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I just don't get it.

April 23rd, 2008 at 07:16 am

I acquired my debt for one item at a time. I always knew the full amount I was paying for that item and made the choice that it was worth it.

What I don't understand even 6 months later was how my friend who bought a car justified to herself accumulating a 10k (actually 14k once interest is added in) car loan when 3 months earlier she made that kind of money in a year...

Yes she had a new job at that time that paid better and was up to 30k per year (she lost the job within 3 months) but she had just moved cross country, no ef but she was comfortable buying this car.

Do people really only see the monthly payments? She told herself she could afford $200 per month without calculating the cost of gas and insurance. She realizes she went overboard now but I still don't see how you could just go and buy a car (she only spent a few hours shopping before she closed on it)without thinking about the fact that she could have bought one for 1/3 of the price.

Maybe I don't get it because I don't feel the need to own a car? I mean this loan has a strong chance of outliving her car.

I just don't get it.

By and by, so far she has managed to make ends meet doing temp work so she is doing okay. I need to help build a new budget and actually figure how much she needs to save for her goals which I will probably help her with this weekend. (Hence the reason I was thinking about it.)

6 Responses to “I just don't get it.”

  1. sagegirl Says:

    She is lucky to have you--maybe you can help her "see the light" and prevent future rash purchases. We are a society built on only looking at monthly payments instead of overall costs. She is not alone in that thinking unfortunately.

  2. miclason Says:

    Yes, sadly, people only look at the monthly payment.
    There's a company here in ES that gives small loans (up to $1.5K)with weekly installments. Recently, the Center for Consumer Defense determined they were charging interest upon interest (which is not allowed by law) and the company had to give back the money that had been illegally charged...cousin had gotten a couple of loans through them (1 to buy a printer, another to buy paint for her house and for something else, I don't really remember what) and she thought it wouldn't be worth it to go to the company and try to collect....She got about $60 back on one of the loans (which was originally for $300!!)

  3. Petunia Says:

    Some people solve their problems by taking the first answer that comes to their heads and running with it, whether that's truly a good idea or not! So if your car dies, hey! just go to the nearest dealer and buy a new one!

  4. luxlivingfrugalis Says:

    I hate those car salesmen/lots wherein when you ask the price which is not posted and they tell you the payment is only $XXX.XX!

    I have left lots before where in I could not get through to the people that I wasn't buying a &%&!@ payment.

  5. disneysteve Says:

    Yep. People think if they can afford the monthly payment, they can afford the purchase. If not for that mindset, nobody would ever have credit card debt.

    I've said many times that I will never understand what goes through someone's head when they make a purchase knowing full well that they don't have the money to pay for it.

  6. Caoineag Says:

    While I understand what you are saying Steve, not so sure about the no credit card debt. Too many furniture places offering 0% apr for 2+ years for that. Not to mention lots of people use the credit card to pay bills and get rewards. Doesn't matter that you never pay interest. That still qualifies as credit card debt.

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