Has any of you ever bought a piece of Hifi with money you knew you did not have? Not talking about a 4-payment free interest deal when you have the cash anyway, I am talking putting the purchase on a line of credit or worse credit card and repaying it over many many months with interests to pay?
If so, no need to give a $ figure but how many months of net income did this represent and how long did it take to pay back? any regret? do you think it is a sign of ultime hifi sickness or true passion (not mutually exclusive!).
Gjames: I think that sums it all, tks. Personally, as to close this thread (at least for me), I am willing to finance up to next year's half-bonus. If it comes in, I have enjoyed my gear one year earlier for a mere rate that I call "cost of living happier", if it does not, it does not take food or shelter away from my family. Just that my wife will have to clean the house and both cars herself for one year to absorb my loan - no big deal, to me at least. Oh, and cut the lawn and shovel the snow for a year too, that keeps her in shape and save on the gym membership. win-win.
Back in the late 80's, when I was in grad school, I bought a surround sound pre-amp, Carver silver nine mono amps and a CD player on credit, because I had no real income other than student loans. The interest compounded over the several years that it took to pay it off and that ended up being a much bigger purchase because of time compounding. I did it because I knew that I would eventually have the funding to pay it off but the purchase price was easily tripled before I did. There was no other way I could buy it.
One issue that no one has breeched here is the value of the satisfaction you reap from your system. It's hard for anyone to place a value on that other than yourself. If you spend several hours a day listening to music, and it relaxes you which is beneficial to your well being, then it has more value. In fact, it could end up being worth a lot more than what you are actually spending. If, however, you really don't listen very often, or it is only a "pride factor" purchase, then you are not being very wise and may well be wasting money no matter how you pay for it. I have a motorcycle that sits in my garage most of the time which is a prime example of that. I've put so much into customizing the bike that I cannot bring myself to sell it because it's not worth much more than what I've put into the mods alone now. So there she sits, a gorgeous garage queen.
The parallel about leasing a car, or purchasing anything of depreciating value other than a home, may or may not be prudent as some things are necessary for work and life in general so money has to be spent on them in some fashion and would not be strictly a luxury like audio gear. One just has to decide how much more they are willing to spend on that daily commuter (Corolla versus LS460 for example). Any dollar spent is financing against the future in that it's money not saved or invested. Only you know how much of that future value you are willing to sacrifice. The only thing buying on credit does is decrease that future value even further so you have to take that into consideration.
I realize this thread is more a survey of how people pay for their gear and you are not really asking IF you should finance an audio purchase so this, as most of the responses, are written more for those who are reading the post who are really searching for some advice about if to finance.
I've spent tens of thousands of dollars on audio gear, and I've used savings for most of it because I don't have that kind of disposable monthly cash on hand to blow on audio. If I were to order a pair of Evolution Audio MM3s, or Wilson Alexadrias, or those Wavac amps, then I'd have to finance them, which is why I don't. With exception to education, cars, and homes, I don't finance anything (unless it's zero interest).
The comment by kennyt about spending your last dollar on your deathbed is certainly an inspiring message, but of practically no real value. Unless you take your own life as you spend your last dollar, that timing is completely out of our control. Thirty years ago, planning for a ten year retirement would have been reasonable as most people didin't live much past their mid seventies. Now, with the advances in modern medicine, we are living longer even if not really healthier than generations before us. And those extra years are really very expensive when you consider the cost of that medical care alone. Thus we will require more funding for the future than we probably realize.
I try to balance my life by spending plenty along the way to enjoy life. I buy cars, motorcycles, take trips to foreign lands, send my kids to the college of their choice, etc. rather than saving every extra penny. But, I do fully fund my retirement account and tithe to my church first before anything else. But my job is very stressful and having the opportunity to sit and listen to music for an hour over a great system is theraputic, as is riding my bike on the back road with the country air invigorrating my soul. No regrets yet.
There have been several threads of this nature over the course of time, and they always turn into lectures about the evil nature of credit. I'm never sure what the question really is, nor why it always turns into a debate about the nature of credit.
