there were two born that minute...

[danny_galaga]

so yesterday at work i overheard one of the guys (not the brightest spark funnily enough) talking about a car he was thinking of buying. the car is a 90s model holden commodore. cant think what international examples would be (maybe 3.5 rover, 2001 chevrolet impala etc), but its a large V6 family sedan. it only has 125,000km on it he was saying. how much? 24000! bloody hell! a car like that wouldnt be worth more than say $5000...

only a minute later another guy (sparks much brighter) asked if id seen his new car. no. which one? the mitsubishi lancer. oh, yeah. how much? 14. 14 thousand! i say, joking because im sure he meant 14 hundred. then i realised he was serious! 14 grand for a 94 model lancer. the reason he paid that was he has a  bad credit rating and went through one of those dodgy car dealers with instant finance.

now its hard for me to imagine (because i could NEVER have a bad credit rating) but if i did, i would be catching buses/trains/riding bikes until id saved some cash. my car cost 2500. still going strong after two years. i guess though if there werent guys like this born every minute id never stand a chance of getting rich off them!

[shardian]

People with bad credit usually don't have the sense to realize the seriousness of their situation. My dad and sister have both been in major credit debt multiple times. At one point, my dad was paying on a car, a van, and a boat that he didn't even have anymore! Luckily, I got my mom's sense when it came to money.

[danny_galaga]

yeah, my housemate is like that. her card is maxed to ten grand. and shes just getting her place evaluated so she can shuffle around the debt AND buy a new car. she earns nearly twice what i do and yet i have more. theres no point telling her that it doesnt matter what angle she looks at it from, shes still in debt...

[patrickl]

I can understand people borrowing money to purchase an expensive item, but I don't understand people having a debt last longer than the "life" of the item purchased. If you buy a car the loan should end when you don't own/use the car anymore otherwise you just go down in debt further and further.

[ChadTower]

I don't see the wisdom, really, in financing luxury items that depreciate quickly.  A car is a necessity, but only a reasonable car if you cannot afford an expensive one.  A house, same thing, but most people seem to overstretch there too.  Other than that, crap like $1500 televisions and $2000 PCs, vacations, putting consumables (dinners, entertainment) on credit are just bad personal finance.

What seems to get most people is financing things that quickly depreciate in value.  Then they can't figure out why they don't have all that much of value yet are paying 100% of their income out every month.

[shardian]

I can understand people borrowing money to purchase an expensive item, but I don't understand people having a debt last longer than the "life" of the item purchased. If you buy a car the loan should end when you don't own/use the car anymore otherwise you just go down in debt further and further.

What usually happens is that the person has no sense of value, interest, or amortization. They pay too much for the car in the first place, then they get bored of it, wreck it, need cash fast, etc. Any way they cut it, they end up selling for less than the remainder of the loan. The worst part is that they probably got the loan as a no down payment/ high interest and or long repayment period. They actually think that  when they pay that $150-$200/month on the car payment that it is going towards the value of the car. WRONG!!

This is why I think basic life skills should be taught in high school. Those skills are MUCH more important than placement tests for 99% of high school students.

[Loki]

Never buy anything when you don't have the money... simple as that

For a house it's another story of course, but a car or luxuries you should just save money till you can buy it.

[ChadTower]

Depends on where you live for the car.  Here, if you don't have the car, you probably can't work, so you can't earn the money.  Plus your family has to eat and live in a building and wear pants in the mean time.

[shardian]

putting consumables (dinners, entertainment) on credit are just bad personal finance.

It depends on the person there. A responsible person who is knowledgeable can use credit cards as a financial tool - and even profit from it.

Personally, I have two credit cards I carry - one for gas, and another for purchases. I always pay my balances in full, and keep track of all purchases on a regular basis online and by paper reports. I get 3% cash back on the gas card, and receive amazon gift certs from the other card. In effect, I am getting PAID by the credit card companies for letting them do my bookkeeping.
I also have a Home Depot CC that I use to get 0% interest on large home purchases. I took their 1 year 0% interest PLUS 10% off deal to fund my bathroom renovation.

Of course, not everyone can do this with credit cards. Although I'm sure they could if they were properly educated and/or learned from others mistakes.

