It might cost $15-$275/year (only the 1st year) but the less times I see the monthly payments draining the bank acct, the better I feel.
After the first year paying the "lump", simply apply the same investing strategy.
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How to destroy the economy with common sense.
- Thread starter nobbie48
- Start date
After the first year paying the "lump", simply apply the same investing strategy.
The flipside to this is that I've seen a lot of people be penny-wise, but pound-foolish.
Yes, you can save a couple thousand dollars a year brown-bagging your lunch, but if you're losing tens of thousands of dollars on larger ticket expenses like financing/leasing a car or not shopping around for the best mortgage rate, or paying thousands of dollars in banking fees, then all that cost-savings effort is focused on the wrong task.
Leases are such a boon for car dealerships. The aim for any business is to get predictable and regular, repeat business.
You sell a guy a car and he pays cash, you have no idea when he'll ever come back to the dealership again. Could be 3 years later, could be 12...
You lease a guy a car and you *KNOW* he'll be back in 36 months time, already pre-conditioned to pay $xxxx a month.
Mad Mike
Well-known member
Cards are usually locked by credit card companies after 60 days of delinquency, or when they reach 10% overlimit. You can request your card be blocked at the limit, this is a good idea as it limits the chance of being stung with an 'overlimit fee' of between $29 and $50.
The smartest thing one can do if they need to carry a balance is to switch their points/cashback card to a low interest credit card. Banks will switch you over the phone, you just need to know what to ask for. Low rate Mastercards are about 9%, low rate VISA about 13%.
Soon enough, that 9% rate will be looking pretty good for unsecured debt.
Got a replacement amex after last one got compromised and it is 22% preferred rate but if you are late twice in 12 months you get bumped to 27%.
Mad Mike
Well-known member
Leases are great for dealerships for a number of reason. As mentioned, you get the consumer back in 3-5 years, typically qualified and excited about a new car. Dealers also like them because most consumers don't understand leases so it's easy to upsell lucrative extended warranties and dealer options. Finally, the dealer gets first look at your return vehicle. In many cases the cars come back pristine or with low mileage and are worth more than the buyout -- dealer takes that.
Sadly Ive seen a few dealers bilking customers (particularly seniors) out of their leased cars early because they know consumers don't understand when they have equity in their leases. I know at least one guy who was taken for $10K by a Ford dealership, the worst attempt Ive seen is a Mazda dealer in the west end -- they tried bilk a customer out of $25K.
The other big gotcha on leases is a big downpayment to buy down the monthly payment. If the car gets wrecked on day one, insurance pays out the car so the dealer is whole but your downpayment has evaporated.
AllistonGT
Well-known member
Look after the dimes and the dollars will take care of themselves.
Sometimes it makes sense to use these financing plans to spread out payments on something that might not be lump-sum affordable for people IF they are offering "no interest" promotions etc.
We've done this about 5 times in the last 5 years with my Lowes Card - we put new carpet through the whole house (and some pretty expensive super premium stuff) and financed it on the card for 12 months. I just setup the bank account to auto-pay an amount every month that divided it by 12, and at the end it was paid off with zero interest.
Bought our new 86' 4K TV last November on the same deal - zero interest if paid in 12 months. Just made the last payment on it last week.
Now, where they get you with these plans is that interest IS accrung, but it's waived if you pay it within the promotional period. I'm pretty confident there's a lot of people who don't and then get whacked with not only the accrued interest from the last 12 months, but are now stuck paying 25-33% interest or whatever on the balance.
But done wisely, it has benefits.
On the topic of credit cards, one of my Amex cards has a high 5 figures limit. I think it has about $1K on it right now (from our cruise). I couldn't possibly imagine ever charging something that would run it to it's maximum, or really, even a 20% range of that. But they just keep raising it every 5-6 months and it looks nice on our credit history. There are certainly people out there without the willpower to not go out and buy that shiny bauble or whatever just to satisfy an itch without much thought about the long term consequences however, so I'm surprised that some credit card companies will let things "creep" this way.
One big caution on deferred payments.
