Monthly Payment Plan

[xdan0920]

$500k houses on $75k household income

My household income is significantly above this, and when I bought my house a couple years ago, I couldn't get approved for even 85% of that. Where'd you get these numbers?

Call him Suze Orman or Dave Ramsay, whatever. Those people don't have to say it to validate its truth. It IS destroying America because we are owned by China, our people can't understand basic finance and our government not only wastes the taxpayer dollars, they print money in the trillions to pay for failing govt programs and entitlements.

I actually agree with your basic premise. Debt is a problem in the country. I don't agree with your hard line, if you can't afford something up front, you can't afford it. That's just dumb. Debt itself is not a problem, and is actually a useful financial tool. Overusing it is a problem. I find myself wondering how old you are, and besides your BMW, what exactly do you own outright.

 

[DisneyJunkie]

Unfortunately, not everyone in this country has so much money thrown at them regularly for doing things like hitting a ball with a stick, throwing a ball into a hoop. or catching a thrown ball at them.......that they can basically within seconds get the idea of taking a vacation and already know it's paid off with a few keystrokes. Most have to save or pay off over time the kinds of vacations they want, and that option to do so doesn't mean they're doing anything wrong financially. People who toil at 40 or 40+ a week month in and month out in order to provide for themselves and/or their families DO deserve a vacation. Now the KIND of vacation should have a bearing on their financial status. Carrying a certain amount of debt doesn't harm a person at all, it actually helps with their credit score, provided the debt isn't insanely high. If it is, then perhaps the person should choose a much less expensive vacation than say, a trip to Disney World, so it could be something they could do reasonably and still have the money to work towards paying down that debt.

People have all sorts of options available to them. Maybe they have ONE particular credit card with no balance on it that they use specifically for vacations, and they pay it off over time. That's fine. Or they plan to use certain income (maybe a good tax refund) they know they'll be getting that can cover the cost of the trip so it eventually can be completely paid off. That's fine too.

 

[MichWolv]

Politics has nothing to do with it. Debt is a serious problem that is destroying people's lives.

Sure. But you could replace the word "Debt" with a ton of other things. "Drugs", obviously. "Alcohol", of course. "Guns".

But also "Video Games", "Sugar", "Television", "Gluten", "Icy Roads", "Stupidity", and, pertinent to this discussion "Excessive generalization".

Debt is a tool. Like a hammer. Use it right, and you build a house. Use it wrong, you need an X-ray to see if your thumb is broken.

Not pertinent to the topic, however, is "Debt". Paying over a year for access to entertainment for a year really isn't debt in the ordinary sense. Disney is doing something for you for a year, and you're paying for it over that year.

 

[Chef Mickey]

My household income is significantly above this, and when I bought my house a couple years ago, I couldn't get approved for even 85% of that. Where'd you get these numbers?



I actually agree with your basic premise. Debt is a problem in the country. I don't agree with your hard line, if you can't afford something up front, you can't afford it. That's just dumb. Debt itself is not a problem, and is actually a useful financial tool. Overusing it is a problem. I find myself wondering how old you are, and besides your BMW, what exactly do you own outright.

No, it's not dumb. You're just a typical American that thinks not being able to afford something means there has to be another way to get what you want. Lucky for you, there is....debt. I told you, I understand debt and its role in financial markets better than most. People that use the "debt is good" argument don't actually use it because they are leveraging up with the intent of making more money by acquiring more assets. They are using it because they can't actually pay for the item. I actually agree with using debt to your advantage, but most people do not do it for that purpose.

I have 0 debt, actually and own: My house, My cars, 2 Rental Properties, 401k, Several IRAs, Brokerage Accounts, etc.

You think buying a car with a loan really makes any sense? The car is going to $0, just like every other material thing you can buy in this world with few exceptions.

With the exception of a house where debt can be a useful financial tool, I can pretty much say you should be buying everything else in cash. Even buying stocks on margin is a bad idea, but it can also make you rich. That doesn't mean it's for everyone. Ever heard of a margin call?

