Average new car payment $554

[clinebarger]

Originally Posted by tony1679
Originally Posted by Win
Originally Posted by tony1679
Originally Posted by clinebarger
At 29 years old....NO WAY, NO HOW!!

I don't have a Mortgage or a Car Payment. And even if I was single, I couldn't see 200K getting me very far!
Owning a home & land is expensive!
I have two ways to easily do this.
1. I can buy an acre of family land with an existing well and septic for $5k. I can then build a small, simple, extremely energy efficient house for well under $75k, as I've already had multiple estimates based on what I want. Then pay off both cars (rounding way up) for $20k. That's only $100k. I have no debt other than that, so that's $100k I can put in savings, invest, etc. With no real bills, $100k will last a very long time with my lifestyle.

2. I can buy my current house I'm renting for $125k. I'd instantly have $25-50k equity in it (again, family deal). Paying off the two cars would leave me $55-60k, plus $25-50k in equity. My lifestyle consists of surfing BITOG and the everlasting hunt for the motherload of clearance oil. Not to mention the things I could do for income in all that free time that I couldn't do now.

Of course, as ad244 said, assuming I don't rack up millions in medical bills.



It wouldn't be that hard around here - I bought a couple of lots at a tax sale a few years back, 1/4 acre each, adjacent, on a small lake about twenty miles south of here, all paved roads, for < $7K IIRC. City water, but no sewer, so I would have to add septic. Big mobile home dealer used the biggest double wide they sold as a sales office, when they wanted to rotate it out, I bought it for $15-20K ( don't remember) and moved it to some land over in OK where I planned on renting it out, but has just sat there unused ever since.

So that's $27K, figure another $20K for septic, moving the thing back to Arkansas, and fixing up / repairs, and a small boat to fish from, and that's < $50K to be living on 1/2 acre on a nice little lake. I would think if you were frugal, another $400 / month would cover your other expenses. Take a part time job greeting at Wal Mart.

For a while I sold pre fab buildings off one of my empty lots - I had a cabin size building with a porch, etc., that people would finish out as a hunting cabin, lake cabin, etc. for not much money.

See? I'm not the only one who gets it.


If you want to live in a Mobile Home, Or other "manufactured/pre-fab" junk? I would expand on that.....But, Someone probably has a story that trailer homes are great.

I'm glad others had luck with Septic & Well's......I didn't & it soured the whole concept for me! When I lived in Rendon TX......My well water smelled like sulfur & was so hard that it would stain clothing with filtering & water softening. I most certainly wouldn't drink it, Didn't really care for bathing in it either.

Trash disposal was another irritation for me, While the folks around me burned their trash.....I couldn't do that! Too many plastics & such. So I took my trash to work every other day & dumped in the dumpster. I could have rented a dumpster I guess.
I love my city provided services, They give you Toter's for Trash & Recycling & I bought a Toter for grass & trimmings & all it cost me was the price of the bin & they dump it every week for free.
We also have monthly bulk pick-up, If I cut down a tree or have a old appliance.....Put it across the street & they dispose of it for you.

Water quality & taste is excellent in Fort Worth BTW, Granted I've seen/tasted some nasty city water before.....

 

[Wolf359]

Originally Posted by Ws6
Originally Posted by flinter
56 years old and NEVER had a car payment in my life....and NEVER will. I currently drive a MINT condition 2017 Hyundai Elantra Value Edition, paid cash. Remember, one NEVER gets rich with constant car payments!

Terrible decision, financially. Why not have a 2-3% 72mo loan with GAP? Too many [censored] drivers, deer, etc. Out there for me to be 100% all in on a newer vehicle.


Probably also a terrible decision financially. You have to pay extra for GAP insurance. It's like buying the warranty on an item. It's priced to make the issuer a profit. It's basically like buying a lottery ticket with slightly better odds than a lottery ticket, but still long odds that you will collect on it.

Some people like to play the arbitrage game, but let's just say that if the cash purchase price of a car is in the single digits of net worth, then you mind as well just pay cash and not bother playing the game.

