Never buy a car again..

[kirks5oh]

i'm thinking of getting a rear tail light modification for my audi. it basically makes the tail lights strobe from the center to the periphery. its not a cheap mod, some say it will cost $8k.

 

i can't watch the above posted video at work---does it say anything about spending $8k on a tail light modification on a new car??

[Radio Flyer1647545514]

It says to take your tail light modification and buy a new car.

[RC K9]

I will say that this is 100% how I have lived my car life since day one. I have never lost money on a car- and we are talking 30+ cars later. I have only leased once for my wife and it was only because the deal blew every other dealer out of the water, she liked the new car, I was not buying a new car, and it was baby time! They truly gave me a deal no one else was close on (2014 Rav 4, Loaded, 0$ down, $0 first pay, $253 a month for 3 years), and I will never do it again simply because at year 3, I have nothing. Nothing I could have bought for the same $8855 would be worth 0$ at the end of the lease. Nothing! Stupid.

 

If you have any mechanical ability, you should never buy a new car-its a huge hit day one, and a monthly loss due to interest. Even a poor performing mutual fund will make 2-4% a year. Even if your paying a nominal 2% interest rate, you have a net loss of 6%, and that's a worst case scenario!!

 

*golf clap*

 

Well put.

 

There is a lot of good advice in the article/video, but a lot left out. It is more feasible for someone who is mechanically inclined to make it work than someone who is not. That being said, I don't know that I would buy a new car again, (unless maybe the new focus RS :masturboy:), ha ha. But then again, I can do most maintenance things myself, whereas the 43yr old widow and mother of 3 may not, and it's going to cost her tons of money in maintenance and repairs on her old hoopty, whereas if she has good credit and got a loan at 2.5% and was able to negotiate a good final price on a car, she will be better off.

 

I feel the scenario that was outlined is more complicated than it leads on.

[Farkas]

Never purchased a "new" car.. seemingly always made money on old cars. I feel like buying a new car/leasing is like renting a home/apartment. You're literally just throwing money away, for what?

[RC K9]

Never purchased a "new" car.. seemingly always made money on old cars. I feel like buying a new car/leasing is like renting a home/apartment. You're literally just throwing money away, for what?

 

Renting can have it's perks depending on the situation. If you have no desire to put down "roots", and may move soon, etc, it would make sense.

 

Lets put it this way; i purchased my home here in 2011. I got a really good deal on it as the market was in the tanks then, it was the last home the builder had in that neighborhood, etc. I lived in it until this past summer. The market got considerably better over the last couple years. Houses were literally, and still are, flying off the shelf. The problem is, it's not "my kind" of neighborhood. Cookie cutter, neighbors close to each other, etc. I could also see the direction that the neighborhood was going, and I predict the values have pretty much peaked where they are now, and would start to come back down. If I wanted to get out of that neighborhood, and make money while doing it, I needed to sell now. Which I did. I sold it for $42k more than I paid for it 4yrs ago. Now, I was very particular on what kind of property I wanted to buy if I was going to buy again and stay in TX. Had I not found pretty much exactly what I wanted, I was fully prepared to rent/lease until what I wanted popped up. I think that would have been a much better move than to jump into buying another house that I didn't really want just because I needed some place to live. Renting/leasing would have been a better move in that situation I think. Though, fortunately, what I wanted did become available and I was able to buy it literally the same day I closed on the sale of my house.

[Berto]

I would have to sit down and do the math but, at some point there has to be a benefit to buying a new car.

 

For example my civic is in almost mint condition, 10yrs old, Paid $18500 for it new.

 

I've been without a payment for 7 years, plan to have it another 5 to 10 yrs. Its been treated well and the only thing I did to it was brakes and a battery (wear items).

[coltboostin]

I would have to sit down and do the math but, at some point there has to be a benefit to buying a new car.For example my civic is in almost mint condition, 10yrs old, Paid $18500 for it new.I've been without a payment for 7 years, plan to have it another 5 to 10 yrs. Its been treated well and the only thing I did to it was brakes and a battery (wear items).

 

 

The math is real easy, cost of ownership.

