Gary JR

That makes no sense. You take that cheap loan and you still have that cash to make payments while making money with it.

Dewinator

An economist would tell you that budgets are irrational. Each prospective purchase is rational when it's value to you exceeds it's cost, which is not dependant on how much of a given "color" of money you've spent that month.

Selo

Gary JR,
Sure, if you have the stomach to take it out of the bank every month. I completely understand the concept of cheap money, but I think there's a lot to be said for writing a check and then never having to worry about it again. It's gone money.
If I'm writing a check every month, I'm facing the wisdom of that luxury purchase over and over and over again.

Gary JR

AKA discipline. Actually more like autopay. Very weak argument.

The good news is we all get to make our own choices.

Code

I try to pay cash for everything. No sense in paying interest when you don't have to.

Dan Nagy

For me, writing that monthly check is a nice reminder that I am able to do so!

Selo

Dan,
And when I go out for a spin, I like the reminder that I paid cash for my toy, and the title's in my keeping!

Dan Nagy

Hehe. Yes sir! It's all about what makes us feel good.

This is my first 911, so I leased it. I really wasn't certain how to configure it and I went on recommendations from what I read, my SA, and service advisor. At the end of the lease, if by chance I happened to configure a perfect car for me, I'll buy it. But if I want to make adjustments in the configuration, then I'll do it then.

For example, I thought the base 911 probably has more capability than I will ever use, but perhaps I'll want an S. I haven't had PSE before, so will I think it's worth the price? Or will the glass sunroof work instead of an open air car? With all these configurations, I need to have a least one of these before deciding what I really want.

Gary JR

...and that comes at a price. many of us see no need to pay.

ENCT

Do whatever makes you happy, end of thread.
Eric

917k

Both: rates are so low, I got 1.75% fixed for 5 years - given investing I am already up on this leverage and I expect it to be more so over 4-5 yrs - but I also put enough down so I can sell and not owe, so I use a mix of cash and leverage.

stealthboy

I own all my cars outright - paid in cash. It's nice to not have a monthly payment and have the titles for all vehicles.

Dirac

And you use the $100K that PNA does not have yet to buy (for instance) 2500 shares of AT&T. At 5% return, the first year yield will be more than the total interest you'll pay over the 5 year life of the loan. Yes, there are assumptions in this, but AT&T has an excellent record and there are other similar choices for the sake of diversity.

http://www.att.com/gen/investor-relations?pid=5675

It all boils down to your preference. You could leave money on the table, but if you're going to lose sleep over the risks involved in investing the $100K, pay up front and sleep with the title under your pillow.

socalpcarfan

Won't find this topic with the big boys over at Ferrari chat

Gary JR

Not so sure about that. Lots of successful people there that know how to take advantage of cheap money. Apple has all the money in the world - over $100B. So why do they borrow billions? Smart to use cheap money, that's why.