New Cars and Financial Ineptitude
- Thread starter Kurtatron
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i cant see doing large car payments myself. if you annually max out the ira and 401k of you and spouse, prepay some mortgage principal, then consider splurging on a new car, better yet a cpo. i have zero sympathy for folks who run out of money or worry about layoffs but drive large.
Yeah, it sucks when people are overextended financially but I know car guys who spend money on cars as their hobby instead of vacations. Personally, I finance if the interest rate is lower than the average rate for return on the SP500. I can pay off my debt but it makes sense to keep that money invested and not tied up in my car.
I buy new to me cars for safety features, and because there's a lot of corrosion in NY. The weather here sucks and people drive like idiots. The cross traffic detector saved me from hitting a guy who rode his bike the wrong way down one road, then turned down the wrong way onto the road I was pulling out into. I had my head turned into the direction of traffic and didn't see the guy but I stopped when I heard the blips and then he rocketed by me. Dude was on a bike doing 30 mph.
My strategy is to buy used cars, and either drive them into the ground or sell them after four or five years. Keeps my total price of ownership down because I'm not paying that much in depreciation, and I avoid major repairs. I kept one car too long and it rusted through the drivers foot well.
If you're in a place that's not so crowded and the weather doesn't get freezing or wet then I understand keeping a car forever. But I feel that electronic stability control, auto emergency braking, lane keep assist, blind spot monitoring, and adaptive cruise helps me stay safe. And air conditioned seats are cool.
I buy new to me cars for safety features, and because there's a lot of corrosion in NY. The weather here sucks and people drive like idiots. The cross traffic detector saved me from hitting a guy who rode his bike the wrong way down one road, then turned down the wrong way onto the road I was pulling out into. I had my head turned into the direction of traffic and didn't see the guy but I stopped when I heard the blips and then he rocketed by me. Dude was on a bike doing 30 mph.
My strategy is to buy used cars, and either drive them into the ground or sell them after four or five years. Keeps my total price of ownership down because I'm not paying that much in depreciation, and I avoid major repairs. I kept one car too long and it rusted through the drivers foot well.
If you're in a place that's not so crowded and the weather doesn't get freezing or wet then I understand keeping a car forever. But I feel that electronic stability control, auto emergency braking, lane keep assist, blind spot monitoring, and adaptive cruise helps me stay safe. And air conditioned seats are cool.
Some people just have weird logic. I think I asked someone why they spent so much money on a car instead of house and he said that you can't get in your house and drive it around the block.
Right there with you. With the four BMW's and the rest of the fleet, I'm calling the folks today to say the wife and I are moving in.
This is atypical of the average person on this forum. Not knocking this at all-just stating a fact. It's also the profile of a person that starts a thread like this.
I checked trade in value on my wife's 2017 Hyundai Santa Fe XL-Limited w/ AWD and my 2018 Silverado LTZ with all the options. I can tell you based on just the trade in values-depreciation is what I consider a reasonable amount. Paid $32,000 for the Hyundai-worth $20,000 on trade in. (owned it 38 months). That's about $315/month in depreciation-and that amount will level off/go down because we all know the first few years of ownership is where you take the hit. If I tried selling it privately-it's worth more.
The Silverado has depreciated at a far slower rate due to crazy high resale values.
I don't buy cars for resale values.....I buy what suits our needs. I looked at much more expensive makes-and the cost to maintain those things (while we could afford it) just didn't make sense to us. So ended up with th Hyundai.
I'm quite sure total mortgage debt value has a similar graph with big increases in the last ten years. With such low interest rates borrowing for a car and especially a house makes alot of sense. We borrowed on our Outback purchase because it was a less than 1% interest rate. Almost any type of savings usually does much better than that.
I would agree that buying a new car when you start your first job can set people back financially quite a bit if your income is marginal to buy a house in your area.
I still kind of like having an older car, you can tinker with it and do whatever with it. I could get something new but having one new car is good enough and I like to have something that's super cheap to run.
I would agree that buying a new car when you start your first job can set people back financially quite a bit if your income is marginal to buy a house in your area.
I still kind of like having an older car, you can tinker with it and do whatever with it. I could get something new but having one new car is good enough and I like to have something that's super cheap to run.
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When I bought my disaster house back in 2016, they were handing out mortgages like candy. I (single guy, one income) was approved for $140K 30 year mortgate. I'm not quite sure how I would have been able to afford it, but I had it! I ended up buying a disaster house for $55000 on a 15 year mortgage and a decent downpayment. I like having a $500 mortgate.
Later, all of my older, paid off vehicles broke at once. I started shopping used Subarus - which were just as expensive as new. I ended up getting a brand new 2018 at 0% interest. Over the course of the 5 year loan on it, I'll have paid less than I would have paid for a used 2011 Subaru.
If I lived in a part of the country where stuff didn't rust away, I can guarantee I'd be daily driving a Jeep Cherokee that I bought for $2000 and my pickup would be a 90s in immaculate condition. But that stuff can't exist in NY
$500 mortgage sounds good to me too if I was single. My one co-worker here is trying to get an average nice house here but its climbing to $450k+! That gets into big numbers like $90k down and a 30 year mortgage with over $1800/month payments... We live to close to Toronto so people sell their 1 million dollar townhouse and move here to retire.
