Last class, we read pages 7-11 in Mr. Hallam's book, Millionaire Teacher. This section mainly covered buying and selling cars. Mr. Hallam believes that nobody should buy a new car. You can find used cars with small mileage and not worn down. Mr. Hallam told us that he has never bought a car in Canada over $5,000. This is remarkable. Back in Maine, my parents bought a new Toyota Sienna minivan for around $20,000. Little did they know that they could have probably bought a nicer, used car for around the same price. There are some important facts to know when buying used cars however. Number one, you can find better deals through individual sellers rather than at a lot. This is because the lot needs to make money off of their sales, whereas an individual selling a car only needs profit from his automobile (no salary). Number two, you generally don't want to buy a used car that has over 90,000 miles on it. If they've driven more than this, chances are the car is pretty worn down and won't last you much longer without spending hundreds on repairs. Number three, there are always going to people who want to get rid of their automobile quickly and won't pay much attention to the actual price they should be selling for. They might put the car up for sale a few thousand dollars cheaper than it's worth if they are trying desperately to get it off their hands.
We've briefly discussed credit cards in class before. Mr. Hallam has told us that, "If there is one thing you get out of this class, it should be that you never should have credit card debt." According to this article, Credit Card Statistics, the average American household has almost $16,000 worth of credit card debt. This is ridiculous because if you cannot pay for your credit card payments, don't own one! It is much easier to spend money on a plastic credit card than actually handing out cash. My dad has $0 worth of credit card debt. If his debt is 0, and the average debt is 16,000, that means there must be plenty of people out there with debt much higher than 16,000 too! I had a discussion with my father on credit cards. He says that he uses them for things like petrol, where it is more convenient than paying with cash. He also uses credit cards for big purchases, but only when he knows he has the savings to pay for it. One great thing about credit cards are that you get points whenever you purchase something with it. My father uses the points for frequent flier miles, which helps when my four siblings come to visit in Singapore or when we return to Maine. So credit cards are great, but ONLY if you have the savings for it.
I had a look at Zack Chaudry's http://sb-sas19540.blogspot.sg/2012/09/september-27-class-blog.html blog. In it, he discusses three types of cars that "Mr. T" could buy. The first car he could buy is a brand new Mercedes Benz, which he would have to take out loans to pay for. The second option is a used Ford that he could pay for upfront. The third option is a leased Toyota, which Mr. T would have to pay for monthly. I agree with Zack that the best option would be the Ford, because he could pay for it all right away and not have to worry about it later. He already has student debts to worry about anyway. Mr. T needs to make sure the Ford is in good working condition though and that the mileage isn't too high.
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