Big Surprise when looking at my finances....

[UTfball68]

It goes a bit deeper than just saying car payments are bad...mmmkay. We've discussed TVM here before. Say you have $10k to spend...do you lay all that cash out on something used and pay cash, or go bargain hunting at a dealer where you still have a shot at a bumper to bumper warranty. I think any time you can pull a relatively low interest rate, it's worth entertaining the idea of taking the cheap/free money. Furthermore, that 5-10 year old used car, what do future repairs possibly look like. If repairs exceed what accrued interest would be, it's a no brainer. Maybe you're lucky and can pull a vehicle out of a field and it'll run 300k, I don't quite have that luck myself. And with the expense of repairs for vehicles made in the last 10 years, it can add up quick. I replaced two sensors in the trans of my wife's Edge, $7-800...wasn't the easiest task, and the dealer wanted $2k. There are a ton of variables in determining if the debt is good or bad, generally where it turns out bad is when people can afford a $10k car, but opt for the $50k loan.

 

[BIGWOODY]

It goes a bit deeper than just saying car payments are bad...mmmkay. There are a ton of variables in determining if the debt is good or bad,

The variable here is having to examine and possibly adjust your finances to be able to afford going into debt, that's a no-brainer for any educated person.
It comes down to planning for the "now" or for the future and let me assure you the future is on its way. I bought my first house at 23 and drove a $1000 car for several years. I gave 75k for the house in 1994. I still own it and it currently rents for $1800 a month as it sits down the street from UNCG, Greensboro college and downtown Greensboro. It's paid for itself and the house I live in now over the years. Make sacrifices when you're young and you will reap the benefits forever. Live for today and you'll always be looking at your finances to see if you can afford the next "thing" you feel like you need. Having money is a much more rewarding feeling than looking like you have money.

 

[UTfball68]

Well...duh...that was already clarified in the first post.

Edit...the assumption was, if you're looking, you can afford it. And that there actually is good debt. If Ford Motor Credit gives me 72 months at 0%, and I have $20k cash in hand...I wouldn't lay out cash for the car, I'd let the cash work for me. Now assuming my investment nets a 10% return, and FMC offers me a 12% rate...then yes, pay cash.


Double Edit...say I pay $4k in interest regardless of rate, so I decide to buy a 5-10 year old $20k rig...say it's a 6.0 that hasn't been bullet proofed, but needs to be. $4k in interest isn't looking too shabby now.

 

[RatLabGuy]

Our car payment plan is a little more forgiving, a hybrid approach.
We assume any bought car will be a 5 year minimum ownership purchase (although history shows 6+ years average thus far).
Buy a few years old, past the steepest part of depreciation. Pay 1/2 down, 1/2 lended.
Take 5-year loan (as safety net just in case), but plan to pay higher and finish off in < 3 years.
Then once the payments stop, keep paying the same amount of $$ into a savings acct. E.g. never stop making payments, just pay yourself instead of bank.
Then on year 6+ you have a ton to put down on the next car + that cars value and the loan amount remains very small. Never driving a really old car but the payments are pretty minimal AND over generations of cars you move up in price/quality, eventually get to where you just pay cash to buy and let the payment $$ make money for you.

 

[Tacoma747]

Not once in the past 10 years have I thought I would rather have a car payment again vs paying cash up front. I am not at the point of having a paid for house/land yet but once we build our new house and sell our current one I hope it is not far off. Planning to be debt free by 40 or sooner. I am in the process of trying to sell off some of the extra military projects/vehicles instead of letting them sit around longer, just trying to de-junk to build up the cash for a house.

 

[jeepinmatt]

The only way I validate eating out is how many extra meals I can get from the leftovers... like a $12 Mexican dinner making 4 meals for me. I also enjoy making 2 meals from a cookout tray.

This. When we go out for some occasion at a nice steakhouse, I do steak math. If I get the 8-9oz steak for $22, I'll eat all of it, but if I get the 12-14oz steak for $25, then I'll eat half of it. Take the other half home, slice about 1.5-2oz on top of some fried eggs for breakfast, then eat the rest with a side for lunch.

Try living with my family! Everything has to be organic, non gmo, free range, blah blah!!! Hell a dozen eggs cost me almost $6!!! Even the fawkng dog food has to be "all natural " witch=$$$....I swear we have to buy all this shit every 3 days or so!!!

Sounds like my house. $6 eggs and $50 bags of dog food.

Tell him this so Mommy can meet Woody

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