Reply to Cost of a car and HHI/NW

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Car culture is depressing.  We are rich because we have only ever purchased one car, it was paid off in one year, it's 14+ years old, cost us 13K, and it has fewer than 90K miles on it.  We take the bus, walk or metro most places.  Spending 50K a year every few years (not to mention the insurance for an expensive car and fuel) is killing most Americans and then don't even know it.  [/quote]

That just means you value money more than you value time.  You’re spending more time walking and taking the bus, or you just don’t leave the house.  Many people enjoy going more than 6500 miles in a year outside the areas possible to travel by foot or bus.  [/quote]

And what's your point?

A used $14k Hyundai, Mazda, or Kia can do that as easily as a $50k Benz or BMW.

Cars are the stupidest waste of money on the planet. [/quote]

Lol you can buy a 14k used bmw too.  What on earth are you talking about?  You can also buy a 50k hyundai.

You anti-car people are real nut jobs.[/quote]

I don't care what you buy, just buy something you can afford.  And my definition of afford is that you should be working towards paying cash for your vehicle by the time you are 30.  
The real nut jobs are people who spend everything they make then complain they don't have any money when an emergency hits them....but they have been driving fancy cars, taking expensive vacations, etc.  (I'm not talking about people who drive clunkers, live in a crappy apt and are struggling because they don't make enough for basics).  The real nut jobs are people who cannot adequately define "needs" vs "wants"[/quote]

Why should I pay cash when interest rates are 0.3-0.5% above what I am making in my savings account and I can pay monthly payments from cash flow.

Please lecture me on why debt is bad, David Ramsey.  Debt is bad for poor people. Debt is awesome for a lot of people.

On a 40k car note over 4 years I’ll pay $4400 in interest at 5.2%.  If I leave 40k in my bank account making 4.75% over 4 years I’ll make 8200 in interest.  So by financing rather than paying all cash I’m saving 3800 dollars, over withdrawing and paying now.  And if my savings account rate goes way down, I can always lump sum pay off the loan, if I want.  To break even on the interest I need my savings account to stay at 4.75 or higher for around 2.5 years.

You’ll say “yea but if you pay cash and then pay yourself the monthly payment out of cash flow, you’ll be ahead!”  No… I won’t. The math works the same way.

Accumulated cash is king.  You can use it as collateral, you can invest it, you can do a lot with it.  But the last thing you want to do is spend it.

A low debt ratio means missed opportunities.  A high debt ratio is foolish and reckless.[/quote]

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