Credit Culture

 

There are constantly offers to entice me into debt, courtesy of my bank and other sources.  Everyone wants me to borrow money from them but I refuse to bite.  We are in a good place financially and unless things really went South for us, borrowing is just not a path we want to go down.  We've learned that lesson the hard way.  I'd rather scale back and do with less than go into debt to get something I wanted.

 We own three cars.  This Scion Xb is a 2006 and we were in debt when we bought it.  There was no choice, our prior car had died.  It was twelve years old.  This was a practical replacement and we are still driving it.  The picture is six or seven years old.  We have had to put money into it for repairs, but nothing that wouldn't have normally needed to be fixed or replaced in a car with 170K miles on it.  Our yearly expenditures, even with major repairs is still quite a bit less than the payments were were making on it.

The Benz was a splurge.  It's spent the entire winter with the mechanic.  We needed to fix the heater and they couldn't find the heater coil, so they kept it.  That's OK, this is a warm weather fun car.  It's my splurge --  it's not necessarily cheap to repair and keep a car from 1984, but it's the only way I will ever own a Mercedes Benz station wagon and I just love this car to bits. It cost me $3500 cash.  I've probably put $1200 into it.  If things got tough, I might sell it and cut my losses.

Our other car is a 2003 Chevy Malibu with about 80K miles on it, which we inherited.  That's a good dependable ride.  We've kept up with that too and since we didn't purchase it, it was the best automobile bargain we've ever had.

Last night we spent a little bit of time trying to talk a friend out of leasing a car.  Her car is eight years old and it's making funny sounds.  Like, what car doesn't eventually make funny sounds?  From what we could tell, it's probably something easy with the exhaust -- and we know a reliable and inexpensive repair shop in town, so we asked her to go there first.  My guess is the repair is going to be around $300.  She thought a lease would be a good idea -- $150 per month with no money down, for 36 months.  What she wasn't aware of, was the mileage charges on low mileage leases, etc.  When you lease, you are basically just paying them for the depreciation, plus a little more. When you are done, you need to either lease or buy another car.  You've gotten nowhere.  Her current car has 80K miles on it.  It's only middle-aged if she takes care of it!

We see people at our RV park who periodically buy up to a new trailer, rolling the financing from the old into the new.  They are perpetually under water, never having equity.  When they need to sell it, they can't because they owe more than anyone would pay for it.

All this is the kind of borrowing or financing we avoid.  Cars need maintenance, they don't stay shiny or new forever.  However, that is a poor reason to go into debt to replace them when all they need is regular maintenance and considerate handling.  If I want compliments and people to check out my car, I'll take a ride in the wagon and get my cheap thrills that way!