 

[Chef Mickey]

Whether or not that is true, it has nothing to do with this conversation. You said that if someone cannot afford to pay for a vacation all in one shot, they do not deserve to go. Actually, I asked you to clarify if that is what you meant, and you confirmed it. If everyone had to pay for their entire trip up front, the entire park system would be empty, which would obviously be your dream come true, but it is not the reality of most Americans. And on that note, I am out. Have your little elitist last word, whatever it may be. I won't be reading it. Good night.

I never said anything about deserve.....I said if you can't afford to pay for it up front, you can't afford to go. I also said if you can afford it but want to pay it off and 0% interest, that's fine too....it just can't be the reason you can afford it.

 

[xdan0920]

No, it's not dumb. You're just a typical American that thinks not being able to afford something means there has to be another way to get what you want. Lucky for you, there is....debt. I told you, I understand debt and its role in financial markets better than most. People that use the "debt is good" argument don't actually use it because they are leveraging up with the intent of making more money by acquiring more assets. They are using it because they can't actually pay for the item. I actually agree with using debt to your advantage, but most people do not do it for that purpose.

I have 0 debt, actually and own: My house, My cars, 2 Rental Properties, 401k, Several IRAs, Brokerage Accounts, etc.

You think buying a car with a loan really makes any sense? The car is going to $0, just like every other material thing you can buy in this world with few exceptions.

With the exception of a house where debt can be a useful financial tool, I can pretty much say you should be buying everything else in cash. Even buying stocks on margin is a bad idea, but it can also make you rich. That doesn't mean it's for everyone. Ever heard of a margin call?

Not a big deal, and I do happen to be American, but how did you know?

I actually agree that most people don't use debt correctly. What is dumb, is saying all debt is bad, which you originally did say. And if you finance any purchase, that means you can afford it. That's dopey reasoning. I bought a car recently, 0 interest for 60 months. Should I have paid up front for it? Is that really your position? Anyways, you seem to agree with my sentiment here, as you bring up examples of acceptable debt.

One other thing. Where did you get your home purchase #s? 75k income and 500k houses?

 

[xdan0920]

No, it's not dumb. You're just a typical American that thinks not being able to afford something means there has to be another way to get what you want. Lucky for you, there is....debt. I told you, I understand debt and its role in financial markets better than most. People that use the "debt is good" argument don't actually use it because they are leveraging up with the intent of making more money by acquiring more assets. They are using it because they can't actually pay for the item. I actually agree with using debt to your advantage, but most people do not do it for that purpose.

I have 0 debt, actually and own: My house, My cars, 2 Rental Properties, 401k, Several IRAs, Brokerage Accounts, etc.

You think buying a car with a loan really makes any sense? The car is going to $0, just like every other material thing you can buy in this world with few exceptions.

With the exception of a house where debt can be a useful financial tool, I can pretty much say you should be buying everything else in cash. Even buying stocks on margin is a bad idea, but it can also make you rich. That doesn't mean it's for everyone. Ever heard of a margin call?

I am new to the forum, but just logged my 25th trip to WDW in 26 years of being alive. I was there 8 days, 7 nights (never long enough) and stayed at the Dolphin. I am an enormous Disney supporter and huge fan of Disney World.

Save and invest. Also, having a good income helps.

Never take trips on a credit card or by taking money out of a 401k or IRA. Never take trips if you have credit card debt or are living check to check.

Personally, I'd have 12 months of cash for living expenses before I'd do anything "extra."

If you have to ask, you don't get it.

I've been 30+ times in 30 years and as much as 3 times in one year (minimum 7 days per trip). I honestly never get sick of it and I'm always sad to leave and can't wait to return. There is something special about the feeling I get when I'm there, something I don't feel anywhere else. When it's in your blood, it's for life.

Excellent point. I have gotten so sick of movie theaters over the years (Talking, texting, eating, etc) that I have spent almost $10,000 building a home theater in my house where we can enjoy movies and sound just like the theater.

