Anonymous
11/12/2020 17:38
Subject: Finally entering six figure land. New car or pay down loans?
Loans loans loans. I drove an absolute clunker until my loans were totally paid off. If your clunker dies, buy a slightly better than clunker. So keep like $5k around in the bank.
Anonymous
11/12/2020 17:35
Subject: Re:Finally entering six figure land. New car or pay down loans?
I'd be paying down my loans and when you NEED a new car buy a nice used car coming off a three year lease.
Anonymous
11/12/2020 17:22
Subject: Finally entering six figure land. New car or pay down loans?
Anonymous wrote:OP - do you have at least 3 months' cash reserve? That's what I would do with extra cash. The student loans are low interest rates. I would do cash reserves and fund IRAs or anything else you can, then inexpensive used car
+1. You need to do the following:
1. Establish and emergency fund if you do not already have one
2. Max your 401k or other employer plan
3. Max a Roth IRA
4. Buy a new car only when your current car dies
You will be glad you did 2 and 3 a decade from now.
Anonymous
11/12/2020 17:21
Subject: Finally entering six figure land. New car or pay down loans?
Congratulations!
Let's try and have you hang on to some of this money. Remember you may be in a different tax bracket now, and also, if Biden's 12% extra tax goes through, hang on to some cash to pay that.
First, I'd vote to pay down the loans. Lots of reasons for this. Yes you want to "treat" or reward yourself for your hard work, but a car is a BIG reward...
Second, if you are going to buy a car regardless, please research on how buying a new car is not a great financial decision vs. buying a two or three year old car.
Many cars are leased by one owner, and car leasing periods are usally three years. You can get a one-owner three year old car in great condition with no history of damage for so much cheaper than a new car. Tons of these cars out there.
Look at autotrader.com and find what you want, and you can check their history thru carmax to see if there has been prior damage.
Let's try and have you hang on to some of this money. Remember you may be in a different tax bracket now, and also, if Biden's 12% extra tax goes through, hang on to some cash to pay that.
First, I'd vote to pay down the loans. Lots of reasons for this. Yes you want to "treat" or reward yourself for your hard work, but a car is a BIG reward...
Second, if you are going to buy a car regardless, please research on how buying a new car is not a great financial decision vs. buying a two or three year old car.
Many cars are leased by one owner, and car leasing periods are usally three years. You can get a one-owner three year old car in great condition with no history of damage for so much cheaper than a new car. Tons of these cars out there.
Look at autotrader.com and find what you want, and you can check their history thru carmax to see if there has been prior damage.
Anonymous
11/12/2020 17:17
Subject: Finally entering six figure land. New car or pay down loans?
OP - do you have at least 3 months' cash reserve? That's what I would do with extra cash. The student loans are low interest rates. I would do cash reserves and fund IRAs or anything else you can, then inexpensive used car
Anonymous
11/12/2020 17:16
Subject: Finally entering six figure land. New car or pay down loans?
Omg you are about to make double the average family income for the US and you want a free pass on your $50k in debt?!! Unbelievable. You save your money and get a civic.
Anonymous
11/12/2020 17:16
Subject: Finally entering six figure land. New car or pay down loans?
Anonymous wrote:I’m 29 and just got a six figure job. This is a big deal for me. I want to avoid lifestyle creep, but I do need a new car.... it’s on the border of “need” versus NEED.
I also have six figures of student loans to pay. Now if Biden can get the $50K forgiveness that would be huge, but I need to make a choice between paying the amount adjusted to my income, or paying more to catch up with interest. I also don’t know what the future holds for student loans or if another big break is on the table.
I don’t plan on taking on any more expenses. My rent is still $1300 and I’ll stay here until I move in with a partner.
But my car... is actually the same car I passed my drivers test with. I grew up with it. There is some sentimental attachment and it’s about to hit 200,000 miles. So the new car is becoming less of a want and more of a need, and I’d rather not hit the point where I break down on the Beltway. There is also the fact that there are zero percent rates out there right now and it would be the best time to buy.
But the financially responsible thing to do could also be to max out payments on those loans. What would your choice be?
Do not get suckered by the 0% rates. Nothing in life is free. The 0% loans wrap the costs into the price of the car.
200k miles is a lot for a car. All things being equal buying a used car is cheaper. The problem is often you are not as attached to a used car and therefore may not be willing to own it for 10+ years and 200k miles. Buying a nice new car that you love now might help you avoid lifestyle creep later on. Given your numbers I would totally splurge on a 30k new car that I love. Finance it (comparing rates at credit unions, banks and the dealer as well as the cost of the car with the different financing options) and pay it off in 5 years so you have built a little credit history and then keep driving it until it dies.