[Loki]

My parents both have their own car and my dad is planning to buy a motorcycle... all without loans... they are fine cars bought 2nd hand.
You don't need an expensive new car just to get from point A to B

[shardian]

I will never buy a new car. It would be nice to own a newer used car, but for now I am happy with what I have.

Besides, I am too spoiled with the fact I have never had a car payment.

[ChadTower]

Of course, not everyone can do this with credit cards. Although I'm sure they could if they were properly educated and/or learned from others mistakes.

Plus, that's not even really financing in the traditional sense, as the balance has to be paid to zero each month in order to avoid interest charges.  The only way to pull that off is to stay within what you could have paid in cash during the month.  Most people don't have the discipline to do that.

[shardian]

Of course, not everyone can do this with credit cards. Although I'm sure they could if they were properly educated and/or learned from others mistakes.

Plus, that's not even really financing in the traditional sense, as the balance has to be paid to zero each month in order to avoid interest charges.  The only way to pull that off is to stay within what you could have paid in cash during the month.  Most people don't have the discipline to do that.

Exactly. Some people think of credit cards as the devil. Those evil credit card companies, blah, blah blah.
They are offering a service with a clear cut set of rules. If you follow the rules and stay responsible, you benefit. They will get their 3% from the places you purchase from either way - interest from you is the icing on the cake. And boy is that some thick, sweet icing.

[Chris]

Personally, I have two credit cards I carry - one for gas, and another for purchases. I always pay my balances in full...

I heard a rumor that some cards are charging people that do this "convenience fees" since they're not making any money on finance charges.  Have you run into this at all?

--Chris

[shardian]

Personally, I have two credit cards I carry - one for gas, and another for purchases. I always pay my balances in full...

I heard a rumor that some cards are charging people that do this "convenience fees" since they're not making any money on finance charges.  Have you run into this at all?

--Chris

No. Both of my cards are from Chase.

[ChadTower]

I used to do what Sharidan does a few years ago until I had a card cancelled on me because of "usage patterns".  It happened a second time a year later.  I forget who the issuers were now, that was a while back.

[shardian]

I used to do what Sharidan does a few years ago until I had a card cancelled on me because of "usage patterns".  It happened a second time a year later.  I forget who the issuers were now, that was a while back.

That is crazy! If one of my credit cards were cancelled due to paying off my balance every month, I would file with the better business bureau.

Heh, maybe they thought you were laundering money

[ChadTower]

That is crazy! If one of my credit cards were cancelled due to paying off my balance every month, I would file with the better business bureau.

To what end?  Nothing would come of that.  I just signed up for another card.  I was in college and there were people literally walking the streets begging us to apply for their credit cards.  Maybe the issue was that I wasn't spending enough each month... I only made $50/week. 

[shardian]

I guess " a few years ago" has different meaning for different people.

[ChadTower]

It was probably 1996-1997, so that's about 10 years ago.  More than I thought.  Yow.

[RayB]

I'm still driving a '91 I paid off in late '90s. I'd love to have a new car, and I could afford it, but it makes no sense when I have zero car payments to make right now.

[ChadTower]

I'm still driving a '91 I paid off in late '90s. I'd love to have a new car, and I could afford it, but it makes no sense when I have zero car payments to make right now.

Same here with a '99.  Been paid off for a couple of years now.  I did have to put $900 into the rear struts and bearings last week, though, so if I have to do that again within the next year it will be hitting the bad side of the maintenance vs payment ratio.

[shardian]

Back when I was in college/ interning, I used to think that you could tell what people made by their car. I was surprised to find that alot of the people I worked with at the Corp. drove beaters or at best, a few year old used car. It never occurred to me in my youth and naivety that just because you CAN afford a brand new, nice car that you HAD to. There are so many more things in life that money can go to rather than a car you will drive for a few years at most.

[ChadTower]

Well, keep in mind, many of those older guys probably had two cars.  One for the wife and kids, which is still in repayment and 100% reliable, and the older paid for car they themselves drove.  That's my situation, I drive a '99, my wife (who drives the kids most of the time) drives an '05.

