The Church's Anti Credit Card Culture

[Guest]

29 minutes ago, mrmarklin said:

I don't know where you live yjacket but here in the SF Bay Area no one is saving for their first home and paying cash in just a few years. Starter homes here are $500k and appreciation is currently over 5 percent a year. That's a lot of after tax $$$$$$$. 

The average Joe Sixpack is definitely going into debt to buy a first home.  Or any home, for that matter.

Well, there is the first problem right there.  It simply makes no sense for anyone to really live there.

• First, the poor people making very little could easily find work anywhere they want to go.  Cheap jobs are always available.
• Middle income people shouldn't be living there because they can't afford it.
• With all the lower & middle class folks gone, what services could wealthy people get that makes it worth living there?

I realize there was almost circular logic there.  But the fact is that if some place is unaffordable, don't live there.

[Fether]

Just now, MormonGator said:

 There are three things that couples don't talk about: Money, sex, kids. If you can openly talk about money and be on the same page, than you are on the right track for sure. 

Haha we talk openly about all three of those things x) probably even today we had mentioned each of those once.

thanks for the advice though  we do have a pretty strong financial plan for up till our honeymoon, it's ganna get crazy till then!

[Guest MormonGator]

3 minutes ago, Fether said:

Haha we talk openly about all three of those things x) probably even today we had mentioned each of those once.

thanks for the advice though  we do have a pretty strong financial plan for up till our honeymoon, it's ganna get crazy till then!

Anytime my brother. God bless you. Hope you have a wonderful and successful marriage! 

[Guest]

Again, I'm not trying to beat you over the head, but this is friendly advice that you can take or leave.  In fact, you may already be doing this.

6 minutes ago, Fether said:

I feel like buying a cheap junker can be one of the worst investments ever  Unless you can't help it, get something that will run well.

The only thing that makes this statement even remotely true is the time factor.  Do the math.  Used car price + repair bills, etc.  You could rebuild a car almost three times before paying the price of a new car.  Forget the warranty.  You take it into the dealership and they will ALWAYS give you every excuse in the book to not honor the warranty.  

• I had an O2 sensor go out on me on the one and only new car I ever purchased.  It also caused the muffler to do something that I never got an explanation on.  It was supposed to be covered under the bumper to bumper warranty (which was the main reason I decided to buy a new car in the first place).  They told me that I had to do these other maintenance items first in order for them to replace the sensor.  The sensor was just $350.  But they had me do $400 worth of other stuff first.  Then they charged me a "deductible" on the warranty of $100.  So, if I did NOT have a warranty I would have been dollars ahead simply on the repair work, let alone the cost of the car.

The only thing is that repairing the car can be time consuming.  Again, do the math and see if it makes sense to get another beater as a backup.  The cost of a monthly payment vs the cost of the repairs may actually surprise you.  Learn to do many repairs on your own.  If you can go to the University of Youtube, depending on the make/model of your car, you could to the repair of a timing belt yourself.  Maybe you did.  Belts are a chunk of change in and of themselves.  But overall, the money you will save over the long run.

I realize this is advice you could have used months ago before you bought the car, but there is another thing to consider.  You may be having buyer's remorse because of the repairs.  I'm just saying -- add up the cost of repairs vs a monthly loan payment.  Unless you got very unlucky (or you simply didn't know enough about cars to make an informed decision on a purchase) then the math usually favors a used car.

Finally, here's a benefit that most people overlook.

While you're a poor college student, some mechanics will be more reticent to try to stick it to you since they know you don't have a whole lot of money.  So, by the time you get out of school and start making some money, you'll know enough about what goes wrong with cars and what is reasonable to fix them.  Then if you have a bad mechanic who is lying to you, you'll have learned that what they're saying doesn't make sense.

[mrmarklin]

59 minutes ago, Carborendum said:

Well, there is the first problem right there.  It simply makes no sense for anyone to really live there.

• First, the poor people making very little could easily find work anywhere they want to go.  Cheap jobs are always available.
• Middle income people shouldn't be living there because they can't afford it.
• With all the lower & middle class folks gone, what services could wealthy people get that makes it worth living there?

I realize there was almost circular logic there.  But the fact is that if some place is unaffordable, don't live there.

There are a lot of very high paying jobs here. I just stated that only the very wealthy have the means to pay cash for a home. 

I own two, both financed. I could pay one off, but why?  More $$$$ to be made in investments. Interest is cheap right now. 

Nothing has ever been a problem for me financially that more income hasn't cured. ?

That being said, consumer debt where one pays very high interest is stupid. And that is what the church is saying. Live within your means.

one advantage of using credit cards to pay almost everything is air miles and other rewards!  I've paid for several nice trips with this feature, and bought some nice things for my motorcycle as well using HD Visa card. But I've never paid a dime's interest.  Pay as I go.

[yjacket]

3 hours ago, mrmarklin said:

I don't know where you live yjacket but here in the SF Bay Area no one is saving for their first home and paying cash in just a few years. Starter homes here are $500k and appreciation is currently over 5 percent a year. That's a lot of after tax $$$$$$$. 

The average Joe Sixpack is definitely going into debt to buy a first home.  Or any home, for that matter.

