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Thread: Living on Credit

  1. #21

    Default Re: Living on Credit

    Home loan
    Car loan
    Study loan
    Renovation loan
    Credit Card
    Credit Line
    0% Instalment Plans
    Ah-Long Loans

    All I can say is - other than Housing Loan, i am FREE of debt! CCs are cleared in full every month and every item I own is completely paid for! Oh, I don't own a car

  2. #22

    Default Re: Living on Credit

    Quote Originally Posted by ManWearPants View Post
    I don't know if this idea is driven in to people's mind by financial institutions. I mean a loan is a loan, whether good or bad. You owe people money after taking out a loan. The whole idea of a loan is to allow. you to get what you want faster and earlier. It is like telling people to buy what he cannot afford now. The reality is you are only the owner of the item after you paid up your loan. So whether you are able to reap anything out of it still depends on your ability to pay off your principal loan amount + interests.
    Not really. Think about it, it's actually a simple logic.

    Good loan: you take out a loan that costs you X%, but can generate you Y% in return, with Y%>X%

    Bad loan: everything else that makes you suffer by taking out the loan (e.g. for living beyond your means, etc.)

  3. #23
    Member voxies09's Avatar
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    Default Re: Living on Credit

    Quote Originally Posted by toroluce View Post
    Not really. Think about it, it's actually a simple logic.

    Good loan: you take out a loan that costs you X%, but can generate you Y% in return, with Y%>X%

    Bad loan: everything else that makes you suffer by taking out the loan (e.g. for living beyond your means, etc.)
    Canon Kiss X4 | 18-55mm f3.5-5.6 IS II Kit lens | 50mm f1.8

  4. #24
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    Default Re: Living on Credit

    Quote Originally Posted by toroluce View Post
    Good loan: you take out a loan that costs you X%, but can generate you Y% in return, with Y%>X%
    I think the good loan you are talking about likely applies to property investments. While I do not deny that many reaped from it. The reverse can also be true. The person taking up the loan may not be able to finance the loan and ends up making a loss. So is there such a thing as good loans? It is more likely a case of good management of loan.

  5. #25

    Default Re: Living on Credit

    Quote Originally Posted by ManWearPants View Post
    I think the good loan you are talking about likely applies to property investments. While I do not deny that many reaped from it. The reverse can also be true. The person taking up the loan may not be able to finance the loan and ends up making a loss. So is there such a thing as good loans? It is more likely a case of good management of loan.
    Great, you got it!

    Any kind investment with the loan put to good use, whether it be property, business, financial investments, education/self-improvement, etc.

    Again simply, like many things in life, matters that are managed well are likely to turn out good (e.g. getting Y%>X%), and vice versa (e.g. non value generating waste)

    Probably a quirky example as mobile phones nowadays are very affordable. but for simplicity let' say someone takes out a loan to buy a mobile phone
    - bad loan: just using it to woo xmm/xdd
    - good loan: using it to woo potential customers

    Thus, there exist good loan and bad loan.

  6. #26
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    Default Re: Living on Credit

    How about those who pay thu their nose those photo gear like FF cam, L lenses, CZ lenses, trinity lenses, large aperture primes, etc.

    I know that many can hardly afford such gear, but caught by the BBB virus. They pay by credit card.......
    Do not be afraid [of ghost and bullies] Shoot them......

  7. #27
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    Default Re: Living on Credit

    Quote Originally Posted by toroluce View Post
    - good loan: using it to woo potential customers
    I understand what you are saying about loans that are good. But no loan is good until you get the returns. So technically there are no good loans. All loans are bad. You start off with a negative and it remains a negative until you clear off the loan and whatever is left is your positive.

    In your example, you can use hp to woo potential customers. But not all you woo will become your customers and even if they become your customer, they may default on their payment. So you may still get a negative.

    So is there such a thing as good loan? Maybe not guaranteed good loan but a calculated good loan.

  8. #28
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    Default Re: Living on Credit

    Quote Originally Posted by La Fontaine View Post
    How about those who pay thu their nose those photo gear like FF cam, L lenses, CZ lenses, trinity lenses, large aperture primes, etc.

