How much can you REALLY afford...?
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Joined: Sep 2006
Posts: 911
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From: Oklahoma
didn't agree with everything in article, but did agree with paying with cash. It may be difficult if not impossible for most folks making avg incomes to come up with 50k to buy a new 3500.
but that same person with avg income can make the choice to purchase a low mileage first gen or 2 gen 12v for cash. this keeps free the same monthly cash payments for real estate mortgage(s) instead of a truck payment.
end result is you end up with paid off real estate that keeps on raising in values and a paid off CTD truck that maintains it's value. hopefully besides your home, you've also purchased income producing properties that's now producing $$ for you.
amazing how being always saddled with a large monthly payment for a new vehicle(s) can truly affect your long term financial success or failure.
but that same person with avg income can make the choice to purchase a low mileage first gen or 2 gen 12v for cash. this keeps free the same monthly cash payments for real estate mortgage(s) instead of a truck payment.
end result is you end up with paid off real estate that keeps on raising in values and a paid off CTD truck that maintains it's value. hopefully besides your home, you've also purchased income producing properties that's now producing $$ for you.
amazing how being always saddled with a large monthly payment for a new vehicle(s) can truly affect your long term financial success or failure.
That's excellent advice, but unfortunately the average family in this country isn't able to put that kind of money into savings. We are considered "above average" when compared to the average household income even though we're a single income family, but even with a reasonable mortgage payment, only one car payment, very little credit card debt and no other debt we don't have an extra $19k per year to put into savings. Even if my truck were paid off we wouldn't have that.
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Joined: Jul 2003
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From: Lloydminster, Alberta, Canada
Where's the dancin' smiley?
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Joined: Feb 2004
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From: Northern Iowa
Now I want to add a little $.02 as well. This advice is generally good, however one thing they fail to mention is when "dimishing marginal returns" outweighs good comon sense. What do I mean?
If one has a truck valued at around $4k fair market value, has had it a while and begins having problems with it, at what point do you throw in the towel and look for another unit? I cannot see putting more than 50% of a veichle's value into it in repairs and maintance within the course of a year. If it gets to this point (or if one really begins to sense thier personal safety being compromised) then it may indeed be time to look for something else.
Let me also say this - I think for a young driver, some "challange" in thier daily driver vechile is a good thing. I would not want my son or daughter in something blatantly unsafe. However I had the privledge of driving real "beaters" through college and after walking enough, dealing with enough flat tires, broken parts, calls to AAA, etc. I can assert that I really appreciate a vechile that starts and runs when you expect it to. In fact, having something with under 100k on it would feel like a brand new truck to me!
If one has a truck valued at around $4k fair market value, has had it a while and begins having problems with it, at what point do you throw in the towel and look for another unit? I cannot see putting more than 50% of a veichle's value into it in repairs and maintance within the course of a year. If it gets to this point (or if one really begins to sense thier personal safety being compromised) then it may indeed be time to look for something else.
Let me also say this - I think for a young driver, some "challange" in thier daily driver vechile is a good thing. I would not want my son or daughter in something blatantly unsafe. However I had the privledge of driving real "beaters" through college and after walking enough, dealing with enough flat tires, broken parts, calls to AAA, etc. I can assert that I really appreciate a vechile that starts and runs when you expect it to. In fact, having something with under 100k on it would feel like a brand new truck to me!
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Joined: Sep 2006
Posts: 911
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From: Oklahoma
totally agree.... not everyone is a pro mechanic or want to be.
just so happens I'm a pretty solid mechanic, so what would be a minor inconvenience for me may be a HUGE problem for someone else.
note that's why I always stated in my examples of getting a low miles CTD. be it first or second gen 12v. no way I'd get a 24v if your on a low budget. too much risk of a huge unexpected expense ($2k).
hey it's not a perfect world out there, but it never hurts to stack things on one's favor. if one starts out with a low mileage CTD. odds are you will not be doing near as much major maintenance/repairs.
I'd even go one step further... once you get a 12valve lined out. it can be almost as dependable as a late model CTD, if not more so.
just so happens I'm a pretty solid mechanic, so what would be a minor inconvenience for me may be a HUGE problem for someone else.
note that's why I always stated in my examples of getting a low miles CTD. be it first or second gen 12v. no way I'd get a 24v if your on a low budget. too much risk of a huge unexpected expense ($2k).
hey it's not a perfect world out there, but it never hurts to stack things on one's favor. if one starts out with a low mileage CTD. odds are you will not be doing near as much major maintenance/repairs.