Ah but that was part of my plan.  I saved all my money to pay for cash in one of the highest priced home markets out there-DC.  I made good money, rented dirt cheap-I never paid more than 1k/month including utilities for rent all at the same time supporting a wife and a new baby. I made tons of sacrifices and then when the time was right I moved to a place that had a much lower cost of living and bought for cash at the same time getting a pay increase to move.

Anyone trying to buy a home in SF is just nuts-that's why I don't live there or plan to raise a family there.  Plenty of places in the USA that have good jobs and a much lower cost of living; you just have to be willing to find them :-).  I literally don't think a company could pay me enough money to move to SF- they would easily have to pay me 250k+ for me to live the same lifestyle I have where I currently live and I make a fraction of that.

Oh plus right now, is probably not a very smart time to be buy a home-probably smarter to be selling a home.  Housing prices are nominally right about the same price before the '08 collapse; but since that was 9 years ago no one remembers the lessons of it.  Echo-bubble.  A lot of the similar mindset and attitudes are prevailing like I saw in '05-06 when I first graduated.  

It's not as bad and I don't think it will get as bad-but mark my words we are in for a recession and a housing drop.  A few more interest rate hikes from the Fed. should pop this bubble. And this is the reason why I hate credit; our economy is a debt-based economy and the Fed. causes the business cycle-the "Masters of the Universe"-blah.

Edited April 16, 2017 by yjacket

[yjacket]

55 minutes ago, mrmarklin said:

Nothing has ever been a problem for me financially that more income hasn't cured. ?

??? Yeap and most people can't just magically pull off making an extra 20k a year to pay the interest when things get tight.

[yjacket]

59 minutes ago, mrmarklin said:

There are a lot of very high paying jobs here.

LOL . . .high paying jobs in SF that's a good one.  I've checked, my skillset doesn't transfer to anything close to what I can get elsewhere (when comparing apples to apples).  I'm in tech-software engineer.  I'm sure they'd love to have me in San Jose.  No thank you!!!!  I'd get maybe a 10-20% pay bump.  The only people who stay in SF over the long term and deal with the housing mess there are people who are like those in DC-just so enamored with the place that they can't see the forest for the trees.  Plenty of high-tech jobs all over the US that will pay good money (not as much actually salary-but your lifestyle will be much better).

And until people vote with their feet SF and the rest of the bubble cities will get more and more expensive.

Edited April 16, 2017 by yjacket

[Blackmarch]

20 hours ago, Fether said:

We have all heard from General Authorities that we should stay out if dept. I'm sure many of us agree on that. But when I got home from my mission, my mom was apprehensive in me getting a credit card, and I meet YSA members of the church that regularly feel accomplished or superior because they don't have a credit card.

does anyone else see this? If so, why does it exist? 

In my opinion, life is almost impossible, even for a fresh college student. I feel one of the first steps in being financially independent is theough getting a credit card. Until then you need cosigners, can't apply for apartments, and you can't make large, necessary, purchases.

there is somewhat of one. while i'm sure the being frugal admontions do play a part in it, there being so many credit card companies who want to screw you over probably also adds to it.

[yjacket]

2 hours ago, Fether said:

I did buy a cheap car, but again... I just got off my mission so I didn't really have any money saved in the firstborn place. I bought a pretty cheap one and had to replace the timing belt not long after, that was about 1/3 of the original cost to replace... I feel like buying a cheap junker can be one of the worst investments ever  Unless you can't help it, get something that will run well.

I have been over my finances quite often. We are going to be able to avoid a LOT of debt. My fiancé works quite a bit, I do too.   We got a cheap apartment and neither of us really demand anything high maintenance. I'm just really grateful for the credit card. Without it, getting a car, apartment, and buying all the things we needed for the wedding would have been a nightmare and would have remained in debt to my parents rather than leaving their financial care and being on my own financially.

Trust me a used junker pays it's way in spades.  I've got a junker that costs me 1-2k/year in maintenance-still much better than paying 5-6k/year on payments. They only way buying a new car makes sense is if you are going to drive it until the wheel fall off (and even then you will come out ahead if you buy a cheap used junker). If/when those maintenance cost start really going up (3k/year) then I'll consider ditching it-that or it completely breaks down-probably happen first.

You're wedding, but while we are doling out financial advice :-).  Weddings should be cheap-get married in the temple (no cost), reception (use the church building, maybe 500 in food costs?).  The biggest expense would be the honeymoon.

Since your fiance works, I would also advise challenging yourselves to live off of 50% of the take home from your salary.  Save the rest. Don't really splurge until you have at least 6 months-1 year of living expenses. At some point, you'll probably have kids and if you are smart you'll want to make sure your wife stays at home with the kids.  

Trust me on this one . . .life happens.  People get sick, you lose your job, economy goes in the toilet.  Be prepared.  Having a financial reserve and no debt has saved my bacon when my world was crumbling into tiny pieces.

I will also say you should take a portion of the money you save and buy some hard assets with, gold and silver. Some people might laugh but you know what, one day the crap just might hit the fan and you might find the internet down or the banking system has a meltdown.  It has happened to plenty of other countries over the past 10-20 years.  And I guarantee you will always be able to take hard physical assets and get money for it.

And if you decide to use long-term debt; use it for something productive like starting a business not for something that just sits away and rots (a house).  

Just some crazy advice from the guy who bought 2 houses with cash :-).

Edited April 16, 2017 by yjacket