    I know that many can hardly afford such gear, but caught by the BBB virus. They pay by credit card.......
    Which is what I am trying to say in another thread when the TS asked whether it is good to use cc 0% interests installment plan. I am against it but there are so many who are for it.

    Let me see if I can still find the thread.

  9. #29

    Default Re: Living on Credit

    Quote Originally Posted by La Fontaine View Post
    How about those who pay thu their nose those photo gear like FF cam, L lenses, CZ lenses, trinity lenses, large aperture primes, etc.

    I know that many can hardly afford such gear, but caught by the BBB virus. They pay by credit card.......
    luxury items should only be bought if you can afford to pay in full.

  10. #30

    Default Re: Living on Credit

    Quote Originally Posted by Muckafutha View Post
    I put everything i buy on credit card even if I can pay cash, but i pay them off when they are due in full. So that I can get points. Why not, its getting something for nothing rite (in a way).
    The points you get are being subsidized by people who pay cash. Credit cards that award points cost merchants more in processing fees. Merchants recoup by passing on the extra cost of doing business to all their customers. So in effect, cashing paying customers subsidize credit card customers, especially those cards that award points.

  11. #31

    Default Re: Living on Credit

    Quote Originally Posted by ManWearPants View Post
    Which is what I am trying to say in another thread when the TS asked whether it is good to use cc 0% interests installment plan. I am against it but there are so many who are for it.

    Let me see if I can still find the thread.
    Good if you're disciplined. As in my previous post, one group of people is subsidizing another group here. The group that benefits is the disciplined group that pays back on time, enjoying free credit/money. The other group gets into trouble and have to pay all kinds of penalties and thus indirectly subsidizes the first group.

  12. #32

    Default Re: Living on Credit

    Quote Originally Posted by neech7 View Post
    The points you get are being subsidized by people who pay cash. Credit cards that award points cost merchants more in processing fees. Merchants recoup by passing on the extra cost of doing business to all their customers. So in effect, cashing paying customers subsidize credit card customers, especially those cards that award points.
    so then do u want to subsidize everyone else by paying cash, when you know you are able to get points.

  13. #33

    Default Re: Living on Credit

    Quote Originally Posted by Muckafutha View Post
    so then do u want to subsidize everyone else by paying cash, when you know you are able to get points.
    Of course not! Like you, my friend, I use my point-earning credit card whenever I can.

  14. #34
    Senior Member ovaltinemilo's Avatar
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    Default Re: Living on Credit

    Quote Originally Posted by Muckafutha View Post
    luxury items should only be bought if you can afford to pay in full.
    Agreed on this. This is good spending habit.

    I think living on credit is inevitable. How many can pay lump sum for their houses? Only Abu Dhabi's ATIC can afford to buy Chartered at 1.8Billion cash to avoid bank charges...CN richies who pay millions in cash to buy local condo...for the "normal" mortals here, we have to live on credit..just manage them so that they don't turn into a bad debts...
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  15. #35

    Default Re: Living on Credit

    Quote Originally Posted by ovaltinemilo View Post
    ..just manage them so that they don't turn into a bad debts...
    I think that's the key. Using credit wisely, with a plan, with discipline, and watching every aspect of one's finance with a hawk's eye. Credit is a leverage that allows us to purchase something (like property) that costs much beyond what we can afford now. With good planning and some luck, the investment appreciates way more than what the credit costs us and that's how we are able to increase our net worth much more than those who will only pay cash for everything.

  16. #36

    Default Re: Living on Credit

    I applied cc because it has 0% installment for my post degree course. I do have the hard cash but rather keep it aside just in case. That cc will be kpt some safe place from me using it for some other things.

    Like some of you says if you can clear your 'debt' with the cash you have at hand and salary cover your bills and loans, i think it should be ok.

    Discipline is one of the most important thing here. Just because someone have these and that, you want to have them too. Buy things you 'need' rather than 'want'.

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