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You see this all the time. People bragging that they never finance and instead pay cash. So my question to them is what is your secret? Where do you find $25,000 sitting around to pluck down on a car?
25K ? Well you save it obviously. Often it is combined sale of old and savings of new. Wife and I for instances have always once a car is paid off opened a vehicle savings account toward next purchase. Can;t save; then of course you can't pay cash or even finance a reasonable amount.
Wife and I for instances have always once a car is paid off opened a vehicle savings account toward next purchase. Can;t save; then of course you can't pay cash or even finance a reasonable amount.
Don't fool yourself. You have a payment too. You either pay First Federal or your own "vehicle savings account". Car loans can be had for no interest and you get to drive NOW. In the mean time, your bank is giving you 0.5% interest and inflation is running at 3%. In 8 years, you are still behind the eight ball. Heck, I may be dead in 8 years.
The last car I purchased, 7 years ago, was 10 years old at the time and I paid $1700.
I see small, economical new cars I wouldn't mind having like a Focus, Sonic, or Impreza, but the occasional $100 part to keep my old ones going is still far easier to swallow than a regular monthly payment.
As for plunking down 25k cash, some people just fall backwards into money one way or another or it's saved over long periods of time. Not putting it down. I'd probably do the same. As for any savings, mine will go towards retirement or travel.
Don't fool yourself. You have a payment too. You either pay First Federal or your own "vehicle savings account". Car loans can be had for no interest and you get to drive NOW. In the mean time, your bank is giving you 0.5% interest and inflation is running at 3%. In 8 years, you are still behind the eight ball. Heck, I may be dead in 8 years.
This is so true. A lot of people don't understand that if they can be disciplined enough to put savings aside every month for a car purchase, they can put that same money into a car payment and have the car already. There is no budgetary difference to putting money aside every month than there is putting a payment aside every month. Same money leaving your paycheck every month. And frankly, if I've got a savings account that I'm maintaining, I'd rather finance the car and leave my liquid assets alone for emergency or retirement use.
And like you said, you may have a heart attack and die and then you'd have been saving for nothing.
I've bought cars outright with cash, financed them traditionally, and leased them. Each situation is different and you need to use the right financial tools for the job. My daily driver is a leased PHEV and that makes a lot of sense for my use. My project car was cash outright back when I bought it. And my tow rig was traditionally financed and paid off early.
In the mean time, your bank is giving you 0.5% interest and inflation is running at 3%. In 8 years, you are still behind the eight ball. Heck, I may be dead in 8 years.
I think that you either need to get yourself a financial advisor, or to learn much more about investing.
My savings accounts pay only .90% to 1.05% currently, but they represent only about 10% of my assets. According to my Quicken software, my stocks and mutual funds have returned 16.57% over the past 12 months.
Periodically, I "capture" some of my capital gains by selling a few shares, and then transfer that money to other investments or (to a very small extent) to my savings accounts. Sometimes I reward myself by buying some nice things for myself with part of those gains.
Somehow, I don't believe that I will be behind the eight ball in 8 years, given my decades-long history of successful investing--and paying cash for my cars.
Lucky for me I'm not one that needs to have the latest and greatest... hey, I'm still on rabbit ears and no personal cell phone... right there I'm saving close to 2k a year compared to what some of my friends are paying.
America is a rich country simply judging by what we throw away.
A co-worker bought a 2013 Silverado Pickup last year... saw the 2014 and decided to trade for the newer model... said he just likes it better.
I thought about buying his 2013 and decided it was too new for my needs and will keep my 91 a little while longer...
Last edited by Ultrarunner; 07-04-2014 at 05:08 PM..
Reason: typo
Lucky for me I'm not one that needs to have the latest and greatest... hey, I'm still on rabbit ears and no personal cell phone... right their I'm saving close to 2k a year compared to what some of my friends are paying.
America is a rich country simply judgeing by what we throw away.
A co-worker bought a 2013 Silverado Pickup last year... saw the 2014 and decided to trade for the newer model... said he just likes it better.
I thought about buying his 2013 and decided it was too new for my needs and will keep my 91 a little while longer...
Everyone's financial plan is different. My finance strategy works well for me. Yours obviously works well for you.
I agree with this, and personally would never ask or worry about how someone pay for a car in cash. It's just not my business and see it as a personal thing. And how would anybody know, I would never put that out there that I paid for my car in cash.
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