What is up with compulsive financers?

Discussion in 'Archived Threads 2001-2004' started by Josh Lowe, Aug 24, 2002.

  1. Josh Lowe

    Josh Lowe Screenwriter

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    Been reading threads on various forums based around various interests of mine and I notice more and more posts from people constantly bragging about their huge new "X" item purchase, and almost inevitably it's financed or put on a credit card.

    Can I just stop a moment and ask "What the hell?"

    Is a new toy worth driving yourself into several thousand dollars of debt and a monthly payment monkey on your back, honestly?

    I don't get it.

    I can understand mortgages. Real estate -gains- value, it's an investment. Unless something very bad happens, it's almost a certainty that when you pay your note off your property will be worth significantly more than what you paid for it.. even after you add in interest to the cost.

    I can understand financing a car (within reason). Not everyone has the cash for or is willing to commit the cash on an outright purchase of a vehicle. But like I said - within reason. I know more than a couple of numbskulls who make $30k a year and are sporting $700 a month car payments. They live paycheck to paycheck (or on their credit cards) because between their rent and their enormous car payments, they're only left with barely enough money to cover expenses (maybe). But they're out to be cool in their $45k cars that they "got a great deal on" at 0% financing or whatever the latest scam is..

    It just amuses me. I read a post somewhere from a guy talking about how he just dropped $3000 on a new TV. He was originally going to get a much less expensive model but his SO urged him to spend more on the "nice" one. The punchline - financed. LOL. Yeah, drive yourself into twice as deep a hole PLUS interest on an item that depreciates like -no- other. Seriously, there aren't many things that take a bigger depreciation hit than consumer electronics.

    I wonder how that guy will feel in 2 years when he's still upside down on his TV payment but it's now falling behind on the latest doodads and features.. and it's worth about half of what he owes, if that. But not to worry! Mr. Credit Man will be there with a warm smile and a handful of cash at the ready to help his upgrade dreams come true! Maybe there'll be a little left over for that new guitar he's been eyeing, too. After all, you only live once.
     
  2. Carl Johnson

    Carl Johnson Cinematographer

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    The only time I use credit on home theater or computer gear is if I get a deal like six months no interest financing where I know that I'll easily be able to pay off the balance in time. I took the middle ground when it came time to buying a vehicle and a home, I spend just under 50% of my income on those. That leaves me enough in petty cash to spend on big boys toys without having to break a sweat. Being a bachelor is cool[​IMG]
     
  3. BrianB

    BrianB Producer

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    Josh, I know where you're coming from. I've had the exact same discussions with my wife about "keeping up with the Joneses".
     
  4. Josh Lowe

    Josh Lowe Screenwriter

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    People characterize the 1980s as being the decade of greed. But I'll say this - at least that greed was based around real wealth. The 90s and early 2k's seem to be built around theoretical wealth, vooodoo accounting and credit.
     
  5. Steve Schaffer

    Steve Schaffer Producer

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    Josh,
    I think a lot of these folks who buy $3k sets on credit are taking advantage of 1 year no-interest-same-as-cash offers, not the typical credit card scam where the minimum payment will pay it off in 40 years and the total cost of that 3k tv ends up closer to ten grand. I'm one of those folks who can make payments like crazy but can't put the same amount of money away in savings and delay the purchase until the money has accumulated for a cash purchase.

    I intentionally live in a cheaper place than most in my income range, and also drive a cheaper car so that I can indulge my HT addiction. I have no kids to educate, or wife to support or leave an inheritance to.

    I'm 52, and my modest home will be paid off in another 5 years, leaving me rent and mortgage free before I retire. My car, which should last at least another 10 years, will be paid off in 3. I do admit to having more credit card debt than I'd like, and a considerable proportion of it has gone to HT stuff.
    However, I have reached an upgrade plateau, meaning I see no expensive HT upgrades looming within the next 5-7 years.

    Although at present I am stuck making little more than that minimum payment on the credit card debt, most of it is at a fairly low interest rate, and once the car and house are paid for it will be quickly retired.

    Perhaps erroneously, I have adapted an attitude that I should indulge myself now rather than wait until I've saved up cash for 3k televisions, as I may not live that long. I've seen too many frugal folks who deny themselves everything to save for a comfortable retirement, only to die prematurely and never enjoy the fruits of their hard work.
     
  6. AjayM

    AjayM Screenwriter

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    Hmmmm, I don't know. As others have pointed out you have to factor in how many people finance using those financing "deals" and how many people just do regular financing. Using the stores money to buy the TV and not pay any interest on it is the smart thing to do financially because I leave my money in my savings account for 1 year and gain interest on it.

    Ditto for car financing, if you can find zero or one percent financing on a car for 4-5 years, take it. Well take it as long as you can afford the car payment. Even if you have enough money in the bank to pay cash for the car.

    Now if you are financing something at a ridiculous interest rate that's totally different, even at like 9-10% it's not worth drawing it out, especially smaller purchases like TV's and such. On a car it's a little better, but not much. But you may not be upside down after 2-3 years if you plan it out well.

