I am a full time college student at Iowa State. I have a Smart Passion so I have the AC and radio. Over the summers I live at home and work at a Golf Club. I don't spend really anything so I had (and still have) the proper savings and funding for my purchase. It depends on your situation. I also consulted with my parents and they backed up my decision. It doesn't matter who you are, you could be a 16 year old or a 116 year old. If money is the determining factor, then look at your budget.
By the way, people at school LOVE it, talk about being popular .
Im not saying that lifestyle is all bad, but in todays world, you need credit. You need credit to get insurance, you need credit to get a checking account, you need it to do just about anything. 30 years ago, you could buy everything with cash because a) things cost lest then and b) because we made more, adjusted for inflation. If income/debt were adjusted for inflation, then it would not be so hard to get cars and houses. YOU NEED CREDIT!
(sorry, it posted w/o my consent)
The thing you need to understand is you need to use credit as a tool and wisely. Get a credit card, by 10-15% of the card's max and pay it out. After 6mo-year of keeping a balance on it, you look like a good credit risk and your score will raise and you can be lent more. Thats something else they didnt have then was a scoring system designed to keep your score low and lenders richer. A loan or account was based on a good handshake and a good night's sleep on the part of the lender.
We got into this mess because of predatory lending techniques, and the "Ill just charge it" (BTW, the new bankruptcy laws FAVOR the credit card industry and hurt the housing market because now, you must pay the cards off before the mortgage... hmm wonder what that will lead to.
Point is: if you can afford the smart payment, and then some, then go for it. But try to stay a month ahead. Honestly, I didnt like paying my 1st car payment because I wasnt used to it. The repo man fixed that and now Im terrified of my car being repoed. If your not used to a payment, you might want to get a smaller one to get used to. But Im not going to sit here and tell you no. You only live once, and if worst comes to worst, seven years fly by fast and you will have learned a valuable lesson.
Good luck, and for more credit info google Credit Secrets Bible.
Taking credit advice from this poster is HILARIOUS. Thanks for the belly laugh.
Taking credit advice from this poster is HILARIOUS. Thanks for the belly laugh.
Merry Christmas!!!!!
Why? Because we hit hard times? Because we HAD to use our credit to live on? Because we know what its like to have horrible credit? Or maybe because we have been fixing our credit while most just sit and complain? Why is it so funny? Because its true? And how would you know either way?
Based on housing costs, very few would be able to save up to pay cash for a home. The problem is not having credit as much as not using it properly. The only things that should be bought on credit should be homes (keeping your total payment under 25% of your gross monthly income) and cars that do not have a full price that represents more than 50% of your gross annual income.
As long as the Fed and State Govts. give you a tax deduction for home mortgage and property tax income, it is still in the average W2 employee's best interest to buy an affordable house, make the payments and pay the property tax and take the deduction from your income taxes. He/she do not get that benefit from renting. Visualize your rent as in $1.00 bills stacked in piles on your front porch and then set it on fire. This is renting. If you do not currently own a house or condo, this is a great time to get a mortgage on a home you can afford. Prices will not stay down forever, and the government will allow you to deduct the interest and property tax in the meantime.
This is not 1960-home prices will not be $5-10K total or even the equivalent in 2008 $. Paying cash is not an option for most folks and never will be. The key words remain, affordable housing, and use your credit properly.
back to the OP-you would be better off at this point to find a reasonably priced used (certified used with a 12month warranty, better) car than paying out $250 per month for the next 60 to 72 months for a $13-19K car.
All, of course, just my $.02 .
Just as a follow up, my husband and I just made the last mortgage payment on our house (30 year mortgage - but we RE-mortgaged after 8 years to add on). My mortgatge total was $32,000. Sooooo, I'd say, there is no way the AVERAGE American is going to be able to pay cash for a house these days. You pay more for a mid-sized American car than we paid for our mortgage. The key is to keep on top of your credit rating and NEVER make a late payment. Good luck.
