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28 April 2011 @ 01:29 pm
The consequences of getting car loan  
Some time ago I talked with a guy who's in his early thirties.
He definitely looked few years older than that, in part due to occasional grey color in his hair.
I told him that he looks older than his age.
He told me that several years ago he looked much younger than his age.

I asked why did that rapid aging happen?

It turned out that his wife asked him to buy a new car and get a loan (HELOC) for home improvement.
So he ended up owning banks significant amount of money.
He has a good paying job. I can guess that as a software development team lead / project manager he's making around $100K per year.

But now he cannot afford to lose that job. And the job is getting more and more stressful recently.

So he started turning grey at his early age.

My takeaway from that story:
don't borrow money for your car and home improvement.
If you don't have cash for that -- you cannot really afford it.

Inspired by: Счастье такое счастье by azbukivedi

Про тоже по-русски
ex_juan_gan on April 28th, 2011 05:42 pm (UTC)
Kind of funny.

Heloc is a great financial cushion. I use it as such; I don't care if I lose a job for a couple of month, take it out from heloc, then return, big deal.

As to a car loan, with heloc it is not a big deal either. I'm currently paying $713/mo for my car; sounds ridiculous, but that's because of a short term and good rate (I hate paying interest, eh).

I lived the other way most of my life, always calculating how long can I go on without, well, going helpless. The worst time it was about 2 weeks (Russia, 1992). Thank you. Not again.

Dennis Gorelikdennisgorelik on April 28th, 2011 05:59 pm (UTC)
Exactly: HELOC is a great financial cushion.
That's why it's better not to use that cushion without real need.
You would sleep better if you know that option is not exhausted and is available to you anytime.

Does new car really give that much joy that it worth to trim your financial cushion for that?
ex_juan_gan on April 28th, 2011 08:00 pm (UTC)
It is not about a car being new. My previous car was not new; no big deal. It must be affordable of course; one must be reasonable.

But eating maruchan because one cannot imaging borrowing money, as some Russians a while ago suggested, it's not my life style. I want my life now, not in the imaginary future.
(Deleted comment)
ex_juan_gan on April 28th, 2011 09:15 pm (UTC)
Well, I more or less agree with this.

Except that when I was buying my house, I got 95% financed. Which pretty soon turned into 70%.
Dennis Gorelikdennisgorelik on April 28th, 2011 08:14 pm (UTC)
"I want my life now" is a valid argument.

Still it's important to consider that without financial cushion life quality tends to suffer.

"No financial cushion" means more nervousness, less flexibility with changing jobs and less flexibility with taking other risks.

As usual, it's about finding the right balance [of the size of financial cushion].

I'd say that it's ok to get home mortgage for 80% of house value.
It's also ok to use HELOC for financing other stuff (e.g. buying car) as long as total debt is no more than 80% of house value.

Shrinking financial cushion below that amount generally introduces more problems than gains.
Clean and soberanspa on April 29th, 2011 06:40 am (UTC)
С чего это должник должен сильно переживать из-за того что не сможет вернуть? Пусть кредиторы мучаются (впрочем, они этим не мучаются).
Dennis Gorelikdennisgorelik on April 29th, 2011 06:46 am (UTC)
Так ведь если не вернуть, то заморозят банковский счёт.
Уровень жизни упадёт очень быстро, а это болезненно.
odin_dedodin_ded on November 28th, 2011 06:12 am (UTC)
Хмм, не так давно читал в каком-то журнале, что поседение волос никак не связано со стрессом, а зависит чисто от наследственности человека.
Dennis Gorelikdennisgorelik on November 28th, 2011 06:25 am (UTC)
Я думаю, что поседение связано и с наследственностью и с уровнем стресса и с возрастом.