Paying House Off Early

DBCooper

Old Mossy Horns
Contributor
The “next guys” that can’t pay their debts definitely affects me. It affects you as well. How did your accounts do when those guys couldn’t pay their loans back in about 2008ish? If you would have been planning to retire then....I imagine it would have affected you.
I guess I should have clarified......

The deal you make or don’t make has no bearing on the next guy.
 

pattersonj11

Old Mossy Horns
Db,

Do you think there is a difference in your decision making in life in regards to having debts vs being debt free?

I feel like you can definitely stand your ground or say no in some situations when you are beholding to no one in terms of debt.

Being it family decisions or work decisions? What day you?
 

Homebrewale

Old Mossy Horns
I hope you are never in a position to have to choose what to do with the money. If you have a major issue I highly doubt you are making the decision to pay off the car vs use a small nest egg to help yourself or loved ones with medical procedures or treatments. I can think of extreme examples of people using set aside money to help themselves or family, but I can think of zero examples of people paying off a car first.
If I'm in that position, I hope I have the flexibility to make a decision instead of no flexibility which is what you have if you pay cash.
 

pattersonj11

Old Mossy Horns
I guess I should have clarified......

The deal you make or don’t make has no bearing on the next guy.
If i make a cash offer and am turned down....do you not think the next guy stands a better chance at getting a lower price?

Example in car buying:

I see a car I like.
Dealer says ok, $30,000 if you finance.
I say no, I don’t value it that high. $26,000 is where I’m at.
Dealer says $28,000 is as low as he can go.
We don’t deal.
Next guy comes in and they start at $30,000.
Guy says no, $26,000.
Do you think the dealer goes any lower than $28,000 this time when (2) pin points in the market have him pegged as too high?

I would bet he comes down a bit lower.
 

pattersonj11

Old Mossy Horns
If I'm in that position, I hope I have the flexibility to make a decision instead of no flexibility which is what you have if you pay cash.
Unless you are walking and talking in multi 7 figures, it doesn’t take long to burn up your flexibility. When you have hundreds of thousands in medical expenses and bills, most people will have to utilize some form of government assistance. You get no help with money in the bank. The flexibility is negligible. That’s just money you will have to spend.

It all boils down to being in debt vs being debt free. Which does a person prefer.

I will say that most people doing cash deals usually have more in reserve than they are spending. Not the rule.....but it is trendy.
 

DBCooper

Old Mossy Horns
Contributor
If i make a cash offer and am turned down....do you not think the next guy stands a better chance at getting a lower price?

Example in car buying:

I see a car I like.
Dealer says ok, $30,000 if you finance.
I say no, I don’t value it that high. $26,000 is where I’m at.
Dealer says $28,000 is as low as he can go.
We don’t deal.
Next guy comes in and they start at $30,000.
Guy says no, $26,000.
Do you think the dealer goes any lower than $28,000 this time when (2) pin points in the market have him pegged as too high?

I would bet he comes down a bit lower.
He may just like the guy. He may need to move it off his floor plan. He may not have liked you.

Who knows?
 

Homebrewale

Old Mossy Horns
It all boils down to being in debt vs being debt free. Which does a person prefer.

I will say that most people doing cash deals usually have more in reserve than they are spending. Not the rule.....but it is trendy.
Taking debt or not is a spreadsheet calculation. The spreadsheet will tell you the best financial option. Some people take the less optimal option that let's them sleep better at night. There is value to that person beyond the numbers.

Some people like myself do it strictly by the numbers in the spreadsheet. If debt is better in one situation, I'll take on the debt. If paying cash is better in another situation, I pay cash. The sleep at night factor has no value to me. If you don't recall earlier posts by me, I'm an engineer so the math is how I make decisions.

Unless there is another factor which is happy wife, happy life. The only reason I paid off my mortgage last week was that it was really important to her. If it was 100% my decision, I would have held it to the end.
 

DBCooper

Old Mossy Horns
Contributor
Taking debt or not is a spreadsheet calculation. The spreadsheet will tell you the best financial option. Some people take the less optimal option that let's them sleep better at night. There is value to that person beyond the numbers.