Unfortunately, $10,000 won't buy me a Disney

It's very true. People can ruin an experience with their obnoxious behavior and the sheer volume of guests wanting to maximize their experience.

OK. Just gonna establish a timeline here...

You are 26 in 2011, and have taken 25+ trips debt free, while carrying 12 months of living expenses.

You also purchased a house, debt free by 2014 at the rip old age of 28/29? And install a 10k home theater because the idea of going to an actual movie theater offended your 28 year old self.

Now you are 30? 31? And you own 3 houses outright? Plus all that other jazz?

Is this all accurate? or are you blowing smoke out your, whatever...

 

[BuddyThomas]

OK. Just gonna establish a timeline here...

You are 26 in 2011, and have taken 25+ trips debt free, while carrying 12 months of living expenses.

You also purchased a house, debt free by 2014 at the rip old age of 28/29? And install a 10k home theater because the idea of going to an actual movie theater offended your 28 year old self.

Now you are 30? 31? And you own 3 houses outright? Plus all that other jazz?

Is this all accurate? or are you blowing smoke out your, whatever...

LOL - Brilliant. Thanks for taking the time to go back and do that. I was tempted to go back and put together a compilation of his most obnoxious posts too, but I didn't want to spend three more seconds of my time on this person.

All he ever does is brag about how rich and educated he is, and how Disney should double their prices so the rest of us can't afford to get in. This is one of the most obnoxious posters I have ever encountered on any forum, anywhere.

 

[Chef Mickey]

OK. Just gonna establish a timeline here...

You are 26 in 2011, and have taken 25+ trips debt free, while carrying 12 months of living expenses.

You also purchased a house, debt free by 2014 at the rip old age of 28/29? And install a 10k home theater because the idea of going to an actual movie theater offended your 28 year old self.

Now you are 30? 31? And you own 3 houses outright? Plus all that other jazz?

Is this all accurate? or are you blowing smoke out your, whatever...

Thanks for putting it together. Looks like I've been pretty consistent in my messages.

My trip calc is always a little off because I've honestly lost track. I think I've been a lot more than 30 times to be honest, but many were as a kid. I changed my profile to 60 trips because many of my family trips as a kid to Disneyland and World weren't even counted. We went 3 times/yr.

BTW, $10k home theater is nothing in the home theater world.

12 mos of living expenses was just my advice...it is more than that.

My situation is pretty lucky/unique, but I still don't consider my advice to be bad. All of that is true, yes.

 

[xdan0920]

My trip calc is always a little off. I think I've been a lot more than 30 times to be honest, but many were as a kid. $10k home theater is nothing in that world.

You don't know my situation...yes, all of that has happened.

Indeed. I do not, I am simply using your posts to try and figure out your situation. Best guess, your pops had his stuff together, you were born into money and have literally zero clue about living in a normal world. Which is fine, by the way, I wish my Dad was rich.

The point is, normal people can and do use debt intelligently. We can't all take out a loan from the bank of Mom and Dad to buy a house or a car debt free.

Like @MichWolv said earlier, debt is a tool. It is neither good nor bad in and of itself.

 

[Chef Mickey]

Indeed. I do not, I am simply using your posts to try and figure out your situation. Best guess, your pops had his stuff together, you were born into money and have literally zero clue about living in a normal world. Which is fine, by the way, I wish my Dad was rich.

The point is, normal people can and do use debt intelligently. We can't all take out a loan from the bank of Mom and Dad to buy a house or a car debt free.

Like @MichWolv said earlier, debt is a tool. It is neither good nor bad in and of itself.

I edited my post to give more background.

And I totally agree about debt being a tool, one that I've used in the past. The rental properties were paid off due to some extenuating circumstances to reduce leverage in a world where nothing was performing well. In 2015, stocks and commodities went no where. Sometimes paying off a low interest mortgage is the best return on your investment. It's a tough market and if it keeps up like this in 2016, I might be making payments on a trip too.