Originally Posted by HowAboutThis
Originally Posted by fdcg27
Originally Posted by HowAboutThis
Here's my math:
If you pay $30k cash and put what would have been the car payments into savings @ 2.2% for 5 years, $525/mth into savings, you end up with $33,300, a gain of $3,300.

If you take a $30k loan out @ 1.9% and leave your $30k in savings growing at 2.2% you
Pay an extra $1470 in interest and earn $3490 in interest. A net gain of $2,020.

That's how. Feel free to check my math if you'd like. I won't gurantee I didn't make an error somewhere with online calculators.


I don't know what errors you've made in your arithmetic or assumptions, but there's no way you can come out ahead in earnings, not savings, giving up 2.2% in interest to save 1.9%.
This is simple arbitrage to anyone with even a minor knowledge of finance and investment.


I laid my numbers out. Calculate it yourself. You're honestly going to say my numbers feel wrong but not prove it?


It's basically simple math. Borrow at 1.9%, invest the money at 2.2%. The only difference is taxes. You also have to pay taxes on your 2.2% earnings, which erodes some of your savings.But I wouldn't do a fixed 2.2% CD, I'd just stick it in the stock market and hope that it hits the averages of around 10%. Plus in some years when you get some good stock market gains, you take some out and pay cash for a car as a diversification method...

 

[Andrew1972]

Many ways to justify "debt life".

The only real fact is chances of building wealth are slim taking/carrying on consumer debt no matter what the interest rate is.

 

[Mad_Hatter]

Originally Posted by JeffKeryk
If you are lucky, one day your wants will become doable without too much pain.
My wants are to put children through college, etc.
I have a few promises out there that I intend to keep.


Here here..ðŸ‘

 

[Ws6]

Originally Posted by HowAboutThis
Let me rephrase my buying option. Assume I have $30k in cash. Option 1: pay $30k for car with cash, put what would have been the car payment into savings at 2.2% rate. After 5 years, how much do I have?

Option 2: Keep $30k cash in savings account for 5 years at 2.2% rate. Take $30k loan out at 1.9%.

Option 1: $524.52 per month into savings for 5 years, compounded daily. After 5 years, $33,328 in hand.

Option 2: $524.52 paid monthly for car payment. $31472.29 paid for car. $33480 in savings account. So, made $3480-1470 in interest to pay for car loan. Net gain of $2410. Option 1 I had a gain of $3328. I can't simplify it any more, don't "feel like I'm wrong" prove to yourself I'm right.



Option 2 is also superior because it provides a safety net. Total the car? GAP got your back, $0 loss other than interest paid. Paid cash for the car? Big loss. Life/this world ain't perfect.

 

[Ws6]

Originally Posted by Wolf359
Originally Posted by Ws6
Originally Posted by flinter
56 years old and NEVER had a car payment in my life....and NEVER will. I currently drive a MINT condition 2017 Hyundai Elantra Value Edition, paid cash. Remember, one NEVER gets rich with constant car payments!

Terrible decision, financially. Why not have a 2-3% 72mo loan with GAP? Too many [censored] drivers, deer, etc. Out there for me to be 100% all in on a newer vehicle.


Probably also a terrible decision financially. You have to pay extra for GAP insurance. It's like buying the warranty on an item. It's priced to make the issuer a profit. It's basically like buying a lottery ticket with slightly better odds than a lottery ticket, but still long odds that you will collect on it.

Some people like to play the arbitrage game, but let's just say that if the cash purchase price of a car is in the single digits of net worth, then you mind as well just pay cash and not bother playing the game.

Originally Posted by HowAboutThis
Originally Posted by fdcg27
Originally Posted by HowAboutThis
Here's my math:
If you pay $30k cash and put what would have been the car payments into savings @ 2.2% for 5 years, $525/mth into savings, you end up with $33,300, a gain of $3,300.

If you take a $30k loan out @ 1.9% and leave your $30k in savings growing at 2.2% you
Pay an extra $1470 in interest and earn $3490 in interest. A net gain of $2,020.

That's how. Feel free to check my math if you'd like. I won't gurantee I didn't make an error somewhere with online calculators.


