Year after year, conversation after conversation, I'm simply amazed at how many people don't follow this simple rule of shopping. If what you are buying will depreciate over time, then you shouldn't pay interest on it.

Recently my brother was down visiting (he's still in college) and was admiring my big screen TV. He starting talking about wanting to buy one for his house at school. He went and looked into it and the dealer gave him a *great deal* paying only 7% interest for the first year. Luckily he called me first to ask what I thought about the TV he was buying, when I finally got out of him how he was going to pay for it my jaw hit the floor.

Of course, this is one of the more extreme cases I've heard. This sales guy obviously saw my brother as the virgin consumer who didn't know any better, and he was right. But even cases that aren't so extreme should be avoided. Simply put, you should buy what you can afford, if you can't afford it, don't buy it!

I am not saying you should never finance anything. I've filled my house with furniture and electronics by financing them. However, I never paid a cent of interest on any of it. Stores are almost always willing to pay a lender for 0% financing in order to make a sale, but often times they won't do it unless you ask.

Just remember, paying 7% interest for 5 years on something will increase it's cost almost 50%. I know the sticker says $20,000 for that shiny new car, but in 5 years you'll have paid $30,000 and the car will only be worth $8000. That's not smart shopping.mortgage calculator