Is there anything wrong with buying large ticket items using 12 months same as cash financing? It seems like an easy way to buy expensive items.
You use their money, and if you pay it off early or on time you’ll incur no fees or interest.
Bad idea! To start with, 12 months is not the same as cash.
If I walk into a store with cash up front I’ll get a better deal than you will. It’s called negotiating, and that doesn’t happen when you just sign up for their deal.
Let’s say you’re buying $2,000 worth of stuff. If you’ve got $2,000 sitting in a savings account for 12 months making four percent, you’re looking at about $80. We’re not talking about a bunch of money here. Do you think I can walk in and negotiate at least $80 off the price? You bet I can!
Here’s another problem. What if that company messes up on one little thing? What if they record a payment wrong and it ends up being late? They’ll back charge you through the entire period at finance company rates, that’s what. I’m talking 24 to 38 percent! And this is even if you do everything right and abide by all the terms.
Stay away from snakes, Bud, and you won’t have to worry about being bitten!
I’m a senior in college, and I’ll be doing my student teaching next semester. The tuition for student teaching has dropped, so I just got a $2,300 refund on my university loan.
An economics professor told me I should invest the money in the stock market, let it grow and then use it to pay off my student loan. What do you think?
That’s really bad advice, especially coming from an economics teacher. You should never invest money in the stock market unless you’re going to stick it in there and leave it alone for at least five years. The market is just too volatile to play around like that for a shorter period of time.
Now, the stock market is a great place to invest over the long haul. But I don’t want you stay in student loan debt for five years or more. I want you to get out of school, get your teaching career in gear and get this loan paid off as fast as you can.
If I were, you, Brett, I’d apply this money directly to the student loan principal now. If you stick it in your checking or savings account you’ll probably end up blowing it on something you’ll wish later you hadn’t bought in the first place!
How do you save up cash to buy a commercial building without getting killed by taxes? Our accountant keeps telling us that’s what’s going to happen if we just let the money we’re saving sit there, instead of borrowing to make the purchase.
What do you think?
I think I’ve got two words for your accountant — you’re fired!
If you buy a building, you’re going to get killed with taxes. You can depreciate the building and even write off the interest, but none of this creates a tax-free situation. This is America. If you make a profit, you get taxed.
Sure, you’re going to get taxed on the money as you save up to buy a building. But here’s the situation. If you pay out $10,000 a month in interest, that’s $120,000 a year. If you write off the interest, it’s only going to save you about $30,000 in taxes. A $120,000 tax deduction doesn’t save you $120,000 in taxes. It only saves you the taxes on the $120,000.
Saving up to buy the building is a great idea, Jill. Going into debt just to get a tax deduction is a really bad idea!
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