How Millennials Became Spooked by Credit Cards

gouf78
Fri, 19 Aug 2016 14:05:03 +0000

Three questions were asked by jrcs:

“How about your home? Did you save and pay cash for it or did you decide what a reasonable interest rate was on a loan so that you could buy a home before you had the cash saved?”

–All comes down to income. Having living quarters is a necessity. You need a roof over your head. You can rent or buy. One is not necessarily better than the other these days depending on circumstances. Having home mortgage is a necessary debt because the cost is too high for most. But that does not mean you need the biggest house on the block. You have to comfortably make the payments. Banks aren’t very forgiving when you miss payments. Shop for interest rates. It’s a big purchase.
Saving a substantial down payment prior buying saves a ton of costs and cash. Financing over 15 years vs 30 is big. Many variables. Insurance. Taxes. Maintenance.
Homes are put in the positive net worth column (an asset) on a financial statement.
(Yes, we didn’t buy over the years due to high interest rates and we’ve paid with cash too).

“Of course it’s a bigger savings not to buy things and not to spend the money, but when someone’s refrigerator breaks down, do you recommend they do without until they can save to replace it?”
—That is why emergency funds exist. “Emergencies” don’t need to be emergencies. “Be Prepared” is a good motto. You save BEFORE it happens, not after. You know appliances will need fixing/replaced, the car will need repair, etc. No surprise. Stuff happens. All the time. Get ready for it. Go to the emergency fund, pay for it and move on. Pat yourself on the back for being so forward thinking. Rebuild the fund.
Life does not need to be lived crisis to crisis on credit debt.

Cars? Easy, pay with cash.