[stimpy]

Car, Credit Card(s), and Student Loans are paid off.

I don't foresee ever paying off my house as the interest rate on is low, tax breaks on the interest, and Obama was kind enough to allow me to walk away from it free and clear should I ever need too.

[Mr Tonka]

Originally Posted by P1et

Having a credit card and enjoying the perks that come along with having one is a different topic than buying your houses and cars cash. If you pay off your credit card each month, you pay 0% interest.

Now back to owning your house free and clear. Suppose you have $500K cash in your bank account. Would buying a $400K house cash make sense? Probably not.

Now imagine if you have $5M in the bank. Why wouldn't you pay cash for a $500K house? You still have plenty of money left to invest, use for retirement, pay for your kids to college, etc.

Perhaps it's because I'm European and was brought up that you should never buy something unless you can pay cash for it (with the exception of a house perhaps), but I don't prescribe to this whole "financing everything until you're drowning" crap.

Could I buy a new Porsche Panamera Turbo and make payments on it? Sure. But would I rather buy a used X5 and pay cash? All day.

You don't have to drown in debt to finance everything. that's why some people in this thread are talking about the correct use of their credit.

Another forum member once pointed out in another thread that financing a $100k car while having $1m in the bank and at the same time, taking $100k out of the bank and putting it in the market is not wise. Some have correctly pointed out there is no guarantee of return.

But most of us in this forum don't have a liquid $1m sitting in the bank burning a hole in our pockets. Most of us already have our saved money working for us. In this instance, it's not wise to take $100k of return generating money and use it to buy a car. Nkc is correct about it depending on your specific circumstances.

Originally Posted by Nkc

It all depends on what stage in life you are currently in. If you're young and have little to no assets, yeah go ahead and leverage the hell out of yourself and try to make something out of it. Because you have nothing to lose and you must build from somewhere. There's nothing wrong about CCs and buying with credit as long as you're able to utilize the grace period and pay before it ends. But using CC as your best argument is kind of weak when we're here talking about paying in cash for cars and houses.

I'm a cash person because it helps a lot when I consider purchasing something. Especially with all the superficial shit we have in the market now. If I can't buy it in cash, I can't afford it. Really simple stuff and I live by it. So far so good, 2 houses in HK, 4 cars, no debt, self made. Some people may get great returns on financial investments but you know damn well that a lot don't and may even lose all their money. Your great returns last year do not guarantee a great return for the following years and that's the kicker. I'm as risky as it gets when it comes to stocks and my business because that's what it takes for me to be successful. On a personal level, I'm super conservative. I buy with cash because I can and if and when shit hits the fan, everything that I need is paid for in full.

For people who are successful in monetary terms, you really think a buying a house or cars with cash will affect their income and ROI?

If i can afford to pay cash for it i'll find means to use someone else's money to pay for it. Even if it only buys me 30 days or so by using Amex. As mentioned before, if i used my Amex, i get points for that purchase and i get to make (albeit a very small amount) a little interest on the money until i have to pay that amex bill. So that $1000 purchase after the monitory value of my points and the small interests only cost me $973.

It's funny because most people scoff at me when i tell them this. But figuring what i purchase on Amex over the year that amounts to nearly $1000 a year in points and interest gained. Even then people say it's peanuts. Maybe, but i didn't have to do jack shit for those peanuts. Not to mention that i also have other card member privileges due to purchasing via Amex.

To your point of cars and homes. Not everyone's investments are in the stock market.

A good for instance.... I could have sold one of my rentals and cleared enough money to buy my M3 in cash. But what i would have done is trade my appreciating asset for a depreciating asset. What sense does that make? I financed my car with 0 down. I paid a total of about $7k in interest over the last five years. In that same time that ONE rental, worth just a little more than the car itself, generated more revenue than the purchase price of the car. Of that $77,700 in revenue, $19,250 made up all the expenses involved with owning that rental, leaving us with $58,450. Why would i forfeit $58k ($51k if you subtract the vehicle interest) just so i could buy my M3 cash? As it sits, i laid out 0 cash for the car, paid very little in interest, and the car is still worth about $6k more than what i currently owe.

Don't know what you mean by shit hitting the fan, but that term to me means collapse of our society. If that happens, i hope i'm leveraged to the hilt! haha

The only reason i want my personal residence paid off is to better my financial statement in order to get more borrowing power to buy more rentals.

[Whostheboss]

Originally Posted by NemesisX

I thought this was an old wives' tale. Dubious reputation notwithstanding, "creditcardforum.com" has this to say about utility bills and building credit -



Anyone knowledgeable about this field please feel free to chime in. This isn't my area of expertise.

To be honest, im not 100% sure if it builds credit. I just know that i've been paying it since age 18 and when my credit was checked it was 790 ( with which ever of the bureaus that gives you the highest score)

Originally Posted by gatorfast

How do you live without a credit card? Are you constantly going to ATM's to reload? Dont you want the convenience of not being tied to physical bills when getting gas, groceries, buying something online, etc? Have you ever been on an airplane?

I have a Debit/Bank card, which can be used as a Credit card, but i've never spent money that i dont have. If my checking acct balance is $100.00 then the most i can spent is $100.00. I dont go over my balance irresponsibly.

[zx10guy]

Originally Posted by gatorfast

I understand the logic of using cash to earn a higher rate of return - but for most people they would simply rather not have the debt. Also, most people dont have the time/ability/access to actively manage an investment which guarantees a return higher than their debt.