I don't know what errors you've made in your arithmetic or assumptions, but there's no way you can come out ahead in earnings, not savings, giving up 2.2% in interest to save 1.9%.
This is simple arbitrage to anyone with even a minor knowledge of finance and investment.


I laid my numbers out. Calculate it yourself. You're honestly going to say my numbers feel wrong but not prove it?


It's basically simple math. Borrow at 1.9%, invest the money at 2.2%. The only difference is taxes. You also have to pay taxes on your 2.2% earnings, which erodes some of your savings.But I wouldn't do a fixed 2.2% CD, I'd just stick it in the stock market and hope that it hits the averages of around 10%. Plus in some years when you get some good stock market gains, you take some out and pay cash for a car as a diversification method...



I was sitting in class back in college one day when someone was talking to their friend about their life or something, and I remember thinking "[censored]! That person is dumb as a rock." and then it hit me...here we both were, the same ages, sitting in the same class, at the same stage of life. So maybe they weren't dumb, maybe they just did things differntly, because sure as [censored] we were at the same stages in life. So let me ask you...how you living, brother? What's all this holier than thou mindset translated into when we compare lifestyles? I'm 33. I have a few thousand in CC debt. I have significant equity in my home on 13 acres by the river, which I love loving in. I can afford to go on vacations and do the things and buy the things in life that make me smile. I drive a new vehicle that I can trust to get me to work/around rain, snow, sun. I work 3 days a week. Life is good. How's your plan going?

I've got a pretty awesome life, and I hope you do, too, but please, show us what all the above mental masturbation has done for you, I'd like to see how my "betters" are living.

*I am single income, no inheritance.

 

[Ws6]

Originally Posted by clinebarger


If you want to live in a Mobile Home, Or other "manufactured/pre-fab" junk? I would expand on that.....But, Someone probably has a story that trailer homes are great.

I'm glad others had luck with Septic & Well's......I didn't & it soured the whole concept for me! When I lived in Rendon TX......My well water smelled like sulfur & was so hard that it would stain clothing with filtering & water softening. I most certainly wouldn't drink it, Didn't really care for bathing in it either.

Trash disposal was another irritation for me, While the folks around me burned their trash.....I couldn't do that! Too many plastics & such. So I took my trash to work every other day & dumped in the dumpster. I could have rented a dumpster I guess.
I love my city provided services, They give you Toter's for Trash & Recycling & I bought a Toter for grass & trimmings & all it cost me was the price of the bin & they dump it every week for free.
We also have monthly bulk pick-up, If I cut down a tree or have a old appliance.....Put it across the street & they dispose of it for you.

Water quality & taste is excellent in Fort Worth BTW, Granted I've seen/tasted some nasty city water before.....

I lucked out. My well has a TINY hint of sulfur. Only if you run the water HOT can you smell a whiff of it. It tastes fine, etc. I have been washing white clothing in it for years, and no issues. Trash? I have a trash dumpster 1mi from my house where our "neighborhood" puts trash. It costs me $78/6mo. I cut my own grass with a 60" eXmark (That, was a hand-me. My Dad loves working on mowers and things like that, so I lucked out, there). I burn my own trees/limbs while drinking beer and roasting stuff with friends and listening to the coyotes. Oh, if you want nasty city water, McAllen, TX is the place to go.

 

[Ws6]

Originally Posted by Win
Originally Posted by tony1679
Originally Posted by clinebarger
At 29 years old....NO WAY, NO HOW!!

I don't have a Mortgage or a Car Payment. And even if I was single, I couldn't see 200K getting me very far!
Owning a home & land is expensive!
I have two ways to easily do this.
1. I can buy an acre of family land with an existing well and septic for $5k. I can then build a small, simple, extremely energy efficient house for well under $75k, as I've already had multiple estimates based on what I want. Then pay off both cars (rounding way up) for $20k. That's only $100k. I have no debt other than that, so that's $100k I can put in savings, invest, etc. With no real bills, $100k will last a very long time with my lifestyle.

