The 5 Top Reasons People Dont Buy Guitars

Not to continue to derail the thread, but here's the simple principle around paying cash:

Let's say you make 1000 bucks a month (to keep the math and the example simple). 

If 500 goes to rent and 200 to food and everything misc. else, you have 300 left.

Now, let's say you have payments on a car of 150 bucks a month for 4 years (instead of paying cash).  Regardless of how low the interest rate is.  That leaves you 150 bucks to play with.  But, had you paid cash for the car and it was yours immediately, no financing or payments, you'd own a car, and still have 300 bucks a month left to play with and save or invest etc, instead of only 150 bucks.    

In other words, those payments for the car at that "super great low interest rate" have now just strangled your income (which is basically your best and almost always your only wealth building tool) by half. 

Your wealth building tool has just been reduced to half-strength because of those low interest payments.    (or, you could say your entire income has been reduced by 15% for 4 years, whatever way you wanna look at it, it's not good).

So, not criticizing here, Lord knows I'm still trying to get this down pat perfectly myself, but just explaining that the principle is sound and true.  You will always grow wealthier and be better off paying cash for stuff instead of any kind of financing.  Millionaires around the world have confirmed this by the 10's of thousands as to this principle being how they got there.

Ok, sorry for the infomercial.........now back to our regularly scheduled programming of .......erm........uh.........ya......what were we talking about again??    Oh ya, Top 5 Reasons People Don't Buy Guitars......I'd like to add a sixth reason.......they didn't have the cash.   

I love my heated seats as well!    Ya, the last couple of years were the best time to grab a Hyundai for a steal cuz they were publicly on a mission to get as many of their cars out there on the market as possible.  One couldn't find a better deal on any car than a Hyundai for a good 2 or 3 years there. Trust me, I tried.

I got mine for just over 6 thousand dollars off.  LOL!  The salesguy couldn't even authorize it at the end, the dealership manager had to come and finish the deal himself.  At the end of it all, he shook my hand, gave me a wink and said "Well played."  ha ha!  One of my favorite product buying moments ever.

I've always been able to get good deals on cars cuz I'm always patient and I love playing the "game" at dealerships, but to be honest, I don't think I'll ever be able to top the deal I got on this particular car that I have now. (not that years down the road, I still won't give it a try!)

Just my two cents worth:

Cash is king with most small purchases and in most situations, especially vehicles. But henk is also right - There is such a thing as smart investing, where you use someone elses money to fund your own assets long term, where the asset gains a higher overall appreciation than the collective interest you pay on the loan. Property developers do this all the time, and are usually rolling in it.

The big thing with those kinds of investments is that the risks are higher. And the borrower is always servant to the lender. With me, the amount of emotional stress that comes from having a looming debt is just too much to bear. I'm a real chicken with debt. And so I try and do everything cash. Its because I want to sleep at night. But I have friends who are very smart investors using other peoples money - And they sleep just as easy. They have the psychological makeup to handle all that risk, and even enjoy it. It just depends on how you are built. Rather them than me!

confused
if you took GMC loan, ie dealer financing, that wasn't a cash incentive, it was a markdown available to anyone

if you took a loan from a bank, credit union etct, then u can claim a cash incentive
but from GMC..uhuh
if i were another customer handing over cash...i would be quite upset seeing someone getting same markdown with dealer financing. I would take case to Quebec Consumer Protection, re false advertising.

---Welcome to Acoustic Cars and Guitars!

Yes, investing is of course good.  And I get your points about the diff between a small interest loan on a car and the bigger scale stuff El Gull, was talking about.

My example did not include however (was trying to keep it really simple) that the principle was "supposed" to imply that you had a good amount of liquid savings (what's known as your emergency and disposable fund) in place as well, which is much easier to build and maintain when debt free.

I agree, it's not good to touch your investments, nor should you.  It goes against the very idea and principles of investing.  Living debt free and paying cash for everything actually includes that part, the investing. 

The idea is to basically, pay cash for everything, live debt free, so that you have even more of your income available for investments and savings (investments being the "untouchables" and the savings being the "touchables").

So ideally, the idea is, when living debt free or pay-cash-for-everything, you will never have to take a loan for anything except a house.  Everything else you can afford to pay cash for, because you always have the cash because you're always paying yourself back (savings) instead of loans and credit cards with interest.  Every single bit of interest you ever pay to someone else, no matter how small, could be money you're paying yourself.

The plateau for someone like me (no house, living in a apt. with no bills other than rent, food & car maintainance. [no cell phone plans or cable etc] ) is about 6 to 9 months living expenses liquid in the bank.  This would cover job loss (6 months worth) and disposable purchases etc (3 months worth). 

That's the beginning of it.  Later, if one keeps going, within another year, you pretty much have enough liquid for everything, including buying a car cash, or fixing a roof or whatever, and you're on your way to never having to borrow a cent again.    True financial freedom.......which allows you to have no reasons not to buy a guitar.   (sorry for the double negative!) 

My wife handles all the investments, a good idea considering i have done things like go to Household Finance to pay off Chargex (now Mastercard) ..not one, but TWICE. I have had rented stove.,fridge and cloth washer seized for missed payments,,,twice! But Not with THIS wife.

So she has set up RDSP and RRSPs and TSAs for each of us, invested in multiple funds etc . etc

Her adviser (one of..!!)  did an asset audit of our family and surprisingly told us that if house, cars, funds, savings were liquidated and insurance cashed out, we would be millionaires.!>!>!>!> insane!

I do not believe it personally, its a myth... I still feel like the kid who thought kraft dinner with sliced hot dogs was a luxury meal.

...now im hungry, why don't we have a cook and a maid?
oh
new guitar check out!! seee Seagull area.