Not if they go up percentage-wise.
Let’s say I have a house that is worth $200 and I want to move to one worth $100.
If I sell, I pocket $100.
If prices rise 10%, I sell for $220 and buy for $110, and pocket $110.
Of course, that has to be weighed against inflation. If inflation tended to push the prices up, the $100 might be worth more than the $110.
The opposite is true for falling markets.
Exactly, and well said. No, Stainz, you’re not suckers. Far from it.
We have four credit cards, and pay them off promptly each month. We completely own our house now - no mortgage. We paid off our previous house’s mortgage when we could, and when it was advantageous to do so. We invest the nontaxable max every year for each of our sons’ college funds, and for our own retirements. We’re not hung up on materialism and we have no interest in keeping up the Joneses.
Keep doing what you’re doing - sounds like you’re on the right track.
Not many people can pay cash for a car. When you need one and you don’t have the money (and most folks don’t have $10K laying around), you have to finance.
Obviously, and I’d say that a car is something that falls into the “need” rather than the “want” category for most people. Moving closer to your work, getting a job closer to home, or taking public transit just aren’t realistic options for most people.
But I think that, if you do have the option of getting a less expensive car and paying cash, or getting a more expensive one and financing it, you should generally go for the former, as long as the cheaper car is reliable enough and suitable for your needs.
The thing is, it’s not rational thinking. The urge to belong is strong. I’m thinking of that Larson cartoon with a dog running across the freeway and two other dogs greeting it, as it arrives on the other side, with cries of “Yay! Rusty’s in the club!”
I may not have been in the ‘keep up with the Jonses’ thing so much–I have never had that much money–but I can attest to buying things non-rationally.
I was thinking about this earlier today. When I was in debt, even before the rollover to keep eating, I felt constrained, even poor. When I got some money or credit, I would buy something just to feel better, even if the long-term effect was to make things worse. My emotional dynamics were working against my rational long-term goals.
Now that I have all my bills paid, a (small) pad of money in my account now, and a paycheque coming next Friday that will be about two thirds uncommitted after food and transport and other necessities, I don’t feel as much of an urge to buy things, though there are things I want. I’m saving and preparing for my trip ot a conference in Italy this summer (so I will probably take some of it, stuff it in my prepaid Mastercard, and use that to pay for the conference fees).
The emotional dynamics are completely different: no neediness, but relaxation and patience.
I take the bus to work, and have never owned a car. Now, I live in Toronto, and I understand the public transit situation is somewhat better here than in some US locations.
But that brings up a question… if society orders itself so that most people need to buy cars to go about their lives, and go into debt, is that the best use of our resources? And what if those who benefit by promoting consumer indebtedness do the ordering?
Great replies everyone thank you. Although my OP may have sounded facetious - I was dead serious.
I am glad everyone has given me a healthier perspective.
I have had money issues before, and had to declare personal bankruptcy 8 years ago. Since then I have been terrified of debt - not of the concept, but of my ability to manage it properly.
So now that I am married and I am a mother, I want to (a) have realistic expectations of what we can acquire with our income - including retirement savings, investments, etc, and (b) have healthy spending AND saving habits to teach to my daughter.
My husband and I are used to buying what we want - within reason - I’m talking about DVDs and steak dinners here, not vehicles or trips to Europe - and we now have to radically change the way we think about money.
Again, I appreciate everyone’s replies.
The U.S. is huge as is Canada. There simply isn’t the population density in the vast majority of both countries (geographically speaking) to have a public transportation network that people could use to fulfill their needs. It is hugely expensive to build most elaborate public transportation networks and even more so when people don’t actually use them (like bus lines in many cities). Things are spread out and our city centers aren’t like those in Europe even if they exist at all. There just isn’t a good way to do it. Indivuduals just have to move someplace else if it is that important to them. I live 40 miles outside of Boston which has good public transportation but there is none here. Not being able to drive would be an absolute disaster especially since we live in place A, our daughter go to day care 10 miles away, my wife works 40 miles in one direction from there and I work 40 miles in another direction. There is no good solution. Such is life.