Quote:Paying things off in cash is obviously the ideal way to go, but a lot of people don't have that luxury for big ticket items, even with planning.

 

With money being so cheap to borrow and interest rates so low recently, the argument could also be made that you could get a higher ROI doing other things with your cash than purchasing something outright, especially with something as low as automotive interest rates.

 

If I have $65,000 cash in the bank and want to purchase a new car, am I better off buying it outright than borrowing the money at 2.x% and picking up a cheap rental property or throwing it in the market and maybe getting a 6% return on it?

 

Sure, nothing can ever replace the peace of mind of not owing anybody anything, but there are different options based on your goals.

 

Certainly, and your age has a lot to do with it.  However, think about this for a bit.  Why are loans so "cheap" right now?  Is real estate really a good investment?

 

With the way that the economy is right now, I wouldn't want to hold any debt, and I would rather invest money in something that isn't going to fail in the near future.  Consumer loans and real estate is going to take a huge hit in the near future.  Because money is "so cheap to borrow" right now is in fact what the problem is.  When and if the Fed decides to start raising interest rates, the economy is going to have to correct itself.

 

There is a false sense of security right now.  People seem to think that they can get loans, credit cards, cell phone plans, etc. at "cheap" rates all of the time.  That's all going to change soon.  Once interest rates start rising again, things are going to change.  Not only will the cost of consumer loans go up, but also loans that many businesses rely on in order to stay operational.  That in turn is going to raise the cost of products and services as well as possibly cost jobs.

 

Quite frankly, the economy is headed for a recession if not a depression very soon, and it will be on a global scale.  The global markets are dependent on the U.S. markets.

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