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Is credit a good thing?

Is credit a good thing?

  • Total voters
    50
Henrin said:
Would you raise your prices if you knew you could rely on consumers relying on future earnings to buy your goods and services? I bet you would.
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I believe colleges and universities have done just that, with the advent of easy student loans.
 
radcen said:
Is credit a good thing?

Financial credit. Consumer credit. I.e.: mortgages, auto loans, business loans, credit cards, student loans, "payday" loans, even borrowing from friends or family.

We're talking concept here, as in if we were starting from scratch what we as a society should do, not today's reality.
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Yes and no.
Depends on the person and the reason to use it.
 
cpwill said:
We could start by getting rid of the tax advantages to it.
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I heard that mortgage interest is not tax deductible in Canada, but people still buy houses there. Big ticket items will probably always drive consumer debt for things we need, using debt for daily wants is dangerous.
 
PirateMk1 said:
Credit limits the ability to accumulate wealth. Wealth accumulation in the end is the superior form of credit. Accumulated wealth is far superior to any credit card as you don't have to pay interest and instead are paid interest for access to your wealth.
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Those who understand interest collect it, those who don't pay it.....Mark Twain, I think.
 
Does anyone remember when credit card interest was tax deductible? I am old enough that I was able to catch the last two years of that. Though the last few years were only a certain percentage, to wean people off the idea, IIRC. Early/mid-80s, somewhere in there.
 
radcen said:
I believe colleges and universities have done just that, with the advent of easy student loans.
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I have no doubt that is the case. In any kind of transaction both parties try to get as much as they can from the other party.
 
cpwill said:
:shrug: it depends on what you are willing to buy, live in, and how long you are willing to wait.

I could see myself having the ability to save for a few more years and buy a cheap condo in cash, saving for a few more years and moving up into a beginner home, saving up a few more years and moving into a final home, etc.

The wife, however, has been dragged all over the world (literally) for a decade now, and I am asking her to move again. She finally wants a place of her own... :shrug: and I'm willing to take on some risk to give her that. I don't like it, but it's a tradeoff that's worth it to me, to meet her hopes and dreams that way, just as mine are met by my career.
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There are transaction costs associated with both home purchases and sales that you need to account for. Lawyers ain't cheap and neither are moving expenses. And your time spent dealing with finding a new home and moving into it costs something. As well, as you point you, constantly moving takes a toll on people that's very real though difficult to quantify.
 
I voted yes; I have utilized credit my whole life, legally & a very loooong time ago, illegally :mrgreen:

my credit score is typically over 800 but when it drops below 800, as recently, I take out a small loan even though I don't need the cash

this will allow my credit score to go back over 800 points once the loan is paid off correctly

cash from the small loan goes toward balances I may have

$$$$$ makes the world go round ..........
 
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Credit is good in specific instances. Mortgages are secured credit so I don't see them as a big problem. It can even be good if you are smart about it and make a profit on it.

Using credit to help you acquire things that will earn you money is good. For example, starting a business. I might conceivably go as far as to include a modest car loan in that if the car is used to get you to work. I use credit to buy investment properties that generate a monthly positive income.

Using credit to purchase non-income-generating consumer items, that you couldn't otherwise afford, is bad. Like that big screen TV you really want. You might find yourself in a situation where it is necessary, such as not being able to afford your electric bill otherwise, but that doesn't make it good, just necessary.
 
cpwill said:
I'm working on my 4th degree program - no debt
I've bought probably half a dozen cars - no debt

I'm about to buy a house, which will involve debt.

Other than that, though, the notion we would be poor without going into debt is like saying we would be weak and out of shape if we couldn't eat refined sugar. Credit is the trap of the working stiff.
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I was 32 when I bought my practice, 35 when I bought 1/2 an interest in my building and 42 when I bought the other half of the building out. I'm 51 and they're paid off (have been for a while as I mortgaged my house for better interest rates) and now my house is paid off. No way, no how I'd have even a fraction of what I have w/o out taking the debt and risk. Now I'm taking all that money that was going towards debt and saving it and if the next great opportunity presents itself I can pay cash for it.
 
Skeptic Bob said:
Credit is good in specific instances. Mortgages are secured credit so I don't see them as a big problem. It can even be good if you are smart about it and make a profit on it.

Using credit to help you acquire things that will earn you money is good. For example, starting a business. I might conceivably go as far as to include a modest car loan in that if the car is used to get you to work. I use credit to buy investment properties that generate a monthly positive income.

Using credit to purchase non-income-generating consumer items, that you couldn't otherwise afford, is bad. Like that big screen TV you really want. You might find yourself in a situation where it is necessary, such as not being able to afford your electric bill otherwise, but that doesn't make it good, just necessary.
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Car loans. I detest car loans. I would rather have mindless credit card debt than a car loan. I can't articulate why, and I know that doesn't make any sense, but that's my visceral reaction.

Having said that, I do currently have a car loan, albeit not very large. I have commonly gone long periods without one. My longest stretch without a car loan was 7 years, IIRC. Vehicles is one area where I get my money's worth. I impulse buy in other areas, but not vehicles. I will drive a vehicle until it's pretty much dead, and I'm just fine with that.