As for the cars, you guys must use more salt sprays or something? My municipality uses rock salt mostly. Some of the cars I see on the South Main Auto youtube look bad compared to here, almost like they park the cars in a field... We haven't retired a car yet to structural rust, but I spray oil on the bad spots whenever I'm under there.
Should have seen it pre Great Recession. I was married but what they were willing to hand to me was obscene--and they were like "if that's not enough we can talk!" Umm no thanks. Boy do I wish I had waited and bought during the Recession, I would have done much better.
Some days I look back at when I had $500/month rent and think, geez I had it made!
Much worse than salt. They use salt brine spray now. Which is super corrosive, both chemically and how it's applied. It is a liquid they spray on the road. It's so corrosive it eats all of the plastic and rubber too. it's just terrible! And because it starts as a liquid, it just sprays everywhere once cars run over it and it's wet. It is terrible! It will mist and get all over then run down the drains.
I am willing to bet a modern vehicle would last 30 years if they had to deal with the lower salt levels of the 70s and 80s. They just go so overboard. NYS doesn't like to plow the Interstates, so they load up with salt brine and rocksalt then don't plow and shut the interstate down if any snow builds up
Oh we definitely fight over the cheap house haha. It's a cheap house for a reason. But it's our cheap house!
When I moved to this area 11 years ago I had a $420/mo studio apartment that included all utilities. That was awesome! If they hadn't started jacking the rent, I would probably still be there. Then I moved to a one bedroom that was $500 with no utilities. But in 5 years there, the rent was up to $850 a month + utilities and some weird electrical bill for many apartments. Couldn't afford it so I bought the cheap crappy house.
I bet my "unemployed" 17 year old self could have got a mortgage back then!
Around here $500 would get you a bed space. Apartments in crime and drug ridden neighborhoods are at least $1000.
The question would be and it is not my business to now about your personal details but my opinion and it is only that can you afford the cost if so good, if not,, not good.
So, again, what does "afford" mean?
I can make the payment.
Does that mean that I can "afford" the payment?
All rhetorical questions....because, without knowing more about my financial situation, that one data point, $875/month, exists without context, and therefore, without meaning...
I can make the payment.
Does that mean that I can "afford" the payment?
All rhetorical questions....because, without knowing more about my financial situation, that one data point, $875/month, exists without context, and therefore, without meaning...
To me, it means, what do you want? You want the item now or do you want financial security later?
If you can only pick one, it's your choice.
If you can pick both, then good for you.
Yep, and this is why you have people who are 80 years old still working. They can barely tie their own shoes but still need to make their 6 figure salary to afford their lifestyle. To each their own, I won't judge them they can do whatever they want. If I'm still working at 80 please shoot me, because I've planned poorly.
Yep, and this is why you have people who are 80 years old still working. They can barely tie their own shoes but still need to make their 6 figure salary to afford their lifestyle. To each their own, I won't judge them they can do whatever they want. If I'm still working at 80 please shoot me, because I've planned poorly.
I'll argue that point.
The Surgeon who recently took care of my hands is about 70. He likes what he does. He owns and flies an airplane (twin) and his restored Porsche 356 has its own climate-controlled garage. He takes ski trips and vacations several times a year.
He likes what he does. He "doesn't work too hard" - his words. He does great work (can't even see the scars on my hands).
He's happy.
I would say he represents the pinnacle of success - he likes what he does, he's happy, he doesn't need to work, but he finds it rewarding.
Absolutely! When I reach retirement age, I suspect I'll keep doing something productive. I like the routine of getting up , going to work, making some sort of money. Even if I'm a walmart greeter, I'll still feel like I'm doing something.
gathermewool
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Same happened to me. When I was purchasing my previous condo I was approved for way more than I had asked, something like $350k!
I too enjoyed the $430/month payments, low bills, etc. I got lucky, but the guy I purchased from got hosed, since he purchased near the peak, before 2008. I don't remember how much he said he paid for it, but some of his neighbors purchased AT the peak for over $100k. Some hated the place and the loss so much that they simply walked away.
In fact, the seller was actually flaming hot mad about the situation when the assessment came back by almost 10 grand less than I was willing to pay for the place. In the end, I ended up paying him cash on top of the max amount my bank was willing to finance the place for and still felt as if I came out on top.
My mortgage now is over $2k, but it comes with 3 acres near a nice town with great schools. I can't imagine trying to afford this place before a couple of raises ago. As-is, we have to maintain a budget to make sure ends meet, along with maxing out 401k, HSA, etc. of course.
I never thought it would happen to me, but I recently went through some tough times; I was on STD for about a year. I'm glad I had the savings to carry me through without having to take on debt or take out a 401(k) loan, etc. I've got some work to get my savings back to where they were, but that's OK. I'm just glad to be where I am now.
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Because not eveyrone values money the same way? I have 3 newer cars that are all paid off and 1 older hand-me-down. Nothing wrong with buying new cars if you keep them long enough to deal with the depreciation hit. At this point in my life, I can afford not to drive POS cars and deal with the PITA that they can be. Again, eveyrone values time and money differently. I've never been one to churn through cars even when I could afford to.
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