Day 53: Quiz Review

Debt:

• Debt is Normal
• Debt is Dumb
• Normal is Dumb

Types of Debt:

• Home average of $147,000
• Student average is 29,000
• Car average is 27,000
• Credit Card average off those who use debt is $16,000

Ease of getting into debt:

• 6 billion credit card offers each year
• low introductory rate offer

Cost of Debt:

• interest
• stress and conflict
• 52% marriage end in divorce
• 90 % of divorces are money problems
• prevents you from spending $ on what you want later

Cars:

• New cars are dumb
• lose 20% in first day
• lose 70% in first 4 years
• Leases are most profitable for dealers $1,300 (worst deal for consumer)
• Financing makes $700
• Buy with cash $82
• Drive for free
• save monthly car payment for 1 year (+$5,000)
• buy used car with cash (-$5,000)
• keep saving for another year (+$5,000)
• upgrade to better used car (trade-in old car (-$4,000-$5,000=-$9,000)
• keep saving and invest for 5 more years (+$30,000)
• upgrade to used car that is half of your car fund(-$15,000)
• wait 7 to 8 more years for fund to double to $30,000
• buy another $15,000 used car
• Drive "free" for life
• put additional $5,000 per year in retirement account

Myths:

• you need credit history
• just show landlord / employer your bank statement to show you're responsible
• you need a house
• homeownership comes with lots of extra costs
• mortgage interest
• homeowner insurance
• private mortgage insurance
• property taxes
• maintenance (time and money)
• I'll pay for it later when I have more money
• what if you don't have more money
• need a new car
• see dumb car info above
• loaning money to family and friends is helping them
• give it to them, instead of loaning it
• get rich playing lottery
• ha ha.