2. I can buy my current house I'm renting for $125k. I'd instantly have $25-50k equity in it (again, family deal). Paying off the two cars would leave me $55-60k, plus $25-50k in equity. My lifestyle consists of surfing BITOG and the everlasting hunt for the motherload of clearance oil. Not to mention the things I could do for income in all that free time that I couldn't do now.

Of course, as ad244 said, assuming I don't rack up millions in medical bills.



It wouldn't be that hard around here - I bought a couple of lots at a tax sale a few years back, 1/4 acre each, adjacent, on a small lake about twenty miles south of here, all paved roads, for < $7K IIRC. City water, but no sewer, so I would have to add septic. Big mobile home dealer used the biggest double wide they sold as a sales office, when they wanted to rotate it out, I bought it for $15-20K ( don't remember) and moved it to some land over in OK where I planned on renting it out, but has just sat there unused ever since.

So that's $27K, figure another $20K for septic, moving the thing back to Arkansas, and fixing up / repairs, and a small boat to fish from, and that's < $50K to be living on 1/2 acre on a nice little lake. I would think if you were frugal, another $400 / month would cover your other expenses. Take a part time job greeting at Wal Mart.

For a while I sold pre fab buildings off one of my empty lots - I had a cabin size building with a porch, etc., that people would finish out as a hunting cabin, lake cabin, etc. for not much money.


Thing is, mobile homes are a liability, not an asset. Homes should accrue value, not lose it.

 

[demarpaint]

Originally Posted by HowAboutThis
Let me rephrase my buying option. Assume I have $30k in cash. Option 1: pay $30k for car with cash, put what would have been the car payment into savings at 2.2% rate. After 5 years, how much do I have?

Option 2: Keep $30k cash in savings account for 5 years at 2.2% rate. Take $30k loan out at 1.9%.

Option 1: $524.52 per month into savings for 5 years, compounded daily. After 5 years, $33,328 in hand.

Option 2: $524.52 paid monthly for car payment. $31472.29 paid for car. $33480 in savings account. So, made $3480-1470 in interest to pay for car loan. Net gain of $2410. Option 1 I had a gain of $3328. I can't simplify it any more, don't "feel like I'm wrong" prove to yourself I'm right.

That was my thought process, it was quiet easy in fact. I was able to take advantage of 0%, and under 1% on another vehicle. My money stayed invested. Had the rates been high enough I might have paid cash.

 

[JeffKeryk]

I pay cash because I hate payments.

 

[Mad_Hatter]

Originally Posted by Ws6

Thing is, mobile homes are a liability, not an asset. Homes should accrue value, not lose it.


So is a stick built home unless it's fully paid for. Your home is the asset but your mortgage is a debt on that asset. Until you pay off the debt, it's technically a liability.

But to your point, mfg homes don't typically build up equity like a traditional stick built home.

 

[Wolf359]

Originally Posted by Ws6
I was sitting in class back in college one day when someone was talking to their friend about their life or something, and I remember thinking "[censored]! That person is dumb as a rock." and then it hit me...here we both were, the same ages, sitting in the same class, at the same stage of life. So maybe they weren't dumb, maybe they just did things differntly, because sure as [censored] we were at the same stages in life. So let me ask you...how you living, brother? What's all this holier than thou mindset translated into when we compare lifestyles? I'm 33. I have a few thousand in CC debt. I have significant equity in my home on 13 acres by the river, which I love loving in. I can afford to go on vacations and do the things and buy the things in life that make me smile. I drive a new vehicle that I can trust to get me to work/around rain, snow, sun. I work 3 days a week. Life is good. How's your plan going?

I've got a pretty awesome life, and I hope you do, too, but please, show us what all the above mental masturbation has done for you, I'd like to see how my "betters" are living.

*I am single income, no inheritance.


I'm not really sure what I said to trigger that. I have 10+ rental units and a very decent amount in the bank/stock market. No credit card debt, only mortgages on the properties but decent equity in them. One year I made over 6 figures in stock market returns when it was very good that year. So I figured I'd take some money out and just pay cash for a car. I rode out the downturn in 2000 and 2008 and easily lost over 20k when the market dropped. That's why depending on your situation, it's not crazy to pay cash.

