You’re not financially free, if you are in debt, which is what a credit score is a measure of. If you owe money to others, that is money that you can’t use to buy assets.

Several years ago, I bought a new Ram, 0% for 5 years. Why use my money if I can use their money for free?

We just bought $5k worth of new furniture. I got 12 months at 0%. I had the money to pay cash, but why use my money if I can use their money for free?

I have the cash to pay off my house, but my mortgage is at 3.25%. I make quite a bit more than 3.25% by investing the money I would otherwise use to pay off my house. If I ever need to do so, I can pull that cash out and pay off the house with one check. This is the only debt we usually have, though now I have the furniture mentioned above.

I make lots of $$$ in cash back on my primary credit card, and we get 5% off at Target with our Target card. Pay them off every month, like clockwork. Haven't paid a dime in interest in close to 25 years, and we put just about everything on our cards.

Paying cash for everything is a great thing if that's what someone wants to do. For whatever reason, a lot of the "cash only" folks seem to lack a basic understanding of how responsible use of credit really works. Our credit scores are both in the 820s, and as Mr T pointed out, credit scores can directly impact things like your insurance premiums. They also impact your ability to borrow, and how much it costs you to do so, should an emergency arise that requires you to do so. The latter is not a reason to have debt, by itself, but it is a reason to consider trying to have a good credit score.

You’re not financially free, if you are in debt, which is what a credit score is a measure of. If you owe money to others, that is money that you can’t use to buy assets.
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your credit score IS NOT a indication of how much debt you have. it is only a number that rates you ability to handle debt responsibly.

you can have no debt and have a high score. you can have no debt and have a low score also.
you can have a lot of debt and have a high score. and you can have a lot of debt and have a low score also.

your credit score IS NOT a indication of how much debt you have. it is only a number that rates you ability to handle debt responsibly.

you can have no debt and have a high score. you can have no debt and have a low score also.
you can have a lot of debt and have a high score. and you can have a lot of debt and have a low score also.

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Yep! I have a credit score well into the 800s(so does my wife) We use credit everyday...we carry very little debt

And if, God forbid, you get sick or lose your income, then what? The monthly bills will keep coming. Can you pay everything off if that happens? And still live comfortably? Better in my opinion to owe nothing and have emergency cash to sit on for unforeseen events.

i get what you are saying by pay for your purchases in cash when you buy them. you owe nothing after that for the items.

BUT you are bypassing the part where he says " I had the money to pay cash, but why use my money if I can use their money for free?"

he is basically saying he could have used his cash to pay in full if he wanted to. he chose to INVEST his $$$ to earn more $$$ and use somebody's else's $$$ for free to pay for his purchase them pay off the borrowed $$$ over time.
for a more THEORETICAL way to view this. in real life there are no guarantees. if he chooses to invest in the stock market, currently earning 10% annual return. he would be kissing $500 of earnings goodby by paying cash on his $5,000 furniture purchase.
if he gets sick or louses his job all he has to do is cash in his investment to pay off the bill.

I have savings and investments I could tap. With the only debt being the mortgage, that's an easy payoff. I also have short term disability coverage, long term disability coverage, life insurance, etc.

One way is not better than the other. They are just different. Now, using debt to live above your means is a totally different story. That's never a good idea. I am curious to know one thing...if I can finance something for 0%, and I have the cash to buy it, what is the downside to financing it at 0% and letting the cash earn investment income?

Guess then you have never experienced a catastrophic unexpected medical, natural disaster, victim of a criminal act , etc financial event in your life that went way beyond any rainy day fund, and a soulless scoring system decided you were financially irresponsible?

WOW... never seen anyone with a 850 score....

Nothing wrong with that I guess if that is what you like. I don't for me. I am investing exactly as I like with no mortgage/debt. To each his own. Glad you are in good shape and comfortable.

Generally but not always 0% financing offers are usually either 0% financing or a cash off incentive. You have to do the math to see which is better. I usually take the cash off offer. But it depends on the amount and what your investment money is making. If you are just collecting 2% or less in a savings account then it's probably worth it to take the cash off and pay it in full. Put the payment amount back into your investment every month.

The highest mine has been is 830 it usually is around 799. I charge everything except when tipping. My bank automatically pays off my cards on the due date so I dont pay any interest.

