in regards to interest and financing in general, you may be forgetting one crucial thing... compounding interest. 1st one would need to set the stage of financial independence, I strongly advocate not buying any thing you cannot pay cash for, however actually paying cash for it, most of the time is foolish. this is actually fact not opinion, at the end of the day it's a free country and you can do what you want but math is math is math. for example let's say you have $40,000.00 and you need a vehicle, my interest rate on my 4Runner purchased in Nov 2017 is 2.49% for the sake of easy math let's say my loan if for $30,000.00 and I put 10k down. even if I didn't earn what an aggressive large cap equity position would yield, even if I earned LESS than 2.49% you'd still end up making more than you will pay in interest. do the math $30,000.00 at say only 2.00% COMPOUND interest over heck make it 5 or even 6 years you'll make more than you'll pay in interest. Oh one more thing, you also only pay your simple interest on the remaining balance of your loan, so the amount you pay in interest goes down every year while the amount you are earning interest goes up. I could then go into opportunity cost and illustrate that at an interest rate as low as 2.49% not financing could actually be a $10,000.00 mistake, but that would literally be pages.
where people get into trouble is when they finance things and don't have the cash to back it up having the money to pay off your house is smart, actually doing it isn't, having the money to pay cash for your car is smart, actually doing it isn't. the same holds true for overpaying your mortgage, and once again this is provable, not opinion, you are far better off investing the extra $400.00 a month or whatever the number is than paying down your mortgage faster. My personal financial positon is that I could pay off all of my debt, which is a mortgage and two car loans tomorrow (it's Sunday the bank is closed) most importantly will all non IRA dollars, but I know I am realizing a better return on my money in the market and even the year's income I have stashed in cash equivalents is earning more than 2.49%. You'll notice I only have two car loans but 4 cars, I also believe that you don't finance your toys, no matter what the interest rate, if you want a boat, snowmobile etc. pay cash, not because the math is different but more as an exercise in self control. Everyone has a threshold like that where personal comfort overrules the math your left brain is doing. For many paying cash for everything is an act in conservative self control... they are actually losing quite a bit of money over their lifetime, but it makes them FEEL better, no amount of logic can really overcome that. It's far, far better than the alternative of borrowing money you personally cannot cover. the way I play it is I make sure if all my debts were called on the same day I could write a check, sadly most of the U.S. has something like $50,000.00 in uncovered debt, which is super dangerous.
