Here is something that might help you out, economically, especially if you're young & just starting

[mtnsnake]

This is my own philosophy I've practiced, and it goes against what most people in this country practice, so I won't be surprised if some of you jump down my throat for suggesting it because most people want everything now.

When my wife and I first started out together over 3 decades ago, we had $200 to our names and each had very modest incomes. At the time, I owned a clunker of a pickup that was virtually worthless, but it ran. My wife had an older car, same thing, but it ran. We wanted a nice car just like our friends had, so we went car shopping and picked out a late model car that we figured we could afford the payments on, based upon our incomes. The salesman figured out the monthly payments on a 4-yr loan, and it sounded good, very affordable. Before we agreed on the deal, we went home that night and figured out how much extra we'd be paying on this car because of the interest on the loan. We were blown away. I looked up at my wife and said, "Instead of paying the full price of the car PLUS a considerable sum of money for interest, why don't you and I just save our money for 4 years and then pay cash for a nice vehicle, and save all that money on interest?" She agreed, and for the next few years we kept our clunkers and put away the same amount of money each month that we would have been paying off a 4 year car loan and put it directly into our accounts and waited until we had enough to pay for all of it.

After only 3 years (and yes we still drove our clunkers during that time), we had put away enough "car payments" into our OWN account to buy a newer vehicle and pay cash for it. A year later we had put away enough to pay cash for a better truck for myself. Then we started the process over, eventually paying cash for new vehicles. In essence what we were doing was paying off an imaginary loan BEFORE we bought. It's called saving, waiting until you actually have the money in your pocket before you buy something...instead of buying something with a loan and paying obscene amounts of interest. We paid no interest and we bought only when we had the cash to do so. People who have little money, as we did at the time, would be so much further ahead to stay away from loans and not buy something until you've saved the same amount of months for it that it would take to pay off a loan you're never gonna take.

If you can just put off having something you want, like a new car, for 4 years (the time it will take to pay off your loan) and save your money for 4 years until you've actually got the money to pay for all of it, you'll be so far ahead of the game that the money you save on interest alone over the years will be staggering. Once you WAIT and pay cash for your vehicle, whether it's a late model or brand new, you'll be able to do it again and again whenever you buy. It just takes waiting through what would have been that first loan period.

We did the same thing with purchasing televisions, major appliances, etc. Instead of taking a loan for anything, we put the monthly payments into our savings and waited until we could pay in full, avoiding ever paying interest on anything. Yes, we lived with some awful stuff the first few years, like a color TV that only had black, white, & marroon for colors, but why should we purchase a new one if we didn't have the money to pay for it in full? I hate to tell you how much interest you'll save over the course of your lives if you don't take loans on anything with the exception of a house, of course. Even with a house, if you live within your means, you can take a 15 yr mortgage so you don't pay up the ass in interest.

For cars, boats, major appliances, or any other luxuries with the exception of a house, don't take loans. Save ahead of time, wait until you have the money, and then just pay the bare price minus all the obscene interest. Just think of how much less stress you'll have, too, not having to think about all those monthly payments or the prospect of losing something, should you default on your payments. In a matter of years, you will be so much ahead of the game that you'll never look back.

Most people don't even know how much they're actually paying for something because all they're concerned about is their monthly payments. I think our country is so fucked up economically because of two words: Loans and Credit.

[NC_Nurse]

1. I agree with one exception: I buy used. I never buy new cars, furniture, or

appliances. I look at Craigslist, Carmax, the local newspaper, etc.
The markup on big ticket items is HUGE and you can often buy something in pristine
or even new condition for WAY less.

Then you have nice stuff, no loans, and money left over. :-)

[mtnsnake]

2. Doesn't matter if you buy used or new, just wait until you have the money to pay cash for it

and don't take any loans. You're going to pay for it regardless, but you can opt to pay more for it now when you don't have the money, or you can put your money away until you have enough for that item and pay much less in the long run. Thanks for your post :)

[Lydia Leftcoast]

3. I wish I had followd this advice earlier in life, and I do now

Credit cards are quicksand.

[mtnsnake]

6. I think credit cards are a curse for so many well intentioned people

They make it way too easy to live above your means, and that gets people in serious trouble.

[dysfunctional press]

4. that's not always possible with appliances...when the frig conks out, you can't wait.

same deal with a washing machine.

and if you keep buying cheap second-hand ones that eventually breakdown, you'll end up spending as much or more than just getting a quality item with a warranty from the get-go.

but i'm 47 and i've never had a car loan- we always buy used, for cash.

[NC_Nurse]

7. Being in a college town probably helped us. People were always moving and selling

appliances that were practically new - for cheap. We just bought a 2 year old washer and dryer for $300. Those should last a good 10-15 more years.

