credit rating is a scam

[5yrplan]

And if credit /debt was a good tool you all wouldn't be in this forum. Mortgages that at 15 year fixed with 10-20% down and the payment is less then 25% of your monthly take home pay is the only acceptable debt. Mortgage only if you plan to live in the house at least 5 years.

[justbroke]

Agreed. The downside all consumables is that they lose value and eventually have no value; cars included. I think of a vehicle as a utility, a tool, to accomplish another goal. While I don't run financial models to predict the cost of the depreciation versus the opportunity value, I know that the opportunity value exceeds the depreciation. Especially where it comes to reliability.

Example, while I did pay $25K for a new Ford Focus in 2012, I have not had any major repair which came out of my pocket. All under warranty or recall. I did not purchase an extended warranty. Count me lucky at 65,000 miles. My most expensive item is new tires. I just had the brakes done (pads and rotors) for $323. However, the opportunity costs were enormous.

So there is "acceptable" debt when the opportunity cost is greater.

For what it's worth, a poor real estate investment could lead to a major depreciation of unprecedented amount. I bought an investment property for $205K (new) and sold for $111K two years later. It hasn't scared me away from the investment side of real property, but it did humble me.

[shipo]

90% of the time it doesn't work. With cars the depreciation is the loss that most people can't afford. 50% of a new cars value is gone before the 0% loan is paid off and if murphey comes and payments are miseed the interest could be added into the loan from payment 1 on. That's to big of a risk of interest and depreciation loses. Using credit is risky no matter the interest rate. Debt free with 3-6 months of expenses in cash (not invested) is the shortest path to be wealthy. Anything with engines and tires should not be purchased with credit because you can't afford the depreciation if you want to become wealthy. Once you are a net worth millionaire you then can afford to throw money out the window on depreciating items. Yup live like no one else to live like no one else. Normal people are broke. It's your money do what you like.

And if credit /debt was a good tool you all wouldn't be in this forum. Mortgages that at 15 year fixed with 10-20% down and the payment is less then 25% of your monthly take home pay is the only acceptable debt. Mortgage only if you plan to live in the house at least 5 years.

Once again you are speaking in absolutes which do not exist in real life. The fact remains, paying cash for a car is not on one's best long term financial interest unless that person cannot trust themselves to invest money wisely. To take your "Mr. Murphy" example, if I was to say, pay $36,000 in cash for a new(er) car this year, that is $36,000 which I would need to take out of one of my investments (i.e. regular trading account, Roth IRA, or 401K), and effectively prevent that money from working for me. Now, if Mr. Murphy does indeed come along, I can simply sell the car and pull the few thousand out of one of my accounts to cover the difference, assuming I'm upside down on the loan, or simply pocket the cash if I'm not. Where's the risk?

As for why I'm here on this site, yes, credit was my undoing, but the fact is, I'm not the one who ran up most of the debt; when my wife's business failed, it was very difficult to keep food on the table for my family, so yes, we did incur some debt then, however, the real blow was when I found out my, now former, business partner had five different unsecured lines of credit in my name and had run up over $150,000 in debt. Over the course of a few years I could have easily recovered from the family debt, but tacking on my business partner's debt was way too much and drove me into a Chapter 13.

Back to you, look, I'm sorry you either don't understand credit, or don't know how to use it safely, but the fact remains, the absolutes you frequently espouse apply to you and ONLY you. For my part, and for those with a similar mind set, we will continue to use credit to grow our financial futures.