Car Payment Stupid Nation

I wish my ex wife would find a new man to bail her out...

alfadriver wrote:

Keith Tanner wrote: This is where CPI calculators are fun. You get a hell of a lot more car for the dollar these days than you ever have. Base Miata in 1990: steel wheels and no radio. Base Miata in 2016: airbags everwhere, ABS, traction control, more power, more efficient, better top, etc etc. In real dollars, that 1990 Miata was more expensive.

As I've done before, it's also interesting to compare cars that are of equal price in 1990 to today. You find the same thing- and generally, the hated expansion of the size of cars have moved cars up a segment. So it's fair to compare an Escort sized car of 1990 to a Fiesta sized car today. Or an Accord to a modern Civic. You get the same answer you found.

This makes sense. A 1985 civic was 7,474, 16,442 in today's money. A fit is 15,890, and a civic is over 18,000. And I beleive a fit compares more favorably size wise with an earlier civic.

Hal wrote:

Streetwiseguy wrote: Alternatively, if you buy and maintain properly, most people can easily get 15 years out of almost any modern car. So, $500 a month for 4 or 5 years gets you 10 years worth of no car payments. Go until you don't trust the car to reliably perform the tasks you require, then its back to payments, or better yet, cash for a new car because you kept making the payments to yourself.

To add to this: It is not always smart to pay cash for a new car even if you can. Wife and I are in a position where we can afford to pay cash for a new car every 5 years or so. But recently it was smarter to get a loan and make the payments. If you have the money invested earing 2-3% and a car loan is available for 0-.5%, why would you not opt for the payment?

I just heard this on Financial Peace University on the radio - another Dave Ramsey type guy. He said he had a few Texan friends making a LOT of money in oil so why not take out loans for home remodeling even though they have the cash? The answer was you never know when it can turn south and you should always strive to keep debt free.

Datsun310Guy wrote: I just heard this on Financial Peace University on the radio - another Dave Ramsey type guy. He said he had a few Texan friends making a LOT of money in oil so why not take out loans for home remodeling even though they have the cash? The answer was you never know when it can turn south and you should always strive to keep debt free.

In the situation described (putting cash in the bank to earn more than the loan costs), that wouldn't have happened -- economy turns south, you take the cash out of the bank and you pay off the loan, poof no more debt. The problem comes up when you spend the money on something else instead.

I been paying daycare for our kid for 4 years now. That could've paid off a 50k car. I pay nearly 1k a month for 'pre-K' here in California. So far that's $24,000 in the 24 months I've been here.

Oh wait, we were talking about car payments. I only bought one brand new car and I financed it. I buy used stuff with cash. New stuff depreciates right off the bat and my lowly enlisted pay can't keep up.

I need to find a way to make $300, 1% of my monthly income.

yupididit wrote: I been paying daycare for our kid for 4 years now. That could've paid off a 50k car. I pay nearly 1k a month for 'pre-K' here in California. So far that's $24,000 in the 24 months I've been here. Oh wait, we were talking about car payments. I only bought one brand new car and I financed it. I buy used stuff with cash. New stuff depreciates right off the bat and my lowly enlisted pay can't keep up. I need to find a way to make $300, 1% of my monthly income.

I take it you’re stationed at March AFB…I’m up the road in Ventura and when both of my daughters were in daycare, it was costing me $21,500 per year; no AGI reduction so $28,700 in gross dollars for me.

codrus wrote:

Datsun310Guy wrote: I just heard this on Financial Peace University on the radio - another Dave Ramsey type guy. He said he had a few Texan friends making a LOT of money in oil so why not take out loans for home remodeling even though they have the cash? The answer was you never know when it can turn south and you should always strive to keep debt free.

In the situation described (putting cash in the bank to earn more than the loan costs), that wouldn't have happened -- economy turns south, you take the cash out of the bank and you pay off the loan, poof no more debt. The problem comes up when you spend the money on something else instead.

I'm no economics wizard, but I think in the instance, you're better off with the loan payments. You can live on the cash and dole out the loan payments until things improve. You can't live on the satisfaction of being debt free. At the worst, you have bought yourself some time to sell off some of those assets.

IIRC this is how Ford weathered the economic gefuffle that had GM and Chrysler needing bailouts. They took out massive loans before things got bad.

There is some truth to the adage to never use your own money. Especially if you can get it cheaply.

So where do racecars fit into being financially responsible?

yupididit wrote: I need to find a way to make $300, 1% of my monthly income.

Start an LLC and pay yourself $1000 every day. Route that right back in to the LLC as capital investment.