    Andrew
     
  7. Todd Hochard

    Todd Hochard Cinematographer

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  8. Jason_H

    Jason_H Second Unit

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    I have to agree with those talking about 0% financing for smaller items. I have bought my RPTV, receiver, iPod, and MiniDV camcorder on zero-percent deals over the past two years. I always wound up paying the full amount before the term was due, and I never paid one cent of interest. It sure was nice being able to get these things many months before it would have taken me to save up the cash. It all depends on how you use it, I never ever let me credit card bill carry over a month since THAT is like the world's highest percentage loan. Horrible.
     
  9. Tim Kilbride

    Tim Kilbride Stunt Coordinator

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    I also agree with the 0% interest options...hell it's free money by any accountants viewpoint.

    On a personal side...which I rarely talk about,but wanted to really chime in here...the wife and I do not carry any credit card debt whatsoever. Sometimes we feel like outsiders sometimes though. Most of our friends (all pretty close in age) have huge credit card debt. They then go and get 2nd's on their house to pay off the ccards.

    We have 5 vehicles between us, only one with a note (0% Ford Excursion), and a house note due every month. Almost one half of our income goes to retirement (457,401k,rothIRA, etc.). We pay cash for almost everything (which is getting more difficult by the day). We both have our own ccards...but rarely use them. I only use mine for online purchases/paying bills.

    I too think it is a lot of "Keeping up with the Jones'". I have an employee who works for me (he makes 1/2 of what I do) and everything I purchase, toy-wise, he shows up with the upgraded/improved version about a month later. I have yet to figure out how he does it on his salary?!?!

    I think with good planning, proper use of your credit, and a little luck, you can get most of everything you want without going in over your head to get it!!!!


    My .02

    Tim K.
     
  10. Cam S

    Cam S Screenwriter

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  11. Scott Merryfield

    Scott Merryfield Executive Producer

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  12. Jack Briggs

    Jack Briggs Executive Producer

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    How one spends money is her or his business. If a consumer believes he or she can assume a hefty debt in the purchase of an HDTV or a sexy vehicle, even though everything else might be tight, what's it to anyone else?
     
  13. Steven K

    Steven K Supporting Actor

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  14. Josh Lowe

    Josh Lowe Screenwriter

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  15. Tim Kilbride

    Tim Kilbride Stunt Coordinator

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    Steven K

    HERE HERE!!!!


    Tim K.
     
  16. Todd Hochard

    Todd Hochard Cinematographer

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    I have to agree with the last three posts, Jack. I foot part of the bill for those who end up not paying- which is fine, in some cases. But, increasingly, it's those who live a financed, lavish lifestyle that are becoming more of the problem. The two couples I previously mentioned are just such an example.

    I, too, use my CC day-to-day, and then pay the balance at the end of the month. It makes life simpler, as I only go to the bank once a month, or so.

    Todd
     
  17. Patrick Sun

    Patrick Sun Moderator
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    Guys, I don't think Jack is saying buy on credit until you're forced to declare bankruptcy. Rather, he's making the case for "what's it to you if someone has a plan to buy something on credit that will make them happy (without having to go bankrupt)?" Again, it's really none of anyone's business how they spend their present or future income on toys/hobbies/etc for present or future gratification. Are we at a point where adults need supervision/permission by some higher authority/committee to spend their income or buy on credit?

    Just because there are some irresponsible credit abusers doesn't mean everyone else will be corrupted by "easy credit". While it's unfortunate that people do abuse the system and go bankrupt, they have to fight an uphill battle for quite a few years before they dig themselves out of that hole (in terms of getting any more credit and/or payback plan depending on the type of bankrupty filed). These people are penalized for their credit abuse. Whether the punishment fits the crime is a subject for another day.

    If you're a saver, and only buy when you have cash in hand, that's terrific, I'm the same way. But my way is not everone's else way, and I don't begrudge people for buying stuff that makes them happy and is within their monthly budget when bought on credit.

    The last time I bought a car, I paid cash. Haven't had a car payment in 6 years, plan to drive it another 4, and by then, I should have enough to buy another with cash. But I'm an extreme case of being a saver. I don't begrudge those who buy a car that requires 60 monthly payments, even if I think it's more car than they should be buying. If you can manage the payment in your budget, go for it.
     
  18. Josh Lowe

    Josh Lowe Screenwriter

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  19. Caleb Penner

    Caleb Penner Agent

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    Well, I'm a soon-to-be "poor student," living at home. I have no debts and few monthly bills.
    However, I admit I have a bit of a money problem. The only time I ever borrow money is off my parents. If I have money in my wallet I find it hard to *not* buy a DVD or two, even though I don't need them.
    I'm really glad I don't have a credit card, because I wouldn't be able to resist ordering a whole bunch of DVD's thinking, "oh, I'll get paid in two weeks- it will be fine."

    Caleb
     
  20. Jack Briggs

    Jack Briggs Executive Producer

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    Patrick noted exactly what I should have made clearer: I was speaking about people who are meeting all their responsibilities. So, even though I don't want to hear someone making a modest salary complaining about living from check to check when there's a Loewe Aconda 38-inch 16:9 direct-view HDTV in his or her living room, if that's a priority for some then fine by me.

    Sorry I didn't make that clear in my post!
     

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