Obviously, the U.S. has a trouble with spending. Naturally, it only makes sense that it would "infect" high-end audio purchases for some people. Is there something about credit for high-end audio vs. any other non-essential expenditure? Does it make somebody more "desperate" or "addicted" to high-end if they use credit to fund a high-end purchase rather than, say, an expensive car, new furniture, or a vacation?
Money is just a means to an end, and different people are willing to part with different amounts for different things. The two points of view expressed here seem to be the extremes. There's a lot of validity to the notion that you only go around once and you should enjoy it. There's also a lot of validity that living within one's means builds on itself and pays dividends, literally and figuratively. Neither of these concepts is any better or worse applied to high-end audio than anything else.
Awesome post, I could not agree with you more. One of my former partners (we lost our hospital contract for services) used to rave of the most influential book he ever read about the ideal time of dying being when you absolutely ran out of all funds/credit/assets.... While I think none of use could do this, as time of death is so difficult to assess, but it always comes to my mind when patients are told their disease is terminal, and they have (enter lame guess here) time to live.
I think once I got over the shock and new found drug abuse, I would be rather liberated and it would be perhaps a better way to end my life than some surprise MVA or such that took you out with no forewarning.
BTW How do you like the Canton CD 300's?? I was supposed to get them, then some things changed, I use their Vento's for my main rig and LOVE them, I think you would be hard pressed to find better for less than twice the price.
Thefalls1117, you hit the nail on the head. My wife is a Internal Medicine MD. She's always telling me stories just like the one you told. No one on their death bed wants more money! I'm not in debt but,I have been and it was a very stressfull time in my life. Now I live way below my means and don't try to impress anybody with what I own or have achieved. The secret to happy living is having your backyard clean because we are not guaranteed our next breath.
I have worked in the health care field for over 30 years. I have talked with ,too many to count,hard working people that did nothing but saved their money ..no travelling..no extravagant buying.Always had to save save save and NEVER borrow.Many had their life shortened by a life ending disease. Trouble with that ....they never got to enjoy their hard work and respectable bank account. I talked with many and if they had a chance to do "it all over again" they would enjoy life to the fullest...spend on themselves and NEVER DO WITHOUT ..enjoy life today and pay for it tomorrow even if they had to borrow.Everything in reason of course.
Now I buy for today and yes I buy audio equipment on CREDIT all the time. Why not ..life can be too short..... Instead of "doing without" for months ,enjoy it today.
Beheme, "Paying cash is one of the most certain way to building no asset and eventually going broke".
ROTFLMAO! But, then again, who might I be but just a symplistic newbie. I shouldn't expect other more sophisticated folks, like you, to decode what I meant by 'paying cash'. :-)
Against my present inclination to beat you over the head with credentials, and success stories, I'll not do that as it will only pe percieved as being self serving or a fabrication, and frankly to do so would just be boorish. Those two paragraphs have been edited out.
But, since I must clarify what I intended by the expression 'paying cash' I offer the following. Over the last 30 years I have built my modest estate by prudent investment's and spending. The only time I use 'credit' is when it results in a net gain for me, such as using a credit card which pays a 1% rebate for all purchases (I pay the balance each month and I pick up an extra $500 to $750 anually). I own a VW which was financed at 1.5% and the cash I could have paid remained invested with a return of 5%, for a net gain. I also understand and use to its maximum the concept of float. Small change for you perhaps but its things like that which helped me gain some financial security.
I have no other debt, but I did have a mortgage on my home which I foolishly paid off in 15 years when I probably could have used that money to buy some more NASDAC stock in 1999/2000, the years when I actually chose to get out of the stock market totally. Many would have, and many did, and lost their shirts using your 'credit' mentality. But they sure knew how to use credit to advance thier net worth. Some of them were even 'getting rich' day trading. WOW! I didn't move back in to stocks until about 2 years ago. More good luck, perhaps.
