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Some people are too caught up with $ and the depreciation of a car. I personally lease a brand new car every 3yrs because I enjoy cars and like to have the latest safety and tech features. Not to mention I enjoy the peace of mind that comes with having a new car that is covered under warranty.
I see a vehicle as I do a utility bill. I don't mind low payments every month that provide me reliable service. I pay a cell phone bill every month for reliable service. I pay a cable bill every month because I enjoy watching what I want when I want. I pay an electric bill every month just like everyone else here does unless you're Amish! Etc.. I take 2-3 vacations a year because I enjoy doing so. There's no investment in a vacation other than rewarding yourself with fun and relaxation. This entire notion that buying a brand new car is a huge mistake just because it depreciates is crazy. Almost everything you buy in life depreciates.
I get that, but one needs a certain level of income to do all those things.
Some people are too caught up with $ and the depreciation of a car. I personally lease a brand new car every 3yrs because I enjoy cars and like to have the latest safety and tech features. Not to mention I enjoy the peace of mind that comes with having a new car that is covered under warranty.
I see a vehicle as I do a utility bill. I don't mind low payments every month that provide me reliable service. I pay a cell phone bill every month for reliable service. I pay a cable bill every month because I enjoy watching what I want when I want. I pay an electric bill every month just like everyone else here does unless you're Amish! Etc.. I take 2-3 vacations a year because I enjoy doing so. There's no investment in a vacation other than rewarding yourself with fun and relaxation. This entire notion that buying a brand new car is a huge mistake just because it depreciates is crazy. Almost everything you buy in life depreciates.
Quote:
Originally Posted by johnd393
I get that, but one needs a certain level of income to do all those things.
Leasing is keeping a perpetual payment just so you can always have the latest and greatest. All of the bolded words above are key points. "Nice to haves" are enjoyable and have gotten a lot of folks into serious debt because they want the latest and greatest, or "need" to keep up with the hottest trend. When you put your wants ahead of your needs and abilities to pay for those needs you end up snowballing into debt. You cannot finance your way out of debt. You don't get to a point where there is "throw away income" by mishandling money. Broke people cannot afford vacations, nor leases, nor anything else that some folks waste money on.
I think people get to wrapped up in this stuff and forget to live your life. I mean what good is retirement if you sacrificed your entire life to get there. I want to enjoy life while I am young and create memories with my family, not be a frugal penny pincher that puts money before my family and happiness. At the end of the day its only stuff!
We did the Dave Ramsey car thing and it worked for us . We dumped the payment and bought a $2400 POS for a year. Granted we were always afraid to go anywhere and but we made it through a year without any issues. We then upgraded to a nicer car but carried a very small payment and paid the loan off 2 years early. In todays world a family car is over 20-30k and used ones aren't much of a discount these days. I don't know many people that can stroke a check for that or would want to with low interest rates.
I think DR has a lot of good things to help you get on track financially but it can be overwhelming and consume the important things in life. I also think he needs to revise the thinking a bit to accommodate todays COL
I think people get to wrapped up in this stuff and forget to live your life. I mean what good is retirement if you sacrificed your entire life to get there. I want to enjoy life while I am young and create memories with my family, not be a frugal penny pincher that puts money before my family and happiness. At the end of the day its only stuff!
We did the Dave Ramsey car thing and it worked for us . We dumped the payment and bought a $2400 POS for a year. Granted we were always afraid to go anywhere and but we made it through a year without any issues. We then upgraded to a nicer car but carried a very small payment and paid the loan off 2 years early. In todays world a family car is over 20-30k and used ones aren't much of a discount these days. I don't know many people that can stroke a check for that or would want to with low interest rates.
I think DR has a lot of good things to help you get on track financially but it can be overwhelming and consume the important things in life. I also think he needs to revise the thinking a bit to accommodate todays COL
For most people in debt you need a kick in the pants. Getting out of debt is tough. You have to be smart with your money. Telling people it's ok to "cheat" once in a while doesn't work (same principle goes for dieting). You really have to be all in and 100% committed. You can't have a weekly/monthly binge. It just doesn't work that way.
I think people get to wrapped up in this stuff and forget to live your life. I mean what good is retirement if you sacrificed your entire life to get there. I want to enjoy life while I am young and create memories with my family, not be a frugal penny pincher that puts money before my family and happiness. At the end of the day its only stuff!
We did the Dave Ramsey car thing and it worked for us . We dumped the payment and bought a $2400 POS for a year. Granted we were always afraid to go anywhere and but we made it through a year without any issues. We then upgraded to a nicer car but carried a very small payment and paid the loan off 2 years early. In todays world a family car is over 20-30k and used ones aren't much of a discount these days. I don't know many people that can stroke a check for that or would want to with low interest rates.
