Saturday, August 22, 2015

Going Dutch: Financial Fitness Message of the Week (29)

Perhaps the biggest myths regarding debt deal with car loans. People who use credit to purchase cars are on a road to financial struggles. Do not use car debt. The myths say that financing a car is okay, but it isn’t. Find another way. Buy your car used. Plan ahead and save up so you can pay cash. Drive around in an old clunker until you have cash for something better.
Research shows that even those who can easily afford to buy a brand new car for cash… don’t. More often than not, the wealthy purchase quality, pre-owned vehicles with low mileage. And they pay cash. They do this because they see their vehicles as transportation, not as status symbols. If you want to be financially fit, follow their example.
PRINCIPLE 29: See your car(s) as transportation, not status symbols. Save up and always pay cash for them.*
Work to put yourself in the right mindset concerning cars. I know, I know, we all love cars. Cars are fun. Cars are pretty. The right kind of cars even sound beautiful, but we must always remember that they are just tools for transportation. They are not business investments. They are not status symbols, except in the sense that they create a false feeling of status where the owner looks good to others who cannot afford the payments on the same set of wheels. This is another way the big hook of PRIDE comes in.
Furthermore, don’t fall for the marketing tactics about leasing or financing – paying cash is the only way to go. Whatever type of financing you choose (lease, standard interest loans, or even 0% interest loans), financing something that depreciates in value is a great way to just throw away money. Before the ink on the paperwork is dry your car will lose about 25% of the value. The car will lose value faster than most people can pay it off and even if you are saving on interest, debt is debt, and cars are not worth debt. No matter how you slice the deal, God says debt is slavery.
Proverbs 22:7 – The rich ruleth over the poor, and the borrower is servant to the lender.
Romans 13:8 – Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.
If you really want a certain type of car or even a brand new car, fine, there is nothing wrong with that, but save up the money and pay cash. This is one way we can avoid the myth and stay financially fit.
Remember, buying cars you can’t afford is one of the main reasons most people are struggling financially. The majority of millionaires don’t buy new cars. They buy used cars with low miles, and pay cash.

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