Leasing is against self-discipline?

[Haris]

Since my current PC is not capable to run the softwares which I require such as Adobe photoshop CS2. I'm planning to switch to iMac 17".

I don't have enough money but I'm planning to borrow money from my parents? I've heard leasing money is against self-discipline? Is that true?

Please let me know the disadvantages according to the PD by leasing money.

Cheers,
Haris

[starlet]

Really, leasing money is against PD? Well, guess I better not go try and get that mortgage now!

[annie]

Ok, let me tell you a REALLY short story that puts this into perspective.

My sister-in-law (also my best friend) was having trouble getting pregnant and after years of trying decided that they were going to adopt instead. But as you know, adoption can be very expensive. When she told me this, I said to her "You better start saving now. Just put $200-$300 in savings in month and it won't be long before you'll have enough."

She whole-heartedly agreed this was a great plan. I also mentioned to her that if the adoption came up sooner than planned I would help her be loaning her some money.

Fast forward 2 years: The perfect baby comes up for adoption. She calls my husband and I to ask about the possibility of a loan.....$10,000+. Because she was so blunt asking for money, I was very blunt in asking her what her savings account was up to. She admitted that she hadn't saved a dime because they really couldn't afford it.

So I told her that unfortunately, I wouldn't be able to loan her the money because if she couldn't save the $200 a month, then obviously she wouldn't be able to pay the $200 a month on the loan.

She really didn't get it. (BLOWS MY MIND!)

Anyway, my thoughts are that people need to get in the habit of making the payment for months before actually getting a loan. That way, they'll know what it's like to have that monthly debt before they get themselves into it and they will also have some money to put as a down payment. If that doesn't make sense, you have no business borrowing money or getting into a loan.

[Haris]

annie, I guess I will wait for one or two months before purchasing my new rig.

[free spirit]

Great analogy Annie. x

[RT Wolf]

Great story Annie. I also took the old, "Pay yourself first" idea from it. Solid idea, save like 10% of your income (if you can't save that much, start at like 3% and work your way up) as soon as you get paid. Invest. Enjoy life.

[Adam]

Here's something else to consider about Annie's story... You will save a lot more money by 'paying' for something before you buy it...

Let's take a cheap car as an example... If it costs $12,000 with all of the options that you want, etc., then you can save $1,000 each month, and own it in a year... If that's too steep, you could save $500 per month and own it in two years... or, since you're getting a cheap car, so your finances really aren't that great to begin with, you could put $334 in a bank each month and own the car in 3 years. You won't be able to drive it while you're saving up the money, but that 12,000 car will only cost you 12,000 dollars, and you never have to worry about missing a payment. You're also earning more money, because the interest on your savings account will add up to a pretty fair amount.

If you finance the car, though, especially if it is your first new car, you might end up paying $365 per month for that $12,000 car for a total of four years...

Let's do the math here... The car is worth $12,000... $365 * 12 * 4 = $17,520... Where did that extra $5,520 come from? Instead of getting paid for saving up for a car, you're paying out of the nose for the privilege to drive the car three years early... You also have to worry about losing the car if you miss payments as well.

So, saving up for a car will save you a lot of money compared to financing it... (Having good credit, unlike what I had when I bought the car in this example also helps a lot, if you absolutely *must* finance.)

Decide what you want first, get an accurate price, then pretend like you're making payments on it before you buy it... It will save you a lot of stress and money, which lets you get more 'stuff' than those people who are so addicted to 'stuff' that they spend the rest of their natural lifetimes trying to afford what they've already bought.

[Haris]

Originally Posted by Adam

Here's something else to consider about Annie's story... You will save a lot more money by 'paying' for something before you buy it...

Let's take a cheap car as an example... If it costs $12,000 with all of the options that you want, etc., then you can save $1,000 each month, and own it in a year... If that's too steep, you could save $500 per month and own it in two years... or, since you're getting a cheap car, so your finances really aren't that great to begin with, you could put $334 in a bank each month and own the car in 3 years. You won't be able to drive it while you're saving up the money, but that 12,000 car will only cost you 12,000 dollars, and you never have to worry about missing a payment. You're also earning more money, because the interest on your savings account will add up to a pretty fair amount.

If you finance the car, though, especially if it is your first new car, you might end up paying $365 per month for that $12,000 car for a total of four years...

Let's do the math here... The car is worth $12,000... $365 * 12 * 4 = $17,520... Where did that extra $5,520 come from? Instead of getting paid for saving up for a car, you're paying out of the nose for the privilege to drive the car three years early... You also have to worry about losing the car if you miss payments as well.

So, saving up for a car will save you a lot of money compared to financing it... (Having good credit, unlike what I had when I bought the car in this example also helps a lot, if you absolutely *must* finance.)

Decide what you want first, get an accurate price, then pretend like you're making payments on it before you buy it... It will save you a lot of stress and money, which lets you get more 'stuff' than those people who are so addicted to 'stuff' that they spend the rest of their natural lifetimes trying to afford what they've already bought.

My dad won't charge a penny as interest. It's like borrowing the money.

[Addict]

Instead of getting paid for saving up for a car, you're paying out of the nose for the privilege to drive the car three years early

Couldn't agree more, but also remember that if you save beforehand, your saved money can grow interest as well, probably nearly the same rate that you'd be paying it while in debt and so you'll be paying even less.

I think the story by annie is a perfect example. How could your sister-in-law possibly have more money and be able to save more after adopting if she couldn't do it before? A lot of people just have no clue when it comes to finances.

[da1prophet]

Originally Posted by Haris

Since my current PC is not capable to run the softwares which I require such as Adobe photoshop CS2. I'm planning to switch to iMac 17".

I don't have enough money but I'm planning to borrow money from my parents? I've heard leasing money is against self-discipline? Is that true?

Please let me know the disadvantages according to the PD by leasing money.

Cheers,
Haris

I don't think you can categorically say that leasing/borrowing money is contrary to the principles of self discipline. I'll agree that too many people misuse credit because they're unwilling to delay gratification, but at its essence credit is a tool. You can use it wisely or unwisely. Just using it is neither good nor bad--this can't be determined without some context.

In other words, its not a black or white answer--for some people there are tax advantages to using credit, leasing vs. buying, etc. Another poster gave the example of buying a house--most people are better off owning than renting, even though renting is "paying as you go" while for most people buying a house requires taking out a mortgage.

I'd suggest that the answer to your specific question requires a little more context--is it a case where you just want a new gadget and you're rationalizing it as being integral to your educational/professional development? Or is it really something that you *do* need to progress toward your desired goals? These are questions that only you can answer.....