Everyone has a different tolerance for both risk and the “stress overhead” of servicing a loan. I borrowed money for my first car out of college (a used 1987 Regal T-type) because I really wanted the car and I didn’t have the cash. By today's standards it was a paltry loan with an inconsequential monthly payment. The problem for me was that owing money on the car took away a lot of the pleasure of owning the first nice (and genuinely fast) car I’d ever had.
After a few years of working for other people, I set up my own business and went out on my own. This was great, and I really am not wired for the corporate world of salaries and unpaid overtime, but for the most part I was a one-man show, which also meant one project (customer) at a time. So now I made a lot of money when I was working, but the income wasn’t steady. (the parlance in the business for gaps between contracts/consulting gigs is a ‘contractor vacation’). So with a mortgage, and a little later a family, debt became an anathema to me. The only other loan we have ever taken was the mortgage on the house, which we worked hard to pay off early, and much later a home equity loan to rebuild the house and garage (also paid off early). I wanted to be able to flip burgers and support the family without worrying about losing the house.
Yes, the opportunity cost is real, and we could have put that money to other uses and probably been richer for it, but neither of us is comfortable doing that, and peace of mind has value. Anyway, if you want to talk about opportunity cost, consider that by first me then my wife staying home with the kids for a total if fourteen years we gave up fourteen years of an engineering salary, which hugely outweighed any gains we could have realized from investing the money we used to pay down the house. But for us, it was worth it. It’s all about choices, and what we did wouldn’t work for others and vice versa, and I don’t make value judgements about other’s spending, as long as I’m not asked to pick up the pieces if it all goes south. You want an eighty thousand dollar truck, and you can make the payments? If that’s what makes you happy, go for it.
Eventually I went with a company that offered a good salary, great opportunities, and compensates engineers for extra hours. I still drive what many here would consider old beaters at best, and probably penalty boxes, and at this point I can drive whatever I want to (which, come to think of it, I do), but I really don’t care that much. I did have a BMW 840ci for a while, and it was nice, but man, did I ever get tired of its entitlement issues. We have a fleet that we are happy with and that I understand and can work on, and they provide either driving engagement (NA Miata, EK Civic, and a WRX, for example) or utility (Full size extend cab truck with an 8’ bed). We are happy and debt free and intend to stay that way.