[dysfunctional press]

12. ebay has helped a lot in that regard as well.

it's a great place to get used appliances at good prices.

[uncle ray]

13. yes it is.

remember the whole idea of this plan is to actually have money in the bank, or quickly available. i live cash only, if i cannot afford something with the money i have on hand, i don't buy it. without credit card or car payments, it is quite easy to have enough money in the bank or under the mattress to handle little emergencies like a "major" appliance quitting.

and as the other poster said, used appliances are a good deal. when i bought our current washer and dryer, i got the advice of a good used appliance dealer/repairman. he directed us to 20+ year old Kenmore units checked over for $300 or so for the pair. they work great and have for 5 years now without a problem. they are workhorses that are cheap to fix if i ever need to. stay away from any appliance like this that has a circuit board, soft keys etc. and you will have something that is cheap to maintain and repair.

[dysfunctional press]

16. it's not ALWAYS possible.

when a major and necessary appliance suddenly conks out- there isn't always going to be a quality used one available, and/or the time to shop around to find one. you can often find very good deals on new discontinued or sale items at a retail store as well.

we've got a mix of appliances right now- when the washing machine i bought on ebay conked out, i replaced it with a new, but discontinued one at a very good price at home depot, with no interest or payments for 12 months. the dryer from ebay is still going strong. our refrigerator was a scratch-n-dent, but brand new model that i bought thru a dealer on ebay as well. i had to drive 100 miles round-trip to pick it up myself, but it's one of those french-door units with the freezer on the bottom, and i got it for a third of what it would have cost in the store- and since it's inset, you can't even see the scratches or the small dent. on the side. and it's warranteed.

[TooBigaTent]

5. Yours is the method of responsibility - NOT the Amerikan way. Here, we must have new stuff

every other year. That is what the corps and media tell us and we blindly and dumbly obey.

And that is why we are in the situation we are drowning in today.

If only more of us were like you.

For disclosure - my car is a '95 Neon that was bought with cash. We have always bought our cars that (your) way. The only debt we have is the mortgage on our ONE home.

[mtnsnake]

10. Yup, the banks, media, and corps want us to get so buried in debt

because that's how THEY make their money. They are so worried about themselves, and that's why they want this bailout to occur. They want everyone in the lower and middle classes to continue living above their means and taking loans with obscene amounts of interest for luxuries we can't really afford so they can profit by making so much unnecessary interst off us. In other words, they want to further enable the same old tired process that's killing us right now so they can make a living by sponging money off us that we should be reluctant to give them.

Thanks for your post, btw.

[Romulox]

8. Why should we? These rules don't apply to the best paid people in our economy...

"Success leaves clues". So shouldn't we emulate the raiders on Wall Street, who've bought the US government on Chinese credit?

[we can do it]

9. Don't forget pay off mortgage early - no debt is good

unless you are a bank......even paying a teeny bit extra on principal each month will shave off time.

[mtnsnake]

11. and if possible don't let a bank talk you into a 30 yr mortgage

If you can stick to something like a 15 yr mortgage, not only will you save so many thousands of dollars, but in 15 years it will feel soooo sweet when you get that notice in the mail that you've paid your final mortgage payment on your home. Sticking to a 15 yr mortgage also keeps you living within your means...and in control of your life.

[BreweryYardRat]

14. Depends on the quality of your clunker.

I saw $4400 go down the toilet on the clunker I used to have...in a year. I stopped wasting money on repairs when the transmission crapped out. Sometimes buying new or lightly used is a good idea.

For the most part, though, you're giving good advice. Might I add: PEOPLE, NEVER USE "RENT TO OWN." Talked to a guy who worked in the business -- he said folks wound up paying TEN TIMES the value of some items. TVs, etc...

[mtnsnake]

18. Thanks for adding that about "Rent to own". Interesting!

But it makes sense that people would pay so much more if all they're concerned about is what their monthly payment is. Those same people probably don't ever find out what they've ended up spending on something. All they're concerned about is how "affordable" their monthly payment is. Yikes.

[Jeanette in FL]

15. Remember Lay-away plans

God, how old am I?

In the past this is how we used to buy things. You would find a product that you needed or wanted and it would be put away in the store. Every week you would pay a portion of the price until you paid it in full and then you would get your merchandise. No interest.

Now the stores immediately want you to sign up for credit.

[Lydia Leftcoast]

17. I used lay-away (or "lay-by," as we said in Minneapolis) as recently as

the late 1970s. I was an impoverished grad student, working part time in the library, who needed a new winter coat. In September, I went to Macy's in New Haven, picked out my coat, and put it on layaway. By the time the weather turned wintery, I had a paid-for coat.