I'm not saying I'm not lucky. No one can be 100% self made, but I'm simply telling you my perspective on debt, and it's good advice! It's pretty much what Dave Ramsay would tell you (and I don't even like the guy, at all) but I'm not just trying to be a jerk. I don't even consider myself rich. I have rental property, but you don't know the value. It doesn't have to be mansions. You have to start somewhere.

My parents aren't rich either. I've had help, freely admit that.

You're trying to turn this into a debt discussion, but I agree debt is fine in certain situations. If you follow my advice on buying things for cash most of the time, you'll be in better shape.

BTW, a car at 0% is never free. That is built in to the price of the car. You could have gotten a better deal if you negotiated an all cash deal. I've done it on my cars in the past. If the dealer says no, go to another dealer or buy a different car.

 

[xdan0920]

I edited my post to give more background.

And I totally agree about debt being a tool, one that I've used in the past. The rental properties were paid off due to some extenuating circumstances to reduce leverage in a world where nothing was performing well. In 2015, stocks and commodities went no where. Sometimes paying off a low interest mortgage is the best return on your investment. It's a tough market and if it keeps up like this in 2016, I might be making payments on a trip too.

I'm not saying I'm not lucky. No one can be 100% self made, but I'm simply telling you my perspective on debt, and it's good advice! It's pretty much what Dave Ramsay would tell you (and I don't even like the guy, at all) but I'm not just trying to be a jerk. I don't even consider myself rich. I have rental property, but you don't know the value. It doesn't have to be mansions. You have to start somewhere.

My parents aren't rich either. I've had help, freely admit that.

You're trying to turn this into a debt discussion, but I agree debt is fine in certain situations. If you follow my advice on buying things for cash most of the time, you'll be in better shape.

BTW, a car at 0% is never free. That is built in to the price of the car. You could have gotten a better deal if you negotiated an all cash deal. I've done it on my cars in the past. If the dealer says no, go to another dealer or buy a different car.

I see the edit now...

The purpose of me bringing all that up was just to show that maybe you shouldn't be using your life to give advice to people who don't have your advantages. Using myself as an example, my wife and I do pretty well. But we have not ever been in a position to buy a house debt free, nor are we in a position to pay down 300k in a couple years. So we carry debt. It doesn't make us typical dumb Americans. We have a kid, and new cars, and do fun things, etc....If we were putting all our money towards our house, we would have none of that. Maybe in 7-10 years we would be debt free, but we would also be over 40, and not in a position to have a kid. So we use debt.

The car isn't free at all. The loan is free. I buy my cars at opportune times and use past deals to negotiate new deals. I have paid cash for cars, financed cars, and leased cars. I have seen no measurable difference in the type of deals I am able to secure. In fact, my latest car purchase is the best deal I have gotten yet. Bought it on Jan 4th, the last day of the year for dealers to hit their quotas. Anyway, that's not the point.

Using interest free monthly payments for an AP is a smart financial decision. It frees up money for you to use as you see fit throughout the year, and it doesn't cost you anything extra. Why let TWDC hold my money if I don't need to?

 

[Chef Mickey]

I see the edit now...

The purpose of me bringing all that up was just to show that maybe you shouldn't be using your life to give advice to people who don't have your advantages. Using myself as an example, my wife and I do pretty well. But we have not ever been in a position to buy a house debt free, nor are we in a position to pay down 300k in a couple years. So we carry debt. It doesn't make us typical dumb Americans. We have a kid, and new cars, and do fun things, etc....If we were putting all our money towards our house, we would have none of that. Maybe in 7-10 years we would be debt free, but we would also be over 40, and not in a position to have a kid. So we use debt.

The car isn't free at all. The loan is free. I buy my cars at opportune times and use past deals to negotiate new deals. I have paid cash for cars, financed cars, and leased cars. I have seen no measurable difference in the type of deals I am able to secure. In fact, my latest car purchase is the best deal I have gotten yet. Bought it on Jan 4th, the last day of the year for dealers to hit their quotas. Anyway, that's not the point.

