boelkers

Financing the Tools

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I recently got a promotion at work and my wife has agreed that after we get certain bills paid off in the next few months, then I can put some of that extra income towards outfitting the shop with some new tools.  I'm just trying to find the best way to go about making the purchases on the tools I'd like.  Hopefully without having to wait for saving up the funds.  

So I was wondering if some of you would be willing to share how you make your tool purchases.  Do you wait till you have the full amount of money in the bank and then buy?  Or do you put it all on a credit card and pay it off over time?  Or is there some other way you pay for the purchase?

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Most of my purchases were cash. My latest investment was a Powermatic 20" helical head 5 hp and I financed it ... How? The banks pay very little to depositors so I paid a friend 5% plus some cutting boards and we are happy. You may know somebody who wants to help and has cash laying around and not happy how little the banks are paying.

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Most of my purchases have gone on a credit card. I maintain a very low balance on my cards, and get very good cash back rewards. Also makes it easy to keep everything on one card for online purchases. 

 

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I HATE credit cards. However if I buy something on line, I do use it, but there is money in my pocket to cover the CC bill when it comes in.

I knew a woman who used credit cards for EVERYTHING! She even paid credit card bills with credit cards. And used credit cards to cover bad checks. Yep, her credit went onto the dumper and she can't get a checking account at any bank in the city but, the credit card companies keep sending her new cards all the time.    ????

 

Rog

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Cash only!  IMHO purchasing tools for our hobbies on credit is never a good idea.  Like TOIDS said if I don't have the cash I can't afford it.  I haven't used a credit card in over 12 years for anything at all.

If you want something for the shop either buy it pre owned, buy a model or two down from what you really want and upgrade down the road or wait until you have the cash.

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I want to jump back in here and perhaps clear a few things up.  When I say "new tools"  they may be new or used, but they would be new tools to me either way.  Also I'm not spending thousands to get into cc debt just simply asking what others have done on their purchases.  If I were to use a cc I would be making payments to have the card fully paid off within 6 months.  There are cards out there that have zero interest if paid off within a 6-12 month range.

Thank you to those of you that have given good feedback.  

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16 minutes ago, TIODS said:

I should clarify that I've used my card for the purchase but, they're paid off immediately.  My credit card never carries a balance.

As Mel pointed out, the cash back rewards are very nice as well as some protection when ordering on line.

Exactly. Which was my point. Online purchases almost always require a credit-card, rewards, protection ect... 

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If used properly, debt can be a great tool and with the low cost of debt for qualified users,  sometimes it makes sense.  

Personally,  I have run my shop on a self sufficient basis.  I've been using cash proceeds for all purchases from sand paper to wood to tools.

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I buy most of my big stuff locally, but still always use a CC because, points. Then it always gets paid off before the statement due date.

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For me it is a hobby, so I can't justify borrowing money for it.  I have to save up for something, then buy it outright.

If I had a going woodworking business with cash flow and needed a tool for the business, then I could see the business borrowing the money and considering the interest a business expense.

If I had a credit card that didn't charge interest for 6 months and thought I could pay off the debt in that time, then I would save my money for six months instead.  Then if I was right I would buy the tool 6 months later outright.

But that's me and I am admittedly conservative.

By the way, congratulations on the promotion!

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If I can't afford to purchase the tool outright, then I can't afford it.  I use this philosophy for all purchases (except for things like a home or vehicle).  I would never borrow money to buy a tool, or a TV, etc.  Save your nickels and the time will come!

Of course, I don't run a business, so this is from a personal finance position.  Businesses are run quite differently.

 

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I won't buy anything on credit except the home I live in, or an income producing asset. As other's have said, I won't take on debt for a hobby. (I do use the CC to make most purchases, but only when I already have the cash and I pay it off every month). 

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Don't finance tools! Be patient buy them as you can afford them. Interest rate on credit cards are too high. It takes time to "put together an awesome shop" patients is the key. I just am starting a site check it out, it's funny but informative. Woodknut.com but don't use your smart phone to see it.

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Don't finance tools! Be patient buy them as you can afford them. Interest rate on credit cards are too high. It takes time to "put together an awesome shop" patients is the key. I just am starting a site check it out, it's funny but informative. Woodknut.com but don't use your smart phone to see it.

Sent from my iPad using Tapatalk

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Cash, generally earned with the tools I already have.  

Edit: Actually that isn't literally true.  I do use a rewards credit card, but do not run a balance.  I pay it off every month.

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There is a lot to be said for patience. Buy the best you can afford that you really need for the project you are currently on. That way you can avoid making some impulse purchase that as time goes on you find you don't really need for anything anyway. Shop space is limited enough, anyway. I went the credit card route and I do not recommend it. (one of the more foolish things I have done). Won't do that again.

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Cash only here, but that's because 90% of my purchases are off craigslist and most guys don't have a square. I agree with everyone that financing a tool purchase is a bad idea. Maybe not a bad idea for a one off situation, but you do it once, then you do it a second and third time, and before you know it something happens and you have $3000 collecting 23% interest. Can't say I haven't seriously considered the PayPal zero interest deal. I make an okay amount of money out of the shop, and I still prefer to pay cash on items. In all honesty, I prefer my shop to run self-sufficient. I don't know the status of your shop, but I know it can be addicting and obsessing to upgrade to this or that. It's easy to get caught up in the tools and not in the craft itself. As a guy that was guilty of doing just that, I would urge you to make some smart buys and not let yourself think you can't do X because you don't own Z. 

 

As as a guy that also had a recent promo double his income, enjoy the money, but don't go wild! After a few months, I had to check myself and curtail spending. You would do yourself a favor to keep your spending lean. 

 

Forgot to to add that it would be interesting to see companies offer a 0% financing for 12 months, or maybe a leasing option. I know some of the industrial companies offer leasing options and more creative financing options. Most of the stuff I'm looking at now is in the 2-4K range, which really makes you think and think and think before pulling the trigger. 

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