Just for fun, how are you enjoying your car payment

[TimeFlies]

I'm Gen Z, saw some mentioning that.
Although just barely Gen Z, almost Gen Y.
My 2014 F150 is paid off, but did have a 5 year loan on it when new. I was looking at a new Ram 1500, beautiful trucks, but priced too high. Since buying a house in 2019, my mortgage payments, and other household expenses are plenty. My Grandmother lives with me, as she cannot afford her own place now, and her tiny pension sure won't be paying for anything. I owe her everything to, my grandparents took me in when I was just a baby, and raised me, my parents were killed in a car crash. My grandfather passed away when i was 17, i got a job in high school to help my grandmother with the bills. The house was old, and literally falling down. It was condemned when I was 20, so I rented a basement suite, and moved my grandma in with me. At 24 I bought my house, nothing huge and fancy, but we like it.
Right now a new truck just doesn't work for me financially.

 

[SC Maintenance]

I'm Gen Z, saw some mentioning that.
Although just barely Gen Z, almost Gen Y.
My 2014 F150 is paid off, but did have a 5 year loan on it when new. I was looking at a new Ram 1500, beautiful trucks, but priced too high. Since buying a house in 2019, my mortgage payments, and other household expenses are plenty. My Grandmother lives with me, as she cannot afford her own place now, and her tiny pension sure won't be paying for anything. I owe her everything to, my grandparents took me in when I was just a baby, and raised me, my parents were killed in a car crash. My grandfather passed away when i was 17, i got a job in high school to help my grandmother with the bills. The house was old, and literally falling down. It was condemned when I was 20, so I rented a basement suite, and moved my grandma in with me. At 24 I bought my house, nothing huge and fancy, but we like it.
Right now a new truck just doesn't work for me financially.

Well done. You should be proud of your accomplishments. I predict much success for you.

 

[SC Maintenance]

I have done well buying new cars and keeping them forever. I financed the first two for a short period and paid cash for the third. All 3 are still in the family. I think the issue is people buy too much car, or are constantly rolling into new ones so they never get ahead.

FWIW - something like 20% of all new cars are paid in full on purchase. I think I saw a stat for the make with the highest percentage paying cash for new and it was Toyota or Honda or something - not a luxury brand.

 

[wpod]

Though I understand your sentiment, I don’t think car payments and boat/ATV payments go in the same category. One is a necessity and the other is a luxury. If someone is going into $30,000 worth of debt to have a car, I think they are justifiable reasons for that. If someone is going into $30,000 worth of debt for a boat, not so much.

Think of the $$$ saved when you catch fish to eat.

 

[ATex7239]

Think of the $$$ saved when you catch fish to eat.

 

[alarmguy]

I retired at 55 years of age because I didn't listen to Dave Ramsey......

There are many exceptions to every rule

 

[alarmguy]

Disagree. Ramsey is good for people with really poor financial habits. There are far better ways than his process.
Personal finance needs to be taught in schools; give kids a fighting chance.

We must agree that Ramsey is one of many ways to build wealth not just for people with poor habits.

It’s a method that works, works well, doesn’t take effort or education.
Since he is so well know he is most exposed to criticism from 20% or less of the population that do not become enslaved to a life of turning their income over to shareholders of banks.

How pathetic is this savings?
“The median balance for American households is $5,300 …”

Dave Ramsey is one method and an easy one for those who wish to not get involved in finances. Don’t make a life of giving your income to banks.

“In 2020 the Federal Reserve reported that only 64% of Americans had enough money on hand to cover a $400 emergency.”

Source:
https://time.com/personal-finance/article/average-american-savings-account-balance/

People mindlessly borrow money. Let’s say, first home. Couple pays $400,000 puts 10% down, 30 year mortgage, by the time they pay off that house they have paid close to $1,000,000 ( million) in payments, now also take into account all their additional borrowing and spending over those thirty years. They take on a life of servitude to banks and by thier own free will.

Pay off that loan in 15 years and they will pay $390,000 less for that house and most likely understand they can now start investing the $390,000 they are saving instead of giving it to the bank.
People that achieve this also learn the real cost of paying interest on all that they buy and will build wealth and NOT be the 60% of the population that has less then $500 for an emergency

 

[ATex7239]

I'm Gen Z, saw some mentioning that.
Although just barely Gen Z, almost Gen Y.
My 2014 F150 is paid off, but did have a 5 year loan on it when new. I was looking at a new Ram 1500, beautiful trucks, but priced too high. Since buying a house in 2019, my mortgage payments, and other household expenses are plenty. My Grandmother lives with me, as she cannot afford her own place now, and her tiny pension sure won't be paying for anything. I owe her everything to, my grandparents took me in when I was just a baby, and raised me, my parents were killed in a car crash. My grandfather passed away when i was 17, i got a job in high school to help my grandmother with the bills. The house was old, and literally falling down. It was condemned when I was 20, so I rented a basement suite, and moved my grandma in with me. At 24 I bought my house, nothing huge and fancy, but we like it.
Right now a new truck just doesn't work for me financially.

