I agree for the average person even someone not into having all the best gagdets, etc., credit can help with certain items.
For example, just imagine some one starting out - they get a new job, but may need a car to get to it - voila - they can borrow so now they can earn an income to eat food and have shelter.
A family wants a home - even a modest home - most would not be able to buy this home until saving up for 15 years or more. Not unreasonable - they can get a mortgage - and for the average home buyer they are in their home for quite a long time - there home will be worth more than when they bought it for - so bonus - they have a nice nest egg for retirement when downsizing.
Cycloptichorn wrote:What's Idealistic is pretending that our national love for Stuff has no consequences, when we let that become the standard.
Where do you get the idea that I pretend there are no consequences to using credit? I suppose it's easier to maintain your superior attitude when you believe everyone else is stupid.
You seem to have accomplished both, and I'm jealous, but I think both discipline and luck were on your side.
I am saying as far as buying a car if you have $0, then you cannot buy a car without borrowing. You cannot get the job and get income without getting to the job, thus you need the car to get income - doesn't matter if you are buying a $1K used car or a $50k new luxury car.
Besides a bit more expensive car, might be better as a $1k car would not be reliable thus making getting to work a problem where you could lose this income.
As far as mortgages as I stated for the average home owner, they purchase for long term - so even if they bought say a couple of years ago at the height of home values - 15 years from now, their home (most likely) will be worth more than what they bought it for.
Who could buy a house outright?
Where would you live while you are not paying a mortgage? I guess you would need to pay rent...so even if the rent was less than a mortgage - it would take over 15 years of saving, giving your money to some one else (who by the way is using that to pay their mortgage) to live and building no equity over that time.
Yep sounds like an awesome deal to me.
Who could buy a house outright?
Quote:Who could buy a house outright?
Me. But I worked in a high income field for a number of years while I continued to live in my dumpy, rent controlled college apartment. I think people (especially a working couple) can do it if they don't have student loans, wait to have children, use public transportation, and really pay attention as to where their money goes. The savings over 5-8 years should equal the cost of a starter home in many parts of the country. At least people should try and put away as much of a down payment as possible in order to avoid longer term interest payments. Most people buy more house than they can really comfortably afford. Being mortgage free is real freedom.
Yes, it is quite likely that in 15 years the housing market will be back up. The stock market is already up in this current year. I have a graduate degree in economics and overall in the long term the economy climbs " there are “blips” of large ups and downs, but overall in the long term it is a consistent increase. 3 years is the short term " 15 years is a long term view.
Here is a basic image of the business cycle over time -