Interest rates, loans, etc.

tonycondon

tonycondon

Gastons CRO (Chief Dinner Reservation Officer)
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Tony
talked to the bank today about paying for school this semester (and recovering my glider). said they could do me a $6000 loan at 8.5% for 2 or 3 years. monthly payments are well within my abilities. i have no idea what typical interest rates are these days, does that sound reasonable?
 
tonycondon said:
talked to the bank today about paying for school this semester (and recovering my glider). said they could do me a $6000 loan at 8.5% for 2 or 3 years. monthly payments are well within my abilities. i have no idea what typical interest rates are these days, does that sound reasonable?
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Not a bad rate for an unsecured loan...but you're young enough to avoid the pitfalls of the rest us and just save up and pay cash.

If you started putting away for retirement now, you will be a multi-millionaire with no sweat whatsoever.
 
thats kinda what i was thinking mike. assuming that i get a fair paying job after grad in december it should be no problem paying it off significantly early.
 
I have one CC through my bank. its keeps me alive when i have to live ahead of the paycheck during the winter CFIing, and it covers me if i overdraw. ive had a card since i was 16 and i think ive carried a balance for 2 or 3 months. most of those were by accident. forgot i had charged anything that month.
 
Tony:

For those of you with your head above water when it comes to debt--that sounds good. The alternative is a floating rate loan. I have a line of credit at prime; my development loans float at prime plus 1/2; however, I'm hopelessly in debt <g>. It's probably better that you do the fixed rate thing and have a chance to repay it (unlike your developer friends). Look at more than the rate; some loans have origination and other costs.

Best,

Dave
 
thanks dave. good news this is my hometown bank and they basically own my dad lol. i know that they'll treat me well, and frankly i think its worth it to take a slightly higher rate in order to do business with them.
 
tonycondon said:
thanks dave. good news this is my hometown bank and they basically own my dad lol. i know that they'll treat me well, and frankly i think its worth it to take a slightly higher rate in order to do business with them.
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Yeah, but be aware that any bank can be bought out. You might suddenly find that the loan is with BoA or someone!:hairraise:
 
true grant but i really dont see this happening. this is a two (i think) branch bank that is owned by a family friend. the manager and the loan officer that i talked to are both parents of my HS friends. Id consider it Cheers National Bank, everybody knows your name.
 
That's not too shabby of a rate. I think I'm sitting somewhere around 6-9% on student loans right now (up from 3.5% a few years ago). The nice thing about them, though, is that repayment is deferred for 6 months after graduation, so I'll have a little time to get 'settled' before having to start repayment (although I'll start throwing chunks at it ASAP as soon as I get a 'real' job).

The Gov't Student Loans are nice to pay for school, but they might frown upon a large chunk-o-change going towards recovering the glider (if they ever found out for some weird reason).
 
I'll loan ya at 5%. But keep in mind I am also playing softball, and have extra bats should the payments be late. :D
 
tonycondon said:
thats kinda what i was thinking mike. assuming that i get a fair paying job after grad in december it should be no problem paying it off significantly early.
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What do you do if you don't get a fair paying job in this "awful awful economy" the media keeps telling us about?

Debt adds risk. As someone who used to think debt was a tool, let me promise you - it isn't.

Debt is just a way to sell your future to buy the present.

Follow mikes link: http://www.daveramsey.com

Spoken by someone with $365,000 of assorted debt for "good causes".
 
Debt sucks--but so does the fabric falling off your glider. The rate is reasonable IMO.
 
I've been doing Dave Ramsey's get out of debt plan for a couple years now.
Making good progress and starting to see the light at the end of the tunnel.

Edit: And yes debt sucks.
 
I tend to believe you only go into debt for things that are investments. Otherwise, you buy them outright. There are a few cases where it makes sense to do otherwise, but not a lot. In this case, as I understand it:

School = investment
Recovering glider = toy

Take the school loan, that funds your future. Then pay it off as soon as you can. Save up the money to recover your glider. At least, that'd be what I would suggest. I also am not fully aware of your situation. :)

The ONLY debt I have is my mortgage, but I was fortunate enough to not have to get loans to pay for school. Now, the first 10% of my pay check goes into retirement savings. My three vehicles combined in total value (all of which I bought used, and bought outright) are worth about what a number of my peers have paid for one new car. Only thing is that my three won't depreciate nearly as quickly since I bought them used.