You’re a good person. Don’t let the ageist around here bother you. If you can look passed all their judgmental comments, new vehicle bashing, oil hoarding, bickering, complaining, conspiracy theories, fear mongering, and general hatred of anything new or different… they are actually ok guys.

 

[supton]

People mindlessly borrow money. Let’s say, first home. Couple pays $400,000 puts 10% down, 30 year mortgage, by the time they pay off that house they have paid close to $1,000,000 ( million) in payments, now also take into account all their additional borrowing and spending over those thirty years. They take on a life of servitude to banks and by thier own free will.

Pay off that loan in 15 years and they will pay $390,000 less for that house and most likely understand they can now start investing the $390,000 they are saving instead of giving it to the bank.
People that achieve this also learn the real cost of paying interest on all that they buy and will build wealth and NOT be the 60% of the population that has less then $500 for an emergency

Let’s see.

First mortgage calculator, using its default 7.98%, comes up with $2,625/month on a 30yr. Changes to $3,228 on a 15, not bad, not a bad small increase at all.

$600 per month at 9% return is $227k after 15 years. But that person has another 15 to go, so after 30 they have a house and $1.1M. The other person waited 15 years, then put that $3228 per month in. After 15 years they have $1.2M. Or are $100k up.

But the first person had liquidity from the get go, while the second had to wait 15 years before having money outside of their real estate. Which is better? the one who bought a house for half as much, paid off in 10 while investing the whole time, of course.

 

[hrv]

There are many exceptions to every rule

I retired at age 62 because I followed Dave Ramseys advice even before he mentioned it and was way in debt in his early years.....

 

[Pablo]

I retired at age 62 because I followed Dave Ramseys advice even before he mentioned it and was way in debt in his early years.....

I retired at 62 because I saved like a mad man, didn't have debt (yes house payment, kept small) - all the while my wife stayed home for the kids, then worked with them launched. I THOUGHT Ramsey made some sense on the "Ratch-chee-oh" but was not a follower.

 

[SwampSurvivor]

No car payments currently. Newer vehicles are tempting. I'm going to try to stick with ford Panthers for another 4 or 5 years.

I have been renting to tow my jeep longer distances. Another Marquis can tow my 4 wheeler longer distances without issue.

I am going to have to do something about the truck situation. Seems people have been importing 2wd southern gas trucks and the price isn't terrible. Not going to drop or finance $25000 on something that won't fit in the parking garage at work, but a $6000 2wd V10 f250 might be worth my while.

For the most part, we're in pretty good shape. Cheap(er) mortgage on the mobile home. I have friends who have similar income who are paying double what we are. Sure their house doesn't have two frames under it ... but long term that won't make much of a difference.

 

[alarmguy]

Let’s see.

First mortgage calculator, using its default 7.98%, comes up with $2,625/month on a 30yr. Changes to $3,228 on a 15, not bad, not a bad small increase at all.

$600 per month at 9% return is $227k after 15 years. But that person has another 15 to go, so after 30 they have a house and $1.1M. The other person waited 15 years, then put that $3228 per month in. After 15 years they have $1.2M. Or are $100k up.

But the first person had liquidity from the get go, while the second had to wait 15 years before having money outside of their real estate. Which is better? the one who bought a house for half as much, paid off in 10 while investing the whole time, of course.

For 70% of the population and maybe closer to 85% of the population. The person that paid off the mortgage at 15 years is far, far ahead. Why would one want to make payments to a bank for ten to almost 15 years and still owe the same amount of money?

I expected a response like this and why I published the stats from the Federal Reserve. The American vast majority of public doesnt save money, they spend everything that comes in and borrow the rest. Human nature for the masses. You did see that 60% of the population doesnt even have a spare $400. and almost no savings at all for what, maybe another 10% on top of that?

Your thinking is 100% sound but it doesnt work that way. The masses do not have the maturity for your plan. With the $600 per month you think they are going to invest, they are going to spend on more expensive cars associated loans, boats, jet skis, entertainment, travel, motorcycles, everything and anything with any spare change and ALSO the means to make monthly payments to banks because their monthly debt ratio is good with the 30.