This is probably in violation of some law or another.

logdog wrote: So where do racecars fit into being financially responsible?

I'm thinking somewhere below "cocaine habit" but still above "trying to win strippers' hearts through gift giving".

logdog wrote: So where do racecars fit into being financially responsible?

Probably tied in the financial ranking next to children, based on observing the folks I know who had to give up one for the other.

(They gave up racecar when children came along... Not the other way around Just in case you were wondering)

logdog wrote: So where do racecars fit into being financially responsible?

Seriously, it goes in the "discretionary expense" category. If you have a racecar, a car note, and you are one paycheck from missing the rent, then you're doing it wrong.

On the other hand, ya gotta have some fun. Dying with a pile of money and a lot of regrets is doing it wrong, too.

In reply to RX Reven':

Indeed I am. Doing everything I can to pcs.

logdog wrote: So where do racecars fit into being financially responsible?

So far below "Airplane" they're damn near economical.

Appleseed wrote:

logdog wrote: So where do racecars fit into being financially responsible?

So far below "Airplane" they're damn near economical.

That is why I don't have one of those "holes in the sky to throw money into." I think it would be fun sometimes, dump all the cars and get a sky-hole, then I remember the expense in comparison.

I put more emphasis on autocrossing when I bought my first FX16 back in '87. The car payment was my flying money.

In reply to volvoclearinghouse:

The average age of them on the road has more to do with the fact that new cars are so expensive compared to average income....

I wonder what the average percent of someone's household income their car payment and house payment actually is?

Sometimes I wonder when I see a brand new, say Impala or accord or something what that person makes a year. I'm an idiot who is totally adverse to being tied down, but according to some quick searches I should be able to spend 1,000 a month on a car

logdog wrote: So where do racecars fit into being financially responsible?

What's the old quote? "How to end up with a million dollars racing cars? Start with two million."

joey48442 wrote: I wonder what the average percent of someone's household income their car payment and house payment actually is?

Our invoiced monthly mortgage payment is about 1% of our household annual gross income (but I overpay the principal). For car payments we've never gone above 0.25%.

joey48442 wrote: I wonder what the average percent of someone's household income their car payment and house payment actually is? Sometimes I wonder when I see a brand new, say Impala or accord or something what that person makes a year. I'm an idiot who is totally adverse to being tied down, but according to some quick searches I should be able to spend 1,000 a month on a car

I did a little research on this a while back. Median (not average) houshold income in the US is around 45k/yr. The median home price is tickling 180k. So that's 4x ratio.

I think the median new car price is around 25k. So a bit over half median income.

I found similar data for the year 1950. I forget the exact numbers but the ratio of home price to income then was less than 2:1. And that was back when you typically had one earner in a household.

Don't know what the car/income ratio was back in 1950's. Bet you could find it out.

In response to another question: is the average age of cars on the road now high because cars are lasting longer, or because they're more expensive to buy? Going by inflation %'s (which basically show that new car prices are pretty much flat over the past 30 years or so) I'm guessing it's the former.

Duke wrote:

joey48442 wrote: I wonder what the average percent of someone's household income their car payment and house payment actually is?

Our invoiced monthly mortgage payment is about 1% of our household annual **gross** income (but I overpay the principal). For car payments we've never gone above 0.25%.

So let's say for ease of math you make 100k per year pre-tax. That means your monthly mortgage payment (are you including insurance and taxes in this too?) is 1,000. Assuming that's just the mortgage payment, with 20% down, 4% and all the other WAGs, that's about a 200k mortgage.

In reply to volvoclearinghouse:

Yes, that number includes HMI, taxes, P&I.

WOW Really Paul? wrote: In reply to volvoclearinghouse: The average age of them on the road has more to do with the fact that new cars are so expensive compared to average income....

How many times do you need the valves cut before 50k? How unusual is it for an engine to make it to 100k without needing a rebuild? Can you go more than 5,000mi without a tuneup?

People got into the habit of buying a new car every three years because they were used up after three years. Other people bought a new car every year so they could have something worth selling/trading in.

When I started driving 25 years ago my friends and I all started with 10 year old cars because at that point a 10 year old car was a used up rusted out piece of crap. My first three cars were less than 10 years old and the very first thing I did on all of them was repair the giant holes in the floor. Most of those cars never lived long enough to really need new suspension pieces.
When my dad was that old, it was massively exciting for a car to survive long enough to roll over the odometer. A ten year old car today, even in the rust belt (for the most part) is still a pretty solid car. My 8 year old truck has 160k on it and I haven't even changed the spark plugs, which I know I should, but the point stands.
The fleet is older largely because cars are massively more durable than cars in the past.