What I don't get is people who purchase things like a $46K pick-up then never use it for work or hauling. To me that's just a status symbol.
 
radcen said:
Does anyone remember when credit card interest was tax deductible? I am old enough that I was able to catch the last two years of that. Though the last few years were only a certain percentage, to wean people off the idea, IIRC. Early/mid-80s, somewhere in there.
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Yep, I was actually doing tax returns for people that were deducting consumer debt. IIRC it was a 5 year phase out, can't remember if it was phased out between 84-89 or 86-91.
 
Winchester said:
Yep, I was actually doing tax returns for people that were deducting consumer debt. IIRC it was a 5 year phase out, can't remember if it was phased out between 84-89 or 86-91.
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I tell that to young people today and they're amazed it was ever deductible to begin with.
 
Credit is a tool, if used properly and with restraint. In the wrong hands, a useful tool can be a dangerous weapon.

On the fun side of this issue, I love it when someone gets me on the phone thinking I owe them money and they threaten my credit rating. I tell them that cash trumps credit, and that I have plenty of cash.

On the down side of this issue, it bothers me that Madison Ave. is doing their best to convince todays consumers that debt is a normal and expected aspect of life. It doesn't have to be that way....
 
radcen said:
Car loans. I detest car loans. I would rather have mindless credit card debt than a car loan. I can't articulate why, and I know that doesn't make any sense, but that's my visceral reaction.

Having said that, I do currently have a car loan, albeit not very large. I have commonly gone long periods without one. My longest stretch without a car loan was 7 years, IIRC. Vehicles is one area where I get my money's worth. I impulse buy in other areas, but not vehicles. I will drive a vehicle until it's pretty much dead, and I'm just fine with that.

What I don't get is people who purchase things like a $46K pick-up then never use it for work or hauling. To me that's just a status symbol.
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a few years ago I wanted a very nice German made auto; approached my bank about a loan because I did not want to pay out right from savings

bank rate was 2% higher than CC interest so, I put the Porsche on two credit cards with the 2% lower interest :2razz:

**** Wells Fargo ................. :lol: .................
 
Commerce would end without next 30/60/90
 
radcen said:
Car loans. I detest car loans. I would rather have mindless credit card debt than a car loan. I can't articulate why, and I know that doesn't make any sense, but that's my visceral reaction.

Having said that, I do currently have a car loan, albeit not very large. I have commonly gone long periods without one. My longest stretch without a car loan was 7 years, IIRC. Vehicles is one area where I get my money's worth. I impulse buy in other areas, but not vehicles. I will drive a vehicle until it's pretty much dead, and I'm just fine with that.

What I don't get is people who purchase things like a $46K pick-up then never use it for work or hauling. To me that's just a status symbol.
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People spend lots more on cars when credit is involved, it's insane. For a long time I drove cars into the ground and I still would... but kids, lol.
 
radcen said:
Car loans. I detest car loans. I would rather have mindless credit card debt than a car loan. I can't articulate why, and I know that doesn't make any sense, but that's my visceral reaction.

Having said that, I do currently have a car loan, albeit not very large. I have commonly gone long periods without one. My longest stretch without a car loan was 7 years, IIRC. Vehicles is one area where I get my money's worth. I impulse buy in other areas, but not vehicles. I will drive a vehicle until it's pretty much dead, and I'm just fine with that.

What I don't get is people who purchase things like a $46K pick-up then never use it for work or hauling. To me that's just a status symbol.
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Things like the truck are more often bought by young men to impress male friends. I think women have different motivations, not sure what they all are. Now, if the truck is paid for in cash up front, then I think the women are more likely to be impressed. That means earning power, a real asset to us all, male or female....
 
UtahBill said:
Things like the truck are more often bought by young men to impress male friends. I think women have different motivations, not sure what they all are. Now, if the truck is paid for in cash up front, then I think the women are more likely to be impressed. That means earning power, a real asset to us all, male or female....
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I think there's some truth to that.

Probably the same with women and large SUVs.
 
radcen said:
Credit is like bacon. Damn it tastes good when you're indulging, but it's best done in moderation.

Things like purchasing a home isn't doable for most people without a mortgage, so for that alone I don't think it's realistic to say 'never', unless you're willing to have no home ownership ever and pay rent your entire life and end up with nothing to show for it at the end.
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There are some high ticket items, like a home, or a car, where credit is mandatory for most.

Moderation is definitely called for. It's an addictive drug that many get buried by.
 
Credit actually based on a person's purchase power is a great thing, when it's given arbitrarily its horrible.
 
UtahBill said:
Things like the truck are more often bought by young men to impress male friends. I think women have different motivations, not sure what they all are. Now, if the truck is paid for in cash up front, then I think the women are more likely to be impressed. That means earning power, a real asset to us all, male or female....
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And really old men, for the same reason, to impress friends. If they ever did away with Social Security, Ford and Dodge would take a big hit...
 
ocean515 said:
You mean deducting home mortgage interest?

That would make 2008 look like a fire drill.
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Unlikely. The housing market isn't going to go into a massive bubble because you lose a tax deduction on a portion of a mortgage payment any more than our medical system would collapse if we stopped offering a tax deduction on medical expenses.
 
ocean515 said:
There are some high ticket items, like a home, or a car, where credit is mandatory for most.

Moderation is definitely called for. It's an addictive drug that many get buried by.
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I don't agree that credit is mandatory for a car. Buying cheap cars when you are young and broke can be.
 
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