Dan Snyder buys Johnny Rockets (could get interesting)

Actually, I know a couple of people. They aren't rich, but they live within their means.

People live within their means and are still in debt. Everyone with a mortgage is in debt!

They don't even have mortgage! It may take them longer to buy an item, but they live well.

There are many ways to define "living well". To some people, it means a roof over their head and food in the fridge. For others, it means being able to vacation and buy lots of fancy stuff. All I'm saying is that most homeowners are in debt because they owe more on their houses/townhouses/condos than they make or have in a savings account. That's not even getting into the fact that many people have car and student loans!

Carrying debt is not a bad thing. It can be, but it doesn't have to be.

I've found that in general our credit score is best when we're riding a small amount of debt.

It is good to carry a little bit of debt. Creating debt is also a good way to establish credit when you're young. Weird how that works (owing money means people are more willing to loan you money) but I suppose that's the way it goes. Probably has something to do with showing that you're able to deal with the responsibility of making regular payments and still keeping your head above water.

True. I've got student loan and some stuff with my mechanic, so I'm off to a good start.

But is Dan Snyder buying Johnny Rocket's with his own loose change, or through Red Zone? Face it, he's not going to run it as a personally owned business and leave himself with all the liability, so why would he buy it personally?

BTW, wasn't that "advertising" agency he founded and got rich on just a junk mail company? I remember reading something to that effect before.

For the record junk mail IS advertising. I belive the buzzword is "direct marketing" Besides, junk mail keeps a lot of people employed. There's a fairly large printing company near my house that mostly prints the stuff.

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Rob Ascough said:
It is good to carry a little bit of debt. Creating debt is also a good way to establish credit when you're young.

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It's good to be out of debt. It's good to not buy things you can't afford. :)

My goal is to be debt free and never go back in it, with the possible exception of a mortgage. People think they "need" a car payment or they "need" a credit card, but it doesn't have to be that way.

*** Edited 2/12/2007 7:22:37 PM UTC by Gemini***

In general, yes. But I've always maintained that if you can handle your debt, you're usually fine.

Like these guys said - car loans, mortgages, student loans - that's debt. Who really buys cars, houses and college education with cash?

And establishing credit is a biggie. It is better to run with a few credit cards and charge little things here and there and pay it off/keep the balance low than to never use at all.

The key is to use credit, not abuse credit. :)

(I'm one of those people who think you can take the whole 'managing money' thing too far - common sense is good for me....excessive frugality is not)

*** Edited 2/12/2007 7:29:34 PM UTC by Lord Gonchar***

True, but how many kids leave high school these days with NO clue as to how much trouble they can get in by paying the minimum on their credit card every month...

The trick, so to speak, is to be an EDUCATED consumer in a society that places no value on education.... ;)

A debt-free lifestyle doesn't mean a frugal one, it just means you save up the money before you buy something. There's a lot of freedom in not having to make payments. People today think they need payments to live. It doesn't have to be that way.

It is possible to buy a car without a car loan. Let's say a typical car payment is $350. Save that for 10 months, buy a $3,500 car. Keep saving, 10 months later, sell your $3,500 car - which has lost little value in 10 months - and buy a $7,000 car. Keep doing that, and it doesn't take long to have something nice, does it? That really does work. Instead, people want a new car, and they want it now. But the "want it now" mentality of our society comes at a price.

And, big shock here, it is possible to go to college without going into debt. Yes, you have to work for it, and that's what scares some people.

Mortgages are a different animal. It's great to pay cash for a house, but there's nothing wrong with a 15-year fixed.

I'm not saying I don't have school loans or a car payment. I've made the stupid choices, just like everyone else, and have more than enough tuition into the School of Life. But I can't pay it down fast enough.

I wish someone would have told me this stuff 20 years ago. You don't need to establish credit. I can't wait for my FICO score to be zero. The only thing I'd ever borrow money for again is a mortgage, and you don't need a credit score to get one. So I could care less what my FICO score ends up being.

*** Edited 2/12/2007 8:03:34 PM UTC by Gemini***

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RatherGoodBear said:
But is Dan Snyder buying Johnny Rocket's with his own loose change, or through Red Zone? Face it, he's not going to run it as a personally owned business and leave himself with all the liability, so why would he buy it personally?

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Either way, the point still stands. Red Zone is actually the stock holder in Six Flags and they don't assume the debt of Six Flags when they purchase stock.

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It is possible to buy a car without a car loan. Let's say a typical car payment is $350. Save that for 10 months, but a $3,500 car. Keep saving, 10 months later, sell your $3,500 car - which has lost little value in 10 months - and buy a $7,000 car.

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As if Dave Ramsey himself were speaking. ;)

I understand where you're coming from, really I do. But that kind of thing is exactly where it's gone too far for me.

So continuing that pattern is it safe to assume:

10 months - $3500 car
20 months - $7000 car
30 months - $10,500 car
40 months - $14,000 car
50 months - $17,500 car
60 months - $21,000 car

Is there really a difference between saving the money and 'building up' that way and just getting the loan for the $20,000 car to begin with and paying $350 a month for 5 years.

And yes, I understand that at the end of that 5 years you have a $20,000 car and I have one that's depreciated to $5000. But now I take that car and walk away with a $25,000 vehicle - so I'm still technically 'ahead' so to speak. (not counting the additional costs used cars tend incur)

I'm also assuming it doesn't stop there. The idea is that in another 5 years you could be in a $40,000 for the same $350 a month. That's the benefit, right? Or do you stop at some point?