Anonymous
11/12/2020 17:12
Subject: Finally entering six figure land. New car or pay down loans?
Anonymous wrote:What kind of car? Have you had a mechanic look at it recently?
PP. This too. If it is a car with cheap and easy replacement parts, may be better to budget for another 12-24 months of repairs and put that into the car. Especially if you want to keep the car for sentimental reasons. See if you can find a mechanic that works outside of the shop who may be willing to negotiate a labor rate if you buy the parts. Work up an estimate on what the cost would be over 2 years and compare Run to Failure Cost vs. New Purchase Cost vs. Maintenance to X Date Cost. Compare against cost/savings for the 2 aggressive loan plans.
Good luck. And congratulations on your promotion! You're big time now, buddy.
Anonymous
11/12/2020 17:09
Subject: Finally entering six figure land. New car or pay down loans?
Anonymous wrote:Anonymous wrote:Pay down your loans. This is not the time to buy a new car.
If the car breaks down on the highway in the winter, it is definitely time to buy a new car. But as PP said not necessarily “New”
NP. I strongly disagree. PP doesn't have kids or family. If car breaks down, he pays $200 to have it towed and calls an uber. The cost of an uber or alternate transportation allows him flexibility to literally ride his car till the wheels fall off. That is what I would do PP. Also, see if you can telecommute. There is also an option to rent a vehicle temporarily while searching. If you have good credit you may not need anything down because of rates right now. They won't be changing anytime soon. Definitely not before 12/31. However, this is the best time of year to purchase, because dealerships want to move inventory before the spring and close out their books with high sales numbers.
Anonymous
11/12/2020 17:05
Subject: Finally entering six figure land. New car or pay down loans?
buy a used car, 2 years old or so.
Anonymous
11/12/2020 17:01
Subject: Finally entering six figure land. New car or pay down loans?
What kind of car? Have you had a mechanic look at it recently?
Anonymous
11/12/2020 16:43
Subject: Finally entering six figure land. New car or pay down loans?
Anonymous wrote:Pay down your loans. This is not the time to buy a new car.
If the car breaks down on the highway in the winter, it is definitely time to buy a new car. But as PP said not necessarily “New”
Anonymous
11/12/2020 16:40
Subject: Finally entering six figure land. New car or pay down loans?
Pay down your loans. This is not the time to buy a new car.
Anonymous
11/12/2020 16:39
Subject: Finally entering six figure land. New car or pay down loans?
If your car has 200k miles on it, it's financially irresponsible to not put some money aside for a replacement. That said, you don't need a "new" car or even a particularly nice one. Pay your loans as agreed and put money to the side for the next 3-4 months to use as a down payment on your next vehicle.
Anonymous
11/12/2020 16:37
Subject: Finally entering six figure land. New car or pay down loans?
I’m 29 and just got a six figure job. This is a big deal for me. I want to avoid lifestyle creep, but I do need a new car.... it’s on the border of “need” versus NEED.
I also have six figures of student loans to pay. Now if Biden can get the $50K forgiveness that would be huge, but I need to make a choice between paying the amount adjusted to my income, or paying more to catch up with interest. I also don’t know what the future holds for student loans or if another big break is on the table.
I don’t plan on taking on any more expenses. My rent is still $1300 and I’ll stay here until I move in with a partner.
But my car... is actually the same car I passed my drivers test with. I grew up with it. There is some sentimental attachment and it’s about to hit 200,000 miles. So the new car is becoming less of a want and more of a need, and I’d rather not hit the point where I break down on the Beltway. There is also the fact that there are zero percent rates out there right now and it would be the best time to buy.
But the financially responsible thing to do could also be to max out payments on those loans. What would your choice be?
I also have six figures of student loans to pay. Now if Biden can get the $50K forgiveness that would be huge, but I need to make a choice between paying the amount adjusted to my income, or paying more to catch up with interest. I also don’t know what the future holds for student loans or if another big break is on the table.
I don’t plan on taking on any more expenses. My rent is still $1300 and I’ll stay here until I move in with a partner.
But my car... is actually the same car I passed my drivers test with. I grew up with it. There is some sentimental attachment and it’s about to hit 200,000 miles. So the new car is becoming less of a want and more of a need, and I’d rather not hit the point where I break down on the Beltway. There is also the fact that there are zero percent rates out there right now and it would be the best time to buy.
But the financially responsible thing to do could also be to max out payments on those loans. What would your choice be?