I've looked into a lot of the 0% financing offers. Like stater earlier, most (nearly all) are either a 0% financing, or a discount for cash payment. If the 0% financing price is actually higher then the cash price, how can it be 0% financing?
Your paying the financing cost up front, and then they are hoping you don't make that last payment by the date set, or they get to charge you more financi8ng charges, back to the original purchase date. You can keep believing its really 0 % financing if you want.

A couple years ago, we bought new flooring for our house. The company was advertising 0% financing, but the cash price was $1,000 cheaper. Please explain how that works.
BTW, our credit score is over 800 with no debt of any kind. Gene

You guys are right about needing to check the cash price. I've never paid more $$ to get 0% financing, ever, for anything. Hell, the truck I bought at 0%, I got for about $9,500 off sticker. It was an 06 Ram, QC, 4x4, TRX Off-Road package, Hemi, etc. Very nice truck at the time. The furniture price was the same whether I would've paid cash or not. We once financed some appliances back in the days of no interest/no payments, too, but the crash of 2008 put a stop to those offers. We also bought a mattress/box spring at 0% for 12 months, no difference in price. I've invested my money well, which is why I'll be able to retire once my kids are done with college, should I choose to do so. My wife, we'll have to wait and see. Years of service make a huge difference regarding her pension once she goes past 30 years. We will be fine if she wants to retire at 30, but there's a huge advantage for each year between 31-35.

The 0% interest loans are an incentive from the manufacturer. Its truly interest free. Any single penny you pay above that is on you for being late on a payment.
The unit you are buying has the same dealer price if you pay cash or finance it. If a Ford employee walks in and wants a new truck, the price is fixed, its better than anybody can get. Whatever that price is, you get 0% from that price, or no zero% and instead more money off from Ford in the case of a rebate.
Where the difference in price comes in is from the manufacturer via a rebate. That comes over above the deal the dealer cut you. You have the ability to go to your bank and see what rate they will give you. Do a little math and figure out if say a loan at 4% and say a 4000 dollar rebate will save you over no rebate and 0% interest and not getting the 4 grand rebate.

Regards your above example..... do you think the flooring company can loan money at 0% interest without it costing them something. Use your head bud. It isn't that hard.
They “ buy down” the rate. In other words, say they can get money for 3%. They pay the difference to give you an option. The other option Is to just knock money off( your 1000 bucks) and let you get your own financing.

Quick example..
You go in and want 30K in flooring.... they offer you your choice, they knock a grand off and you finance the 29k that is left at your bank at 4% for 5 years.
Or you finance the whole 30 grand and they give you 0% but not the grand off.....
Well, taking the 0% offer would save you three times as much as getting the 1000 off and going to YOUR bank.
Now, do you see it costs them more in the above example to give you zero% than a 1000 off? You seem to not know dealers nor GM nor Ford nor Honda nor anybody prints money at zero%. They PAY to make that money available to you for free, zilch, no interest

I just looked into a Jumbo loan (probably wont do it). You need a credit score of 680 or more. I have never been a 680. That's setting the bar pretty low. Depending on how much I have on my business credit card (that I pay off in full every moth and have never been charge interest), I fluctuate in the low 800's.

My son that sells cars said anything over 750 is considered "perfect credit". He said you WOULD NOT believe how messed up peoples credit is. Said many people that make very decent money have terrible credit cause they live on the edge and their entire life is financed. Said one young girl in her 20's that made $90k had terrible credit. So bad they couldn't get her a loan. Another young girl the loan was 26%. You read that right!!!!

Like Dave Ramsey preaches - IM DEBT FREE!!!!!!! No mortgage, no car loans, no credit card debit, nothing. I tell all my kids (in their 20's) to NEVER get a 30 year mortgage UNLESS they make payments like its a 5, 10 or 15 year mortgage. 30 year mortgage (that took us 22 years to pay off) was one of the STUPIDEST things we have ever done financially!

We do exactly that. We have a 30 year fixed, but we we pay bi-monthly, and we pay more than is necessary on each of the bi-monthly payments. I could save a few bucks by having a 15 or 20 year mortgage, due to the slightly lower rate. For me, I prefer the flexibility of the 30 year mortgage, because if I circumstances dictated, I could always just start paying the actual payment amount. I pay enough extra to offset the difference of the 15 or 20 year mortgage rate, and invest the rest of the $$ that I could otherwise use to pay off my house. It's worked well for me thus far.