The one thing I will say is that I make pretty much all of my purchases (including my vehicles) on my credit card. The reason there is that way I get the points for my purchases, which goes to help fund whatever else I'm interested in doing. I've got enough points now to just about buy me my next vacation. I also pay it off at the end of every month.
 
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tonycondon said:
talked to the bank today about paying for school this semester (and recovering my glider). said they could do me a $6000 loan at 8.5% for 2 or 3 years. monthly payments are well within my abilities. i have no idea what typical interest rates are these days, does that sound reasonable?
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You're a young guy, ignore all the Eeyores posting doom and gloom, borrow the money and enjoy your glider, fer Pete's sake!


Trapper John
 
Trapper John said:
...fer Pete's sake!
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True, our favorite Glider Goober would surely want you to enjoy your glider, and probably suffer great personal ill if you didn't. ;)
 
well, im pretty comfortable that even when working at the airport this semester ill be able to make the monthly payment. so if i graduate and all of the engineering jobs evaporate and i instruct full time im pretty sure ill still be able to pay.
 
tonycondon said:
well, im pretty comfortable that even when working at the airport this semester ill be able to make the monthly payment. so if i graduate and all of the engineering jobs evaporate and i instruct full time im pretty sure ill still be able to pay.
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In that case I think you should go for it. Someone will correct me if I'm wrong, I'm sure, but doesn't it look better on your credit report if you have had a loan and paid it back than if you have never had one at all? I got a car loan back when I was only a little older than you just for that reason.
 
Ted DuPuis said:
I tend to believe you only go into debt for things that are investments. Otherwise, you buy them outright. There are a few cases where it makes sense to do otherwise, but not a lot. In this case, as I understand it:

School = investment
Recovering glider = toy

Take the school loan, that funds your future. Then pay it off as soon as you can. Save up the money to recover your glider. At least, that'd be what I would suggest. I also am not fully aware of your situation. :)
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There are two main dangers with going into debt for school.

1) What if you don't finish? If you don't finish school - which I'm sorry to say, does happen for a variety of reasons from serious to stupid, then you are liable for those student loans anyway, and they are not bankruptable, so they will follow you for life. Without that high paying job you were going to get, how will you pay them off? Do you know how many would-be doctors and would-be lawyers didn't finish and have close to 100k in SL debt?

2) What if its not worth it? If you get student loans so you can afford to go to a more expensive school, and you come out of school with $60,000 in student loans to take a job that pays $30,000...and you have to live on about $25,000 of that, how long, with interest now accumulating, will it take you to pay off Sally Mae?

Debt adds risk. No matter what you borrow for, no matter how much it *might* pay off, nobody can predict the future, nobody can be 100% certain that, "I'll be able to pay this off easily".
 
Everskyward said:
In that case I think you should go for it. Someone will correct me if I'm wrong, I'm sure, but doesn't it look better on your credit report if you have had a loan and paid it back than if you have never had one at all? I got a car loan back when I was only a little older than you just for that reason.
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Oh - sure - but what is a credit report? It's an "I love debt" score. To get a good credit report, you need to borrow money, pay it back, and borrow more.

Truth is you don't *need* a credit report. You definitely don't want a bad one (borrow money, don't pay it back) but you actually can do things like get a mortgage without ever having had credit. You need a bank which will do manual underwriting (look at a persons ACTUAL financial situation instead of look at a number), and they're rarer these days, but you can find them, including ones who won't charge extra for doing it.
 
Greebo said:
Debt adds risk. No matter what you borrow for, no matter how much it *might* pay off, nobody can predict the future, nobody can be 100% certain that, "I'll be able to pay this off easily".
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Tony was only talking about a $6,000 loan, not a $60,000 loan. I know some people are philosophically opposed to debt and that is their choice, but I think it's just another financial tool if you use it properly.
 
Greebo said:
There are two main dangers with going into debt for school...
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Sorry, Chuck, this is going too far. While I'd agree that it makes more sense to try to minimize your expenses on school (in retrospect I would have been better off going to a school that would've cost $5-10k/year instead of $30k/year) and you are right that you may not finish, education is the best way to increase your value to an employer. Sure, I know plenty of people whov'e gone to school for 4 years and now have debt and crappy jobs, but I am certainly proof that education can be a good thing, and I do not doubt that Tony will also put himself into a better position having been educated.

You're entitled to your opinion just as I am to mine, but I would NEVER suggest to someone to not go to school because they had to take a loan for it. I would, instead, suggest that they try to find a school that has minimal costs and, better yet, will provide financial aid.
 