Think about it this way...lets say you mortgage your house since rates are low and invest that money in something that pays you more than the interest on your mortgage. Good decision right? Now lets say 2008 happens again and you lose your investment (or a significant portion) and owe tons of money on a house that is worth much less. Didn't turn out so great at that point.

I don't have much time either to sit and actively manage my investments. That's why I use a financial management company. Even with their fees taken out, I still made a 24% gain.

I don't know of anyone who is anywhere near sane who would take out a new mortgage to pull out money from their primary residence to put into the stock market. This is not what I said in my post. I said, I would rather keep my mortgage with it's low interest rate and take the extra money I would have used to pay it down faster to use to invest in the market.

[zx10guy]

Originally Posted by Mr Tonka

You don't have to drown in debt to finance everything. that's why some people in this thread are talking about the correct use of their credit.

Another forum member once pointed out in another thread that financing a $100k car while having $1m in the bank and at the same time, taking $100k out of the bank and putting it in the market is not wise. Some have correctly pointed out there is no guarantee of return.

But most of us in this forum don't have a liquid $1m sitting in the bank burning a hole in our pockets. Most of us already have our saved money working for us. In this instance, it's not wise to take $100k of return generating money and use it to buy a car. Nkc is correct about it depending on your specific circumstances.



If i can afford to pay cash for it i'll find means to use someone else's money to pay for it. Even if it only buys me 30 days or so by using Amex. As mentioned before, if i used my Amex, i get points for that purchase and i get to make (albeit a very small amount) a little interest on the money until i have to pay that amex bill. So that $1000 purchase after the monitory value of my points and the small interests only cost me $973.

It's funny because most people scoff at me when i tell them this. But figuring what i purchase on Amex over the year that amounts to nearly $1000 a year in points and interest gained. Even then people say it's peanuts. Maybe, but i didn't have to do jack shit for those peanuts. Not to mention that i also have other card member privileges due to purchasing via Amex.

To your point of cars and homes. Not everyone's investments are in the stock market.

A good for instance.... I could have sold one of my rentals and cleared enough money to buy my M3 in cash. But what i would have done is trade my appreciating asset for a depreciating asset. What sense does that make? I financed my car with 0 down. I paid a total of about $7k in interest over the last five years. In that same time that ONE rental, worth just a little more than the car itself, generated more revenue than the purchase price of the car. Of that $77,700 in revenue, $19,250 made up all the expenses involved with owning that rental, leaving us with $58,450. Why would i forfeit $58k ($51k if you subtract the vehicle interest) just so i could buy my M3 cash? As it sits, i laid out 0 cash for the car, paid very little in interest, and the car is still worth about $6k more than what i currently owe.

Don't know what you mean by shit hitting the fan, but that term to me means collapse of our society. If that happens, i hope i'm leveraged to the hilt! haha

The only reason i want my personal residence paid off is to better my financial statement in order to get more borrowing power to buy more rentals.

I was going to respond to Nkc, but you summed up everything perfectly.

[zx10guy]

Originally Posted by P1et

Having a credit card and enjoying the perks that come along with having one is a different topic than buying your houses and cars cash. If you pay off your credit card each month, you pay 0% interest.

Now back to owning your house free and clear. Suppose you have $500K cash in your bank account. Would buying a $400K house cash make sense? Probably not.

Now imagine if you have $5M in the bank. Why wouldn't you pay cash for a $500K house? You still have plenty of money left to invest, use for retirement, pay for your kids to college, etc.

Perhaps it's because I'm European and was brought up that you should never buy something unless you can pay cash for it (with the exception of a house perhaps), but I don't prescribe to this whole "financing everything until you're drowning" crap.

Could I buy a new Porsche Panamera Turbo and make payments on it? Sure. But would I rather buy a used X5 and pay cash? All day.

I never said to leverage yourself to your eyeballs in debt. I said people who really understand how to leverage other people's money through credit or loans know how to use that money to make them more money.

[Razzy]

No debt at all. Not me nor anyone in my family. Very fortunate and glad we made the right choices to keep it that way.

Could have leveraged what we have tenfold but I live with the philosophy that "don't buy anything you can't afford". Of course that is a loose term but you get my point.

[Nkc]

Originally Posted by Mr Tonka

Don't know what you mean by shit hitting the fan, but that term to me means collapse of our society. If that happens, i hope i'm leveraged to the hilt! haha

Sorry I should have been more clear. By "shit hitting the fan" I meant things like being jobless, losing the business, losing on investments etc. Also situations like poor economy, high borrowing rates, and banks calling on their debts.

[Malibu1]

I don't trust anyone with my money except myself. I also do not listen to BMW car forums for any advice on finances.

[bosstones]

Originally Posted by jasonX

Admittedly I know little when it comes to the Real Estate market. Could you post or even PM me information about such a program. My Fico scores are in the high 700s and I do have about 10% saved with absolutely 0 debt.

I don't think most people are aware of new or changes to existing programs (myself included). When the market tanked, I was one of the many that had done things right in getting my residence but was stuck dealing with the fallout of the stupidity of others (lenders and homeowners). Luckily, I have a friend, whose is also BMW enthusiast, that is in the mortgage business so he kept me apprised of things so that I was able to refi to get a better rate. I can send you his info if you want. Any lender/broker worth their salt should be able to help you out. Plus, like most things, you should always shop around when looking for a mortgage.

Something I always stress to people I know is to know their actual debt going in and what they can really afford. Know your true outgoing cash flow each month and know how much you want to be able to save. There are still lenders that push things that they shouldn't.