So people can't afford to invest $458/month into an IRA but taking out a monthly car payment is a good idea?
Average auto loan now over $30k
- Thread starter Goothrey
- Start date
So people can't afford to invest $458/month into an IRA but taking out a monthly car payment is a good idea?
well I wouldn't suggest for them having that big of a car payment, no. Where did you get that idea?
I grew up on a farm that went under, had two pairs of jeans in junior high, started working at 14 so I could afford to do things, and picked up cans in college to eat for a summer. Am I in your club?
For those that always pay cash for a car, I would love to know what you do for a living and how much you make. I can't ever imagine having enough money around to buy a car outright that would be worth buying.
Being somewhat serious here since I'm a year removed from college and don't completely understand how adult in works yet.
Being somewhat serious here since I'm a year removed from college and don't completely understand how adult in works yet.
That insurance is through my employer, but it's certainly not the lowest I've seen. My last job I paid $80/month for a family plan with HSA match, which was pretty outstanding.
If we go with the national averages, that leaves you $780 - ($667-$300) = $413 AFTER you've made the retirement contribution. You could even do that in a 401k and it would be tax deductible, thus lowering your tax burden.
And yes, my utilities really are that low. We keep our house at around 75 degrees in the summer and 72 in the winter. Generally, we turn the air off at night and sleep with the windows open. I have a 55" LCD tv and pay all my utilities every month. I even let my family use the shower every day.
Regarding taxes, it looks like my effective tax rate is around 13%, but I claim two exemptions for myself/family.
I'm going to step out of this discussion, but my parting point is this: We all make choices in our lives. Those are our choices to make and we get to live with the consequences. After all, that is what makes America great. My purpose in doing the math was not to claim it was easy, rather, that it was possible. Ultimately, the average family can save for retirement and retire with enough in the bank to live comfortably the rest of their lives. There will be sacrifices along the way. They won't be able to keep up with the Jones', but who cares what the Jones' think anyway. My goal was not to convince, only to inform.
Judging by people in this thread that would be about the average for their car payment.
LOL I grew up dirt poor on the backside of the farm financial crisis of the 1980s. My parents were young and had land payments up the wazoo on 16% interest so there was nothing left after paying the bank.
But yeah yeah silver spoon, you got it.
then maybe you should show a bit more empathy and understanding? Did your parents have $5,500 a year in extra money? Mine didn't. My point is there are reasons other than poor budgeting for people not to be able to save that much.
see my other response, but I'd say the same to you. I assume your parents had reasons other than sucking at budgeting for (presumably) not stockpiling 5,500 a year for an IRA.
Nothing special here - graduated in Ag Biz a few years back. Wife and I both have good jobs (I have 2 jobs) and live on about 35% of our income.
I have not done it but it just takes time and discipline. If you don't need it to survive you don't do it. It may take months to years to save it up depending on income and where you rank saving for it among going out, vacations and other things that again are not necessities to living.
Well they were making land payments which is essentially investing in retirement, so....
1) Depending on the age of your parents, there is a good chance they have/had a private pension plan. For us currently in the workforce, only 18% are so fortunate. Bottom-line: other generations didn't need to save us much as we will because their employer was funding their retirement for them.
2) My parents (dad is deceased now) never needed that much. It is the time value of money we are talking about here. i.e...someone retiring today might need to have saved $350,000 to maintain their same lifestyle until they die. That same person retiring in 20 yrs would probably need closer to $1 million. (very rough numbers) Time erodes the spending power of your dollar (plus people keep living longer) so the longer you have until retirement, the more you'll need to have saved.
My father was never accused of being a workaholic and sitting around Turkey Day at his side of the family hearing about how bad things were wasn't my cup of tea. He could've got an actual job, but there wasn't Tivo and General Hospital was right in the middle of the afternoon, so that would've been tough.
We live in the US and people can literally do an infinite number of things to increase their income or decrease out go in order to put 10% of their income into retirement, yet so few do, so I have zero sympathy for anyone. I'm scared I'm turning into a Republican frankly.
Still friends?
I have a 11 year old 2,500 sqft house and my gas and electric is $99/month. As soon as it hits 75 outside the air goes on. My garbage and water averages around $50.
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My father was never accused of being a workaholic and sitting around Turkey Day at his side of the family hearing about how bad things were wasn't my cup of tea. He could've got an actual job, but there wasn't Tivo and General Hospital was right in the middle of the afternoon, so that would've been tough.
We live in the US and people can literally do an infinite number of things to increase their income or decrease out go in order to put 10% of their income into retirement, yet so few do, so I have zero sympathy for anyone. I'm scared I'm turning into a Republican frankly.
Still friends?
I don't even understand what everyone is arguing about any more. Back to the original point of this thread - of course someone making $52k per year shouldn't take out a $30k car loan for a new vehicle. I don't think anyone is supporting that idea. But if you make a decent wage, are financially healthy, have a good savings - taking out a 0-2% loan isn't the worst idea in the world, even though some of you want to make it out to be.
I should have saved more when I first got out of college. I made $13.80/hour as a recent graduate and still put $150/month into my Roth. Pay yourself first.
I don't know. My wife makes less than $50k as a teacher and I still save into her Roth.
Exactly.
We gross very low six-figures. One child. House payment is 12% of income. Car payments are 5% of income.
We save 22% per year in after-tax income in two Roth accounts, 529 college savings plan, and future cash spending.
This does not include her pension or my 401k at work.
I did not pay cash for either of our cars because the financing is so low I would rather have that money available to invest in other things. $20 bucks/month in interest is well worth having $25k freed up for other purposes. People on here will tell you "but people don't do that." People who post on here saying they do that, like me, actually do that.
I had a 15 year old Ford Tarus in college. When I graduated I got a 7 year old SUV for $5k cash. that lasted me into my early 30's. I did not buy a "nice" car until I was 32. All of those years I was able to save a few hundred/month and buy something better. I still fretted about it for months, though. You'll get there. The best decisions come over time - not immediately.
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You shouldn’t get discouraged. I was up to my eyeballs in credit card debt, student loan debt, and a new car payment when I was your age shortly out of college. Zero savings.
No one taught me this stuff early in life, so I had to learn it over time.
The point is to learn it, so when you’ve been in the workforce for maybe 5-10 years, you’ll be paying for your cars in cash instead of financing.
I didn’t pay cash for my first car until I’d been in the workforce for about 15 yrs (I believe). Had I been smarter, I could have done it much earlier.