Finance folks please chime in.

[KidVermicious]

You should go back to selling meth then.

I think my point is, if you have the money in hand to be paying cash for a succession of nice vehicles, then absolutely pay cash. It's not about "leveraging credit" or "is the loan interest rate lower than what I can make on the market". IMO debt is an evil to be entered into only when you have to, not a tool to use to make more money so you can take on more debt.

Money is fake. Other entities' financial interest in your things is a threat. Own your junk outright and it's not near as subject to going away as bits in a bank or a truck that you don't hold title on. If you have the cash to spare, absolutely pay off your debts and tell the bank to go pound sand.

 

[bofa]

You are right, credit and debt are not the same thing which I came across as saying. But let me be clear: I have zero problem with someone having a credit card and paying off the balance every month, though I don't necessarily recommend it. My objection is that most people lack the discipline to do that every month without getting into trouble at some point. If you use a credit card with little or no annual fee and never maintain a balance, that's just fine.

You are not factoring risk in this scenario. Yes, there is plenty of potential to invest the cash and come out way ahead. But you could easily take a big hit going the other way. Again, I understand that in many given scenarios you could make money this way. But not having to pay interest on a loan is guaranteed money that stays in your pocket.

Lol, I know exactly how you feel about Orman. That woman's face gives me the creeps.

You are correct that Dave Ramsey does not teach you how to build and maximize credit. Rather, he teaches you how to live without credit. He teaches you that living in a world without mortgages and car payments is not a fantasy, but a reality that tons of people are achieving everyday. Mortgages especially don't have to be a part of your life if you don't want it to be. It is simply about living a life within your financial means, and how you can become wealthy over time doing it.

Basically, Dave Ramsey is trying to dispel the lie that you need to work hard to get a good credit rating to be financially successful. Again, I personally hate debt, so I will always say to pay cash for everything. With the exception of a home, if you cannot pay cash for something, I believe that means you cannot afford it.

I usually end up with a couple grand a year in rewards points. That's not to say I never pay cash - I do when there are cash discounts. But for the most part, if I can get 1-10% back for purchases I would make anyway, I will.

There are low risk investments to park money. In fact, if you keep up with different promos, it's fairly easy to get more than the loan rate in returns. Hell, I joined some small credit union a couple of years ago and was getting 4% on the checking balance and 2% on the savings balance in the first year. That's a relatively optimistic example, but there are others out there too. Also, most CDs can still outpace 1%. These are super low risk.

In any case, I don't think these scenarios apply to Nathan, at least yet.

In most cases, if you are sitting on cash, you are missing out on free money.

Ramsey means well, but still doesn't empower people to make the most out of their financial situation. And the reality of the current market is leverage. Don't be afraid of credit. Use it to your advantage.

I would not confuse "stay out of debt" with never have any debt.

I think financing a vehicle is fine if the interest is low. My car loan is at 0.9% whats the downside of that loan?

Agree

 

[MtnT4R]

Just a quick thought: most auto loans I have had over the years are covered by an early payment penalty that charges you a preset amount of interest if you pay your loan off within the first year. If you do decide to pay it off within one year, it would definitely be worth a call to the lender to make sure you wont suffer this penalty.

Also, as far as paying vehicles off goes, its always worth seeing if you could have invested that 15k at a higher interest rate than your auto loan is charging. If you are paying 4% on your car, and 4ish% on a mortgage, but your investments are averaging more than that, it might make sense to hold on to your extra cash and make those interest rates work a little more in your favor while keeping more cash value on hand in case SHTF. Not necessarily advocating this plan of action right now, but its definitely something to be cognizant of moving forward. You should still play conservatively with your cash, but there are opportunities occasionally to play around with different accounts to negate interest paid on one item with the appreciation of other assets...

 

[TOY2G]

Just a quick thought: most auto loans I have had over the years are covered by an early payment penalty that charges you a preset amount of interest if you pay your loan off within the first year. If you do decide to pay it off within one year, it would definitely be worth a call to the lender to make sure you wont suffer this penalty.

Also, as far as paying vehicles off goes, its always worth seeing if you could have invested that 15k at a higher interest rate than your auto loan is charging. If you are paying 4% on your car, and 4ish% on a mortgage, but your investments are averaging more than that, it might make sense to hold on to your extra cash and make those interest rates work a little more in your favor while keeping more cash value on hand in case SHTF. Not necessarily advocating this plan of action right now, but its definitely something to be cognizant of moving forward.

Good advise. But alas, because of my credit score i am paying 9.6% on this loan, making finding a comparable offset impossible.

I just checked payoff today and it says $394.14.... So i am just going to pay it off and then go get raped when i buy a house.

 

[MtnT4R]

Good advise. But alas, because of my credit score i am paying 9.6% on this loan, making finding a comparable offset impossible.

I just checked payoff today and it says $394.14.... So i am just going to pay it off and then go get raped when i buy a house.

Sorry, I didn't read the second page before I posted so I basically repeated earlier posts.

The good news is it sounds like you've taken all the big steps to improving your credit and building your businesses, so things are definitely looking up. Hope it all works out well for ya