Tooncesthedrivingcat
Banned
- Oct 11, 2007
- 775
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Originally posted by: Beattie
So, you do a lot of bookkeeping to make 3-4% and barely break even with inflation. After tax, you probably actually lose money.
Sounds awesome. Where do I sign up?
Originally posted by: Beattie
I have no problem with that statement but you still need to factor it in. Higher risk things can make you more money. And investing long term in them is the correct thing to do. I don't think that borrowing money to invest in what should be a long term investment is a good idea. If you do that AOR credit surfing thing that someone suggested, that might work for a year, but your mutual fund or whatever might have lost money in a year. Many did in this previous year for example.
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: TruePaige
Originally posted by: Beattie
So, you do a lot of bookkeeping to make 3-4% and barely break even with inflation. After tax, you probably actually lose money.
Sounds awesome. Where do I sign up?
I don't think you know how tax works then, because that made no sense. There is no way that making interest off the money saved in the FDIC account and then paying it towards what you would of paid it towards anyway would lose money. 0.o
Lets say you earn 4% on your schemes. Now you are going to be taxed at your income rate on this money. Lets say that's like 30%. So, you gain 4% then lose 30% of that. In the mean time, inflation was 4%. So, you gained less than 4% and it cost you 4%. You net loss is 30% of 4%.
You lost money.
If you can get a better rate on the money then you might start to make something. But it's very small. And anywhere you would make a good profit like the stock market/mutual funds, you have to then also factor in risk.
Okay, if you add inflation in and say that cancels out the gains, and 30% of the 4% (effectively 1.2%), then you are LOSING a LOT MORE by not doing anything with your money, because if your money is just sitting there you are losing the full 4% by not investing it.
Originally posted by: TruePaige
I don't think you know how tax works then, because that made no sense. There is no way that making interest off the money saved in the FDIC account and then paying it towards what you would of paid it towards anyway would lose money. 0.o
Originally posted by: Xavier434
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: ducci
I agree. Though everyone here isn't claiming to spend money you don't have - quite the contrary.
Say you have $1500 in cash to purchase a TV. Let's also say you are given a $1500 12-month, 0% interest loan. You are foolish to pay the $1500 you have now rather than using someone else's money and pay the balance in full 12 months from now. You can also add in whatever cash-back rewards most credit cards today offer.
I'm not claiming using a credit card will make you rich. I am merely saying it is better than paying via debit or cash.
I will, however, agree to the claim that properly using and controlling good debt will build wealth. More so than, say, not having any debt at all.
Until that one time where something happens and you default and that $1500 tv ends up costing $2100.
What is this magic "Something" I pay my bills online and get a confirmation number 0.0
I think he is talking about some big unexpected expense, but what he is failing to realize is that those who are responsible have money saved up for just that kind of occasion. On top of that, even if the unexpected expense is much larger than your savings can handle then it makes sense that one would place the additional expenses on a CC. That CC probably has a very low interest rate because you were smart enough to call annually and ask for that rate to be lowered which they do for you because your FICO and credit history is awesome thanks to your active and responsible usage of credit over many years.
Originally posted by: TruePaige
Originally posted by: Xavier434
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: ducci
I agree. Though everyone here isn't claiming to spend money you don't have - quite the contrary.
Say you have $1500 in cash to purchase a TV. Let's also say you are given a $1500 12-month, 0% interest loan. You are foolish to pay the $1500 you have now rather than using someone else's money and pay the balance in full 12 months from now. You can also add in whatever cash-back rewards most credit cards today offer.
I'm not claiming using a credit card will make you rich. I am merely saying it is better than paying via debit or cash.
I will, however, agree to the claim that properly using and controlling good debt will build wealth. More so than, say, not having any debt at all.
Until that one time where something happens and you default and that $1500 tv ends up costing $2100.