So with 30 years of mortgage payments and ending up paying one million dollars in payments for a $400,000 house and tens if not thousands more in interest on a lifestyle they can not afford by taking loans our and making more payments to banks for the toys they should not be buying. By paying off in 15 years, is a lifestyle AND an education. People actually learn about managing money which almost any common person no longer does. Everything they buy right down to their washing machine is about the payment, they dont even pay attention to the interest rate.

To repeat, Im not knocking your method that is you, not the majority by any means. Also for some, 15 years fly buy, if you pay off your home you have the whole rest of a lifetime to invest. If you do it the 30 year way and have the maturity to invest instead of taking a 15 year, it is a gamble in a sense because sometimes in life a curve ball is thrown, something not planned for but still saddled with the debt that could have been paid off.
Meaning, even people with means, myself included, used to burn through money, worked hard, lived REALLY good when I was young saying to myself I could die tomorrow. I owned things no one my age owned in the middle income area, but then sold some bought a home and also a business, with the business came a commercial building, it was then, finally I learned. Paid down that commercial building in half the time and glad I did because it was the one smart thing I did as I still enjoyed spending money, but after the building thing, I took it to getting the house paid down early. But I will admit, I didnt really mature with money (except for those just mentioned) until my 40s. I wish I did it sooner but not complaining I am still in good shape. That commercial building from many decades ago still pays me nicely every month like clock work without it I dont know where I would be and why I am a believer in owning real estate.

You mention the 30 savings plan, stuff happens in life, one of the most common is divorce, been there, done that. SO I speak from experience. Having that building paid off, allowed me to finish paying off the house for my x wife. She got the house, I got the building.
Why I love real property, even though it was amicable, large amounts of cash can make people crazy and attorneys chomping at the bit!
Just having a fun conversation here, coffee time, not re-reading this for typos *LOL*
@supton

 

[hrv]

I retired at 62 because I saved like a mad man, didn't have debt (yes house payment, kept small) - all the while my wife stayed home for the kids, then worked with them launched. I THOUGHT Ramsey made some sense on the "Ratch-chee-oh" but was not a follower.

I am not a follower either but some of his points are good...but I figured them out way before he was talking about it...

 

[Torrid]

Just about anybody could say that. You can always "regret" past decisions. In hindsight I should have kept every house I lived in-and not sold them when I bought another.

You are driving a Tesla-you are not doing too bad....apparently!

I used to borrow too much. Two car payments, a lot of credit card usage. I had more things with probably half of my current income. I was an "I can afford the payments" person back then. It's painful to look back on. I guess there's some regret involved, but only because I didn't realize what I was doing. The sad thing is I'm still glad I had the experience with some of the vehicles I've had, but not much of it was smart. It was still fun. I'm just glad I figured it out eventually. I'm not sure if I would have afforded the Tesla even being the base car if I had kept doing that. I'd probably still be borrowing the full values of cars and have $900+ payments to do it.

 

[thastinger]

I have done well buying new cars and keeping them forever. I financed the first two for a short period and paid cash for the third. All 3 are still in the family. I think the issue is people buy too much car, or are constantly rolling into new ones so they never get ahead.

FWIW - something like 20% of all new cars are paid in full on purchase. I think I saw a stat for the make with the highest percentage paying cash for new and it was Toyota or Honda or something - not a luxury brand.

That is what I do, buy new and keep them forever. Usually pay cash unless there is some rate below what I can make risk-free on the loan amount.

 

[Torrid]

For 70% of the population and maybe closer to 85% of the population. The person that paid off the mortgage at 15 years is far, far ahead. Why would one want to make payments to a bank for ten to almost 15 years and still owe the same amount of money?

I expected a response like this and why I published the stats from the Federal Reserve. The American vast majority of public doesnt save money, they spend everything that comes in and borrow the rest. Human nature for the masses. You did see that 60% of the population doesnt even have a spare $400. and almost no savings at all for what, maybe another 10% on top of that?

Your thinking is 100% sound but it doesnt work that way. The masses do not have the maturity for your plan. With the $600 per month you think they are going to invest, they are going to spend on more expensive cars associated loans, boats, jet skis, entertainment, travel, motorcycles, everything and anything with any spare change and ALSO the means to make monthly payments to banks because their monthly debt ratio is good with the 30.

So with 30 years of mortgage payments and ending up paying one million dollars in payments for a $400,000 house and tens if not thousands more in interest on a lifestyle they can not afford by taking loans our and making more payments to banks for the toys they should not be buying. By paying off in 15 years, is a lifestyle AND an education. People actually learn about managing money which almost any common person no longer does. Everything they buy right down to their washing machine is about the payment, they dont even pay attention to the interest rate.