Ted DuPuis said:
Sorry, Chuck, this is going too far. While I'd agree that it makes more sense to try to minimize your expenses on school (in retrospect I would have been better off going to a school that would've cost $5-10k/year instead of $30k/year) and you are right that you may not finish, education is the best way to increase your value to an employer. Sure, I know plenty of people whov'e gone to school for 4 years and now have debt and crappy jobs, but I am certainly proof that education can be a good thing, and I do not doubt that Tony will also put himself into a better position having been educated.

You're entitled to your opinion just as I am to mine, but I would NEVER suggest to someone to not go to school because they had to take a loan for it. I would, instead, suggest that they try to find a school that has minimal costs and, better yet, will provide financial aid.
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Have I suggested someone not go to school?

No.

Have I suggested someone figure out a way to go to school and pay cash while doing it?

Yes.

Plenty of people have gone to school at night or part time while working and paying cash for it. Therefore, it can be done.
 
Greebo said:
Have I suggested someone not go to school?

No.

Have I suggested someone figure out a way to go to school and pay cash while doing it?

Yes.

Plenty of people have gone to school at night or part time while working and paying cash for it. Therefore, it can be done.
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Chuck, I don't think anyone would disagree when you say it can be done. It can also be done by taking out a loan. The advantage of the loan is that you can spend more time on what your primary purpose is supposed to be, education, and thereby increase your chances of completing school successfully.
 
Debt is a tool like any other. When properly used for the right reasons it can be a tremendous benefit. When improperly used it can kill you, figuratively of course.

The problem with American Society is that we teach a lot of other life skills to students but fail to teach them basic money management - budgets, credit card management, debt,- or even how to balance a check book! Our "educational" system has not advanced from the 60's yet to reflect the ease of credit culture.

As far as Tony is concerned, what he's doing appears to make sense. You have to look at the cost/benefit relationship. Going $6,000 in debt and coming out with an engineering degree (if I understand that to be the case) would make sense. But I see too many of our tellers with a BA in the history of basket weaving and $40,000 of debt! That makes no sense.
 
exactly barry. i figure that getting out of school with a commercial multi CFI-I-MEI-G ATP and Aerospace Engineering degree is not too bad for only 6000 bucks worth of loans and fresh fabric on my glider.
 
Greebo said:
Have I suggested someone not go to school?

No.

Have I suggested someone figure out a way to go to school and pay cash while doing it?

Yes.

Plenty of people have gone to school at night or part time while working and paying cash for it. Therefore, it can be done.
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Sure, at what cost? Tony's working hard as it is. You're suggesting that he spend more time working, thus devoting less time to his studies?

Like I said, I can't agree with that. Sure, it's nice if you can do it (and is thoroughly possible depending on your degree), but to get the most out of your investment in school you ought to be focusing on it. An engineering degree, especially, doesn't generally leave enough free time for a job if you give it the proper focus. I know, because I worked my ass off in college at earning money, pulling in enough that I could have paid my way through a less expensive school than I chose to go to, if I needed that option, and was primarily on weekends. How I earned money wouldn't be an option for most people, though.

Oh, and have any of you tried basket weaving? It's a lot harder than people make it out to be! Still not a particularly lucrative career option, of course.

Tony, sounds like you've got a plan. Go for it! :)
 
Greebo said:
1) What if you don't finish? If you don't finish school - which I'm sorry to say, does happen for a variety of reasons from serious to stupid, then you are liable for those student loans anyway, and they are not bankruptable, so they will follow you for life. Without that high paying job you were going to get, how will you pay them off? Do you know how many would-be doctors and would-be lawyers didn't finish and have close to 100k in SL debt?
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Been there, done that. Went to school for 1.5 years on loans after I quit playing basketball b/c it was too much like a 'job' *DOH!*. Then quit school for 3 years. Sure enough, Mr. Direct Loans wanted his money back. Started making the monthly payments (only $80 min at the time). Was making ~$40k, which USED to sound like a lot until you have rent/house payment, car payment, STUDENT LOAN payment, etc. thrown in there -- $40k doesn't last as long as you once thought it would.

