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Except that most (not all) people who finance a vehicle cannot pay for it with cash because they don't have it. In many cases they buy more of a vehicle than they need.
You're not getting it.
If you have no cash but you still need a car, you get a car payment. Debt is your friend.
If you have cash, you should still finance a car because having cash on hand is also your friend. Cash is what bails you out of emergencies. A car title is useless unless you get a high interest cash for title loan.
You now have debt and cash at the same time. The only thing it cost you is finance charges which in turn compared to depreciation and insurance, taxes, etc is one of the more negligible expenses of car ownership.
The objective is to live within your means, not finance vs cash payments. People seem to always get this all twisted.
Exactly. From a young age I realized living on credit essentially makes one an indentured servant.
Lower expenses = more control of TIME.
I hate being a slave to some employer and driving a newer vehicle just isn’t enough incentive for me to become one.
Granted, at this point I can afford a more expensive car without working, but frugality (being “poor”) has sorta become a hobby.
There’s something kinda fun about going cheap and grinning as others become slaves to their “put it on credit” lifestyle. Luckily, I have saved a few people.
Credit is a tool, and most people use it badly. That does not mean it's a bad tool.
Carrying credit card debt is usually a bad move. But if your car needs tires bad, it's better to buy them on a credit card than it is to wreck and ruin your car or even get killed. If it takes a couple months to pay it off, so be it. You *should* have enough in savings to cover this sort of thing, but, if you don't for whatever reason, use credit then. But work on getting your savings up to snuff.
Where credit can make a lot of sense is in buying better tools for your job or profession, and buying them sooner than you could have if you waited to pay cash. There is some risk here, but it can be managed if you use common sense.
Frugality is a different but related topic. It's good to be frugal in terms of trying to get the most value for the money you spend. Yesterday I found a 50% off, short-dated pack of Filet Mignon at my local Safeway, I nabbed it, $15 worth of steak for $7.50. One could say that buying Filet Mignon at all is not frugal, and they might have a point. But I think this is my idea of being frugal, getting a premium product that I like at a better price than most.
What we are doing with older, fully depreciated cars is, is driving a car with no depreciation costs. It's not a free car. You still have gas, tires, oil, etc. and occasional repairs. But if you are on top of things, you can drive an older car and still have a very reliable car, mostly you have to work on it yourself to do this.
My 1972 Lada 2103 has 670,355 KM on it with the original 85 hp engine. We rebuild engine every 6 years in the dining room for about $150 parts. We tree frog 10W40 oil with no problem. Uncle Igor work on Tanks in Both Chechen wars, he fix every car in village with a possum knife and tape. Lada drive forever as long as a missile doesn't fall out of the sky onto it
Yesterday I found a 50% off, short-dated pack of Filet Mignon at my local Safeway, I nabbed it, $15 worth of steak for $7.50. One could say that buying Filet Mignon at all is not frugal, and they might have a point. But I think this is my idea of being frugal, getting a premium product that I like at a better price than most.
One of my favorites... short dated filet mignon.
Whenever we spot 'em, we buy them all and stick 'em in the freezer.
Quote:
Originally Posted by Edvard
My 1972 Lada 2103 has 670,355 KM on it with the original 85 hp engine. We rebuild engine every 6 years in the dining room for about $150 parts. We tree frog 10W40 oil with no problem. Uncle Igor work on Tanks in Both Chechen wars, he fix every car in village with a possum knife and tape. Lada drive forever as long as a missile doesn't fall out of the sky onto it
My hubby bought a beater 20+ year old Malibu (no dents) for $400. He does his own maintenance and this car, while super old and ugly as sh**, was in great mechanical shape and low miles. He drove it (although not that much, as he rode his bike to work) for 8 years, and sold it in one day for $800 by just putting a sign on it. Now THAT'S free transportation.
My hubby bought a beater 20+ year old Malibu (no dents) for $400. He does his own maintenance and this car, while super old and ugly as sh**, was in great mechanical shape and low miles. He drove it (although not that much, as he rode his bike to work) for 8 years, and sold it in one day for $800 by just putting a sign on it. Now THAT'S free transportation.
Ok, so technically not free...but essentially free compared to your friends making the typical $400/month car payment.
My vehicle is 10 years old with around 165k miles. Very reliable, comfortable ride and does everything I need for commuting. I would estimate that for around $70/month I could make all repairs for as long as I would want to drive the car.
Compared to financed car - liability only insurance = $35/month savings
Property tax on $4k car vs ~$25k car = ~$20/month savings
Thus, my $70 “car payment” essentially becomes $15/month.
Now factor in a modest 3-4% return on the money that would’ve otherwise went toward a financed car and the “worthless” car is essentially free compared to those stuck on the constant cycle of having a car payment.
The new car is nice - but I’m a little greedy and refuse to give away any of my time (work) to be surrounded by a fancier wrapper on my way to Walmart.
P.S. - I consider my car safe enough (crash ratings) then, now and in the foreseeable future. It does EVERYTHING I need in the realm of transporting my human body where it needs to go. It also only costs me about $4.66 to drive 100 miles here in the great state of North Carolina.
Don’t boast so much. I have 2 friends that said essentially what you are saying now. One of them had his car break down very severely with engine crankshaft failure a year or two later. The other one tried to convince me that his cost of driving was very low....and his car died just about 2 months after that conversation. Watch out!
Don’t boast so much. I have 2 friends that said essentially what you are saying now. One of them had his car break down very severely with engine crankshaft failure a year or two later. The other one tried to convince me that his cost of driving was very low....and his car died just about 2 months after that conversation. Watch out!
The devil is in the details. You want either car with cheap to rebuild/replace engine and transmission, or one with reputation for lasting for lot miles. High tech complexity is German for EXPENSIVE TO REPAIR. All modern cars will go 100k to 150k miles reasonably reliably even with some neglect. After that is what separates the "men from the boys". There are cars that with good maintenance can go over 300k without major expense. Others clap out at 150k, some if neglected earlier than that.
Smart... reliable transportation from Point A to B does not have to break the bank...
I have never had a car note and all of my vehicles except one were used and some well used.
For 20 years I drove the same $800 car I bought in High School as my daily driver...
Even called into the CEO office of the Hospital where I work to discuss my car... no joke.
She said I know what I pay you and you can certainly afford a new car... I said I have other cars but prefer to drive what I drive when it is left in the parking lot all day...
Car was clean as a whistle 1972 Plymouth 4 door...
A few weeks later I arrived a company after hours function in my pristine 62 Corvette... she noticed and said I should drive it to work but I said it is 10 years older than the Plymouth I drive every day...
I tapped into this vein a long time ago. My then-girlfriend, now wife, gave me her beat-down car, at the time 12 years old and nigh on 200k miles. It was ugly and rough, but I drove it another 70k miles over 5 years on under $1000 for everything save fuel and insurance.
Spent $2500 on a ‘97 Civic, which means I overpaid, but I intend to drive the wheels off of this car, so again, not a big deal. It will die its death with me.
I don’t have to care much about hail, door dings, mileage, or resale. It’s glorious considering that I formerly drove borderline show-car quality 60s Mustangs as DDs before, which, while reliable, still obliged me to wash them, fix any small faults, consumed Tahoe levels of fuel, and warranted more strict basic maintenance than I can get away with now.
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