What is this magic "Something" I pay my bills online and get a confirmation number 0.0
I think he is talking about some big unexpected expense, but what he is failing to realize is that those who are responsible have money saved up for just that kind of occasion. On top of that, even if the unexpected expense is much larger than your savings can handle then it makes sense that one would place the additional expenses on a CC which has a very low interest rate because you were smart enough to call annually and ask for that rate to be lowered which they do for you because your FICO and credit history is awesome.
And if it were something that big, it would be great that one would have credit to carry them through that hardship in their life.
Originally posted by: Beattie
Well, I never borrowed the money in the first place. So, I didn't gain 4%. Correct. I also didn't lose 4%. My net is 0, while yours is -1.2%.
Originally posted by: Beattie
Originally posted by: Xavier434
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: ducci
I agree. Though everyone here isn't claiming to spend money you don't have - quite the contrary.
Say you have $1500 in cash to purchase a TV. Let's also say you are given a $1500 12-month, 0% interest loan. You are foolish to pay the $1500 you have now rather than using someone else's money and pay the balance in full 12 months from now. You can also add in whatever cash-back rewards most credit cards today offer.
I'm not claiming using a credit card will make you rich. I am merely saying it is better than paying via debit or cash.
I will, however, agree to the claim that properly using and controlling good debt will build wealth. More so than, say, not having any debt at all.
Until that one time where something happens and you default and that $1500 tv ends up costing $2100.
What is this magic "Something" I pay my bills online and get a confirmation number 0.0
I think he is talking about some big unexpected expense, but what he is failing to realize is that those who are responsible have money saved up for just that kind of occasion. On top of that, even if the unexpected expense is much larger than your savings can handle then it makes sense that one would place the additional expenses on a CC. That CC probably has a very low interest rate because you were smart enough to call annually and ask for that rate to be lowered which they do for you because your FICO and credit history is awesome thanks to your active and responsible usage of credit over many years.
If you have the money to pay for the thing, what do you need the credit card for? Just pay cash and be done with it.
Originally posted by: Beattie
If you have the money to pay for the thing, what do you need the credit card for? Just pay cash and be done with it.
Originally posted by: Beattie
Why are you buying $1500 TVs if you have such financial hardship in your life?
Originally posted by: Special K
Originally posted by: TruePaige
I don't think you know how tax works then, because that made no sense. There is no way that making interest off the money saved in the FDIC account and then paying it towards what you would of paid it towards anyway would lose money. 0.o
I think he was factoring inflation into the calculation. You may not have lost any dollars, but the effective buying power of your money would have decreased over that time period.
Originally posted by: Xavier434
Originally posted by: Beattie
Well, I never borrowed the money in the first place. So, I didn't gain 4%. Correct. I also didn't lose 4%. My net is 0, while yours is -1.2%.
Money is only worth as much as you can buy with it. Your net is technically 0, but if we are talking about a 4% inflation increase then you can now only buy 96% of what you used to be able to purchase with every dollar you decided not to invest where TruePaige can buy 98.8%.
Originally posted by: Beattie
Originally posted by: TruePaige
Originally posted by: Xavier434
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: ducci
I agree. Though everyone here isn't claiming to spend money you don't have - quite the contrary.
Say you have $1500 in cash to purchase a TV. Let's also say you are given a $1500 12-month, 0% interest loan. You are foolish to pay the $1500 you have now rather than using someone else's money and pay the balance in full 12 months from now. You can also add in whatever cash-back rewards most credit cards today offer.
I'm not claiming using a credit card will make you rich. I am merely saying it is better than paying via debit or cash.
I will, however, agree to the claim that properly using and controlling good debt will build wealth. More so than, say, not having any debt at all.
Until that one time where something happens and you default and that $1500 tv ends up costing $2100.
What is this magic "Something" I pay my bills online and get a confirmation number 0.0
I think he is talking about some big unexpected expense, but what he is failing to realize is that those who are responsible have money saved up for just that kind of occasion. On top of that, even if the unexpected expense is much larger than your savings can handle then it makes sense that one would place the additional expenses on a CC which has a very low interest rate because you were smart enough to call annually and ask for that rate to be lowered which they do for you because your FICO and credit history is awesome.
