GON
$150 Site Donor 2025
Lots of missing pieces in this equation to include maintenance , upkeep, piece of mind, etc .. but the theme of buying a new to used vehicle is eye opening.
Financial graphic comparison of buying a new or used car
- Thread starter GON
- Start date
- Joined
- Dec 20, 2024
- Messages
- 608
- My son, I see that you smoke cigars...are they expensive ?
- Yes, Sister, quite expensive, I confess.
- And for how long have you been smoking them ?
- Well, I'd say - about 30 years or so
- Do you realize, my child that should you have not smoked cigars, and saved the money instead, you would have been able to buy - say - this here Rolls Royce ?
- Oh My...Indeed...You are perfectly right, Sister...but let me ask you, do you, yourself, smoke cigars ?
- No my son, I don't.
- Then why haven't you yet bought this here Rolls Royce - which, by the way, is mine ?
- Yes, Sister, quite expensive, I confess.
- And for how long have you been smoking them ?
- Well, I'd say - about 30 years or so
- Do you realize, my child that should you have not smoked cigars, and saved the money instead, you would have been able to buy - say - this here Rolls Royce ?
- Oh My...Indeed...You are perfectly right, Sister...but let me ask you, do you, yourself, smoke cigars ?
- No my son, I don't.
- Then why haven't you yet bought this here Rolls Royce - which, by the way, is mine ?
- Joined
- Dec 20, 2024
- Messages
- 608
A friend used to save a buck every day by running after the bus from stop A to stop B, instead of getting on it, thus saving the fare.
Then one day he decided to go for the big bucks and started running after taxicabs, saving way more.
While your point is true, the story does a good job a making a valid point. So she only ended up with $100k in index funds and he only bought a $50k car. In the end she has an extra $100k and he as an old car.
- Joined
- Dec 20, 2024
- Messages
- 608
Well, if someone decides not to pay for cable TV (assuming a starting point at $100/mo and adjusting for inflation) at age 18, and putting them in the most conservative etfs possible, come retirement they'll be at:
My cable was $160 when I cut it almost 10 years ago, as it was about to get more expensive.
Then again, $310800 in 45 years might be buying a small house, or two weeks worth of Aspirin at hospital rates. No way to know.
| Return Rate | Value at Age 65 |
|---|---|
| 3% | $183,408 |
| 4% | $318,792 |
| 5% | $310,800 |
My cable was $160 when I cut it almost 10 years ago, as it was about to get more expensive.
Then again, $310800 in 45 years might be buying a small house, or two weeks worth of Aspirin at hospital rates. No way to know.
In concept I don't disagree, but, my own opinion at least... adjust Sam's new car price to $30K and Sarah's return on investment to 8% or 9% (for what it is worth, still seems high given we are talking about a 6 year time frame). In the example in the OP, Sarah is saving $1227 a month (Sam's old car payment) I would adjust that to Sam's new car payment/month ($30,000 new car price minus $10,000 down = $20,000 on loan at 8% over 72 months). Sam's new car payment would be around $350/month.
$350/month saved compounded at 8%-9% year is around $32K at the end of 72 months (i actually compounded monthly so probably am overestimating a bit). Not too bad. Hopefully the $10k car did not leave Sarah stranded, late for work, etc. over the 6 years. I'm assuming we are not even going to think about the value of Sarah or Sam's car at the end of 6 years either...
-----
Full disclosure, I'm driving a 19 year old car that I paid a couple of grand for back in 2015. I 100% agree with the premise of the graphic (spend less now save for later) and on a personal basis tend to be Sarah, not Sam. I just disagree with selective numbers to make the math look as attractive as the graphic does, there's a lot of tradeoffs (as GON noted in his OP).
GON
$150 Site Donor 2025
Heck, I was thinking the car salesman was going to convince Sam to upgrade to a higher trim package and keep his payment the same, only thing is Sam's loan would go from 72 months to 84 months........
edyvw
$50 site donor 2025
I absolutely hate this oversimplification of life.
No wonder other people live longer than we do. Every day comes down to thinking about how to save a dollar, and before you know it, life passes away.
No wonder other people live longer than we do. Every day comes down to thinking about how to save a dollar, and before you know it, life passes away.
AZjeff
$50 Site Donor 2023
Worrying about saving a dollar kinda depends on income level. If your income comfortably exceeds your cost of living not such a worry. Lots of people not there.
This is similar to @GON's recent post about carrying water and taking it literally or not. Has GON found a website with these pearls of wisdom?
edyvw
$50 site donor 2025
Most everyone works and saves. It is really nothing special. However, let's not talk about struggling people bcs. they don't have $1,227 a month for a car or an index fund. They make choices between Walmart and gas station eggs.Worrying about saving a dollar kinda depends on income level. If your income comfortably exceeds your cost of living not such a worry. Lots of people not there.
This is similar to @GON's recent post about carrying water and taking it literally or not. Has GON found a website with these pearls of wisdom?
However, what I find really interesting is that people buy a "dream" house and after a few years, when their income goes up, they go and buy a bigger house, and so on. So they are always on the edge of income and expenses. Then they move to some craphole bcs. taxes are 2% lower bcs. their lifestyle drained them.
Maybe Sam made those 124k's in a different way. As my friend would say: "I don't think too much about expenses and savings. If I need money for something or I want something, it is time to make money for it somehow." So who is to say Sam did not make those 124k and bought the car at the same time?
GON
$150 Site Donor 2025
Who are these people? I have studied housing trends, etc for the last two decades, this is the first I have heard of this.
Generally, people that have overspent on homes since 2010 have made an increadable return on investment, and have a great nestegg in equity, and a potentially superior hedge against inflation over savings/ cds. And unless they purchased the home in the last three years, interest rates make that overspent home a value proposition when compared to purchasing a home today with seven percent interest rate.
I am not justifying overspending on housing by any means, but on a MACRO basis since 2010-- overspending on housing has been a very savvy financial move with a superior ROI when compared to interest on savings/CDs.
edyvw
$50 site donor 2025
I know six families personally who were jumping from house to house. My wife's sister cannot have friends longer than 1 year in Erie, CO (I call those people Boulder Wannabes) bcs. house jumping. They buy a house in Erie and are slowly moving toward Boulder. In 20yrs they will be in Boulder, and I guess, accomplish their lifelong dream?
You don't have to tell me about investing in real estate. We bought various real estate in the last 15 years and now rent it in San Diego, Chicago, and Vegas (using equity, etc.). And yes, I, for example, made an incredible return on investment in our San Diego property and Colorado Springs property. But there are numerous people who are just making dumb decisions. Otherwise, personal debt would not be through the roof.
And still, I ski twice a week, drive three cars, just because, do multiple road trips, etc. etc. and we both have middle-class income. So, the original post it is not whether Sam bought 80k car. It is why Sarah did not figure out how to get 80k car and still invest in the fund? However, my original point is that at one point, there is time and place where chasing every dollar does not make sense. Life passes by while doing it (see under Boulder Wannabes).
the point being, if you can afford to pay a loan, you could've afforded saving....
Similar threads
