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Thread: Debt/Spending, too much?

  1. #11
    AK addicted gunaholic dutchkma's Avatar
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    My gun hobby is cash only. If I have it, I spend it. If I don't, I can't. My cash supply comes from my "allowance", which used to supply my smoking habit. 2 Years being smoke free has bought a lot of fun!

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    Gunco Regular yarro's Avatar
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    I started only buying things that I did not have to go into debt to buy and I justify the purchase as a need not a want. I still have lots of stuff, but I don't owe anyone anything now. If you have to save to purchase everything, you will find that when you finally get the money saved up, you probably don't want it anymore. If you have a bunch of savings when we go into a recession, you can get great deals on other peoples impulse buys. I don't get a new car every 3 years. I replace one of the cars every 5 years and then the other 5 years later. If I can stretch it out more, I do. A car is a tool, not a statement of selfworth so buy the minimum tool you need. I shop at discount stores, garage/estate sales, and always look for the lowest price and haggle over the price of used stuff. I set a limit on the number of guns that I can have to those that fit in the safe and the four in the cars and two out for home defense. I use a credit card that gives me cash back and pay it off in full every month. I look at my bank account and credit card regularly to make sure that I am not over extending myself. Dipping into savings mean no buying anything but essentials until the money is put back. I am much happier and there is much less stress in my life with lessened money issues.

    -Yarro

  3. #13
    Gunco Member valencourt's Avatar
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    Quote Originally Posted by yarro View Post
    I started only buying things that I did not have to go into debt to buy and I justify the purchase as a need not a want. I still have lots of stuff, but I don't owe anyone anything now. If you have to save to purchase everything, you will find that when you finally get the money saved up, you probably don't want it anymore. If you have a bunch of savings when we go into a recession, you can get great deals on other peoples impulse buys. I don't get a new car every 3 years. I replace one of the cars every 5 years and then the other 5 years later. If I can stretch it out more, I do. A car is a tool, not a statement of selfworth so buy the minimum tool you need. I shop at discount stores, garage/estate sales, and always look for the lowest price and haggle over the price of used stuff. I set a limit on the number of guns that I can have to those that fit in the safe and the four in the cars and two out for home defense. I use a credit card that gives me cash back and pay it off in full every month. I look at my bank account and credit card regularly to make sure that I am not over extending myself. Dipping into savings mean no buying anything but essentials until the money is put back. I am much happier and there is much less stress in my life with lessened money issues.

    -Yarro
    That sounds like me, with a few minor differences. My Escort wgn will be 16 this November - has 229,000 miles on it. I'm going to see if I can get it to last another 5 years or so.

    There's something else to consider though. With inflation being what it is - 8 to 10%, with an excellent chance of getting much worse as China's problems with inflation push up the price of all their crap - there is probably no better time to do that building project you've been putting off, or make that big purchase that you really need. Inflation will be eating us alive for the next decade or so. Now is not the time to blow money on luxuries, but if you need it and have the money, you'd better buy it now. But not if you have to go in debt over it.

  4. #14
    Gunco Regular 3/325's Avatar
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    Debt, personal & national, has been an interest of mine for years now. Too many people are burying themselves in debt and are rather blas? about it. Over the last seven years I’ve been; a credit analyst for Discover Card, loan officer, underwriter at JPMorgan, credit counselor, and currency trader. I’ve seen the macro to the micro and everything in between.

    Yarro’s method is the way to go. From my experience as a credit counselor most people have no clue as to what they spend each month. A cup of coffee 5 days a week from starbucks = $80 a month. Or getting your lunch from mcdonalds instead of packing your lunch = $120 a month.

    The best way to go about becoming debt free is to figure out how much you spend a month. Carry a notepad and every time you buy something write it down. At the end of the month add it all up. Then figure out where to cut, make a budget, and stick to it.

    Valencourt’s observation on inflation is pretty good to. If you are concerned over inflation; buy silver, gold, and other commodities as they are a “hedge” against inflation. Personally I don’t have much faith in the value of the dollar. I keep a couple grand in gold and silver in the cabinet next to the AK’s & G3’s.

    I’ll get off my soapbox now.
    Last edited by 3/325; 04-22-2008 at 08:24 PM. Reason: spelling

  5. #15
    Indian Admin Winn R's Avatar
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    Quote Originally Posted by BigAl View Post
    i ordered 13,000 rounds of ammo yesterday because it was a good deal and i know how prices are going through the roof. i guess i justify it on the basis i could sell it all and probably make a 50% return on my investment. could be worse, i could have bought a bass boat...
    Quote Originally Posted by 555th View Post
    I've never seen any money spent on weapons or bulk ammo as being wasted....usually it's money well spent....and what you paid for it now will be half of what it costs in 3 or 4 years.
    I want to make both of you guys my investment advisers. You guys have done better than the the big bucks folks. The market has gone nowhere in nearly 10 years and with the depreciation of the dollar, standard investments have returned nothing in 10 years.
    There is no nonsense so errant that it cannot be made the creed of the vast majority by adequate governmental action. -- Bertrand Russell


    "Never attribute to malice that which can be adequately explained by stupidity." Robert J. Hanlon

  6. #16
    Gunco Regular 3/325's Avatar
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    It is kindof out of place on this forum but if any of you are interested I'll post some info; what is the prime rate and who decides to change it (it is not the fed), how rates affect the value of the dollar, the dollar in general, and mortgage info.