 

Take all your cost; Car+Tax+insurance+maintenance+finance charges/time you plan on keeping it. Considering initial depreciation, and higher insurance, its hard for a new car to win this fight.

 

Simpler math would simply be Cost+tax/time

 

Compare that to a similar used car, and you will find if you are winning or losing.

 

If you always get a good enough deal that you can sell for a profit or break even in 2 years, a new car will NEVER beat the used car because you effectively have a $0 (or + profit) cost of ownership.

[TTQ B4U]

Never purchased a "new" car.. seemingly always made money on old cars. I feel like buying a new car/leasing is like renting a home/apartment. You're literally just throwing money away, for what?

 

leasing, financing or paying cash, the car depreciates the same regardless. Leasing is about mitigating risk and minimizing cash outlay. It also offers more options in a shorter time frame. happy to answer any q's on the details. if you're going to buy, buying used is best.

[TTQ B4U]

Never purchased a "new" car.. seemingly always made money on old cars. I feel like buying a new car/leasing is like renting a home/apartment. You're literally just throwing money away, for what?

 

I would have to sit down and do the math but, at some point there has to be a benefit to buying a new car.

 

For example my civic is in almost mint condition, 10yrs old, Paid $18500 for it new.

 

I've been without a payment for 7 years, plan to have it another 5 to 10 yrs. Its been treated well and the only thing I did to it was brakes and a battery (wear items).

 

meh....all depends on how long you keep it. I paid $24k OTD on the Speed 3, kept it for exactly 7yrs, traded it for $11k vs taking the time to dick around selling it for more and thus total cost was about $154mo. Pretty cheap really but I hardly drove it thus it cost me about $.40 per mile just for the car itself which sucks when looking at it that way but that's the reality.

 

cars are an expense line item and regardless all cars have a cost to ownership either per month or per mile, however you wish to look at it. it really just boils down to how much of an expense you're willing to pay for.

[TTQ B4U]

For example my civic is in almost mint condition, 10yrs old, Paid $18500 for it new.

I've been without a payment for 7 years, plan to have it another 5 to 10 yrs. Its been treated well and the only thing I did to it was brakes and a battery (wear items).

 

Just take what you would sell or trade it for today, subtract that from the total purchase price plus tax and then divide by the 120 months you've had it.

[Green Bastard]

The reason is the money I had earmarked to buy the car and just pay it off is in a series of investments. My investments are doing great year over year. If I took $45k out of the bank to buy a car, I'd lose at minimum the $15,000-$24,000 in earnings it would bring over the next 5 years just leaving it alone and not even adding anything more to it. That's a minimum too. Decent investments are making more than the rate I used, I'm just hitting it low to show you.

 

No thanks. I'd rather pay $2,500 in interest - about $40 per month (if I were to keep it 5yrs) to borrow the money on a depreciating asset and let the principle make the above for me. I actually will make more than the above because I took the money they gave me for the Mazda and put it into an investment vs paying the difference on the car. The reason being is again, my money is making more than the tax savings offered me thus it was better to pay a bit more in taxes today and earn more over time. Thus now my kitty-fund for the car has nearly $60k in it making me money.

 

The key is being able to afford the car payment...check.....and bonus points for being able to write off part of it for business....check. Double bonus points for selling said Audi in 3-5yrs for a decent amount perhaps upgrading vs driving it into the ground.

 

It's the principle Dave R. talks about really. My father showed me this principle back when first got out of college and I put it in motion. I drove a fucking $9k Grand Am for several years to get it started. Hated that fucking car, but to this day it was the best move I made. I didn't really "like" my MS3 either but it helped fulfill a fun-factor need I had and allowed us to put money into another investment we were working on for us.

 

I had a feeling the answer would be something like this, I just didn't know the difference would have been that great.

[oh8sti]

I bought my E55 for $17k cash, no loan - its 10 years old and hasn't cost me a dime in maintenance other than oil changes.

 

Now, if I would have left the car alone and not wanted 600hp then id still be sitting in an originally stickered $102k car thats got 70k on it and 10 years old for $17k.

