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.
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.Looks like Sarah's index funds are yielding ~11%. Seems a bit high to make a point, as does benchmarking on an $80K new car price.
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.Looks like Sarah's index funds are yielding ~11%. Seems a bit high to make a point, as does benchmarking on an $80K new car price.
Return Rate | Value at Age 65 |
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3% | $183,408 |
4% | $318,792 |
5% | $310,800 |
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.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.
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........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...
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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).
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.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.
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?![]()
Who are these people? I have studied housing trends, etc for the last two decades, this is the first I have heard of this.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.
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?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.
This severely assumes Sarah has enough income to put $1227/mo away into index funds.