But, IMHO if you must use (or justify the use of) credit for consumer purcases, luxury items if you will, because you do not have the cash available to pay up-front or back your incurred debt, you are the person who risks eventually going broke, not me. Charge it up to your passion if you will, or ultimate hifi sickness, what ever, if you must, but such financed purchases have nothing to do with personal, and more importantly for some fools family, financial responsibility, unless you can show a net gain by using your cash elsewhere, which is not a simple trick for most folks.
You asked for the opinions in this thread. How ungratious of you to then criticize folks for giving opinions you didn't want to hear, and insult them directly or by implication as well. :-(
Tboooe, I thought I was keeping it simple in my first response, and my second one as well, except for the lack of definition of the phrase 'paying cash'. And while I was critical of the form of the response of the original poster to the posts of many responders, including my first response, even in retrospect I can see no justification to his personalized response most recently to me. Are you signing on to the full meaning of his last posts? I assume not, and FWIW I just happen to have no real issue with your contributions.
Tbooe, exactly, which is why I would have expected that some folks would come forth and, like me, admit that some audio purchases have been made with a little too much optimism about future revenues!!! never enough to put me in trouble but a few thousands bucks, certainly. I do not regret a penny of it and am currently audio-debt-free (not for long!).
The other part of the thread that kind of went unnoticed is the total cost of buying what one can afford instead of what one wants...and trade up and up and every time lose some money..it ends up being a disguised interest rate that far exceed some going rate on line of credits. A hidden cost of being "reasonable".
beheme: well put. i did not want to sound too financial in my response but you stated my sentiments very well. The bottom line, there is no right or wrong way to manage finances. It is an art form that must balance a variety of things including risk, interest rates, personal goals, etc.
an intelligent manager of personal finances would always pay cash
Remind me which business school you went to or who's managing your finances? paying cash is one of the most certain way to building no asset and eventually going broke. An intelligent manager of personal finance uses credit and investments with finesse(such as taking a mortgage and contributing into retirement savings). The "cash" reflex is a great way to build a nation with trillions of dollars of debt.
"I just wanted to see if some folks who buy ....."
Why wouldn't they? If they have the cash there should be no difference, an intelligent manager of personal finances would always pay cash.
If they don't have the cash and chose to finance either cars and/or audios, its still a matter of personal discretion and their individual value systems.
IMHO your question elicited exactly the range of responses you got. It is, first, last, and always, about management of personal finances and establishing priorities in purchases of anything you and your family require.
And, you are right, "....it is VERY personal and discretionary".
It would be nice to come back to the thread - Audio at credit- and not continue with some DOs-DONTs of how to manage personal finance as this is...hum..personal and frankly, discretionary. I just wanted to see if some folks who buy $20,000 speakers always pay cash or if they consider this purchase to be as worthy as a $20,000 car that is financed over 60-month.
There sure are some fiscally responsible members here at Audiogon. Methinks the ones who are in debt over gear will not be so eager to disclose this fact. I for one have financed gear with no interest, put it on credit cards, and paid cash.
For all those who quickly bash people who use credit cards:
how did you pay for your home? how did you pay for your car? what about student loans?
If you have ever taken a loan out for anything, then you cannot simply state that using credit is stupid or outright wrong.
I am not disagreeing that consumer credit card debt has to be managed carefully. There is no one right financial plan. Everyone has different needs and risks. Given today's low interest rates, it may make sense to take carry a little debt in order to keep money in your pocket. The interest could be worth it to some people. Some people dont mind paying more over the long term in order to get what they want now. This is not wrong.
Dave Ramsey has a radio show that talks about becoming debt free. He believes that credit cards should be outlawed. Dave is different than some in that he has a serious spending problem (similar to an alcoholic). He can't trust himself to use a credit card. I trust myself. I don't pay interest cause the balance gets paid. People that say that "life can get in the way" aren't acting responsibly. When the bill comes, it gets paid. That's life and that's what happen.
As already has been touched on, credit cards CAN be a good idea to use. What if you take someone like me who is responsible with credit cards and give them one that gives you savings for buying gas at the pump. 3% to be exact. Now, it's costing them LESS than if they paid with cash. All it takes is a little responsiblity and not abusing the card.
