Memo

So, I'm dumb with finances. Here's the situation:

Right now I'm in no debt (none with interest at least), but have little available cash being that this is my first job and I relocated so have had to buy a lot of things.

I'm currently investing 10% of my budget into an employee stock purchase plan where they use the money to buy stocks at 15% below the lowest closing price of the quarter. The company has consistently grown for the past 20 years. The catch is that I can not sell my stock until 6 months after the purchase date.

My home computer is kaput and I'm looking into buying a new one. My budget is 2,000 for an iMac.

My credit card has an APR of 13%. (Pretty high, I know.)

What would be the smarter choice?

1) Temporarily reduce employee stock purchase plan to 0% and purchase the computer out right

-or-

2) Purchase the computer on credit, continuing to put 10% into the ESPP and making $300 payments per month until I can sell the stock and finish of the payments (in 4 months since 2 months have bypassed already).

Kevster

Just curious, does your company have a computer purchase program? A lot of companies do (the last 2 publicly-traded companies I worked for did), for up to the budget number you have, with 0% interest and the money is deducted out of your paycheck over 12 months or 24 months. If they offer that, I'd look into that instead.

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Cubsfan

How about getting a new credit card with a 0% interest to start?

Memo

Don't have one like that for computers. Many other things but not computers.


I thought about this, I just don't want to have a lot of credit cards. I thought the more open accounts you had the lower your credit score would be, is this true?

Prngr44

A lot of computer companies do 0% for 12 months. Does Apple have anything like that?

As far as your stock purchase plan goes, I wouldn't sell it until 1 YEAR after purchase so you can avoid short term capital gains taxes. Aside from that it's a great investment tool if you believe in your company and they don't pull the Enron.

Are you contributing to a 401 or IRA at all?

Back to the PC... if they would allow you to temporarily reduce your contributions to the espp program, it's probably the best bet. I know my employer only lets us change the contribution rate once a year.

Memo

Ha, Apple's financing is done through some Juniper Visa card with no interest for 90 days and over 20% APR after that. It's a joke.

Ya, I'm contributing the up to the match point for the 401k.

I was not aware that capital gains are taxed differently depending on when you take them out, I'll definitely keep that in mind! That's the kind of stuff I know nothing about .

I'm pretty sure we can change our ESPP contributions at anytime from paycheck to paycheck. I'll make sure.

Edit:

Damn, I lied:
"One change to the contribution rate may be made per quarter; reductions to the contribution rate will take effect with the next pay period; increases to the contribution rate will take effect at the beginning of the next offering period."

Cubsfan

Belong to a credit union? I think mine has computer loans (or at least signature loans).

zippyjuan

Maybe get a lower priced computer like a Dell and continue to save money. I have always believed in paying in full and avoid interest on consumer goods. A durable good like a car or home is a different story. You have a pretty good deal with the stock program (as long as the company is in good shape) and the return on that is higher than the interest rate you would pay on your credit card (meaning that it would be unwise to take money from there to buy the computer). Do you only have one credit card? Having two and paying them off on time can actually give you a higher credit rating than just one. Having several with outstanding balances can be a negative though.

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Memo

Nope, just bank at Washing Mutual


Eh, I'm pretty fixed on the computer to get.

I'm with you on not buying goods that depreciate on credit. That's what I mostly avoid. It's just hard the first year trying to settle down and all. I have 2 credit cards but only use 1. A recent report showed my FICO score at 755 so I'm pretty good in that area.

I guess the best choice might be to take out a 0% card to buy the computer. Paying off the computer over 6 months would be really easy. I just dislike the idea of having so many open credit accounts.

Cubsfan

If I got it right, then I think that your choice is:

- New credit card, 0% interest
- Old credit card, 13% interest (~$75 over 6 months if you pay $346/month, assuming I used the right calculator)

So, basically it'll cost you $75 to not get that credit card. If you're that worried about opening another line of credit, it'll only cost you $75 to not open it.

Napoleon54

Below is what I was able to save, via backspacing, of what was lost in this thread in the wee hours of the morning.

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Memo: Hmm $75 is not a lot especially since my current card has 1% cash back and the stocks stand to grow.

Thanks a lot guys. I think I'll just wait use my current CC. I just don't like dealing with multiple accounts . The new OS X isn't supposed to come out until next month anyways, I can save up some money until then as well .

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oblongmelon

omg, can't you find a decent computer for LESS than 2000 bucks? You must know some geek who'd like to build one for you or something right?

Prngr44

Not the kind of Mac he wants.

cruelpupet

Are you new here?

Geek dream PCs are never under 2k

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dbax791

Yeah Memo, sorry this is so late, but you need to keep pumping money into that plan.

Most people would be ecstatic for a guaranteed 15% return. I don't know what company you work for, so it is up to you whether to keep it invested in the stock or sell it. Keep putting the max into this, it is free money.

zippyjuan

For $2000 I could build a quad core and add a 24" LCD monitor to it.