Some people like myself do it strictly by the numbers in the spreadsheet. If debt is better in one situation, I'll take on the debt. If paying cash is better in another situation, I pay cash. The sleep at night factor has no value to me. If you don't recall earlier posts by me, I'm an engineer so the math is how I make decisions.

Unless there is another factor which is happy wife, happy life. The only reason I paid off my mortgage last week was that it was really important to her. If it was 100% my decision, I would have held it to the end.
^like
 

DuckyDave

Four Pointer
Smart money says this bull market isn't going to last another 5 years. Pay it off and sleep well when the market declines. BTW when the market declines you can do some bottom feeding. Buy low, sell high. Dollar cost average investing...helped me retire painlessly way earlier than most of my friends and all my older siblings...
 

double

Twelve Pointer
I will tell you as a person who finances cars for a living cash is not king and will cost you more. Lots of rebates are tied to financing and you don’t get them with cash. To answer the previous question no if I need one more sale and you will not finance to get the rebate I will not bend over and take it in the rear so you can pay cash.


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pattersonj11

Old Mossy Horns
I will tell you as a person who finances cars for a living cash is not king and will cost you more. Lots of rebates are tied to financing and you don’t get them with cash. To answer the previous question no if I need one more sale and you will not finance to get the rebate I will not bend over and take it in the rear so you can pay cash.


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So you would rather not make sale vs selling a car for cash? I feel like this was related to my earlier post. I don’t recall saying anything about taking it in the rear. Maybe it is a response to someone else.
 

double

Twelve Pointer
So you would rather not make sale vs selling a car for cash? I feel like this was related to my earlier post. I don’t recall saying anything about taking it in the rear. Maybe it is a response to someone else.
At some points and times yes. If the manufacturers offers a rebate for financing I can not lower my price enough to offset that rebate. So yes we will turn down the cash sale. Lots of times the only money to be made is what the bank pays us to finance the car. As a matter of fact go look at Terry Labontes disclaimer on their website every price includes a $1000 discount for financing.


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UpATree

Six Pointer
Contributor
I think someone has to experience a large obstacle in life in order to understand the fear some people have of debt. No matter what you do with the money, if you need it, you will have to spend it. If you are out of a job and/or have a major medical issue, you will have to use that money, whether you set it aside or not. If something happens to you that puts you in assisted living or something similar, you will have to use the money before you will be aided at all.

This is where the Ramsey advice shines in my book.

As long as you are in debt, you are beholding to others. You are forced to make decisions based upon this. You have more decision making power when you don’t owe anyone.

I work and have worked with a lot of people that have to have that paycheck every week. Work negotiations are much easier when you aren’t hurting too much from missing a month or two or a year or two of checks.
Many years ago, I had a college buddy call me, literally crying. He had a terrible job situation that was so bad it was affecting his health. He said that if he didn't owe for the cars and the house, he'd just quit. I made up my mind right then to pay off everything, and I did. In 2008 I had bought a vacation to Hawaii when I got laid off. Because I didn't owe anyone and I had money in the bank, we went anyway. I will never forget sitting on the balcony of that condo on Maui, overlooking the ocean, firing up the laptop, and filing for unemployment. Life is good.
 

pattersonj11

Old Mossy Horns
When I graduated from college, I started working in the construction field. I was a new hire and did not have insurance until my 90 day period was up. I ended up breaking my foot and I could not perform that job any longer. Also found out a couple of weeks later that I had Rocky Mountain spotted fever. Both came from the job site. I hadn’t been anywhere besides working in those swamps...I mean job sites. Had 2 cars break down in the same 2 week period. I made a nest egg of money quickly but by the time I had bills paid and back to work, I only had $800 left. I can’t imagine what it would have been like with payments or a mortgage due.

I can fully understand folks that get Rmsf now. That stuff will drag you down to the point where you don’t care if you are living or dead. Some days you won’t get out of bed because you physically can’t.
 

pattersonj11

Old Mossy Horns
He may just like the guy. He may need to move it off his floor plan. He may not have liked you.

Who knows?
A salesman selling based on liking and disliking customers is new to me. I sell stuff for a living and I can’t imagine liking/disliking being a factor. Repeat customers vs a new customer or slow paying/no paying customer is something that affects me.
 

pattersonj11

Old Mossy Horns
Furthermore, I can’t imagine someone making me an offer that leaves me positive and not taking the deal on my end. Could more money have been made....maybe. In the end, the unit is sold and the dollars are positive. I can’t ask for much more than that.
 