And if it were something that big, it would be great that one would have credit to carry them through that hardship in their life.
Why are you buying $1500 TVs if you have such financial hardship in your life?
Originally posted by: ducci
Originally posted by: Beattie
Originally posted by: Xavier434
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: ducci
I agree. Though everyone here isn't claiming to spend money you don't have - quite the contrary.
Say you have $1500 in cash to purchase a TV. Let's also say you are given a $1500 12-month, 0% interest loan. You are foolish to pay the $1500 you have now rather than using someone else's money and pay the balance in full 12 months from now. You can also add in whatever cash-back rewards most credit cards today offer.
I'm not claiming using a credit card will make you rich. I am merely saying it is better than paying via debit or cash.
I will, however, agree to the claim that properly using and controlling good debt will build wealth. More so than, say, not having any debt at all.
Until that one time where something happens and you default and that $1500 tv ends up costing $2100.
What is this magic "Something" I pay my bills online and get a confirmation number 0.0
I think he is talking about some big unexpected expense, but what he is failing to realize is that those who are responsible have money saved up for just that kind of occasion. On top of that, even if the unexpected expense is much larger than your savings can handle then it makes sense that one would place the additional expenses on a CC. That CC probably has a very low interest rate because you were smart enough to call annually and ask for that rate to be lowered which they do for you because your FICO and credit history is awesome thanks to your active and responsible usage of credit over many years.
If you have the money to pay for the thing, what do you need the credit card for? Just pay cash and be done with it.
Money today is more valuable than money tomorrow.
I am done with this thread.
On another note - where did you get a 0% APR AMEX for 15 months? Mine was only for 6.
I'd get a Chase Freedom card but they don't have a 0% interest promotion and my Discover card is giving 5% back on gas from July-September. Maybe after that.
Originally posted by: Beattie
Originally posted by: TruePaige
Originally posted by: Beattie
Originally posted by: TruePaige
Originally posted by: Beattie
So, you do a lot of bookkeeping to make 3-4% and barely break even with inflation. After tax, you probably actually lose money.
Sounds awesome. Where do I sign up?
I don't think you know how tax works then, because that made no sense. There is no way that making interest off the money saved in the FDIC account and then paying it towards what you would of paid it towards anyway would lose money. 0.o
Lets say you earn 4% on your schemes. Now you are going to be taxed at your income rate on this money. Lets say that's like 30%. So, you gain 4% then lose 30% of that. In the mean time, inflation was 4%. So, you gained less than 4% and it cost you 4%. You net loss is 30% of 4%.
You lost money.
If you can get a better rate on the money then you might start to make something. But it's very small. And anywhere you would make a good profit like the stock market/mutual funds, you have to then also factor in risk.
Okay, if you add inflation in and say that cancels out the gains, and 30% of the 4% (effectively 1.2%), then you are LOSING a LOT MORE by not doing anything with your money, because if your money is just sitting there you are losing the full 4% by not investing it.
Well, I never borrowed the money in the first place. So, I didn't gain 4%. Correct. I also didn't lose 4%. My net is 0, while yours is -1.2%.
Originally posted by: mchammer187
how is your net zero unless the money you had lying around did not inflate at the same rate
you are actually losing MORE money
Originally posted by: SleepWalkerX
I'm 18 and have never owned a credit card. I only own a debit card in my name. I can't stand the idea of debt so I make I have the money before I buy anything.
One of my friends suggested that I'm going to have a harder time in the future because if I want to get a loan, a car, or a mortgage or whatever then people will look up my credit score and it might show that I don't have anything listed.
This is why he sometimes buys small things on his credit card just to build his credit score up. Is this true? Am I screwing myself to some extent by not having a credit card?
Originally posted by: Beattie
3) Credit cards and check cards are functionally equivalent
Originally posted by: sactoking
What?!?! NO! I waited 3 hours and Beattie came back reasonably and in a reconciliatory tone. I'm so disappointed. I had hoped for much more goading and baiting........
