Champ Kind Posted December 29, 2014 Posted December 29, 2014 (edited) Agreed with everything you said but this. The cash that you are paying for that vehicle with (a strictly depreciating asset) you cold be using to invest in something, anything really that appreciates. Even if that something (bonds, CDs etc) does not beat inflation it is a better use of your cash than an asset that strictly depreciates. I don't consider a vehicle an "asset". It's just a mode of transportation. I don't expect anything I own for that purpose at this point in my life to go up in value. Are you saying that financing makes it any better? In that situation, I'm continuing to pay for something that is losing value *as* I'm paying for it, interest or not. My assertion that it's not "mine" until I no longer owe anything on it still makes sense to me. Besides that, as far as investing in anything else that appreciates, we have a set percentage that we put away for retirement. We've also set realistic expectations as to what those contributions will look like at various phases of life starting at age 55 based on some (very) conservative rates of return. I'm not worried that paying cash for a good deal on a car is negatively affecting our portfolio, or even our ability to plan a vacation in the short term. Edited December 29, 2014 by Champ Kind
HossHarris Posted December 30, 2014 Posted December 30, 2014 You pay 15k cash for a vehicle on day zero. I take out a 60 month, 0% loan. I plop that same 15k cash in an interest bearing account and withdraw every month to make my loan payment. In 5 years, we both have a paid in full, used vehicle. I have made money. You have not.
Champ Kind Posted December 30, 2014 Posted December 30, 2014 You pay 15k cash for a vehicle on day zero. I take out a 60 month, 0% loan. I plop that same 15k cash in an interest bearing account and withdraw every month to make my loan payment. In 5 years, we both have a paid in full, used vehicle. I have made money. You have not. If you're earning enough interest to fund a car loan, are you not also paying tax on the earnings?
HossHarris Posted December 30, 2014 Posted December 30, 2014 (edited) Read it again. I'm not "earning enough interest to fund a car loan" We both start with the same 15k lump of cash. We both pay zero interest/financing fees. I have interest income (that I'm happy to pay taxes on). You do not. Yes, I'm paying more tax than you .... But I'm paying tax on income that you don't have. I'm still way ahead in the end. It's definitely anti-ramsey. But it's not hard to understand. Edited December 30, 2014 by HossHarris
pcola Posted December 30, 2014 Posted December 30, 2014 You pay 15k cash for a vehicle on day zero. I take out a 60 month, 0% loan. I plop that same 15k cash in an interest bearing account and withdraw every month to make my loan payment. In 5 years, we both have a paid in full, used vehicle. I have made money. You have not. Who's giving 0% loans on used cars?
Warrior Posted December 31, 2014 Posted December 31, 2014 You pay 15k cash for a vehicle on day zero. I take out a 60 month, 0% loan. I plop that same 15k cash in an interest bearing account and withdraw every month to make my loan payment. In 5 years, we both have a paid in full, used vehicle. I have made money. You have not. Math doesn't lie. You are in fact correct. However, what is USAA paying on money market accounts right now? 0.69 percent? On 20-30k over 5 years were talking about how much money in real dollars? I'm too lazy (and drunk) to do the math right now, but I've done it before and it just wasn't worth the hassle to not pay cash and be done with the car buying transaction. But if it's worth your time, then please enjoy the spoils.
sky_king Posted December 31, 2014 Posted December 31, 2014 With a 0%, 5-year, $25,000 loan, you save about $1,800-$2,000 over the life of the loan if you figure in inflation (~3%). That's no small chunk of change. With low interest rates and high inflation, it almost doesn't make sense to pay it off quickly. I might as well use Year 2020 dollars which are worth less than Year 2014 Dollars.
Champ Kind Posted December 31, 2014 Posted December 31, 2014 An extra $400 a year? No thanks, I'll just keep paying cash and avoid the hassle. I think we'll be fine.
ARIs 'R' Us Posted January 1, 2015 Posted January 1, 2015 Another anti-Ramsey here, although I wish like hell my in-laws that live paycheck to paycheck and are paying off several small purchases (TV, fridge, 2 cars, motorcycle) would listen to him. I've got the Hilton VISA. My wife and I travel a lot, and in the last three years I've stayed in free rooms in NYC, Amsterdam, Budapest, Nashville, Berlin, DC, Cologne, London, Dublin and a few others I can't remember. I put everything on it and pay it off each month. With technology these days, it's all automatic, I don't even have to look at a bill (just browse what I bought every few weeks or so to prevent wife or fraud buffoonery). Zero time, and what is essentially a free timeshare in my pocket. I also double the warranty of anything I buy, and get free rental insurance when I travel. Saying that cash is simpler is one thing, but arguing that it's somehow better than using credit responsibly doesn't add up.
Pajaro Posted January 2, 2015 Posted January 2, 2015 I make $400 to $500 per month on credit card cash back. I have the "old" Amex blue card that gives 5% cash back on groceries (including the Commissary). I buy about $1000 per week of Visa gift cards at my local grocery store, then use the gift cards to buy money orders at Wal-Mart. I deposit the money orders in my bank, pay Amex, and wait for the cash back to arrive. I also buy all non-groceries exclusively in Visa gift cards. That gives me about 3.8% cash back on things that aren't groceries. It seems pretty elaborate, but I have it down to a process that fits with my daily life.
sky_king Posted January 2, 2015 Posted January 2, 2015 Aren't there fees associated with Visa Gift Cards and Money Orders? How do they eat into the cash back? I thought about this as well, but there's always an activation fee with the Visa Cards.
nunya Posted January 2, 2015 Posted January 2, 2015 Bravo... only problem is that Amex closed that loophole now by limiting cash back to the first $6K in groceries.
