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10-04-2012 05:44 PM
10-04-2012 06:01 PM
Imagine we all deposit 200 into a savings acc for 40 years compounding daily @ 6 percent. We'd all have a million dollars. and this is why we're not all millionares. OP doesn't have to explain his spending.
10-04-2012 06:12 PM
I have to agree, APR's are negligible for a majority of purchases. But, in the end, if you actually plan on carrying a balance for some time (for whatever reason) this is when the APR matters. Having a lower APR can save someone hundreds of dollars when paying off a balance (think about why so many people want to do balance transfers). Additionally, APR's are a HUGE deal when it comes to installment type loans (mortgages, cars, student loans). Here, it's a difference between a few hundred dollars in paid interest and thousands.
10-04-2012 06:16 PM
I don't think it's a problem to buy an expensive pair of designer jeans. That's what I like to spend my money on. My bills are all paid. My partner and I make 100K+ together. I make 90 alone. I like to finance sometimes because we have a good bit of bills and we enjoy doing things that sucks up money. I have more than enough money to pay off right away, but if I know I'm only going to be making 3 total payments and racking up $4.00 in interest in a store that I'm going to be in every month anyway it just make sense to me. I may even pay it off earlier. I just like to use my left over gas money to buy my fancy jeans. My company pays my milage but I have a small car that doesn't use nearly what it pays me so I end up with an extra $200 a month in gas money that I either save or spend on jeans. I don't get a check every month for it though it just depends on when I submit my expenses so I thought everytime I get my gas check, I'll pay off my jeans. It only costs me $4.00. Crazy but hey it works for me!
I really do not understand this. You have the money to pay for the clothes but are choosing to pay more than you have to? It is your money and life I know, but I just do not get the logic behind that.
10-04-2012 06:42 PM - edited 10-04-2012 07:27 PM
I kind of thought I explained that. I spend a lot of my income on bills and other things. If I want a pair of jeans today ill finance them and use money I normally save each month from mileage expenses from my company to pay them. Why tie up my liquid cash for normal expenses to buy a pair of jeans. I could save the money and buy them a month or so later but here is my point this is all I was saying:
THE INTEREST IS A SMALL PRICE TO PAY FOR SOMETHING I WANT NOW.
I realize that is a problem for some people but not for me. Again if I were carrying large balances month to month that might be a problem, but really it's not that urgent. I think some people get a little judgmental here. I think people miss the point sometimes. It doesn't matter if it were jeans or a car battery. If you'd like to design a plan and carry a balance what's so awful about that? Quit worrying about what the item I'm referring to is. I could have used any example. Again we've veered so far from the original point ,and here I thought we were all adults.
10-04-2012 07:40 PM
I was not trying to be judgemental. I was just saying I did not get why someone would willingly pay interest on something when they do not need to. I really was not focusing on the item. It was just that you said you make over 100 thousand a year so should be able to pay off the clothes. Again, it is your money so you can do whatever you want with it.
10-04-2012 08:12 PM
10-04-2012 08:50 PM
And I stated I make 90 k and my partner makes 50 combines we make over 100 that ha nothing to do with the topic at hand. We do well but we also invest, save, have investment properties that some are still mortgaged so yes liquid cash is at times tied up. Don't assume because someone makes good money that they have extra money all the time. I make more money but also have more bills. Again the point is what's so horrible about APRs if I plan and use them wisely? I guess paying $4 or $8 is worse in myfico forums book than paying $95 AF for an AMEX that delivers lack luster rewards. No one seems to bat an eye lash for that. We have our priorities mixed up here.
Lol, you will never see me saying anything good about a card with an annual fee The moment any of the cards I have start chargning an annual fee they are getting closed.
I really think the comments I have made have been misinterpreted and I apologise for that. From your first post, it seemed to me that you were struggling with cash and were putting the clothes on the card because you could not afford them. Even though that is none of my business, I just wanted to respond. As long as you are happy with how you spend your money, then that is all that matters. The first comment I made still stands though. Some people have the same idea you do, but it does not turn out so good. Just look at the people who lose their homes and vehicles. You seem to be in a comfortable spot though and that is wonderful.
10-04-2012 09:03 PM - edited 10-04-2012 09:06 PM
Everyone has something they like to spend their money on so if op likes to spend 200 on jeans then its fine. I spend 150 on 1 pair of shoes so i dont think its big deal really. and seriously carrying a balance is seen as such a bad thing on this forum is crazy.
I find this very interesting. The reason so many here on this forum is bias to not carrying any kind of balance or spending more then you can afford to pay off with in a reasonable amount of time is because it is this very thinking that lead to the poor credit situation many are rebuilding upon... So many here had no intention of being in this situation and never would have thought that they would find themselves in a situation that warranted deciding which bill to pay and which not to. Not a fun prospect I can assure you. I think the jist of the good advice here is "don't carry a balance if you don't have to" because you could end up with a bunch of balances that might not get paid. The general attitude that I will "pay this bill off in 2 or 3 months" lead many down the path of over extended. It is always a good rule of thumb to not put yourself in debt period and anyone advocating going into debt for non-necessities is potentially prescribing a recipe for disaster. With that said, I don't find anything wrong with buying what you want when you want it as long as there is the understanding that it's not a justification for the purchase but more for then the convience of using the credit you have worked so hard for...
Buy that great pair of jeans... enjoy the weekend trip to the mountains... just not over and over again if your income doesn't immediately or near future cover the cost. Not a good idea.
I realize the topic is APR and just a thought about that: If the jeans you want to purchase you would pay $4 - $10 more for immediately then go for it. If that $4-$10 would at that very point stop you from purchasing that same pair of jeans, then don't. If you think of it in these terms, it really brings to light the impact of APR on your purchase. The price tag might say $200 but financed it's potentially $210. If this is acceptable to you then enjoy the fruits of your labor!!
10-04-2012 09:28 PM - edited 10-04-2012 09:30 PM
Any interest is bad interest, and any fee is a bad fee. I am against paying annual fee's and paying interest. I have never done either one. The banks should be paying us, not the other way around. They collect enough off merchant fee's, we don't need to give them interest as well.
If you need to carry a balance which it sounds like you do. First and foremost, you should not make the purchase unless it is for your families well being. At the very least you should be using a low interest card, not a high interest store branded card. If you plan on carrying a balance, which is a bad idea in the first place. You should use a card in the neighborhood of 6%, not 25%.
It is a bad mentality to get into the idea of it's only a small amount it doesn't matter. Every penny adds up, and the more you waste now. The less you will have later on.
For example. $8 now and $4 (increased 3% each year for inflation, as in your jeans are costing more so your finance charges are going up by 3% each year) each month invested at 6% over the course of 40 years (retirement age) adds up. In this case it will be $12,000. So every penny counts. I am not even going to go into the waste of money for the jeans. Just always keep an eye out for ways to save money. The money is flowing well now, but imagine if the cash flow stopped. You would feel pretty bad about wasting all that money when now you can't even afford necessities.
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