I think the biggest problem is that many of us are conditioned that this is normal. I signed a 30 year mortgage on my current house. We've been here 7 years. I always paid a little extra here and there but about 5 years ago when I decided to clean up my finances and really buckle down we're now on pace to pay it off in about 4 years. When you see the breakdown of how much you can take a chunk out of interest just by knocking down the principle quicker I couldn't see not doing it. You can typically knock down the balance 4 times faster just by doubling your payment and putting all of that extra directly to principle. Of course this is all dependent on term and amount owed, but pretty early on it could be even more than that.

 

[supton]

Your thinking is 100% sound but it doesnt work that way.

I can accept that. I think we're on the same page, maybe opposite sides but recognizing that one method doesn't work for everyone.

I think the biggest problem is that many of us are conditioned that this is normal.

Indeed. If you don't see anyone saving money, don't hear people talking about the need to save, while getting bombarded by commercial after commercial... is it any wonder?

On the flip side, at least for real estate, IMO by making access to credit cheap and easy, we increased demand without increasing supply, which set off a chain event where now it's all but required to take out large loans. I'd have to think about it some more, but it seems to me that market manipulation here has skewed things (in a bad way) over the last couple of decades, and the only winners were... the banks. No surprise there (the house always wins).

 

[alarmguy]

I think the biggest problem is that many of us are conditioned that this is normal. I signed a 30 year mortgage on my current house. We've been here 7 years. I always paid a little extra here and there but about 5 years ago when I decided to clean up my finances and really buckle down we're now on pace to pay it off in about 4 years. When you see the breakdown of how much you can take a chunk out of interest just by knocking down the principle quicker I couldn't see not doing it. You can typically knock down the balance 4 times faster just by doubling your payment and putting all of that extra directly to principle. Of course this is all dependent on term and amount owed, but pretty early on it could be even more than that.

That is awesome. Once its done, you're not tied down to anything except taxes and insurance.


Using an amortization sheet or program, let's say just as an example.
The principle in payment number 10 is $200 the interest $2,300 for a $2,500 payment. Before making that payment you add the principle from payment number 11 and the principle in payment 11 is $201. You add the $201 in extra principle to the $2,500 payment and you just ended your mortgage one month early and saved $2,300. in interest by paying $201 early.

I know you know all this stuff. I enjoy it, did it with my daughter's college loan that she had. She knocked it out in 5 years after I printed the table out for her and now applies this to things financial because she has the understanding, something we do not teach kids in school, interesting isnt that? Why dont we teach kids how to manage money and pitfalls of loans and interest, common sense stuff for life.
This is a great site to understand the consequences of paying interest, can be used for any type of loan. It allows the user to calculate how much interest they are paying and can change the amount of years to see how much that they save by paying early.
Once you hit calculate you have to scroll down past the insane amount of ads but its a really good program.

https://amortizationschedule.org/

 

[alarmguy]

... I'd have to think about it some more, but it seems to me that market manipulation here has skewed things (in a bad way) over the last couple of decades, and the only winners were... the banks. No surprise there (the house always wins).

Yeah, that is my point too, we arent that far apart just differing thoughts.
The thing is, we (the public) allow the banks their fortunes. Ok, so even lets stick with the 30 and invest the savings, Joe Public STILL goes out and buys everything else on credit AND second mortgages (we forgot about that, as soon as they get equity, they take out another mortgage on top of the original mortgage!.

The banks have grown and become so powerful because we made them that way. If we just stuck to mortgages they wouldnt be half as powerful. I say this, because I think most know we sold our house late 2022. It was stupid fast sale too, never expected it and the price we got.

So new home, barely took anything with us, all new furniture appliances etc. I know this has happened to cars but do you know it's starting to happen with things like Washing Machines? *LOL* (I know I used that example before) Shopping this past spring for all new everything. Every store we were in, including appliances like Washing Machines had the monthly payment on it!!!!
Wow was I starting to feel old!! *LOL* Holy smokes, I said to my wife, you got to be kidding? People have to take out loans for appliances like Washing machines? Just like cars, I bet some day, oh wait, I think maybe I saw it already. I will see appliance ads without the purchase price, just the monthly payments! *LOL*

I mean, the American consumer is literally enslaving themselves to banks, so of course they are getting powerful and winning all the time because the public has turned them into their mommy and daddy at a huge cost.

Ok, I better go now