Using interest free monthly payments for an AP is a smart financial decision. It frees up money for you to use as you see fit throughout the year, and it doesn't cost you anything extra. Why let TWDC hold my money if I don't need to?

I agree with your first paragraph. Everyone has a different situation.

However, IN GENERAL, using debt or even monthly payments to pay for frivolity is just not financially sound even if it's just psychological. I'm not saying Disney is gouging you on interest during monthly payments. I'm saying the mentality is flawed. You're making it sound like most Americans aren't in financial trouble...they are. They are over leveraged and they live on monthly payments.

You can buy food on QVC on monthly payments...are you saying anything you can buy on a monthly payment is a good plan? Perhaps you wouldn't buy it if it didn't offer monthly payments, telling you what?
1) You don't need it.
2) You really can't afford it.
3) Both

Again, using the 0% to pay for the AP is fine. I never said it wasn't. I'm saying that using the monthly payment option to pay for it because it's the only way to afford it means you actually can't afford it comfortably enough to do it.

These are obviously my opinions and there are more than 2 ways to do things. Until the mindset is changed, you really can't expect different results than a life of monthly payments. Sometimes, a hard 2 years will be worth it to live a debt free life in the future.

This is sound advice...I'm not just trying to beat my chest here. People don't like hearing that can't afford something, but affording something is such a gray area. If you put down 3% on a house and get the loan, can you really afford it? Banks loan money all the time to people living right on the edge and even over the edge...that's why there are so many foreclosures. Couldn't afford it. Not enough skin in the game.

 

[Chef Mickey]

Not a big deal, and I do happen to be American, but how did you know?

I actually agree that most people don't use debt correctly. What is dumb, is saying all debt is bad, which you originally did say. And if you finance any purchase, that means you can afford it. That's dopey reasoning. I bought a car recently, 0 interest for 60 months. Should I have paid up front for it? Is that really your position? Anyways, you seem to agree with my sentiment here, as you bring up examples of acceptable debt.

One other thing. Where did you get your home purchase #s? 75k income and 500k houses?

I tried to be careful in saying home debt is not necessarily bad and typically if I used the generic term "debt" I meant other kinds of debt. I do think home loans are toxic for most Americans as well, because they think they can afford a house just because they get the loan. Not the case. That's why these FHA and other government loans are so negative for the consumer, because it gives people a path into a house when they actually can't afford one. You should be doing at least 20% down and the house should be no more than 2.5 times your salary. I just threw out a random salary and home value. Probably not completely accurate, but the point is they loan way more than you can afford.

 

[DisneyJunkie]

I never said anything about deserve.....I said if you can't afford to pay for it up front, you can't afford to go. I also said if you can afford it but want to pay it off and 0% interest, that's fine too....it just can't be the reason you can afford it.

That's absurd. Nobody must pay for everything all at once, and not doing so doesn't mean they can't afford it. Some CAN afford it even if it means budgeting wisely out of their paychecks in order to do so. That goes for anything, whether it's a house, a car, or a vacation. There are very few people in this world that can pay for everything up front. It's simply not realistic or practical to make that claim.

 

[xdan0920]

I agree with your first paragraph. Everyone has a different situation.

However, IN GENERAL, using debt or even monthly payments to pay for frivolity is just not financially sound even if it's just psychological. I'm not saying Disney is gouging you on interest during monthly payments. I'm saying the mentality is flawed. You're making it sound like most Americans aren't in financial trouble...they are. They are over leveraged and they live on monthly payments.

You can buy food on QVC on monthly payments...are you saying anything you can buy on a monthly payment is a good plan? Perhaps you wouldn't buy it if it didn't offer monthly payments, telling you what?
1) You don't need it.
2) You really can't afford it.
3) Both

Again, using the 0% to pay for the AP is fine. I never said it wasn't. I'm saying that using the monthly payment option to pay for it because it's the only way to afford it means you actually can't afford it comfortably enough to do it.

These are obviously my opinions and there are more than 2 ways to do things. Until the mindset is changed, you really can't expect different results than a life of monthly payments. Sometimes, a hard 2 years will be worth it to live a debt free life in the future.