I haven't paid interest to a credit card company in eight years. I pay off my personal card monthly and use new card balance transfer options which offer no interest for 12+ months. I have a PT job as an adjunct professor at a local college that commits to me two terms at a time. If you can figure out a way to use credit to your advantage, it IS a smart idea. The concept of leverage is not new and corporations do it all the time. It's wise to use other peoples money if the benefits outweight the costs. Each situation needs to be analyzed based on their own merits. It's not fair to paint the use of credit with a broad brush. Also, I disagree that most people seriously have a plan to pay off their cards. I think most people spend with reckless abandon with the no fear of consequences or the future.
I would say that practically everyone that uses a credit card does so with a plan to pay it off. However, life intervenes in those plans too often, i.e. your car breaks down and needs repair, your water heater breaks, you lose your job, etc. and before you know its three years later and you're still paying for that amp you bought 3 years ago. Also, the "opportunity cost" theory is difficult to apply to credit cards because the interest rates on credit cards are so high. There's few , if any, guaranteed investment vehicles available that would return more than typical credit card interest (the average rate is more than 10%). It's easy to rationalize how using a credit card is a good idea, but in reality its simply not.
Despite what most of the previous posters have stated, I not only do I think it's OK to buy on credit, I think it's a smart move to borrow against the future. IF, you have something better to do with your cash today AND you have a plan to pay it off.
I would tend to agree with you, hard to believe than in Creditland where consumption is King, no-one buys Hifi gear at credit when 90% of car owners do it for their cars, either leasing or financing.....Apart from Musical Fidelity, there are no Hifi gear that depreciate as much as a good ol' Detroit car!!! Time to tell the truth guys.....
Come on, am I the only guy who's bought something on credit or the equity line knowing it would take a while to pay off but I wanted it?? Granted, MOST of my audio purchases have been with free cash, but not all and I don't feel bad for it. It's not like my family didn't have a place to stay or food on the table to doit.
Never. Audio Equipment is cash on hand only. I will use a credit card to pay but the bill is paid in full when due. My Son starts College in the Fall. My life is about to change BIG TIME!
Everyone is different with a different set of opinions/values. I've bought audio on 12 month interest free. I didn't have 3500 bucks at one time. But, I had the monthly payments no problem. It was paid off, I was happy, no big deal.
I use credit cards, but I also pay off the balance each month. Absolutely nothing wrong with credit, if you know how to use it and not abuse it. (FWIW I am NOT in debt up to my eyeballs)
IMO, "cash" deals are getting harder and harder to get discounts with. They make much more money throwing a credit card at you. In hopes that you screw up and have to pay fees.
Spending money you don't have on something you don't need is never a good idea. I think this behavior is less of an Audiophile sickness than it is pure fiscal irresponsibility.
I was a bit fiscally irresponsible in my early adulthood. But once I became responsible to myself and my (future) family, it became very difficult to spend money I didn't have. Once I started consciously saving money, I typically decided not to spend money needlessly because of the amount of effort I had put into saving the cash in the first place.
Here's a story for you: When I was first out in the working world I really wanted to buy a Porshe. I figured that would be an affermation that I had really "made it" in life. However, once I actually had the money to but the Porshe, I decided not to do it. Saving that much money had been a long and painful process. I had forced myself to live way below my means. When the time came, I decided to invest in a home instead. That lead to a series of homes and ultimately I've ended up with a pretty large real estate portfolio.
I'm sure glad I didn't sacrifice my personal, and ultimately my family's, future for a better audio system!
Enjoy,
TIC
PS, oh yeah, my answer is "no", I've never financed audio because I didn't have the money to pay for it.
IMHO, its no better or worse than buying most anything on long term credit that doesn't appreciate with time, such as homes, so long as you're not taking food out of someone's mouth or clothes off their back. I can't believe that folks buy very expensive cars and have them on credit for 6 years, or have revolving credit accounts at the expensive clothing stores. But they do. Who cares!
I vote for saving 10% to 20% off the top by not financing anything. Get a discount on top of that if you can and you're improve your life all around.
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