Now I'm back IN school, loans have again been deferred until graduation (even the loans from my previous stint in school). Only thing is that my wife and I both will have to pay them off post-graduation. :( Hopefully the average placement salary for my program remains above $50k until I'm out. :yes:
 
gprellwitz said:
Chuck, I don't think anyone would disagree when you say it can be done. It can also be done by taking out a loan. The advantage of the loan is that you can spend more time on what your primary purpose is supposed to be, education, and thereby increase your chances of completing school successfully.
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Yep. I tried the "work & school so I don't have to take loans" bit. It didn't work (for me) - ask my Business Law prof. :hairraise:

I was working at a $14/hr job, Rachel was working two $8+/hr jobs and trying to pay for school ourselves and still meet the previous financial obligations (car payment -$250/month, rent - $700/month, etc.) We were living very minimal in a very 'minimal' town and I still noticed the credit card balance creeping up a little each month and our grades kept creeping down. Not to mention the strain it put on our relationship - we were BOTH always working or schooling. I'm a firm believer in "You can put up with ANYTHING for a short period of time in order to reach your goal", but our situation was not going to work. Either we would have gone financially 'under' or we would have shot/left each other. I finally had to bite the bullet and let Uncle Sam pick up the check until I was done.

It IS possible to pay for school along the way, but it's not for everyone. I applaud the people that can make it work - I tried, and couldn't do it. It might be more viable if you are single, but I'll take married and in debt over single any day. ;)
 
Everskyward said:
In that case I think you should go for it. Someone will correct me if I'm wrong, I'm sure, but doesn't it look better on your credit report if you have had a loan and paid it back than if you have never had one at all? I got a car loan back when I was only a little older than you just for that reason.
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As Dave Ramsey says, he has FICO score of 0, even thought he's a multi-millionaire with lots o' businesses and real estate holdings. It's merely a measure of how much you let yourself get sucked into the game.

My score is good but I'm not so concerned about it since I've locked in a good deal on my fixed rate mortgage...although having my credit cards adjust before I get them paid off could kill me....that's why I say, STAY AWAY, Tony!
 
Same here Mike - good credit, mortgage is locked in, so I've stopped caring about my credit . CC's are gone, have 2 cars, a heloc, and 2 mortgages (one home, one rental) that are on the kill list now. I've closed the cards, I'm sure that hit my score badly, but I just laugh about the tone of voice in the retention operator when they hear my reply to why I closed the accounts. "Ever heard of Dave Ramsey?" "Oh...him...

I remain unpersuaded that borrowing money is any kind of tool - except as a tool for banks to get your money.

Instead of borrowing money to go to school or going to school while working eighteen jobs, and instead of coming out of school with debt you have to repay, what about working extra and *saving* money up front to allow you to pay cash for school once you have enough saved?

We've become a debt dependent society - we want it now, now, now, and aren't willing to wait for what we want. Instead, we buy what we can't afford today with money we don't have and what we sell for it is our futures.

I hope it works out for you Tony - I do - but if I were in your shoes, knowing what I know now? I'd save up for it.

Live like no one else, so later you can live like no one else.
 
My credit cards have a 0% interest rate. Why? I pay them off at the end of every month. :D
 
Greebo said:
Instead of borrowing money to go to school or going to school while working eighteen jobs, and instead of coming out of school with debt you have to repay, what about working extra and *saving* money up front to allow you to pay cash for school once you have enough saved?
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That does not always make sense. The person may spend *many many years* at minimum wage trying to save up for college. If they would have thrown college on low interest student loans they would be making *more* money faster. There is a hell of a lot of loss income potential that likely greatly exceeds the interest rate. There is also a loss of retirement savings, and every moment earlier that you can establish it makes a hell of a difference.

I am not a huge fan of debt. All that said, a lot of this *all debt is bad* stuff is just as bad as the Apple fanboy view IMO. There are times that debt makes a lot of sense when you can establish a return on the debt that greatly exceeds the interest rate.
 
jesse said:
I am not a huge fan of debt. All that said, a lot of this *all debt is bad* stuff is just as bad as the Apple fanboy view IMO. There are times that debt makes a lot of sense when you can establish a return on the debt that greatly exceeds the interest rate.
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Precisely! :yes: :yes: :yes:
 
jesse said:
That does not always make sense. The person may spend *many many years* at minimum wage trying to save up for college. If they would have thrown college on low interest student loans they would be making *more* money faster. There is a hell of a lot of loss income potential that likely greatly exceeds the interest rate. There is also a loss of retirement savings, and every moment earlier that you can establish it makes a hell of a difference.
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Fully agreed!
 
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