Pajaro Posted January 3, 2015 Posted January 3, 2015 The loophole is still open, but hard to find. The "old" Amex Blue still exists: https://www.flyertalk.com/forum/manufactured-spending/1535970-old-amex-blue.html It gives unlimited 5% cash back at grocery stores, gas stations, and major pharmacies. There are reports that Amex will shut you down after spending $50K, but I'm still going strong past that for my anniversary year. As far as fees, I pay $5.95 to activate a $500 Visa gift card. Walmart charges $.70 for a $1000 money order. So, for $1000 of gift cards at a grocery store, I'm making $38 in profit after fees. It's more if I need gift cards for Amazon, Home Depot, etc that don't charge activation fees.
waveshaper Posted January 3, 2015 Posted January 3, 2015 My credit card rewards program sucks. The only reward I get is a free gift whenever I shop at the dollar shave club.
Mark1 Posted January 3, 2015 Posted January 3, 2015 I make $400 to $500 per month on credit card cash back. I have the "old" Amex blue card that gives 5% cash back on groceries (including the Commissary). I buy about $1000 per week of Visa gift cards at my local grocery store, then use the gift cards to buy money orders at Wal-Mart. I deposit the money orders in my bank, pay Amex, and wait for the cash back to arrive. I also buy all non-groceries exclusively in Visa gift cards. That gives me about 3.8% cash back on things that aren't groceries. It seems pretty elaborate, but I have it down to a process that fits with my daily life. So you're spending between 10 and 15k per month? I've got a better 'free cash' plan. Ditch the cash back rewards, spend between 9 and 14k per month, pocket the $500 difference between the two plans, and spend your free time on your boat instead of in the Walmart money order line (that's a scary place to be).
Gravedigger Posted January 3, 2015 Posted January 3, 2015 The other option is buying cash re-load cards and transferring that money to an Amex Bluebird card (which is free). You only have to pay the fee for the re-load card ($3.50-$7), there is no fee to transfer the funds to your Bluebird, and you can load it online, and pay your credit card bill with it. Why? Because Wal-Mart sucks.
BFM this Posted January 4, 2015 Posted January 4, 2015 I make $400 to $500 per month on credit card cash back. I have the "old" Amex blue card that gives 5% cash back on groceries (including the Commissary). I buy about $1000 per week of Visa gift cards at my local grocery store, then use the gift cards to buy money orders at Wal-Mart. I deposit the money orders in my bank, pay Amex, and wait for the cash back to arrive. I also buy all non-groceries exclusively in Visa gift cards. That gives me about 3.8% cash back on things that aren't groceries. It seems pretty elaborate, but I have it down to a process that fits with my daily life. Did we just get spammed? 1
Homestar Posted January 4, 2015 Posted January 4, 2015 Someone clicked on that link about "This One Weird Trick"...
sky_king Posted January 4, 2015 Posted January 4, 2015 Someone clicked on that link about "This One Weird Trick"... You won't believe what happened next. It will restore your faith in humanity, Especially number 8. 1
sky_king Posted January 4, 2015 Posted January 4, 2015 Because my family already maxes out the $6k limit, I'd make $17.40 per $1k in gift cards I scam. That means I'd have to buy 115 gift cards to make $1000... a 1.7% ROI for quite a few trips to HEB/Walmart. Hell, I'd have a higher chance of getting robbed walking into Walmart and losing the giftcards in those weekly trips. I'll stick to eating leftovers.
Guest Posted January 6, 2015 Posted January 6, 2015 Since learning about the American Express SCRA benefits I've signed up for several cards. It's also worth noting that Capital One offers waived fees and a max APR of 4% as well. USAA will cap your APRs at 4% for one year every time you pcs or deploy. Here are the cards I have and what I use them for: Amex Platinum- I use this card once a year for the $200 airline credit. It also got me free gold status with starwood which is my preferred hotel chain since they are pet friendly. I haven't had the occasion to take advantage of the lounge access yet, but intend to in the future. Amex blue preferred-my card for gas and groceries. 3 and 6% back respectively. Starwood preferred guest amex- my card for everything else. Earns 1 starpoint per dollar, which I typically try to use on Starwood tier 2 or 3 hotels to maximize the relative value of the points. Capital One Venture- my card for places that don't take Amex. 2 points per dollar spent, redeemable for travel Delta platinum Amex- free companion pass every year. Free checked bag for the wife. I mostly got the card for the sign up bonus. I previously had a gold delta Amex business card and Amex gold, which yielded good sign up bonuses, but have cancelled them due to redundancy. In all in sign up bonuses I've gotten 75k Amex rewards points, 100k delta sky miles, 40k capital one venture points, 30k Starwood points and $150 statement credit. Also I've gotten $600 in united gift cards for free from the platinum. If you're responsible, you can get a lot by signing up for these cards. Sent from my iPhone using Tapatalk
scoobs Posted February 2, 2015 Posted February 2, 2015 Anybody use the Quicksilver card? 1.5% back on all purchases and 0 fees.
Archa3opt3ryx Posted February 4, 2015 Posted February 4, 2015 What do most folks do when they're stationed OCONUS? Just get a US visa card tied to a US bank account that has no foreign transaction fees? Or do you get a card in the local currency and a local bank account? I've heard that can do bad things for your security clearance though?
WHAP Posted February 4, 2015 Posted February 4, 2015 In the UK I got a Barclays account because most utilities require direct debit and you must have a pound account. Foreign financial interests must be reported on your security clearance investigation but a five minute explanation during my interview was all it took and the investigator moved on as if it was no big deal.
Herk Driver Posted February 4, 2015 Posted February 4, 2015 I second the security clearance info above. It took a short explanation about why I had an account at a foreign bank. Had an account in Germany...better exchange rate than on base and used it to pay all my local bills like rent and utilities.
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