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1986?!?! Wow, I think you are my new hero!! My goal now is to save, save, save. I don't ever want another car payment.
Haha, well, I got out of that "having to have a brand new car every couple of years" mindset a long time ago. I'm fairly mechanically inclined and can keep a car alive, so I buy a clean used one every once in a while and drive it until the wheels fall off, then I buy another one and do the same. Every so often a repair will cost me some money but at least the only monthly expense I have is gas and insurance, no payments.
My two Sons have a different philosophy, they buy new cars and have payments, but the cars have warranties, they are not afraid to drive them long distances, and they can afford the payments. Not sure if my theory or theirs is better, but it seems to work out for all of us somehow.
I also am in that save , save, save mood right now........I bank as many of my paychecks as I can (I am also on SS from retiring 4 years ago) and it is very comforting to see that balance grow every month, just in case I need it for some health or life emergency.
I can just imagine how much leverage that gives you when negotiating with someone. Hard to turn down a big ole pile of lush green cash!
Cash is not the negotiating tool it once was. It is all but a liability now if you're buying from a dealer.
Quote:
Originally Posted by Checkered24
Buying a car using a loan does not mean someone cannot afford the car.
I never understood that either. By that logic almost no one can afford their homes.
When I've paid off some cars, I spent a little money to refresh them. A detail, maybe an audio tune up, splurge on better tires, make some repairs on non-essential items, etc. Just something to make the car a bit nicer. Then I start saving.
Cash is not the negotiating tool it once was. It is all but a liability now if you're buying from a dealer.
I never understood that either. By that logic almost no one can afford their homes.
When I've paid off some cars, I spent a little money to refresh them. A detail, maybe an audio tune up, splurge on better tires, make some repairs on non-essential items, etc. Just something to make the car a bit nicer. Then I start saving.
There's a simple rule of thumb to follow: If you always spend your money on things that decrease in value, you'll always have money problems.
For those of us who buy junk, fix it and sell it for a profit - whether that's a junk car or junk house - there is always good money to be made, and fun to be had.
But it's very sad to see so many people who are literally drowning in debt.
The only time I will finance a new vehicle is if there is some incentive tied to the manufacturer's financing component. Then, I pay it off as soon as I get the statement. I do not like payments on things that I own, but that does not mean that someone who finances is unable to afford it. At times, cash is committed to other investments, that could be liquidated in an emergency to pay off the car, so that does not mean it is unaffordable.
Paying down the mortgage makes sense while the car is new and you are not likely to have repairs. You were disciplined with the car payment, so I'd give it a shot, since it will help build equity faster. And, as your income rises, you will miss the money less and less, yet will have set a pattern of good stewardship of your incoming financial resources, which can last a lifetime. If the obligation on principal reduction becomes onerous, you can always stop and go back to the 30 year schedule, but you will have a jump start on saved interest I've the life of the loan by acting as if you still have a car payment line item in your budget.
I'm a few years older than you are, yet still know people with good HHI ($300k) who are cash poor and mortgage and car payment heavy. They meet obligations, but are far from comfortable. Had they adopted a better discipline in their early 20s, the late 20s/early 30s might not be so difficult. Think about it and see what works for your budget.
__________________
All the world's a stage, and all the men and women merely players: they have their exits and their entrances; and one man in his time plays many parts, his acts being seven ages.
~William Shakespeare (As You Like It Act II, Scene VII)
There's a simple rule of thumb to follow: If you always spend your money on things that decrease in value, you'll always have money problems.
For those of us who buy junk, fix it and sell it for a profit - whether that's a junk car or junk house - there is always good money to be made, and fun to be had.
But it's very sad to see so many people who are literally drowning in debt.
Everything but real estate and some long term items (hyper expensive boats, classic cars, some art if enough drones think it's worthy, memorabilia, etc) depreciates. I guess that means that everyone has money problems?
You may not realize this but there is a middle group of people their neither drive or live in junk, nor are they drowning in debt. They buy cars and homes on payments, enjoy what they have, and don't fret over the hopefully sensible interest.
Everything but real estate and some long term items (hyper expensive boats, classic cars, some art if enough drones think it's worthy, memorabilia, etc) depreciates. I guess that means that everyone has money problems?
You may not realize this but there is a middle group of people their neither drive or live in junk, nor are they drowning in debt. They buy cars and homes on payments, enjoy what they have, and don't fret over the hopefully sensible interest.
First of all, lots of real estate depreciates. Remember the housing crash of 2007?
Second, don't kids yourself about people's debt-load - even what they claim they can easily handle.
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