.........

 

Yeah...everyone is right. The great thing about our economy is we can get almost anything we want but only if we have good credit. For me I see no reason to buy with credit.

1) buy with HD credit if you can get good rates on note (i.e.3.99% or so)
2) buy with CC if you can got good rate cards.
3) buy with credit and pay the hell off starting with FIRST payment
4) buy with 1/2 down if new and finance the rest
5) dealers and credit cards are looking to make money on their loans...and if they give you a loan work to get the lowest rate or walk away.
6) borrow from your 401K but only for 1/2 down and the rest finance. Note: paying interest from borrowing on your 401K is PAYING you and for me this is 3.25%

In a nutshell there is not a problem with borrowing to finance a Harley or anything (but I'd shy away from boats LOL). I mean you are not getting younger and every day....er...year you are one day closr to death. Enjoy life how you see fit and if this includes a Harley...by all means go out and do it.

But if you are going to finance a bike...go used and get it priced right. And if you are going to finance the bike...finance 1/2 of it and the rest cash. And if ya got no cash paying around...heck you do not need a Harley. Your job is to manage your finances responsibly and if you cannot do that...well that is what fu*ks up America.

So there you have it...finance is ok if you do it RIGHT. I have always paid extra on my mortgage so I feel if I want a Harley...well I deserve it. You should be able to do it too to "pay" yourself. Of course I can see paying it in full but like to be able to borrow at 3 to 4% interest and leave my money in the bank especially if I am getting 5% on my Mutual funds.

Happy New Year Boys N' Gals!

 

Yeah, but here's where it get's interesting. If you have 31,000 cash and instead of paying cash for your HD you invest it for the same 5 years you could come out ahead...

Let's say you do well and make 8% a year for 5-years. With compounding interest that 31,000 would grow to $45,549.17 and you'd be $6,326.57 ahead.

If you only make 5% over the 5-years, then you'd break even with 39,564.73, or just $296 ahead.

So, as noted, if you can put your money to work (and leave you hands off it) and earn a higher interest rate than what you can borrow for, you should always come out ahead. Again, OPM & leverage... it's what the big boys do.

 

You are just forgetting one thing: Capital gains tax on the interest.

 

In today's market it's a gamble those potential gains may be losses.

It's a bad time to have any debt hanging around your neck.

Good idea to have an no debt, an emergency fund and a couple months of canned food in the basement.
Never know when the crap will hit the fan.

 

no attractive financing from dealer (7% interest ), so I paid cash.

 

I've been living in Europe for 2 years and have never had a problem renting a car or making hotel reservations with a debit card.

 

Yes, it was a simplistic example and tax implications are a wild card dependent on your investment strategy and how you have your accounts setup. And, the market can also be pretty fickle.

Like I said, I thought about financing our HD, but looked at the market and decided to use a portion of some cash I'd had sitting in a Money Market account since last January waiting for the market to become more predictable.

But, at the end of the day, everyone needs to make sure they're comfortable with the amount of debt risk / exposure they're carrying.

 

They always fail to calculate risk and always be "all in" that the economy will perform perfectly for them. It sounds good in theory, but not in reality. If I owed 100K on a house and had 100K in the bank I'd pay the house off then invest money as it comes in.

Most people think it would be best to invest the 100K and keep making mortgage payments. The risk is: housing marked crash, stock market crash, and heaven forbid losing a job. All would be lost. If they pay for a decade on the house, then the economy and market takes a downturn, the loss of a job will cause a foreclosure and all that money paid on the house in payments over the decade is gone. I keep hearing guys say, "If **** hits they fan I'll stop making payments and they can take the bike." That's money gone. I had an uncle get his fatboy repoed when he only owed 5K. Why not pay it off and when **** hits the fan you can sell it at a bargain rather than losing it all. Or you might even not have to consider selling anything.

I give up trying to convince those against their will...I'm debt free, I live below my means, I have more than 6 months salary in an account untouched unless I have a real emergency. I have an account for home repair, account for car repair, one for Christmas, gifts, furnature...etc. I invest, spend and save more than ever. Very easy to manage, and if the economy craps or I'm laid off tomorrow. I LOSE NOTHING and have my cash in the bank. All I have to do is keep the lights on and some food on the table. That's much easier than trying to keep up my bank notes and a mortgage. I still have the option of selling my assets instead of waiting on the repo man to come get them.

The only thing that scares me about the economy is the number of people that feel noble showing off crap they bought with borrowed money.

 

You sound like me garand, But I still owe on the house. While the work is coming in, Im a mad man paying it off. 2 years then Ill say FU to this train wreck system, and if I have to, Ill hopefully be able make ends meet as a greeter at Walmart.

Hell today if a china man farts the price of gas and food goes up and the stockmarket goes down.