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Old 7 July 2008, 07:49 AM   #75
cmcm3
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Join Date: Apr 2008
Location: Scotland
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Quote:
Originally Posted by sfrolex View Post
I'm not so sure about that. I mean, it seems that way, but, I think that these incentives make it seem "ok" to carry a debt and make humans more apt to spent money than if they pulled out cash and paid 100% at the time of purchase. I even have hesitations about using a credit card even though I pay it off at the end of each month. The credit industry in America is extraordinarily mature with tremendous powers on the human (American) psyche.
Its definitely true that people could get carried away with the idea of credit and that could land them in a bad place. On the otherhand the simple mathematics mean that interest free credit (where there is no discount for cash upfront) is a good idea, and that is a fact. I guess each individual has to weigh up their own strength of character, preferences, and financial security and make the choice.

I just want to make it clear that I am not advocating borrowing to spend money that you don't have. I am advocating delaying and spreading out payment of money that you already possess, where there is no scope for discount for a cash puchase. Two very different things.

One instance where I would borrow for this kind of purchase is in the face of an imminent price-rise, as long as I was close to having enough money. If I was buying a £3k watch, and had saved up £2,500 - then found out that next month the price was going to go up to £3,500, I would absolutely borrow/finance/whatever the extra £500 to miss the price rise. You would have to be a fooking muppet to mess your payments up so badly that you ended up worse off than if you had saved and taken the price increase hit, and in that case, well, in the words of Gordon Gekko - a fool and his money are lucky enough to get together in the first place!
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