I also know a guy who's retired who probably spends $500+ a month on a lease. He's on a pension so every 3 years he just gets a new car with a lease. Can't say it's a bad financial decision for him because he's already retired and on a pension and he worked a good job so has a decent pension. There's no point in saving money at his age because he already saved it for retirement and now's the time for him to be spending it.

And technically if you're getting 2.2% in interest and have to pay 25% in taxes on that income, then your effective rate of return would be about 1.65% so you'd be losing money if you're borrowing at 1.9% as there's nothing to deduct when paying interest.

 

[supton]

Originally Posted by Mad_Hatter
Originally Posted by Ws6

Thing is, mobile homes are a liability, not an asset. Homes should accrue value, not lose it.


So is a stick built home unless it's fully paid for. Your home is the asset but your mortgage is a debt on that asset. Until you pay off the debt, it's technically a liability.

But to your point, mfg homes don't typically build up equity like a traditional stick built home.

I don't know how prefab/modular truly stack up, but last I knew they were more or less considered the same as stick in terms of building equity. In some ways better, as the glue and extra framing they put in (for shipping reasons) gives it the upper hand during some catastrophes (hurricane, tornado).

I think even paid off a house is still a liability. If you have to move, you have to sell. If the market is down they you lose "value". Worse, if the market is down enough, you might not be able to sell at all. Yes, owning and not having a payment is a better situation--but outside of hot markets I think a house can be a liability regardless of its ownership status. [Then toss in potential home repairs!]

 

[Win]

Originally Posted by Jarlaxle
Originally Posted by supton

Pretty admirable, but not for me--married with two kids, need a house larger than a minimum.

I've thought about moving south when I get close to retirement, make my money up here, move south, but I'm not sure I could convince the better half about that.


A double-wide is usually 1300+ square feet, frequently with 3BR/2BA.



According to my notes, this one is 28 x 64 ( 1792 ft. sq. ) with 3 bath, and I wrote a check for $13K even on St. Patty's Day, 2010. I think it's four BDR, but might be five. haven't been in it in a couple of years. A house mover guy that owed me money moved it and set it up to cancel his debt, that he couldn't pay anyway.

I had no idea that things you can buy for pennies on the dollar and rent out for full value are not an asset.

Carry on about arguing over $1000 bucks more or less on a five year car note.

 

[Mad_Hatter]

Originally Posted by supton
Originally Posted by Mad_Hatter
Originally Posted by Ws6

Thing is, mobile homes are a liability, not an asset. Homes should accrue value, not lose it.


So is a stick built home unless it's fully paid for. Your home is the asset but your mortgage is a debt on that asset. Until you pay off the debt, it's technically a liability.

But to your point, mfg homes don't typically build up equity like a traditional stick built home.

I don't know how prefab/modular truly stack up, but last I knew they were more or less considered the same as stick in terms of building equity. In some ways better, as the glue and extra framing they put in (for shipping reasons) gives it the upper hand during some catastrophes (hurricane, tornado).

I think even paid off a house is still a liability. If you have to move, you have to sell. If the market is down they you lose "value". Worse, if the market is down enough, you might not be able to sell at all. Yes, owning and not having a payment is a better situation--but outside of hot markets I think a house can be a liability regardless of its ownership status. [Then toss in potential home repairs!]


Some of the nice ones can increase in value. My mother lives in a retirement community and every home is pre fab/mfg. Most of the homes go up in value. Some of the newest one's are pretty darn nice and you'd be hard pressed to distinguish them as mfg homes. My guess is it just depends on the build quality

And fwiw, even paid off property has tax liability and upkeep costs.

 

[BMWTurboDzl]

Originally Posted by supton
Originally Posted by Mad_Hatter
Originally Posted by Ws6

Thing is, mobile homes are a liability, not an asset. Homes should accrue value, not lose it.


So is a stick built home unless it's fully paid for. Your home is the asset but your mortgage is a debt on that asset. Until you pay off the debt, it's technically a liability.

But to your point, mfg homes don't typically build up equity like a traditional stick built home.