One furniture chain offered "Don't pay for a year" or in some cases even longer. The catch was the deal was based on the purchase date not the delivery date. If your furniture was ordered on Feb 1 and delivered April 1 the due date is based on February 1. Some people thnk the due date is based on the April 1 delivery date. If you miss the payment day the accumulated interest from day one is dumped on you. Needless to say the interest rate isn't customer friendly. Some people ended up paying almost double.
Mad Mike
Well-known member
I use HomeDepot's free financing deal from time to time, usually for a big buy. The last one was a fridge/range combo they had a killer deal on both so we thumped them on the no interest plan for 24mos. The balance needs had to be paid in full by the 24th month or they apply all accrued interest (29%APR, or about $1650) Could be a shocker to see a the interest charge pop up on your credit card.
When I do these sorts of deals I setup an automatic payment directly from our bank account that pays off 1/12'th or 1/24'th every month.
And then I make a calendar entry that starts popping up every day repeatedly about 2 weeks before the final deadline.
Here's a sliver of my calendar right now LOL. This is the card I just paid off from the bigscreen.
We bought a bunch of furniture once on the pay nothing for 12months plan. The furniture store then sells the contract to a finance company . It’s good business for both of THEM. Now you owe “household finance “ xxx thousands and they don’t make it easy to pay them on time .
Always read the fine print ……
Sent from my iPhone using GTAMotorcycle.com
Always read the fine print ……
Sent from my iPhone using GTAMotorcycle.com
Last time I shopped at a "no money miracle" store and the like there was a 0% finance for a year price and a pay now price (some of the time you have to ask for it). The difference was more than I would pay leaving it on my LOC for a year, to finance it myself.
How do you figure, unless you are talking about losing by paying cash upfront?
If someone bought $2000 of whatever at truly 0%, took $2000 cash and put it in a GIC at 3% for the year and then handed over the $2000 the day it was due... they are left with $60 cash in their pocket, interest for the year on the $2000.
If that same person paid cash up front, they get nothing. The retailer gets any interest... all TVM.
NOW, if the retailer charged a $60 processing fee up front or a higher price up front to get "0%" (basically they are front loading financing costs in other fees) then cash up front may be better. This part is common IME and in many cases the upfront difference in price is > actual interest assuming a LOC. But way lower than even a "low" interest credit card.
Then there is want vs need. But to be fair this is a motorcycle forum so want vs need is mostly a moot point....
A part of that issue is people not actually reading their contract. So while yes the dates are different...if you read the contract you're able to keep the 0%.
Technically at 0% the money is in your account until you pay it down. 0% on cars is already baked into the price, but I'm sure it's baked in everywhere.
The whole 0% thing assumes the majority of people do not read their contracts, and then will get hit with a large fee.
@Mad Mike Totally forgot about the HD 0% for 12-24 months on large purchases. This will come in very handy when it's time to do the renovation as the bulk of the stuff will be from HD.
Pay down as much as I can on the 0% offer, and then move everything to a HELOC when time for interests starts.
Making a lot of money makes things so much easier, but "keeping up with the Jones'" will torpedo you regardless of how much you make. There's always someone richer that you can compare yourself to:
www.marketwatch.com
www.efinancialcareers-canada.com
Both sides of my family were generally rather poor, and that evolved into a sort of reverse-snobbery. That is to say, rather than looking down at poor people, they tended to sneer at people who displayed ostentatious wealth. It's still a form of judgementalism so it isn't morally superior to regular snobbery, but growing up with that sort of culture lays a good base for financial restraint as your earning power increases. Things look a lot different when driving a Hyundai is seen as a badge of honour instead of a BMW or Mercedes.
More than 1 in 4 workers making $200,000 or more now say they live paycheck to paycheck. So even rich people are struggling to save, and pros offer 3 solutions
Rising prices have left “little purchasing power,” even for the country’s highest earners, pros say.
www.marketwatch.com
When a million isn’t enough: why top bankers are struggling to get by
www.efinancialcareers-canada.com
Both sides of my family were generally rather poor, and that evolved into a sort of reverse-snobbery. That is to say, rather than looking down at poor people, they tended to sneer at people who displayed ostentatious wealth. It's still a form of judgementalism so it isn't morally superior to regular snobbery, but growing up with that sort of culture lays a good base for financial restraint as your earning power increases. Things look a lot different when driving a Hyundai is seen as a badge of honour instead of a BMW or Mercedes.
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