Would you need to take out a loan for it? We just paid cash for my wife's SUV because the loan % rates were so high. I had originally wanted to put out a loan for half the value to help my wife's credit which was already good. The economy is just shit right now so I am not making any significant decisionsOriginally Posted by GmanVP9
Don't know if this is true nowadays but you can play with loans. Getting a loan through a dealer might be you a better price and then if there is no penalty, you can pay if off immediately. Or, get the loan through the dealer and then the credit union will finance and give you a better rate. Now the devil is in the details of course, this was awhile ago for us.
Cloud Yeller of the Boomer Age
I wouldn't worry about getting nothing for it. Think about it this way...we all see the crazy prices with car prices, where the average American literally can't afford a new car if abiding by the common rules of thumb. So, we know there's going to be a correction at some point, where virtually everything is going to lose dramatic amounts of value.
Would you rather have an old CRV worth nothing, a CRV which you at least got your money's worth out of it and then some....or would you rather have a relatively new 4Runner worth almost nothing, a 4Runner which you overpaid for and haven't even paid off the loan on?
That's how I looked at it. I'm in a nearly identical situation to yours, from the datapoints you posted. When the lease ran out on our Venza, we considered getting something newer that we liked more because like your CRV, the Venza is a great, practical machine...but not a machine that grabs our heart-strings.
We opted to buy out the Venza. There's too much uncertainty in the next 5 years for several critical markets like credit, auto, and housing with the ability for simultaneous, dramatic market corrections/bubble-bursts...so we're being cautious about the possibility of over-extending ourselves and pooling everything we can into retirement and short-term savings. The idea being that we have a bigger safety net, but also if an opportunity does pop up in the next 5 years where we want to pounce on it, we can do so from a position of abundance instead of through debt, which would then result in over-extending ourselves if a/multiple market corrections occur.
"Are you ready? Okay. Let's roll."- Last words of Todd Beamer
It sounds like financially, you are Winning At Life.
What’s your plan if it all goes to shit?
People have sucessfully predicted 39 of the last 4 recessions, so I’m not claiming to have a crystal ball, but the reality is that an economic downturn will happen at some point in your life and I think it’s reasonable to think it might be sooner rather than later. I don’t know what you do for a living, but during periods of economic uncertainty or a job loss, not having a car payment is a beautiful thing.
I’ve found that things like buying cars, guns and guitars have a period of pre-purchase anticipation of how cool it will be, followed by an initial rush of excitement following the purchase, then it just becomes something you own. Our brains often then start thinking about the NEXT thing we’re going to buy, in order to repeat that dopamine cycle. We’re surrouned by lots of media and advertising that feed that.
I’ve spent a bunch of time and mental energy trying to break out of that cycle. It’s one of the many reasons why I don’t view this forum anywhere near as often as I used to. US culture fetishizes consumption. I’ve kinda gone the other way and have started to fetishize minimalism. I don’t have an impoverished, scarcity driven life. I just spend less time thinking about Stuff and more time working on DOING things I enjoy and working on improving myself.
It sounds like you have an oppurtunity to to acheive true financial indpendence at a young age. I’m in a fairly recession safe job, but if I got laid off or fired tomorrow, or if I just decided I needed to quit for my mental health, I could quit, sit on the couch and watch Netflix for six months, then take a job making half what I do now. That makes me much happier than a car. In six more years, I’ll peace out of the Job Job and get to fully enjoy my profitable side hustle.
Right now is a bad time to buy a car, especially if you have to finance it. As TGS posted upthread, I think the car market is due for a correction, and lots of people will wind up even more underwater on their vehicles than they were before.
Last edited by Lester Polfus; 05-25-2024 at 10:23 AM.
I was into 10mm Auto before it sold out and went mainstream, but these days I'm here for the revolver and epidemiology information.
All good points. Ill stick with my practical decision. I also don't hate my car, which is a plus. Its "fine".
No, I wouldn't sell a reliable car at 50k miles. Take it to 100k at least.
Use the time without a car note to fully fund tax advantaged retirement accounts (401k, Roth IRA, etc.) with the appropriate equity/bond mix for your anticipated retirement age. Have minimum 6 months (I prefer 1 year or more) emergency fund in a HYSA (currently HYSAs are paying 4+% APY). Eliminate non-housing debt.
