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| Tue, 03-08-2005 - 12:48pm |
Okay, I will be out of debt in April, and I have been wanting, pining, and daydreaming about getting a Mac Powerbook laptop for the last year and a half. I want to take advantage of free internet access down the street at the coffee shop, I want to take my Quicken and budget info with me, I want to do some writing, and I also bought myself a computer game a few months ago that I can't play on my junker computer at home because it is not new enough, the video card is too old. :( That game, Myst IV, was my big reward for being good last year, and it's sitting on a shelf beckoning to me.
I know I should save up and buy the computer, but I SO want to fulfill my "springtime bikeride to the coffeeshop and work on the computer" fantasies.
I'll have my contingency savings up to $1000 by May. I just transferred my one credit card from Bank of America to my credit union, which has a lower rate by almost 10% and also has 1% cash back. I could have the laptop paid off by fall in addition to continuing to build my contingency savings. I could still meet my $5000 by the end of 2005 goal if I tighten things up a bit more.
Wah! I'm having pre-guilt for a purchase I haven't made yet! hehe.

This may not be a popular answer, but I don't think using credit cards is bad. I think it's *how* you use them that matters. Using them to just shop with no plan of how and when the bill will get paid is bad. Using them and then paying a huge interest rate for years on the balance is bad.
I have charged things in the past year, but when I have charged I do it knowing exactly how much I will charge and when I will pay it back. I know how much I will pay each month and I put it in my budget spreadsheet so I can see I can afford it *before* I make the purchase. I also know whether I will pay interest or not. I don't mind paying the interest if it's short term and I will pay the balance within a month or two. It also didn't bother me to charge a matress for dd (she was having trouble sleeping on the hand-me-down mattress she had that was probably 30 years old, it was from her great aunt) and a new fridge (I didn't have one and I rented a place that required I bring my own, so I had to buy one) last summer when I moved. I bought them with zero interest offers on store credit cards and I knew that I could have them paid well before the zero interest period expired. I didn't mind financing my car because getting another one couldn't wait, I bought a small, fuel efficient car, I put enough down that my payment was a reasonable $200 per month (and I made some cuts in my budget to help cover that), and I got 2.9% financing. I felt good about each of those purchases. Even though they caused me to incur debt, their were the right choices for me and did not make me worse off financially.
Don't forget, using credit wisely and responsibly (charging only what you can afford, always paying on time, not paying outrageous interest rates) is good for your credit rating and does not kill you financially. Using credit unwisely or unresponsibily (maxing out your cards and taking years to pay the balances off) is what gets us into trouble. So if the monthly payment fits into your budget, your financial goals do not suffer from making the purchase, and especially if you can find a zero (or really low) interest offer from Mac or one of your existing cards, then go for it.
Of course, you will never go wrong saving up for a purchase first. If saving up (and proving to yourself you have the self discipline for that) is what you really want yourself to do, then make up a savings plan specifically for this purchase and make yourself stick to it.
Edited 3/8/2005 1:32 pm ET ET by firstamendment
Being someone who used to carry a lot of credit card debt I would have charged the purchase in the spur of the moment, without thought of how I would pay for it. Months became years until I finally decided I needed to become money savvy and make money off the "system" ;)
My view of credit card use is now very much in line with firstamendment's response to you.
I do use it to buy especially big ticket items in the event of the need to process a chargeback which I have never had to do. I make it a point to pay my credit card bill in full every month to avoid interest but I like the fact of using "someone" else's money for 30 days while my money earns some interest, paltry as it may be at the moment.
Besides many banks don't allow you to use the Interac card for purchases over a couple thousand per day, most have even lower limits so the credit card comes in handy.
Treating yourself should be a good experience, not feeling guilt. With proper planning for paying the purchase off within a couple of months you'll be in control of your credit card. You have mentioned that you'll still be able to keep up the savings while taking a few months to pay off the notebook so I think you'll be fine.
If you are going to gain a lot of enjoyment from it and it actually helps you to spend less in other areas then by all means go for it :)
Let us know what you decide.
Kassandra
"It is said that life has its peaks and valleys. The challenge is to accept them equally and experience them
Looks like I'm in the minority in this thread, but if you can pay the purchase off by fall, why not wait until fall to purchase the computer, when you have cash in hand, ready to buy?
All my best,
Danni
I will also be a dissenting voice, agreeing with Danni!
Becky
CL of 4th, 5th & 6th grade Scoliosis
I have to agree with the last 2 posters....Computers always go on sale right during the "back to school" craze. Why not get the same thing at a lower price?
I agree that it's not about NOT using cc...it's about using them wisely, but in this case I think it would be wiser to wait for the big sale.
DH and I bought a new tv unit because we had the cash available and just went ahead and purchased it, then came our surprise when the same store had a huge labor day sale and pretty much everything was discounted :( UGH...If we had had the patience to wait a little longer we could have paid WAY less! But you live and you learn I guess :)
Good luck with your decision.
:)
Thank you all for responding!
The newest upgrade for this machine just came out, so it's the newest and greatest. I was thinking about waiting for fall, but the price reduction for macs is usually about $200, and if I ask myself, would I rather have $200 or the laptop earlier, I'd take the laptop. :) I'm going to wait until after April 1st, when I have all of my debt paid off in full, and I'm going to wait until after the savings hits $1000, and then I will weigh again whether I'll go for it or stick to the original savings plan.
