Originally Posted by
dedhed
Some of us started adult life when there was no such thing as "nominal interest charges" that has shaped our use of credit. My first mortgage was at 12.5% currently I'm at 3.375%. Huge difference. The minimal finance rates of today are a relatively new development in some of our lives.
That was entirely my point in that post you quoted; I'm glad we can agree on this as it is exactly why financial advice from 50 years ago is no longer relevant today--because markets have changed. As you said, interest rates are much lower today than they were in the past (and that's true of loans and investments, btw). Given that a lot of people
don't even have $2000 in cash saved, advising people to just hand over their cash for big-ticket items really doesn't make much sense at all, since doing so would leave them more exposed to calamity.
It is much safer to make sure you can afford the payments, take the loan, and then try to pay if off ahead of schedule. Then if calamity hits, you might lose the item you financed to repossession, but you'll at least have your cash reserves intact to help weather the storm. It's really amazing that some people don't see the wisdom in that approach, simply because they are scared of paying interest.