Buying basses with credit [poll]

[jmattbassplaya]

I’m guessing this OP was inspired by that one thread from yesterday.

I wrote up a short response to that other thread about not buying a bass (or any trivial thing) on credit, but ultimately he’s a young man and capable of making his own decisions so I deleted the response before posting.

What I wanted to tell the guy was to consider what those monthly payments might look like instead if they were investments into an ETF or something similar. I know the market has taken a nosedive as of late, but he’s at a great age to get started on thinking about his financial future if he hasn’t already.

 

[fishdreams]

• Uhh, with today's inflation, it's pretty dumb not to take advantage of the no-interest 24, 36 or 48 month payment options you can get from the big music stores. Money will be worth less at the end of the period. You might feel like a smart buyer by paying it off all at once, but it is actually giving away money.

If this concept doesn't make sense, think of it this way.

Let's say your monthly payment on a no-interest payment plan is the same as the current cost of a gallon of milk (~$5).
Let's say due to inflation, the cost of a gallon of milk doubles over the 4 year period. That means the last payment you make only has the value of half a gallon of milk.

So if you pay it now, you are paying the cost of 48 gallons of milk. If you pay it off over 48 months, it will be the equivalent to 36 gallons of milk (after doing the math).

Inflation won't be that high of course, but the concept applies. Those no-interest payoff plans are free money to you.

The Sweetwater one is done by the Synchrony bank. Their account website is extremely easy to use. They do auto-pay but I log in every month and schedule a payment ahead of the auto-pay, just to make sure there are no issues with my bank connection. Easy to use and will save you a ton of $. Guitar Center, Sam Ash etc. all use the same bank system I think.

I try to avoid the 6-month options since they are trickier to deal with. They auto-payments don't add up to the balance, so you have to make an additional payment, and those do have outrageously high interest that will hit you if you screw up. I have done them a couple times (for Fender it is the only option except maybe once a year on a special promotion), but I don't like the interest penalty hanging over my head, so I try to avoid them.

Read the fine print. The no-interest plans really are a great way to buy. Add discounts from your sales person, sales or coupons, and you are way ahead of just dropping it in your cart and check out with credit card.

You can call it 'pretty dumb' to not do this (and I have done the 0% 24/36/48 months for years) but do realize that

1. you more likely than not will pay full price (no salesperson discounts or bargaining, at least I never got that even when i asked), so there go already a few gallons of milk
2. it still is multi-year debt and ditto creditscore impact

 

[WI Short Scaler]

Why would you want to improve your credit score? A high FICO score simply means that you've borrowed a lot of money. This is what the banks want you to do, so they can make money off of you.

Not necessarily. Again lessons learned from my bride. We've had a credit card since we got married, I thought they were a bad idea. But we used it over the years to purchase airline tickets, reserve hotel rooms, reserve rental cars, maybe on home improvement purchases, etc. All things that were paid in full at the first opportunity.

So did we borrow alot of money? No. What we did is build a credit score that is 800+ which came into play to get lower interest rates on the only things we've ever financed (after my dumb drum purchase) which are cars and our house. We've never had a loan that went the entire term either, all pre-paid early.

So there is an advantage but you have to be careful and manage things well. Not a skill I have, I chose wisely in the bride department

 

[Al Rivera]

I have always used others people money to finance my musical purchases! I pay the payments with my gig money and the savings never gets touched! Same with cars,houses etc. Its a tip gleaned from rich people,and has serves me well.

 

[jmattbassplaya]

Credit cards are tools, and like most tools failure to use them appropriately can cause serious harm to you.

Financial literacy is grossly underrepresented in the public school system and is something I’m a major advocate for getting implemented as many places as possible because dumb financial decision you make in your teens or twenties can last you a lifetime and seriously limit your potential.

 

[WI Short Scaler]

I have always used others people money to finance my musical purchases! I pay the payments with my gig money and the savings never gets touched! Same with cars,houses etc. Its a tip gleaned from rich people,and has serves me well.

And that's why I pay in cash. My gig $ is mine to spend as I want. A deal my wife and I made when getting married. I don't take $$ out of the "family" fund for music related purchases, and she doesn't have an opinion if something shows up at the house because I spent "my" money.

The only difference is I save the $$ first and then buy when I have enough, no payments.

 

[Skip Chucker]

It's not a matter of using credit, it's a matter of having credit. It's integrated in our system. Even a modern utility company requires 550-600 to agree to provide new service for you. They want paying customers same as any business. It also determines how quick you get service and how long they leave it on if you miss a payment/auto-pay malfunction etc. Or you can pay a large deposit and higher rates. And that model is systemic.

You can pay a deposit and not have a credit check when you have your utilities turned on, I've done this at place the military has sent me over the last 15 years (which is... 12... damn, yeah, 12 vastly different areas ranging from the major metropolises that are San Diego and Washington, DC to a town of 5K in South Texas across 7 states). That deposit has never been higher than 100 dollars, but more generally more like 50 dollars. I've never paid higher rates for utilities because I didn't give them permission to run a credit check on me.

As far as speed of service? You're going to have to provide an example for that.

I use credit and play the game, but I can see where the game is rigged against the average consumer. I also know people who have done it without credit.

 

[Skip Chucker]

Exactly. People who've paid off their debt have noticed that their credit score went down.

Yeah, mine did that too- if I carry $7 (that's seven dollars) on a credit card, my credit goes up about 12 points depending on which FICO number you're looking at. If I pay that 7 dollars off, it goes down those 12 points.

 

[blackat]

A word of caution. If one opts for financing, even if it's paid in full and on time in six months, it'll ding your credit score. Credit rating agencies consider it second tier credit for a discretionary purchase and that's not good. Some don't worry too much about their credit score. But for a younger person who also may be getting a mortgage in the near future, the last thing you want is your credit score lowered.