This is sound advice...I'm not just trying to beat my chest here. People don't like hearing that can't afford something, but affording something is such a gray area. If you put down 3% on a house and get the loan, can you really afford it? Banks loan money all the time to people living right on the edge and even over the edge...that's why there are so many foreclosures. Couldn't afford it. Not enough skin in the game.

I want to say, I actually agree with your larger points. Most Americans are in financial trouble. A lot of it is because they over extend, a lot of it is because of the welfare state, a lot of it is because so, so, so many unskilled manufacturing jobs have left our shores, leaving a huge void in our employment levels.

The way you went about saying these things was pretty caustic at first, which is what got me engaged here in the first place. But, I think we have toned down the combativeness on both ends and actually had a reasonable discussion, which is nice.

Here is a question for you. Let's say you want an AP, but you don't have $600 or whatever it costs right now to buy it. What is the difference between saving for a year and buying next years with cash? or using Disney's monthly payment plan and paying for it over the course of a year?

 

[Chef Mickey]

That's absurd. Nobody must pay for everything all at once, and not doing so doesn't mean they can't afford it. Some CAN afford it even if it means budgeting wisely out of their paychecks in order to do so. That goes for anything, whether it's a house, a car, or a vacation. There are very few people in this world that can pay for everything up front. It's simply not realistic or practical to make that claim.

But there is some point where you say, "I can't afford this."

That's all I'm saying. You do whatever you feel is right. Vacation is still different than a place to live and a means of transportation.

 

[Chef Mickey]

I want to say, I actually agree with your larger points. Most Americans are in financial trouble. A lot of it is because they over extend, a lot of it is because of the welfare state, a lot of it is because so, so, so many unskilled manufacturing jobs have left our shores, leaving a huge void in our employment levels.

The way you went about saying these things was pretty caustic at first, which is what got me engaged here in the first place. But, I think we have toned down the combativeness on both ends and actually had a reasonable discussion, which is nice.

Here is a question for you. Let's say you want an AP, but you don't have $600 or whatever it costs right now to buy it. What is the difference between saving for a year and buying next years with cash? or using Disney's monthly payment plan and paying for it over the course of a year?

Totally agree. I enjoy discussing the topic in a calmer, more controlled manner anway, even if we disagree.

To answer your question: For me, the difference is a mindset. I have the money versus I don't have the money. It will trickle over to other aspects of your life and when your outlook changes, so will your financial position. It also raises the question of why you can't afford it today? Do you have other obligations?

I know a woman that declared bankruptcy and went on a trip to Disney during her bankruptcy proceedings.

 

[MichWolv]

In general, if you have to buy something on monthly payments of any kind, you can't afford it.

So taking it away should have no impact, in my opinion. If they have a monthly payment option at no interest, sure? But if you're doing it to budget the cost, you can't afford it.

Fascinating discussion you started with this over-the-top comment. Glad the ensuing discussion was a bit more reasonable.

Surprisingly to me, the survey responses disagree with you. I'm' shocked that such a high percentage of respondents view the monthly payment program as a necessity to convince them to buy an AP. When Disney introduced the plan, I thought it was pretty much a non-event. Sure, I'd take advantage of it, because why pay now vs. paying later without interest, but I didn't think it would actually affect the number of AP holders much at all.

Once again, an example of Disney management knowing their business better than I do.

 

[DisneyJunkie]

But there is some point where you say, "I can't afford this."

That's all I'm saying. You do whatever you feel is right. Vacation is still different than a place to live and a means of transportation.

That I certainly agree with. What they can afford depends on what they're willing to spend and for how long they're willing to take to pay it off. Someone can take 3-4 days and vacation in a condo at the beach somewhere and have a nice time for FAR less money than 3-4 days at Disney World. But they have to stick to whatever they have planned in terms of paying it off, otherwise it's all too easy to charge the WDW trip, and while paying on it still spend money irresponsibly on other things and then never get out of any debt, let alone the one for that trip.