 

I plan on taking great care of it and then selling it in 3-4 years. Ideally Ill upgrade to another AMG that falls into that "8-10 year old AMG everyone is scared of" category. They are cheap and fast and fuckin classy.

Edited September 9, 2015 by Panduh

[Geeto67]

there is more to life than fiscal responsibility. If there wasn't, this forum wouldn't exist.

 

I am not saying everyone should buy new cars always and what not but my wife has never bought a new car and her next car is going to be brand spanking new and I don't care the depreciation hit. Why? just that experience of driving something new once is kind of worth it to me and her. I've already had it - bought a new car when 17 and still driving it, she has not.

 

If you approach life from the always safe position you'll cheat yourself out of some great experiences. Life is all about picking and choosing the right things for the moment and if a new car is the right thing for you - then why should a video about how not financially conservative it is stop you?

[Berto]

The math is real easy, cost of ownership.

 

Take all your cost; Car+Tax+insurance+maintenance+finance charges/time you plan on keeping it. Considering initial depreciation, and higher insurance, its hard for a new car to win this fight.

 

Simpler math would simply be Cost+tax/time

 

Compare that to a similar used car, and you will find if you are winning or losing.

 

If you always get a good enough deal that you can sell for a profit or break even in 2 years, a new car will NEVER beat the used car because you effectively have a $0 (or + profit) cost of ownership.

 

Just take what you would sell or trade it for today, subtract that from the total purchase price plus tax and then divide by the 120 months you've had it.

Not so simple. The calculations that have been used aren't just what you spent but how much you make on investments.

 

Say I own the car 15 yrs, payments stopped after 3. So thats 12 years of monthly payments I could invest with minimal maintenance. The key there being that since the car was well maintained an not bused that the costly repairs would be non-existent.

[Tindall2006]

Savings like at a bank? Probably yes, you are a moron... wait, you didn't ask that exact question.

 

To me, it depends on what the purpose of that money is, the time table for probably using it and how risk averse you are. But with the interest rates on savings versus inflation every day that money sits there you are losing buying power. So the purpose better be very important, short term or you are very risk averse. I'm not risky with my money but we still have our rainy day and car fund in low risk mutual fund... which are still inherently higher risk than a savings account. It was going to sit for a few years so I'm not going to have it sit in a savings account losing money.

 

 

Yes, Savings account. Mainly because I wanted to keep it easy assess to pay for school. Needless I kicked ass in school and got scholarships and stuff and have needed very little of it. Maybe 2-4 grand at certain points that has basically been replenished from scholarships.

 

I am looking at buying a house in the next 6mo or so... but debating if I should dump it into a Mutual fund?

 

I do have a IRA, but I am not sure that is doing anything. When you open an IRA are you suppose to invest that into something? I am rather lost on all of this. I bank though USAA if it matters.

[dq driver]

Wait, you guys don't ask your mom for money when you want to buy a new car...?

 

Baby Steps.

[RC K9]

Wait, you guys don't ask your mom for money when you want to buy a new car...?

 

Baby Steps.

 

I don't understand step 2.

 

I have about another year of payments on my truck and it's paid off. So lets assume that it's just paid off.

 

My next "smallest" debt is the 2014 Escape I just got my wife. The loan is at 1.94%. If I ride the loan out for 5yrs, I will have paid $1044 in interest. Lets say I make and extra $500/mo payment. That cuts my loan duration from 5yrs to 2yrs. But I only save $610 over the entire course of the loan. So if it only cost me $610 to use someone else's money for 5yrs, (essentially 1mo payment), how is it smarter to pay that loan off early instead of pocketing the $500/investing the $500/or putting that extra $500 toward my mortgage which would save me $80,000 in interest and pay the loan off 13yrs early?

[dq driver]

Reason -- To help your average American....

 

1) Build good habits and financial discipline

2) Stay motivated

3) Actually pay off debt versus save and splurge

 

It's about setting smaller goals, achieving them, and building momentum.

[RC K9]

Reason -- To help your average American....

 

1) Build good habits and financial discipline

2) Stay motivated

3) Actually pay off debt versus save and splurge

 

It's about setting smaller goals, achieving them, and building momentum.