I know it isn't always easy to pay cash. But in some cases it's better to opt to spend less, realizing you can always upgrade when you have more to spend.

 

[skycruiser]

You can call it 'pretty dumb' to not do this (and I have done the 0% 24/36/48 months for years) but do realize that

1. you more likely than not will pay full price (no salesperson discounts or bargaining, at least I never got that even when i asked), so there go already a few gallons of milk
2. it still is multi-year debt and ditto creditscore impact

Well, my "dumb" remark was partly in reaction to the postings saying how stupid it is to use this service.

Regarding your points:
1. Not true in my experience. My SW sales guy gives me 15-20% off the web price on all my purchases. And he doesn't ask how I plan to pay until the price is set and I give him the go ahead, so that doesn't seem to factor in at all. But this may vary from person to person, and between the various big music stores.
2. Only my name is on my SW card, but my wife and I share all of our other accounts. We just got a car loan a couple weeks ago and I was able to see our scores. Mine might have been a few points lower, but we're in the high 700's so it has zero impact on any financial services we might need. Now if you put $20k on one of these store cards you might have more problems, but I keep mine below $1k. I think the account might be limited to $5k anyway, something like that.

Funny how the "gallons of milk" thing used as an ILLUSTRATIVE EXAMPLE is being thrown back as a unit of measure of savings.

 

[skycruiser]

A word of caution. If one opts for financing, even if it's paid in full and on time in six months, it'll ding your credit score. Credit rating agencies consider it second tier credit for a discretionary purchase and that's not good. Some don't worry too much about their credit score. But for a younger person who also may be getting a mortgage in the near future, the last thing you want is your credit score lowered.

I know it isn't always easy to pay cash. But in some cases it's better to opt to spend less, realizing you can always upgrade when you have more to spend.

You can also build credit by using these types of service and paying them on time consistently.

 

[Skip Chucker]

I know the market has taken a nosedive as of late,

Great time to get in!

 

[Nuage420]

Low to no interest payments. Keep your capital in your hands and invest it in things that have higher gains than the interest. Learned this from a very successful guy. He financed his corvette ZR1 and nobody understood why when he could have bought the dealership. He laid it out, he got 0% interest and that 100k or so he didn't drop was earning 6%.

 

[JW56789]

COD. Cash on the barrel head. Only and always.

I had a bankruptcy 25-odd years ago, paid off the 25-odd grand I was left with under the terms over time.

So I keep one very-low-interest rate credit card through my credit union that's strictly a 'Break-Glass-in-Case-of' for the dead water heater, etc., and always has a zero balance. My credit union helped me build my credit rating over time back into the 800's (it was 37 at the end of my bankruptcy), and I will not mess that up for anything. House note, soon to be paid car note, that's it.

Basses and the gear are COD. I don't want 'cash back' and all the other lies they feed you to sucker you. I lived for more than a few years under mortal fear of how I was going to pay all these bills, and I'd rather live in an old refrigerator cardboard box by the railroad track than ever let those bloodsuckers get hold of me again.

So when they ask 'What's in YOUR wallet?' my answers are 'not YOU sob's' . . . . and cash.

I look at it backwards alongside most people. I don't get GAS. I research what I want for a while before buying. I know what the going prices are on this or that. I watch for open box, demo, barely used, etc., and only buy good deals: I save money up front, and lower what my resale needs to be on the back end. I never buy without figuring in the resale. And I don't look to make a killing resale-wise: All I need to do is sell it for what I paid for it, and I played it for free. Regardless, I never put myself in a spot to lose my shirt at resale. That's the kind of 'cash back' I'm interested in.

 

[skycruiser]

Low to no interest payments. Keep your capital in your hands and invest it in things that have higher gains than the interest. Learned this from a very successful guy. He financed his corvette ZR1 and nobody understood why when he could have bought the dealership. He laid it out, he got 0% interest and that 100k or so he didn't drop was earning 6%.

Exactly - this guy gets it.

 

[Nuage420]

Exactly - this guy gets it.

Yeah I'm reading through these posts and see there are a lot of folks just not interested in maximizing thier gains, maybe too afraid? Which is understandable if you haven't sought financial education. I was there for a long time too. Now my money works for me and what I spend on bass GAS is a small percentage of my gains.

 

[Al Rivera]

Low to no interest payments. Keep your capital in your hands and invest it in things that have higher gains than the interest. Learned this from a very successful guy. He financed his corvette ZR1 and nobody understood why when he could have bought the dealership. He laid it out, he got 0% interest and that 100k or so he didn't drop was earning 6%.

Bingo!!!!!

 

[MCS4]

My answer is credit card unless the maker only accepts cash.

But two things:
1) I always pay off my entire credit card balance every month, so there is no interest.
2) My credit card among other things gives me cash back and insures my purchase for no additional fee.

Same. I use my credit card for most purchases when possible, primarily for convenience and rewards, but I pay it off every month.

 

[jmattbassplaya]

Great time to get in!

Its a fire sale!

 

[Lo-E]

If it’s a local sale it’s cash all the way.

If it’s not local I’ll use a card but the card gets paid down in full every month.

In my younger days I let my credit cards get a little out of hand. I made sure to pay the bill every month but the balance continued to grow. Once I got my first good paying job I paid all the debt down and I haven’t allowed a balance to carry over now in more than 25 years. Debt’s scary and I’m a big chicken. My mortgage is the only debt I have.

 

[Zooberwerx]

Its a fire sale!

Yep...there are some great bargains available and we’re taking full advantage.

Riis

 

[friskinator]

When you guys say "cash," do you mean literal paper currency? Because I haven't spent that on much of anything in the last number of years. I'm not even sure if I have any at home right now.