Growing up in America, most children have heard the phrase, “bad credit or no credit” more times than they can count. Is this the ultimate downfall of our society? Is it possible that this is the reason for America’s current crisis? Our society has become obsessed with having the best of everything, but at what cost?
I have heard many people say that one thing you will always have is a car payment. Is that true though? In theory you could save $300 a month for a year and trade in your current car with a bluebook value of $3000. Walk into a car dealership with $6600 cash for a used car, and you could walk out of there with a nice used car that will not depreciate at the same rate as a new car. After you have bought that car, continue to save the $300 each month for another year. Walk into a car dealership next year, and you are on your way to that nice new car. It may take a while, and you may have to wait, but you didn’t have to pay a finance charge!
That doesn’t work in this society though. If it is nice now, we have to have it…now. What person in their right mind would save for 3 years and drive used cars when you could walk into that same dealership and walk out with a $15000 car without having to write a check in one day? The smart person possibly. We are not taught to think that way though. In the world of instant financing, of bad credit no credit we have you covered, of 90 days same as cash, we are taught to buy now pay later. If only we were taught to look at the price we would pay if we pay later.
Look at the add for your local pay by the week furniture store. Look at the fine print under the weekly payment amount. It tells you the total of the payments over the duration of the loan. Now look under that and you will find the cash value. Most of the time that cash value is half of what the total payment value is. That makes perfect sense. You could save and buy a washer and dryer set for $1000 cash, or you could go today and pay $2000 for the same set. This is how Americans are taught to shop. Buy now, pay later. We just are never taught to look at the price we will pay when we do finally pay later.
Could this be the cause of the current financial crisis? I believe that America should change their views on lending and purchasing before they worry about bailouts or stimulus packages. The root of the problem is people not being to pay, isn’t it? Why don’t we change our mindsets then, and be determined to buy only the things that we have saved for, and to refuse to go any further into debt? That would certainly be cheaper than the billions that we are currently wasting trying to fix our problem.