’s. That’s how the goods are paid for.
Interest other than 0% increases debt. But 0% interest doesn’t mean an absence of debt. The money someone might have in the bank to cover the debt has to be paid to the business to which the debt is owed, because that’s the only way to make payments. A good credit rating, not necessarily cash in the bank, is what allows someone to qualify for 0% interest. That’s where the benefits of 0% interest blur. The commitment someone makes when he takes on the 0% loan is still a debt that eats into existing cash or new income as the debt is paid off over time.
If somone has cash in the bank that is actually earning interest at some reasonable rate, and if the cash in the bank is sufficient to generate enough interest alone to cover the payments on the 0% financed debt you take on, then the person is no longer earning interest to keep - they’re giving up that income in order to pay for something over time. That’s another effect of debt.
To me debt of any kind is difficult. I don't like making payments on anything. Cash is king. Interest free can be on par but still second best. So I went with cash.
My wife's car has an interest free loan and it is still painful to pay it each month. She wants to pay it off early and I can understand why.
That said, my other hobby is fishing and I have financed half the value of a used boat in the past but that maintains its resale value better, around these parts, compared to audio gear.
When I was starting out "back in the day" I used credit but I used it wisely. I only borrowed for my first house and my first car and used credit cards but paid them off every month in full. Now, we're at the point were we pay for everything when we buy / do it. We do use credit cards now days - mostly for the convenience and the rewards - but overall we've got the $$$ for what we buy / do before we pull the trigger.
As far as my gear goes, my primary system is pretty "stable" and made up of new gear I paid in full for up front. My secondary systems are made up of older vintage gear except for the speakers which are new but in all cased used. I paid cash for all this gear. I actually allow myself $1,000 per year to facilitate swapping used gear in and out of my secondary systems as I see used gear become available I want to try. Wifie knows I swap gear but there may be been a slight communication issue regarding the $1,000 a year I allow myself as "play money"
I try to find a balance where I will do low interest loans (home mortgage / auto loan / line of credit for things like home improvement items). That way I'm not falling into credit card debt but I'm also enjoying a certain quality of life at the same time. I don't need the latest new shiny thing but owning a home, for example, is not something I would have been able to do without getting a mortgage.
So does MusicDirect offer Credit Life with 0% interest for 36 months to Turn Dreams into Reality with the McIntosh MAC7200 Receiver. And are blue Lava Lamps for the memorial service an additional outlay?
When purchasing consumer goods, I only use cash. Already have enough debt. THANKS A LOT COLLEGE!
If someone is going to offer me zero percent for x period of months...I would rather them discount the item by their default interest rate at x months, and I pay cash.
No chance of a usury rate, no need to give ID and tax info to lender for them to sell or share to their buddies.
There is a reason my speakers are from 1993. I want a new pair, but no way I would finance them. Now if it is a capital item for a business, different story.
But, assuming your an adult...it's your choice.
I took advantage of financing when buying my speakers and sub.. paid it off in a less than 2 months..
When I seriously got into this hobby and purchased my first McIntosh, I promised myself that if I didn't have the cash then I would wait until I did. I now have three McIntosh products, an Esoteric, a VPI and Sonus Faber. None have been financed.
AMEN TO THIS
I buy on credit cards for the points, but always pay off immediately.
His point is anything paid over time is debt.......If you enter into an agreement to pay over time that is debt, whether interest is part of it or not. I have never paid cash for a car, so yea that will always be a finance deal for me and whether I get 0% down 0% interest for 5yrs, I still owe 60mos of payments.....which is debt. The risk is if your bank calls the note, then you have to pay up the total due.......The wrong thought is it's never the "banks" money, it's your money that is paying the debt.
We're confusing a lot of topics here - installment debt is not the same as revolving debt is not the same as deferred interest is not the same as interest free.
Most "interest free" options are really deferred interest - if you miss a payment or go beyond your allotted time to pay, interest kicks in and often times the back interest comes due. VERY dangerous unless you're responsible about it.
I treat it like a cash flow issue - if I want something and it can be had "interest free" at the same (or less) per month as I'd have to set aside to save up for it, it's a line item in the budget either way, and has zero impact on my finances/budget/cash flow. If you're the sort to store money in interest-bearing accounts, you actually come out ahead with the 0% option because that up-front full price that you didn't lay out all at once is bearing interest for you.
Practical example of the cash flow approach - I have a set amount that comes out of my monthly budget for tech - gadgets, audio, etc... it can be installments, flat purchases, or saving up - whatever it is, if it fits in the budget, I can do it. If, on the other hand, a new buy won't fit into the monthly expense (or won't be covered by having set the monthlies aside), I don't do it. I may make an exception for a planned large purchase around tax/bonus time, but that's much more the exception than the rule.
If you have to use your credit card, make sure you have the cash set aside for immediate payment. I know too many people with 4 or 5 credit cards maxxed out. It's all too easy to be buried under that kind of debt.
I'm allergic to unnecessary debt, so cash cash cash!
Understood and you are 100% correct. But I don't look at it that way. My rational might be totally wrong but if I buy an A/V component with 12 months 0% financing and pay it off well within that time frame I don't consider it debt. If I bought a bunch of A/V gear with 0% financing and my income was not sufficient to pay it off then I'd consider it debt. Probably not a normal mindset but that's how I look at it. I never buy anything without sufficient cash in the bank.
I bought my current car with 60 months 0% financing directly from Toyota. The chance of Toyota calling the loan is slim at best. If one gets 0% financing from Big Lou's Motors then that could be a problem. The fine print could state that Lou could call the note at anytime. At that point you either pay the loan off with cash, refinance or give up the car.
No mortgage? One can never establish any form of credit if they never borrow money. I'm far from a financial wizard but have an exceptional credit rating which is due to borrowing money over the years mostly at 0% or at very low interest rates (mortgage).
I'm in no way saying the way I buy gear with 0% financing is better than one that uses only cash. I respect those that deal in only cash and who will not buy anything unless cash is readily available. It's just my preference to buy with 0% financing and not the better alternative at all.
Cash in most instances.
I'm on a fixed income, so if I didn't finance things I'd never be able to get much.
I grew up on a small family farm.....watched my dad fix a piece of equipment till he could pay cash for that new plow....seeder....tractor and yes....even combine.
Local farmers lined up for dad's trade ins because everyone knew how well dad took care of his things.
I am 57 years old and that has stuck with me to this day.
May take awhile longer to get something I want but I feel good about it when I do eventually get it and have laid out the cash to purchase it and owe no-one for having it.
Now that is just me.....people who purchase things on "time", credit or what-have-you is ok with me.
Their choice as my method is mine.
Very well said !
Separate names with a comma.