Essentially, I will have $500 per month to either save or apply to something beginning in April. The computer costs $1499 plus tax. I have one extra paycheck in September that will be an extra $550 net after bills. So, I could sit on my $1000 savings and pay off the computer in 3+ months, or do savings/visa until it's paid off. Either way, I still can get my $5000 contingency fund by late December/early January if I stick to it and snowflake a bit to Savings.
I know that I should wait, but it seems that all I've been doing for the last two years is waiting. Waiting to get something paid off, waiting to be able to do things, waiting for the next paycheck, for the tax return, for a break. I do enjoy the little things, and I'm very grateful for what I have and for the path I'm on. But dag nabbit! I'd be on cloud nine for quite a while if I had this item!
I'll let you know where I'm at in April. :) Thanks for your input!
Sometimes you just can't deny yourself something that you want and you know you truly can afford. What you can do when you buy it is keep reminding yourself "Nope, I'm not going to go shopping because I just bought a new laptop." As long as this isn't the start of an indulgent spending spree, it shouldn't be too big of a deal, and like I said, knowing how much you are charging, how much charging it is going to cost you, and when/how you will pay for it make for responsible indebtedness. The other posters points about the timing/pricing of the purchases are very good points, and it sounds like you have considered those as well :)
I think your plan is a good one. You have to continue to exhibit some self control and not buy yet, but you won't go nuts denying yourself a well thought out and reasonable purchase.
We did this once for a patio we wanted so badly. We were renting a house and our son was one. Our house was small, and the yard had very little useable space. We wanted a place for our son to play outdoors, which he loved to do, and which would be easy to sweep clean of those annoying sweet gum balls that pricked his feet and tripped him up all the time.
Lowe's had a 0% for six months offer, and we calculated we could comfortably pay it off in six months.
It was Spring and we knew if we waited until we had the money the season would be over and it would almost be Winter again.
Well, we went ahead with it and a couple months later dh lost his job. That $600 debt became the seed for a couple tens of thousands of debt. Soon after, we moved to a cheaper place--an apartment--and left the expensive, still-unpaid-for, deck behind.
Yes, it was *only* $600, a drop in the bucket of the debt we eventually accumulated, but I can think of hundreds of ways $600 (plus years of interest) could have been better spent. Although in theory it had sounded so ideal, it actually added to our quality of life only incrementally, and only briefly, and there were so many other ways we could have given our son the outdoor play time he needed at that time--public parks, quiet cul-de-sac for riding toy play, wagon trips to the grocery store down the street, etc.
More important, it was a symptom of a way of life that became unsustainable the instant dh lost his job, but that we continued to live and that we are still, three years later, paying heavily for.
Plus, on the other end of things, when we had begun to get out of the hole and rebuild our credit and so forth, $600 would literally have gotten us into our new house a month early. Sure, it's only a month, but the difference in quality of life for us has been enormous. One month in our house is worth far more than twelve months of having a deck at that rental house.
Besides, for me, it's also a state of mind. If I'm always buying things because I have to have them *now*, then I will always be just a little bit behind. But if I can wait and buy things *then* when I have the money in hand, I will gradually get ahead and stay ahead. Paying for things before I have the money in hand for them is a way of gradually frittering away my future. How do I know that in six months (or whatever) when the item is paid for that I'm actually going to *want* to spend that money on that item? Why make the choice now for my future? Instead, if I keep the cash and wait for the purchase, I can know that at the time I spend my money, it is for what I really want and not something I wanted six months ago.
A strange phenomenon has happened now that we pay for things with only cash. Sometimes, when we've saved up for something for several months or however long, and it comes time to buy it, we suddenly discover that we actually don't want it that badly. Having had to experience the true value of that money in terms of time and work BEFORE buying it, gives us a real feeling of the true value, and sometimes we discover that as much as we wanted the THING, it isn't actually worth the money we saved for it. Then we have money in savings we can spend on something else that IS worth that money to us.
So, not to come on too strong, but I guess my opinion is pretty clear on this. One other way to put it though: Instead of spending on something you feel like you really want, consider investing in a new way of life. A way of life that means you always pay cash (or credit with cash already in the bank to pay for it during the 30-day grace period--so that you maintain a credit file for major purchases like a home), that means your money works for you instead of you working for it. A way of life that allows you to stop always paying for your past while denying yourself now and instead be investing in your future while enjoying your NOW.
Whatever you decide, have a beautiful Spring.
Blessings,
Heather
I agree with you Heather! I've been living this way for the past two years, and the cash-based lifestyle is very rewarding. I write six checks per month for the bills, and everything else is cash on the envelope system. When the cash is gone, I'm done until next paycheck. I've been a very good girl over the past two years, I haven't bought any new purchases on the credit card, and the debt I'm paying for now is due to my cat getting really ill and running up a vet bill. (he's gone over the bridge now, so no more vet bills!) My lifestyle is completely happy and frugal, and I've met many of my financial goals, bought a home, have a reliable paid-in-full vehicle that will last a while, commute to work via bus or bike, and now I'm working on the contingency fund again. Crazy unforseen emergencies happen at all stages of the process, I could have the $5000 in contingency and have a $6000 emergency. You still have to live in the moment to some extent, and I feel it's healthy for me to have reached a point where I control my debt instead of debt impacting every decision I make. I'm finally at a point where I can make positive decisions without being in over my head. :)
I haven't bought the computer yet, which in itself is a choice. I have two goals yet to reach in the next couple of weeks, and I'm pretty sure I'm going to go for it because I can afford it and still move forward on my other goals. What I WILL probably do is add that total into my contingency savings check-in so I can feel answerable for it and it will be harder to create a bigger situation.
Thanks! All of the opinions here are excellent and I appreciate the input!