I think DR has a lot of good things to help you get on track financially but it can be overwhelming and consume the important things in life. I also think he needs to revise the thinking a bit to accommodate todays COL
And this is the mindset that some people get stuck in. To build up that retirement you have to invest into it. You can't do that if you're spending every penny you have and financing what you don't have. You'll never have anything if you never put anything back. Too many people want that instant gratification that financing gives them. They don't want to wait until they can afford something. You're not putting money before your family. You're making wise decisions that support your family's well being.
Today's COL shouldn't include "nice to haves". It really doesn't make sense to say "Be frugal with your finances, but it's ok to go out and finance that $20k boat so that you can enjoy it. It's kind of an all or nothing deal.
You mentioned that you followed the plan. And it worked right? He never says it will be easy or fun. But he does say it's necessary. Once you take care of all of the debt, it gets easier and a whole lot more enjoyable.
We Followed the plan, got out of debt but we didn't feel we sacrificed to do it.
DR provided the tools to change the mindset but living your life to retire is a waste of life.It is def worth the time and effort to save BUT retirement is a luxury. Too many people live in this fantasy land that all they have to do is save this, cut out that, invest in this, all while forgetting to enjoy the life they have in front of them. Your retirement isn't guaranteed.
Today's COL shouldn't include "nice to haves". It really doesn't make sense to say "Be frugal with your finances, but it's ok to go out and finance that $20k boat so that you can enjoy it. It's kind of an all or nothing deal.
I agree, if you don't have the funds don't buy something dumb like a boat. I was referring to COL as home prices that are ridiculously high as well as reliable safe new or used family vehicles. Your family doesn't have to be in an unsafe car or live in the ghetto just so you can put an extra couple hundred into your 401k
With all the different viewpoints here, I've got a hypothetical that I'm curious what people think about.
$130,000 a year annual income.
No debts other than a house at less than $3,000 a month total payment.
What's the acceptable level of car payment to take on?
Well, I'd have to make a lot of assumptions to get there.... I assume this is pre-tax and pre-deductions... so for me it would look like this if I were in that situation.
$13,000 per year would go towards my 401k and Roth IRA. (6% 401, 4% Roth)
After taxes and my pre-tax contributions I'd bring home ~ $78,390 per year... or about $6,532.50 per month.
Mortgage - $3,000 (just going with a round number)
Utilities - $200
Cell phone - $85
Internet - $60
Cable TV - $100
Groceries - $200
Entertainment Expense - $200
Misc. Investments - $1,000
Emergency Fund - $1,000
That puts me at around $5,845 per month and leaves me with about $687.50 in the bank to play with. Factoring in insurance and fuel costs:
FC insurance - $80/mo
Fuel (I commute 52 miles per day) - $150 per month (this will be a variable since I don't yet know what vehicle I am choosing to calculate fuel mileage)
That leaves me with about $457.50 per month. I didn't account for health insurance above so knock another $120 per month off and I'd say that if I were financing.... I'd stay around $350 per month.
Owning and keeping older cars running isn't hard.
I have a 15 year old Ford truck and the only repair was a bad water pump a few years back. Everything else was maintenance. Tires get a bit expensive at $1500 a set but that's not a daily occurrence. I'm only on my third set n 15 years. I'm still on the original clutch. Interior is great and I just had it completely painted. Looks like a new truck.
I routinely get 150-200k out of my vehicles. Sure once in a while a trans breaks on a work truck but 2500-3000 for a trans repair beats 25-30,000 for a new car.
If you maintain a car and even with repairs it's cheaper in the long run. Sure it's not new. I have a 12 year old daily driver that looks brand new inside and outside . Still drives like new and everything works. The only repair was a recall on a bolt, a temp sender recall and a broken crank sensor and I had the timing belt replaced since they were elbow deep in the front end. Other than that no issues at all 12 year old car paid off for the last 10 years running as it was with the only out of pocket repair was the crank sensor about $400 unexpected repair. The timing belt is maintenance. Why would I go buy a new equivalent for 38,000. Yes I priced out what a new same model will cost me. Maybe I've just been lucky.
Buy new if it makes you fee better and don't want to deal with any random repairs
Exactly. When a car starts making funny noises, I just call the repair shop and make an appointment to take it in. If it's going to take 2 or 3 days to fix, they give me a loaner to drive. Since I don't make payments, coming up with $2k for repair work is a breeze.
Luck has nothing to do with it. Chalk it up to maintenance. Any modern vehicle will run 200,000 miles with nothing but maintenance and minor repairs. The only transmission I have ever had trouble with I inherited from my father-in-law. He took it to Jiffy Lube to change transmission fluid and didn't check their work. They left it so low on fluid it didn't even show on the dip stick. Given regular service, modern transmissions are very reliable.
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