Just as a follow up, my husband and I just made the last mortgage payment on our house (30 year mortgage - but we RE-mortgaged after 8 years to add on). My mortgatge total was $32,000. Sooooo, I'd say, there is no way the AVERAGE American is going to be able to pay cash for a house these days. You pay more for a mid-sized American car than we paid for our mortgage. The key is to keep on top of your credit rating and NEVER make a late payment. Good luck.
I hate that this thread has been off topic, but that is good to hear. I would love to hear the spcifics of your home and mortgage since we are in the market for a house. Please PM me!
OK Back on Topic. As someone who spent way to many years in College and every summer somewhere else, The Smart would not have worked for me in College. I needed something that would allow me the ability to move my life several times a year.
That included Futon, Drafting table (folding) Clothing TV Stereo, Books Etc. The smallest I was able to fit in was an Omni.
Best advice, Get a Hatchback, Easy to load.
But, If you don't have to move at all, and you can handle the purchase of a new car, then the Smart is perfect. And you will never have someone asking you to help them move like you would if you had a pickup.
Last edited by forestacademy; 01-05-2009 at 08:20 PM.
On topic: I'd say it depends on if you're a student getting it for yourself, or a parent getting one for a student. The upside for the parent is you can only have one passenger (2 if a flexible friend stuffs themselves into the back). Fewer people in the car = fewer distractions, and probably less usage for mass-group trips out, moving buddies stuff, etc. The price is a nice upside for a student, since it's almost a reasonable price for a car (it's almost today's Volts Wagon). But if you can go for a low use previously owned car, it's probably better to do so.
On the credit topic: In an ideal world, sure... it would be great to never borrow money. As even the anti-credit people here point out though, we're living in a false economy because of lending. The key thing they're missing though is that we're living in it. It may have been possible back in the 60's to save up for a house and a car on a job requiring only a high school diploma. But today, because of the false economy, that's not an option.
Not borrowing was possible back when a house cost $7K and it would take 4 to 6 years to save that up on a high school salary. But no matter how hard you try, you won't find a house that cheep most places today. If you can, you won't find a job in the area; Detroit being a prime example.
Where do you live while you save up? And how long will it take to save up enough for a $150K house on that $7.50/hour wage from WMart or McKing? Will your parents let you stay with them for 15 or 20 years while you save?
What if you can't live with your parents? That leaves the option of renting. When you're paying as much in rent as you would on a loan payment for a mortgage, you have an interesting choice. Rent and throw money at someone else to let them build equity in their property, or loan from the bank and continue the false economy while building your own equity. Neither option is good, but in the end path #2 leaves you with something tangible in the end, where path #1 does not.
How do you propose a 18 year old fresh out of high school should pay for college, or a house, or a car? Do you know where a person with a high school diploma could get a job that will pay for the $30K/year price tag most colleges have these days? The $20K average car price (even used cars go for $2 to $6K). Not to mention a house...
How does a student pay for tuition, books, food, housing, and probably transportation to get to work and/or school? Should they just not go to college? Because clearly but the no-loan logic, it's better to make $15K/year at WMart the rest of your life than to get an education and make 4 to 6 times that while paying off the $50K debt after you graduate.
Wishing that housing and college costs would lower if only people didn't borrow money is great. And saying we're living in a false economy is all fine and true. But to say people shouldn't use credit to advance themselves when it's the only way to advance is just being blind.
Running up a credit card for dumb things you don't need is one thing. But purchasing a car, a house or an education these days without credit is impossible for most people under 40 unless their parents setup a nice trust fund for them. Using the "alternatives" in most places these days is either more wasteful (renting), or no longer possible to do. Living with parents 20 years, using non-existent public transit, and "climbing the ladder" at work aren't real options in most places today.
So, to those saying an 18 year old shouldn't take loans for essentials like education, a car and/or housing, I ask you: What should they do instead? I hear a lot of whining, and not much in the way of constructive ideas.
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