Well, if you have debt, you're taking a risk. For most of the life of the loan, you will owe more on the car loan than the car is worth. You're also assuming an interest free car loan. Those do exist, but only for a small number of people. A $21,000 car at 7% is really $25,000, and at 10% is $27,000. I'm also assuming that the car savings rate stays at $350. Eliminate other debt, and that doesn't have to be the case. And, you're correct, there is a long term philosophy in play.

We can talk numbers all day, but personal finance is really just about personal behavior and attitude. Car payments aren't usually the problem. Usually, the problem is not living within your wage.

Dave Ramsey is a wise man. I won't apologize for buying into his ideas. Like he says, if your broke friends make fun of you, then you must be doing something right. :)

*** Edited 2/12/2007 8:36:50 PM UTC by Gemini***

I haven't had a chance to investigate the link you sent me Gemini, but I both agree and disagree with what you're saying.

It's true that many things in life can be obtained through strict savings practices, but to me, that is a very steep price to pay when I can easily incur a little debt and have what I want right away. Perhaps that makes me sound a little impatient but the "car-buying pattern" you outlined makes no sense for me. First of all, the traveling I do for work makes it near impossible for me to get by with a $3500 car, and because I'm something of a car enthusiast, I don't necessarily want a $3500 car. I'd much rather take out a loan (I get good loan rates because my FICO score is high) and deal with the interest and depreciation. Of course that's for me, that's not for everyone.

People do charge too much on their credit cards. Overall I think credit cards are a bad thing unless you pay them off instantly, although there is something to be said for having a high spending limit in case you find yourself in desperate need of money at some point. I put the majority of my spending money in my checking account and use my Visa check card to pay for stuff- I'm only using money I actually have, and because the money's in my account instead of in my wallet, I'm less inclined to spend it on frivilous stuff.

A friend of mine is very strict when it comes to money, and while I admire his desire to save, it also somewhat inhibits the way he lives his life. He counts every penny, and that dictates whether he's able to go out for dinner when he's in town and when it makes sense for him to buy certain things, regardless of when he actually needs them. I'm with Gonch (wow, I've been agreeing with him a lot lately, eh?)- common sense is the way to go. I needed a new TV so I didn't think twice about buying a nice 33" LCD. That made more sense than the 50" one that I really desired.

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Gemini said:
Car payments aren't usually the problem. Usually, the problem is not living within your wage.

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Agreed. Which is my point about being able to 'handle' your debt. For me, riding a certain amount of debt isn't a problem or making too much of a difference in my life. I plan on being dead before I'm 60 :) (notice that's a smile, not a winky)

It's when you get in over your head and no longer manage your debt (or abuse your credit) that problems can happen.

But even I can admit there's a serious difference in approach between 'building up' as you (and Dave Ramsey) suggest and 'paying down' as most people do. Hell, the terminology alone spells it out.

I prefer to use a combo of strategically 'building up' and 'paying down' at the same time. Gets me what I want (and often sooner than later) while still keeping me in the game financially. Best of both worlds (or worst depending on how you see it :) )

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We can talk numbers all day, but personal finance is really just about personal behavior and attitude. Dave Ramsey is a wise man. I won't apologize for buying into his program.

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Agreed, and no apology necessary.

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Rob said:
A friend of mine is very strict when it comes to money, and while I admire his desire to save, it also somewhat inhibits the way he lives his life. He counts every penny, and that dictates whether he's able to go out for dinner when he's in town and when it makes sense for him to buy certain things, regardless of when he actually needs them. I'm with Gonch (wow, I've been agreeing with him a lot lately, eh?)- common sense is the way to go.

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Exactly! At what point do you draw the line? What's the point of building wealth if you never use it.

For me the balance between having what I want (money is for spending....plain and simple...it's useless as almost anything else except a means to acquire stuff) and keeping everything in line (which means having enough money to acquire other stuff should the need arise) is what it's about.

*** Edited 2/12/2007 8:50:56 PM UTC by Lord Gonchar***

Student loans at 3-5% interest to get you thru college, so you can earn decent wages... that's GOOD debt, no question. Glad I got me some o' that.

Now, my car (purchased used) is mine, my house is mostly mine, and I live comfortably enough on what I earn, paying off my CC balances each month. Helps to have simple needs and minimal "wants" (save for travel). Having *payments*, I'll leave that for those responsible enough to mail a check once a month.

Bottom line I guess goes something like this: Borrow money as cheaply as possible, get the most good from it...pay off ALL high-interest stuff first, THEN work on lower-interest balances.

Then again, I think Americans are CRAZY for insisting on living outside their means....

Has this gone far enough OT yet? ;)

P.S. Rob - I'm finding myself agreeing with Gonch more and more too. Are we getting smarter...or is he? :)

LOL!

*** Edited 2/12/2007 8:53:49 PM UTC by rollergator***

Without going any further off-top, I'll leave it with this. Having a savings account that could cover a few months of expenses beats a credit card for emergencies any day, having debt increases a person's risk, and nothing about living in debt has anything to do with common sense. :)

We all talk about "other people" living beyond their means, but debt is good for me. Look at the rise in personal bankruptcy and consumer debt. The chance of you becoming "other people" is a job layoff or a misstep away.

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rollergator said:
Student loans at 3-5% interest to get you thru college, so you can earn decent wages... that's GOOD debt, no question. Glad I got me some o' that.

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And 15 years later, it's still looking at me as "good" debt. No thanks.

*** Edited 2/12/2007 8:55:55 PM UTC by Gemini***