[Chris]

Well, keep in mind, many of those older guys probably had two cars.  One for the wife and kids, which is still in repayment and 100% reliable, and the older paid for car they themselves drove.  That's my situation, I drive a '99, my wife (who drives the kids most of the time) drives an '05.

I'm the same way.  I drive a '99 Taurus while my wife gets the '06 Charger.  But she's in real estate so she needs a decent car to drive clients to houses in.  My '99's transmission is starting to act up, though; I think within the next 12 months I'll probably ditch it for something in an an '03 or '04 vintage, whatever I can afford to pay cash for as I don't want another payment (the Charger's is big enough, thank you).

--Chris

[ChadTower]

A Charger?  What is she doing, jumping them over moats to get to the houses? 

[shardian]

 I drive a '99 Taurus while my wife gets the '06 Charger. 

pwned. 

[ChadTower]

The one thing I'd really, really love to do with my car is trade it in for a pickup... but we have to have the ability to put all 4 people in either car, and once you extend the cab AND make it automatic, a pickup doubles in cost.

[Crax]

I paid 10k for a toyota corolla back in the day.  I've since paid off the loan and I still drive it.  I have put over 100k miles on it with hardly any problems since I purchased it somewhat used.  There is nothing wrong with financing a car if you will drive it long enough to pay it off.  The main problem people get into is the cycle of buying/selling cars for less money than they owe.  They seem to get stuck in a cycle of trading in for less than owed and each time they do it, their "new" car is already worth less than the loan they have for it the day they buy it.

[Chris G]

I drive a 2000 Toyota Tacoma that has been very nice for hauling home-project stuff over the past 5 years.  We've been in need of a 4-door car, though, as my wife drives a Mustang (ya ya, pwned).

I've always said I would never buy a new car since it's a poor investment, but I'm really having to fight against it now... believe it or not, the main reason is that I am ALWAYS hot and my wife is ALWAYS cold, so we really want dual-climate control.  How stupid a reason is that to spend $30k?     Someone shoot me, please.

[this is the part where Chad tells me to buy my wife a $10 blanket]

[ChadTower]

Hell no, put her in the back of the Tacoma so you can't hear her complain.

I'd much rather have a Tacoma than a Mustang, if that helps.

[RayB]

Yeah that's the lamest excuse I've ever heard. If you're cold, wear a jacket. If you're hot, take it off.

I swear, what really pisses me off about this commercial, consumerist society we live in is the excesses they keep throwing into vehicles to justify higher and higher ridiculous price tags. The average family now drives vehicles loaded with features that were considered luxuries 20 years ago.

TVs and DVD players? If you need that to shut up the kids, you have parenting issues. GPS? Learn to read a MAP! They cost about $2. Better yet, plan your trip before leaving the house.

$30k is more than my parents paid for their HOUSE in the late 70's! Now it buys you something that depreciates, rusts and falls apart after 6 years.

Just 15 years ago you could buy a brand new Civic for $16k, and the HF models got as good a mileage as today's Hybrids. Explain that one?! Why aren't hybrids getting DOUBLE the mpg we were getting out of compacts of the early 90's??

Yikes, I'm too young to be sounding this crotchety!!   

[ChadTower]

You can still get a brand new Civic for 16k.  MSRP on a Civic DX 4 door automatic is $16,400. 

[RayB]

You can still get a brand new Civic for 16k.  MSRP on a Civic DX 4 door automatic is $16,400. 

Well color me red!   

[ChadTower]

Not the red one!  Your insurance will double!   

[Chris G]

Whatever we end up with, it's not going to have a DVD player or Nav...

[ChadTower]

Hell with that, my kids take a book or a toy and we use Mapquest to get around.

[Chris G]

... and if they complain, you just strap them to the back of the car.  Boom.

[vorghagen]

The one thing I'd really, really love to do with my car is trade it in for a pickup... but we have to have the ability to put all 4 people in either car, and once you extend the cab AND make it automatic, a pickup doubles in cost.

If you were in Australia, I'd suggest a Holden Crewman. Picture a four door sedan with a tray instead of a boot (trunk).

[ChadTower]

Picturing it now:

. o 0 O ()


There are a few cars like that here, too, but they're definitely not cheap.