37 million Americans living below poverty line

[parihaka]

1. You talk just like my dad, but I have to disagree. Consider my situation, Im about to finish my degree but dont have a car. I dont have $15,000 cash lying around to buy a car, would it be a mistake not to go into debt to purchase a car? It wouldnt because in only a year or two ill be looking forward to $25,000-$35,000 yearly annual income, there is no reason to live like a beggar in this period and then a king in the next. Most people try to smooth their consumption over lifetime, I know my income will dramatically rise in a year or two so rather than living like a pauper now i can take some debt to smooth consumption.

So you'd be willing to dedicate between 3/5ths and 3/7ths of your gross income per annum on one item?
Thats without the interest of around 12% per annum you'll be accumulating?
So infact you'll be probably paying back about 22-23 thousand dollars on a car which by the time you've finished purchasing it will be worth a tenth of what you paid for it as it is a depreciating asset.
Another way of looking at it is you are saying you are willing to spend one year of your life working for free for the car salesman?
Buy a banger and save your money. When you have $10,000 go to your car salesman and offer that much on his $15,000 car. Cash. Hold the money in front of him. Even if he haggles you up to 12, that is still 10 - 11 thousand dollars you've saved yourself.
With that $10,000 you can invest it and earn interest instead of paying it.

 

[sigatoka]

1. So you'd be willing to dedicate between 3/5ths and 3/7ths of your gross income per annum on one item?

2. Thats without the interest of around 12% per annum you'll be accumulating?
So infact you'll be probably paying back about 22-23 thousand dollars on a car which by the time you've finished purchasing it will be worth a tenth of what you paid for it as it is a depreciating asset.

3. Another way of looking at it is you are saying you are willing to spend one year of your life working for free for the car salesman?

4. With that $10,000 you can invest it and earn interest instead of paying it.

1. I didnt buy the car because your argument is correct, the $8,000 debt will be spread over clothes, shoes, phones and so forth. Variety is the spice of life.

2. So what, nothing is free. You cant borrow money without expecting to pay interest. Of course the value of the car will be less, its because you are using it and have more flexibility.

3. Free?? And what about the car you get?

4. I am investing at the moment, getting a degree is accumulating human capital which ensures that I gain a higher future income. This is an asset as much as any buidling or shares is. It is against this higher future income that I am borrowing to "smooth" my consumption.

 

[TexasJohn]

1. Capital markets have further developed since you finshed being a student.......... I am sure your daughter is also increasing debt because all students i know are (as they should if they are rational)..

Actually my friend not much has changed since the early 80s. They just package the same ball of wax with a different name. For my daughter, I had her save up $1,000, found a car in the $3,000 range, she will finance $2,000 and build her credit. My buddies and I went over the car, and preventive replaced odd-ball stuff and made it reliable.

2. Actually, I think ill have around $8,000 debt when i graduate, this isnt a lot. I mean, people buying houses in Texas must be taking $400,000 mortgages. Against this, $8,000 is peanuts.

I can give you some real estate figures as pertains to the Dallas/Ft.Worth area.

The average house ( such as mine) costs about $150,000. So what did I get for my money? A 3 bedroom 2 bath 2 1/2 car garage, 1/4 acre backyard, with a 12ft deep pool. The same house in say, CA or NY would cost about $600,000.

I hope you are planning on making more than 25-30k in annual salary. That would just not cut it around here!

Seriously, don't you think $8,000 is a bit much for clothes?? The dress code is pretty relaxed for IT staff, and I have been wearing Dockers and T-shirts for years now. 8k would be a lifetime supply of those!

Don't mean to sound like your dad, but there are plenty of free "net worth" calculators on the net. I urge you to try one out.

Best of luck! It is always encouraging to see a hard working student. Do you go to school here in the US or in Pakistan?

 

[sigatoka]

1. she will finance $2,000 and build her credit.

2. The average house ( such as mine) costs about $150,000. So what did I get for my money? A 3 bedroom 2 bath 2 1/2 car garage, 1/4 acre backyard, with a 12ft deep pool. The same house in say, CA or NY would cost about $600,000.

3. I hope you are planning on making more than 25-30k in annual salary. That would just not cut it around here!

4. Seriously, don't you think $8,000 is a bit much for clothes?? The dress code is pretty relaxed for IT staff, and I have been wearing Dockers and T-shirts for years now. 8k would be a lifetime supply of those!

5. Don't mean to sound like your dad, but there are plenty of free "net worth" calculators on the net. I urge you to try one out.

6. It is always encouraging to see a hard working student. Do you go to school here in the US or in Pakistan?

1. Ah Hah! so she is getting debt/loan

2. How come houses are so damn cheap in Texas??? Does that $150,000 include the price of land? Is it because you are very far from urban areas? How long a drive would a city of at least 0.5million be from your place?

3. If I started working this year id make $28,000, if i study an extra year then i could start off with $32,000

4. Its not just clothes, it includes eating out, movies, phone bills, train tickets. Remeber, things cost more in Oz than U.S. because your strong dollar makes imports cheaper (and those imported mexicans make services cheaper. Eating out, Haircuts, going to the movies are very expensive because we dont have mexicans doing it at a reasonable rate.) Im serious, all those people against immigration should move here and see how it hits the pocket.

5. My (Texas) graphics calculator has a built in finance program in addition to playing games.

6. In Australia, doing degree.

 

[TexasJohn]

1. Ah Hah! so she is getting debt/loan.

Yes, against my advice. Try beating common sense into a 19 year old. It's her only bill, because she lives at home.

2. How come houses are so damn cheap in Texas??? Does that $150,000 include the price of land? Is it because you are very far from urban areas? How long a drive would a city of at least 0.5million be from your place?.

Because we don't overvalue our housing like CA and NY. Yes, it includes land. Arlington,TX is smack between the twin cities, Dallas and Ft.Worth. It's the entertainment district for both cities. The Texas Rangers ballpark and the new Dallas Cowboys stadium are both less than 2 miles fom my house. It also has an entertainment park (6 Flags over Texas) and a water park next to it. Arlington itself has .5 million people, and it is 18 miles to either downtown (15 minutes).


3. If I started working this year id make $28,000, if i study an extra year then i could start off with $32,000

4. Its not just clothes, it includes eating out, movies, phone bills, train tickets. Remeber, things cost more in Oz than U.S. because your strong dollar makes imports cheaper (and those imported mexicans make services cheaper. Eating out, Haircuts, going to the movies are very expensive because we dont have mexicans doing it at a reasonable rate.) Im serious, all those people against immigration should move here and see how it hits the pocket. .

Ah, yes! you do have my daughter's life style. That's why she has a hard time making ends meet, even though she lives at home and has no bills - except her car, the beloved PT Cruiser she HAD to have!!

5. My (Texas) graphics calculator has a built in finance program in addition to playing games.

6. In Australia, doing degree.

Which city?

 

[sigatoka]

1. Ah, yes! you do have my daughter's life style. That's why she has a hard time making ends meet, even though she lives at home and has no bills - except her car, the beloved PT Cruiser she HAD to have!!

2. Which city?

1. Im quite frugal actually.

2. Brisbane.