Thinking of trading my '13 sport for a new '15

[soulpatch]

The biggest point everyone is missing here is the fact that most people DON'T have any savings/investments because they can't afford to and because they keep spending on their wants instead of their needs. Their credit cards are maxed out and they only make the minimum monthly payments. Plus they buy as much house and car(s) as their monthly income will allow without any thoughts towards savings or if they were to lose their jobs. They won't/don't have any savings to fall back on should they lose their jobs or the economy takes another hit. People just have a hard time living within their means and being prepared for any kind of financial emergency. That is the problem with today's economy...too much credit available, especially for those folks that live pay check to pay check to begin with.....Knock yourself out folks, but living debt free is an amazing feeling that the vast majority of people will never comprehend or ever be able to enjoy

Ok....stepping down from my soapbox now!

Just saying mate there is a vast difference between the joy of living debt free and the intelligence of proper investing. Though if someone is going to simply use the money they "save"by not paying cash for the car/house/ect on something else then I totally agree as they negated the fact of the purchase.

THough both the investment model and debt free model require one to be responsible with their money and live within means. Neither method can withstand purchasing wants constantly.

I totally agree with you that people today live outside their means and stretch themselves too far.

 

[dtr]

The problem with your "solution" is that you are spending money upfront on a depreciating asset instead of working your money to gain value in any form of various investments. Even with a rate of 3% on a car loan that money you used to pay for the vehicle up front if in an low yielding investment would give a greater return then not having a car payment.

I agree that not having a payment is great But int he scheme of finances it is better to have a low interest payment and have the money working in another regard for you. Should you lose your job or whatever you would have more money to pull from your investment portfolio to pay off the vehicle to not have the payment and have MORE money from the investment period to pay for the gas for the MH in your example to go cross country...

Well if you view retiring in your fifties with the ability to come and go as you choose instead of showing up at work due to borrowing for your next new car a problem, then I guess you are correct.

BTW Yellowstone NP is great this time of year and we have been seeing plenty of bears, hiking, having lunch and generally enjoying ourselves. I wish all my failures were so enjoyable.

 

[soulpatch]

Well if you view retiring in your fifties with the ability to come and go as you choose instead of showing up at work due to borrowing for your next new car a problem, then I guess you are correct.

Um no I see putting money that could be earning more money into a negative asset a problem.

IE you want a 40K car and you pay cash on that. With a loan rates these days for 36 months or so you would be paying less then 2% worst case. Best case you pay 0% and save your investment.

So lets say 2% on the loan. You will make more then that in a safe and reliable money market account. Put the 40K into that account and have a payment on the truck. If worst case hits you would have the funds PLUS more to pay off remainder of truck.

I am well on my way of retiring at 55 with quite a nest egg. All from having 401K and other investments since I was 18.

While it worked out for you your strategy with your money did not maximize returns. Perhaps you could have been in that motor home in your 40s instead....

 

[AZmom]

Sorry to add to the conversation so late, but do what makes YOU happy. Life is short and you need to find the balance that works for you. Planning and saving is great BUT you never know what will happen in life. We had 3 family members murdered, they were financially savvy but never lived long enough to enjoy their mortgage free home and cars. So now we are trying to sell a house in Utah that we can't sell. My point is do what's best for you, don't try to appease anyone else or compete with the Jones'. Be happy!

 

[HughCares]

Um no I see putting money that could be earning more money into a negative asset a problem.

IE you want a 40K car and you pay cash on that. With a loan rates these days for 36 months or so you would be paying less then 2% worst case. Best case you pay 0% and save your investment.

So lets say 2% on the loan. You will make more then that in a safe and reliable money market account. Put the 40K into that account and have a payment on the truck. If worst case hits you would have the funds PLUS more to pay off remainder of truck.

I am well on my way of retiring at 55 with quite a nest egg. All from having 401K and other investments since I was 18.

While it worked out for you your strategy with your money did not maximize returns. Perhaps you could have been in that motor home in your 40s instead....

The difference in dollars saved over say a four year loan, versus paying it outright would be very minimal...I'd rather enjoy the debt free feeling versus perhaps having at most, another couple thousand in my retirement fund....Also not everyone is a savvy investor either....think about how many people are using your strategy and losing money on their high(er) risk investments (assuming they have any money saved to begin with).

 

[Fish4five]

Sorry to add to the conversation so late, but do what makes YOU happy. Life is short and you need to find the balance that works for you. Planning and saving is great BUT you never know what will happen in life. We had 3 family members murdered, they were financially savvy but never lived long enough to enjoy their mortgage free home and cars. So now we are trying to sell a house in Utah that we can't sell. My point is do what's best for you, don't try to appease anyone else or compete with the Jones'. Be happy!

+1000....... Life's too short have fun while you can. Had a good friend (quite a few years older) who recently retired at 59. A real tight ass, heck he wouldn't pay for cheese on a burger cause he thought it was a waste of money. Checked the stock market 500 times a day to see what he made or lost. You probably see where this is going..... He died of colan cancer 14 months after retirement. Kids are pissing away all his investments as we speak. Life's a balance, enoy it!

 

[plumbago]

The biggest point everyone is missing here is the fact that most people DON'T have any savings/investments because they can't afford to and because they keep spending on their wants instead of their needs. Their credit cards are maxed out and they only make the minimum monthly payments. Plus they buy as much house and car(s) as their monthly income will allow without any thoughts towards savings or if they were to lose their jobs. They won't/don't have any savings to fall back on should they lose their jobs or the economy takes another hit. People just have a hard time living within their means and being prepared for any kind of financial emergency. That is the problem with today's economy...too much credit available, especially for those folks that live pay check to pay check to begin with.....Knock yourself out folks, but living debt free is an amazing feeling that the vast majority of people will never comprehend or ever be able to enjoy

Ok....stepping down from my soapbox now!

Nice soap box and all very true. Well said, but I doubt many young folks are going to pay much attention. They will however pay one way or the other about the time they decided they can't afford to retire.....!!!!!!!! best regards Plum

 

[tmg19103]

And for every "tightwad" who died young and didn't get to enjoy it, there many, many times more who not only enjoyed their life while being frugal, but also retired with no worries.

For every person who "lives it up" and makes more than enough money to retire in comfort, there are many, many more who are dead broke by age 55 and swimming in debt who will have to downsize to a place they never expected to be to retire.

I agree balance is the key. I enjoy a used (but pretty loaded) 2011 XLT given the money I saved AND the great features it gives me as an awesome (to me) vehicle.

Buying a new loaded Sport would do nothing for me, as would buying a used base model - not that there is anything wrong with either.

But that's just me. Ultimately is your life. Do what makes you happy. That's what I do. My view is as long as you don't harm the equal rights of anyone else, you should be able to do whatever you want in life. Save your money. Blow your money. Do something in-between with your money. As long as you are not harming anyone else, you should be able to do whatever you want and shouldn't feel guilty about it.

Then again, I'm happily divorced. There can be trouble with that rule with a spouse

 

[csimon]

Thank you

Thank you everyone for all your help and feedback in my decision making. I can see clearly that this topic hits home for a lot of us.

There are many sides to this discussion and appreciate the thoughts.

csimon