Comments on: Only Buy Appreciating Assets on Credit

By: Ultimate Collection of Credit Card Posts (Ask Mr Credit Card’s Blog)

Ultimate Collection of Credit Card Posts (Ask Mr Credit Card’s Blog) — Wed, 30 Jul 2008 08:06:44 +0000

[...] from No Debt Plan is a blog about debt free life. He has a great advice: Only buy appreciating assets on credit. Can’t agree more – that means pay in full for your car and electronic gadgets. (perhaps [...]

By: Kevin

Kevin — Wed, 21 May 2008 22:05:38 +0000

@Eric: You’re exactly right. At some point financing becomes a priority just for day to day living. We run into problems when we finance those things that aren’t required for day to day living (like a TV). Especially if your boat is retaining value and you are getting solid use out of it, then that works. And it was a 1 year note, not holding it on a credit card for five years.

@Philip — keep up the good work. 100% down for a house would be mighty impressive.

By: Bonnie

Bonnie — Wed, 21 May 2008 21:06:53 +0000

I agree with you that most people need a mortgage to get homeownership at first. We need to get back to the concept that we actually expect to own it outright sooner rather than later. My website gives an overview of a program we are using to benefit from the same proven banking systems that have been generating wealth for lenders for decades. We are on our way to debt freedom much faster than we could accomplish on our own!

By: Philip Robert

Philip Robert — Wed, 21 May 2008 15:19:07 +0000

Considering the mess that I’ve made using credit in the past to purchase everything from toys, dinners, massages, degrees, and God only knows what else, I’ve learned that the best plan for me is the NO DEBT PLAN. Even for purchasing assets.

In 1982 when I was 21 I found the book Nothing Down by Robert Allen. Attempting to use the concepts in this book was a disaster for me. Last year listening to the radio I first heard Dave Ramsey articulate the idea of purchasing a house with 100% Down.

Currently I have about $135,000 in debt, and I plan to have that cleaned up in 3 years. Once this is all cleaned up I’ll use the money I’ve been paying on this to save for a house, and in about 8 years I expect to make a home purchase at 100% down.

There is much talk of using leverage to increase your net worth over a short period of time. When the market is going up, leveraging seems to work well. As we have seen recently with real estate taking big hits this plan is a plan for disaster.

Don’t forget CASH is also an asset. A fact that the credit companies know very well.

By: Eric

Eric — Wed, 21 May 2008 13:37:00 +0000

If I had a nickle for everytime I told someone “Never borrow money on depreciating assets”…

One thing I wanted to add…

Some people HAVE to borrow money on depreciating assets. If you need a car for transportation and you have no savings and you’re in a checkmate situation, fine…but be smart. Find a car that has nearly bottomed out in value. Any 4×4 vehicle that runs and is in decent shape will always be worth $3,000-$4,000 (at least in the inland northwest). If you buy a vehicle like that, you’ll get -nearly- what you put into it regardless of when you sell it, less the financing fees. That’s about as smart as you can be in that situation.

I personally borrowed $15,000 for a boat in 2006. The boat is a 1988 and is depreciating at an incredibly slow rate and I have no doubt in my mind that I can sell it tomorrow for about $14,500-$15,000. I was pre-approved for a $100,000 boat loan and could have the latest and greatest SeaRay 28 footer – but if I had done that I’d be $45,000 in the hole just 2 years later from sharp depreciation.

Side note: My boat is now paid for. I only carried the note for a little over 1 year.

Both of my cars are paid for as well.

———

Pay cash whenever possible.

And listen to Kevin. The mans on top of his game! SO many people need this blog, K. Kudos.