DBCooper

Old Mossy Horns
Contributor
Furthermore, I can’t imagine someone making me an offer that leaves me positive and not taking the deal on my end. Could more money have been made....maybe. In the end, the unit is sold and the dollars are positive. I can’t ask for much more than that.
Everybody has a bottom line. If your bottom line is simply “positive”, you won’t be in business long.

You’ve had two people who were or are in the business you’re discussing - explain to you how it works. I don’t know what else can be said.
 

dc bigdaddy

Old Mossy Horns
Contributor
A salesman selling based on liking and disliking customers is new to me. I sell stuff for a living and I can’t imagine liking/disliking being a factor. Repeat customers vs a new customer or slow paying/no paying customer is something that affects me.
happens every day
 

pattersonj11

Old Mossy Horns
Everybody has a bottom line. If your bottom line is simply “positive”, you won’t be in business long.

You’ve had two people who were or are in the business you’re discussing - explain to you how it works. I don’t know what else can be said.
What goes around comes comes around. Thank you for all of the helpful advice. I can only assume that most of this was based on new cars? I don’t see a lot of rebates on the used cars.

DB, you need to explain to me how positive sales puts me out of business. I’m all ears on that one. I sincerely want to know how turning a profit puts you out of business.
 

ABolt

Twelve Pointer
At some points and times yes. If the manufacturers offers a rebate for financing I can not lower my price enough to offset that rebate. So yes we will turn down the cash sale. Lots of times the only money to be made is what the bank pays us to finance the car.
This one is easy: You take the financing and the cash discount, then pay off the vehicle in full when the first payment arrives. Win/Win...
 

DBCooper

Old Mossy Horns
Contributor
What goes around comes comes around. Thank you for all of the helpful advice. I can only assume that most of this was based on new cars? I don’t see a lot of rebates on the used cars.

DB, you need to explain to me how positive sales puts me out of business. I’m all ears on that one. I sincerely want to know how turning a profit puts you out of business.
I’ll give you the simplest explanation I can imagine.

After labor and all costs, you turn a profit of $1 on a sale.

That’s a positive sale. You can make 10 of these a day.

How long will you be in business?
 

DBCooper

Old Mossy Horns
Contributor
This one is easy: You take the financing and the cash discount, then pay off the vehicle in full when the first payment arrives. Win/Win...
If it were not a fiscal advantage, why would you finance it?

And, if it’s a fiscal advantage, why would you pay it off early?
 

ABolt

Twelve Pointer
If it were not a fiscal advantage, why would you finance it?

And, if it’s a fiscal advantage, why would you pay it off early?
The fiscal advantage is the $500 to $1,000 rebate off the purchase price for financing through the manufacturer's finance company. Take the rebate and the 5% financing, pay off the loan and incur no interest...
 

double

Twelve Pointer
What goes around comes comes around. Thank you for all of the helpful advice. I can only assume that most of this was based on new cars? I don’t see a lot of rebates on the used cars.

DB, you need to explain to me how positive sales puts me out of business. I’m all ears on that one. I sincerely want to know how turning a profit puts you out of business.
No one except the business owner knows what net profit is. Say I pay $10,000 for a car and sell it for 12,000 thats a 2k gross profit. Now I have to pay a salesman a manager the power bill advertising taxes rent water phone .... they all have to get paid. Oh yeah and at some point the guy who owns the business would also like to get paid. Sometimes making money is not really making money.


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DBCooper

Old Mossy Horns
Contributor
The fiscal advantage is the $500 to $1,000 rebate off the purchase price for financing through the manufacturer's finance company. Take the rebate and the 5% financing, pay off the loan and incur no interest...
Well there you go.

Great answer.
 

Mr.Gadget

Old Mossy Horns
I’ll give you the simplest explanation I can imagine.

After labor and all costs, you turn a profit of $1 on a sale.

That’s a positive sale. You can make 10 of these a day.

How long will you be in business?
Just look at Ray Kroc, McDonald's. .. He will show you how.
Been proven time and time again.
 
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