Random observations:
1. Sounds like you are on top of your finances
2. In broad stokes, you work hard for the money and you should do what you want because you work hard for the money
3. Most cars, most of the time, depreciate
4. I know folks say that they are going to save the “car” payment after they pay off the car, but that money is often re tasked quickly and NOT saved in a set aside account for the next car.
Because most cars depreciate and I needed a reliable car with a payment certain and no surprise out of warranty costs, I started leasing in 2017 w a Jetta. 12k/36m
I repeated w another Jetta in 2020. Bought that one for my residual and sold it to CarMax for a 5 k profit. Just leased a Mazda CX 30.
I NEVER put any money down on a lease (Cap Cost Reduction).
Frankly, the pleasure and confidence I derive from driving a modest but newest reliable vehicle every 3 years far outweighs the supposed financial wisdom of driving a car into the ground while I was allegedly saving a payment to buy a car for cash.
If I was going to buy, I would be looking hard a cars that had aggressive factory financing ie. 2.9% for 48 months etc.
YMMV
I am not your attorney. I am not giving legal advice. Any and all opinions expressed are personal and my own and are not those of any employer-past, present or future.
My trainee's son burned one (1) of his ride-on mowers (plural) using the P=plenty formula for starter fluid application. His wife got pissed and made him take out a loan to have the engine replaced. Same son decided against dog-sitting for their next vacation. Another loan to "buy" an RV to bring the half feral dog pack along (a pitbull being the smallest) plus an interior redesign. Then two trips for new mattress and sheets (because one simply can't have a used mattress or bedding, can one?) plus curtains because those have to match in an RV. The second trip was because the material from the first curtains was too coarse. Plus their truck payment. And car payment. And other car payment. And mortgage. And tractor payment.
He's proud of how hard he works with 10-12 hours days plus weekends and his wife's regular overtime she nagged her boss to approve. To his credit(?), he keeps an immaculate ledger and can point to the exact number on his debt down to the penny.
A local former business owner is working a throwaway labor job for health insurance until a constantly deferred "few more months before I retire" while endlessly bragging about the amount of zeroes in his credit card debt proving his financial prowess as both his and his wife's Mercedes are due for another trip to the Grease Monkey Clinic.
It makes me appreciate our new-hire alcoholic sex pest. His truck is nearing 200k on the clock with no planned end in sight, for which he paid cash years ago, and still admits that he'll be working until he drops. But is a jacked despite being well into middle age because he clocks out after eight to go drunk kayaking and skirt chasing every day. A bit like my boss' old boss who was always pissed if he had to stay late on site because it cut into wife and kayak/cycling/woodworking time but wasn't an alky. Actually, I ran into that boss years after his retirement and he still had the same clothes and fitness to, well, fit them. His wife still goosed his ass when she thought people weren't looking, too. Did the heart good to see.
Automated payments are a huge predictor for success in saving money.
If a person were to take their previous monthly car payment and set up automated deposits to their preferred savings product, the chances they continue to save that money is almost a near certainty. Without it, they usually fall prey to lifestyle-creep and consumerism.
"Are you ready? Okay. Let's roll."- Last words of Todd Beamer
Keeping your goalposts steady, versus allowing them to move and play "keep up with the Jonses" will benefit you mentally and fiscally. Begin with the end in mind, and keep lifestyle inflation on par with 50% of your wage increases, and life gets a lot better, a lot quicker.
Coming from a similar backstory w/ a supercharged V8 coupe - keep your existing car. The cost of replacing a transmission is exponentially less than replacing a car and the increase in insurance costs. That's coming from someone with a 2020 Subaru Forester (CVT, 81k miles) which is apparently a glass transmission/transaxle combo that costs about $8,000 to replace.
Keeping your needs separate from your wants, and acknowledging each, is huge - being able to cashflow your wants at the expense of your needs/future self is not the same as as affording it (your own language - "afford it if I wanted it" - is saying you're looking for confirmation, and you likely wouldn't be as well off making the jump).
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