I don't know how prefab/modular truly stack up, but last I knew they were more or less considered the same as stick in terms of building equity. In some ways better, as the glue and extra framing they put in (for shipping reasons) gives it the upper hand during some catastrophes (hurricane, tornado).

I think even paid off a house is still a liability. If you have to move, you have to sell. If the market is down they you lose "value". Worse, if the market is down enough, you might not be able to sell at all. Yes, owning and not having a payment is a better situation--but outside of hot markets I think a house can be a liability regardless of its ownership status. [Then toss in potential home repairs!]


Modular/Prefab (ie. panelized) come in many varieties. There are a few manufacturers in the Northeast which build modular homes that look just like they were stick built but with higher quality* whereas a typical modular home found in the Southwest has, aesthetically, more in common with a large double-wide.


*Factory conditions allow precise cuts for framing/sheeting/sheetrock and the wiring/insulation is almost always installed correctly. I wish the Southeast had some great modular builders but production builders have essentially cornered the market for mid-low priced homes.

 

[doitmyself]

BITOG Boys One-Upping Each Other's Financial and Lifestyle Achievements

......................................It really is hilarious (and predictable)..........................................

 

[Win]

Originally Posted by supton
... I don't know how prefab/modular truly stack up, but last I knew they were more or less considered the same as stick in terms of building equity. In some ways better, as the glue and extra framing they put in (for shipping reasons) gives it the upper hand during some catastrophes (hurricane, tornado] ...


In Oklahoma they have the disadvantage of being deemed personal property and taxed at the higher personal property rate, unless they are "de-mobile'd" and permanently fixed to the real estate. Mine remains "mobile" because I might want to move it again, although I doubt I would move it down to the little lake - probably less of a hassle to just buy a new, smaller, one.

I pay almost as much in taxes on the double wide, as I do on a 6000 ft. sq.steel commercial building I have on the next lot over.

 

[supton]

Originally Posted by Win
Originally Posted by Jarlaxle
Originally Posted by supton

Pretty admirable, but not for me--married with two kids, need a house larger than a minimum.

I've thought about moving south when I get close to retirement, make my money up here, move south, but I'm not sure I could convince the better half about that.


A double-wide is usually 1300+ square feet, frequently with 3BR/2BA.



According to my notes, this one is 28 x 64 ( 1792 ft. sq. ) with 3 bath, and I wrote a check for $13K even on St. Patty's Day, 2010. I think it's four BDR, but might be five. haven't been in it in a couple of years. A house mover guy that owed me money moved it and set it up to cancel his debt, that he couldn't pay anyway.

I had no idea that things you can buy for pennies on the dollar and rent out for full value are not an asset.

Carry on about arguing over $1000 bucks more or less on a five year car note.




I still want a basement--our 700sqft house still has 500 in the basement for storage, and it just ain't enough to store snow tires and all the other trappings of life. Large detached garage might be nice though...

*sigh* Some days I really wish I had chosen differently after college. I moved to where I like to live, but it really doesn't balance out. Oh well. I'm several years from being able to make any changes (gotta get the kids through school first).

I'm still getting estimates on doing a stick build on our land, and it looks like 2,200 sqft is going to push $300k, all costs covered (except land, well, septic). Houses ain't cheap! I'm not really surprised what houses go for as a result.

 

[supton]

Originally Posted by BMWTurboDzl
odular/Prefab (ie. panelized) come in many varieties. There are a few manufacturers in the Northeast which build modular homes that look just like they were stick built but with higher quality* whereas a typical modular home found in the Southwest has, aesthetically, more in common with a large double-wide.


I'm not surprised, all built to order I guess. I'm not sure what mobile home sales are like up here, I know I've seen a few trailer parks here and there, but I'm not sure just what sales are like. But I'd say, during the summer months it sure seems like I see a modular going down the road every other day. Sales of those must be brisk. I still don't get their economics, most of them seem to be built down in PA and shipped up here.

We thought about doing a two box ranch (27x54 I think) but a friend (a GC) thought he could do a stick build on our land while leaving our house standing, so we've been going down that path for a house replacement.