 

That still doesn't make sense to me. How is paying $500 extra a month for 24mo in above scenario to only save $600 in the end helping the average american more than putting that extra $500 into savings/retirement/paying off mortgage(higher interest loan)?

 

It would seem to me that good habits and financial discipline would be to do something "wiser" with that $500/mo than to tie up all your cash for 2yrs just to save $600 in the end.

[dakotart]

I don't understand step 2.

 

QUOTE]

 

Step 2 is about getting that quick win feeling of having 1 less debt to pay. It isn't the method that results in the lowest payback. Paying off highest interest debt first will yield the most savings.

[TTQ B4U]

Reason -- To help your average American....

 

How is not understanding good financial decisions helping the average American? At the end of the day keep your money working for you where you can. Interest rates today are pretty low and your rate of return is higher on investments, so it doesn't make sense for me or others to give our hard earned money to someone else to invest and make money off of vs me/us doing it.

1) Build good habits and financial discipline

2) Stay motivated

3) Actually pay off debt versus save and splurge

 

Agree, but not paying off debt in certain cases isn't a bad thing. Again, weigh what you are going to do with the money if you do have it and look at your budget to insure you can still make those payments.

 

Car loans and homes are good example. Zero % on appliances or furniture is another. I take advantage of those plans if I'm buying or I'll leverage additional cash discounts if they offer the in lieu of the zero %.

[RC K9]

I don't understand step 2.

 

QUOTE]

 

Step 2 is about getting that quick win feeling of having 1 less debt to pay. It isn't the method that results in the lowest payback. Paying off highest interest debt first will yield the most savings.

 

That's what I thought, pay off the higher interest loan first as that is less of your money going to someone else.

 

How is not understanding good financial decisions helping the average American? At the end of the day keep your money working for you where you can. Interest rates today are pretty low and your rate of return is higher on investments, so it doesn't make sense for me or others to give our hard earned money to someone else to invest and make money off of vs me/us doing it.

 

 

Agree, but not paying off debt in certain cases isn't a bad thing. Again, weigh what you are going to do with the money if you do have it and look at your budget to insure you can still make those payments.

 

Car loans and homes are good example. Zero % on appliances or furniture is another. I take advantage of those plans if I'm buying or I'll leverage additional cash discounts if they offer the in lieu of the zero %.

 

This. Sometimes it is prudent to use someone else's money. The problem is, most people do it even when it isn't wise.

[dakotart]

 

That's what I thought, pay off the higher interest loan first as that is less of your money going to someone else.

 

 

 

This. Sometimes it is prudent to use someone else's money. The problem is, most people do it even when it isn't wise.

 

Some people just don't see the big picture or have the discipline to keep paying so they need to use the lowest balance method even though the higher interest will cost less money in the end.

 

I'm a fan of no debt, but if an investment is earning more than the cost of the debt, that equation is in your favor. I'll borrow at 2-3% if I'm earning 8% any day (for a net earning of 5%). Think of that as like having a margin account.

[dq driver]

I get it, 90% of Americans with an average of $200K in debt don't.

 

It's like telling a person that's 200 lbs overweight that they should exercise 7 times a week, meal prep, and read books about human physiology. OR you could tell them to stop drinking the 10 liters of soda they consume on a daily basis and walk for 15 minutes a few times a week for a small victory and head them in the right direction. These are "Baby Steps" after all.

 

Back on topic - I've yet to buy a new car for myself! And I drove a 1995 Honda Accord for 11 years, after I started my career. Sadly, I sold it to a friend in need last Fall, so I no longer own it.

[RC K9]

I get it, 90% of Americans with an average of $200K in debt don't.

 

It's like telling a person that's 200 lbs overweight that they should exercise 7 times a week, meal prep, and read books about human physiology. OR you could tell them to stop drinking the 10 liters of soda they consume on a daily basis and walk for 15 minutes a few times a week for a small victory and head them in the right direction. These are "Baby Steps" after all.

 

Back on topic - I've yet to buy a new car for myself! And I drove a 1995 Honda Accord for 11 years, after I started my career. Sadly, I sold it to a friend in need last Fall, so I no longer own it.

 

NOOOO. That honduh was most glorious.