  7. #17
    Administrator sniper69's Avatar
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    Quote Originally Posted by 3/325 View Post
    It is kindof out of place on this forum but if any of you are interested I'll post some info; what is the prime rate and who decides to change it (it is not the fed), how rates affect the value of the dollar, the dollar in general, and mortgage info.
    go for it! I'll read it.
    "To show you how radical I am, I want carjackers dead. I want rapists dead. I want burglars dead. I want child molesters dead. I want the bad guys dead. No court case. No parole. No early release. I want 'em dead. Get a gun and when they attack you, shoot 'em."
    Ted Nugent - speaking at the NRA convention April 17, 2005

  8. #18
    Gunco Regular 3/325's Avatar
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    The dollar has lost 85% of its value since 1950. In other words, what cost 15 cense in 1950 cost $1 today. The only thing backing the dollar is what the rest of the world will pay for our national debt.

    Think about this: In 1950 a gallon of gas cost about a quarter. At that time quarters had 0.1804 oz of silver in them. Today the avg. price for a gallon of gas is about $3.30 and silver is $17.61 an oz. So that SAME quarter from 1950 will still buy a gallon of gas because of the silver content. The only thing that changed is the value of the dollar.

    In 1950 the avg. house cost about $8450 new or 242oz of gold. Today the avg. house cost about $219217 or 238oz of gold. Again the only change is the value of the dollar.

    The dollar used to be backed by gold. In 1971 Nixon did away with the gold standard. The gold standard meant that other countries could exchange $35 for 1oz of gold. The result was that the dollar became the “world currency”, it was the standard currency by which other currencies were judged.

    Deficit: means you spend more than you make.

    In 1955 the US started running a deficit, we imported more than we exported, by 1971 the deficit was undermining the world’s faith in the dollar. Because we as a country were spending more than we were making other countries started to become worried that the US had printed more dollars than we could back with gold. They “rushed the bank”. If Nixon had not done away with the gold standard we would have run out of gold as a nation.

    Since 1971 the only thing backing the dollar is how much the federal reserve can sell our national debt for. Which is where the Fed Funds rate comes in. What is the Fed funds rate you say? Well….

    The Fed Funds rate is two fold; the rate that the federal reserve lends money to large banks and the rate that the federal reserve pays the rest of the world to lend the US money.

    There is a common misconception that the fed sets “The Prime Rate”. They don’t. “The Prime Rate” is set by a conglomerate of banks. It is merely the suggested rate that banks charge their best customers for certain types of loans. Kinda like MSRP (manufacture’s suggested retail price) for cars. Ford may suggest that the new ford focus should sell for $18000 or whatever. But the dealer can charge more or less if they like. The same goes for the prime rate.

    The Prime rate is what your credit cards, home equity lines of credit, some car loans, etc are tied to. IE. If you look at your credit card rate it will probably say something like: 8.99 + Prime. So the prime rate may go up and down but your credit card will always be 8.99% above prime or 8.99% + 5.25 (current prime rate) = 14.24%. Or if prime climes to 7.00% then 8.99+7.00% = 15.99%.

    For about the last ten years or so The Prime rate has been set at 3.00% above the Fed Funds rate. Meaning that when the fed changes the fed funds rate the prime rate also changes but it is not set by the fed.

    So… You charge something on your credit card, the bank charges you 14.24%. The bank borrows the money from the federal reserve at the fed funds rate, currently 2.25%. The fed turns around and borrows money from the rest of the world, other countries, hedge funds, investors, etc. The fed pays 2.25% just like when you charge on your credit card you pay 14.24% or 19.99 or whatever they are raping you for.

  9. #19
    Gunco Regular 3/325's Avatar
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    Now we get to what sets the value of the dollar. How much the fed pays the rest of the world when borrowing money from them.

    Say you are in charge of a hedge fund. You have a choice of lending money to the US who will pay you 2.25% or to the EU, European union, who is currently paying 4.00%. You of course will sell, also called short, dollars then buy euros; because Europe is paying a higher rate than the US.

    So when the federal reserve lowers the fed funds rate; the prime rate will drop meaning the rate you are paying on your credit cards or home equity loan will go down. However, that also means that fewer investors will be willing to buy our national debt because the fed is paying less to global investors.

    If we are paying less to global investors than say Europe they start to sell dollars. This is where supply & demand comes into play. Since more people are selling dollars than buying them the dollar becomes worth less and less.

    As the dollar loses value then the cost of goods goes up. Take gas for example. To get gas we have to buy oil from foreign countries. If the dollar is losing value compared to other currencies oil will cost more to import because what we buy from other countries is priced in their currency.

    Lets say, hypothetically, that Kuwait was selling a barrel of oil for 1 dinare five years ago. At that time 1 dinare = 4$. They are still selling it for 1 dinare today, but now 1 dinare = 8$ because the dollar has lost value. So Kuwait has not changed the price of oil but for the US it has doubled as the dollar has lost value.

    This is why I cringe everytime I hear that the federal reserve has lowered rates again. Most people think lower rates are good because they will be paying less money in interest. But the cost of most everything else will go up because the lower rates = inflation.
    Last edited by 3/325; 04-23-2008 at 12:30 AM. Reason: spelling

  10. #20
    Administrator sniper69's Avatar
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    3/325 thanks for posting. feel free to post more.
    "To show you how radical I am, I want carjackers dead. I want rapists dead. I want burglars dead. I want child molesters dead. I want the bad guys dead. No court case. No parole. No early release. I want 'em dead. Get a gun and when they attack you, shoot 'em."
    Ted Nugent - speaking at the NRA convention April 17, 2005

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