I'd even go one step further... once you get a 12valve lined out. it can be almost as dependable as a late model CTD, if not more so.
Now I want to add a little $.02 as well. This advice is generally good, however one thing they fail to mention is when "dimishing marginal returns" outweighs good comon sense. What do I mean?
If one has a truck valued at around $4k fair market value, has had it a while and begins having problems with it, at what point do you throw in the towel and look for another unit? I cannot see putting more than 50% of a veichle's value into it in repairs and maintance within the course of a year. If it gets to this point (or if one really begins to sense thier personal safety being compromised) then it may indeed be time to look for something else.
Let me also say this - I think for a young driver, some "challange" in thier daily driver vechile is a good thing. I would not want my son or daughter in something blatantly unsafe. However I had the privledge of driving real "beaters" through college and after walking enough, dealing with enough flat tires, broken parts, calls to AAA, etc. I can assert that I really appreciate a vechile that starts and runs when you expect it to. In fact, having something with under 100k on it would feel like a brand new truck to me!
If one has a truck valued at around $4k fair market value, has had it a while and begins having problems with it, at what point do you throw in the towel and look for another unit? I cannot see putting more than 50% of a veichle's value into it in repairs and maintance within the course of a year. If it gets to this point (or if one really begins to sense thier personal safety being compromised) then it may indeed be time to look for something else.
Let me also say this - I think for a young driver, some "challange" in thier daily driver vechile is a good thing. I would not want my son or daughter in something blatantly unsafe. However I had the privledge of driving real "beaters" through college and after walking enough, dealing with enough flat tires, broken parts, calls to AAA, etc. I can assert that I really appreciate a vechile that starts and runs when you expect it to. In fact, having something with under 100k on it would feel like a brand new truck to me!
Thats MR Hoss to you buddy!
Joined: Jul 2001
Posts: 2,759
Likes: 3
From: Central Texas
I just happened across this article today and thought I'd share it since it's somewhat relevant to this discussion:
Everything You Need to Know About Money
Make a will.
Pay off your credit cards.
Get term life insurance if you have a family to support.
Fund your 401(k) to the maximum.
Fund your IRA to the maximum.
Buy a house if you want to live in a house and you can afford it.
Put six months' expenses in a money market fund.
Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
If any of this confuses you, or if you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio.
From Dilbert and the Way of the Weasel, HarperCollins Publishers, 2002.
All of that is very solid financial advice, but as I said before the average American probably doesn't have the extra money to do all of that.
Everything You Need to Know About Money
Make a will.
Pay off your credit cards.
Get term life insurance if you have a family to support.
Fund your 401(k) to the maximum.
Fund your IRA to the maximum.
Buy a house if you want to live in a house and you can afford it.
Put six months' expenses in a money market fund.
Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
If any of this confuses you, or if you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio.
All of that is very solid financial advice, but as I said before the average American probably doesn't have the extra money to do all of that.
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Joined: Sep 2006
Posts: 911
Likes: 0
From: Oklahoma
reality is car payments tie up large percentages of most folks monthly income. naturally your choice of vehicles determines how much cash you have left to funds all those options above.
key here is paying on depreciating income VS paying on an appreciating asset. worst asset loss by percentage, is of course buying a new vehicle. values fall, but you are still responsible for the original note signed.
CTD are pretty special in that first gen are pretty equal in function to second and third gen. you could not make that same statement for most vehicles 15-20 years older.
still the point here ... is car payments can make a HUGE difference in your finances. it's your choice to pick vehicle within your particular budget or out of your means.
your choice... the new car dealership will be more than happy to bury you in debt!
key here is paying on depreciating income VS paying on an appreciating asset. worst asset loss by percentage, is of course buying a new vehicle. values fall, but you are still responsible for the original note signed.
CTD are pretty special in that first gen are pretty equal in function to second and third gen. you could not make that same statement for most vehicles 15-20 years older.
still the point here ... is car payments can make a HUGE difference in your finances. it's your choice to pick vehicle within your particular budget or out of your means.
your choice... the new car dealership will be more than happy to bury you in debt!
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