When financial hard times hit and you can't make the payments on your upside down asset. I hear those are fun times.
Average auto loan now over $30k
- Thread starter Goothrey
- Start date
When financial hard times hit and you can't make the payments on your upside down asset. I hear those are fun times.
Well then we are talking past each other as that wasn't my claim either. I was comparing levels of household debt with past generations. Not whether or not there was credit available (although it is much more readily available now, than in the past). It wasn't that long ago a car loans were issued with MAX term of 3 years (for example).
But they have the money in savings or presumably liquid enough to pay the payment or the balance if needed.
According to this http://www.bankrate.com/finance/financial-literacy/the-evolution-of-credit-cards-3.aspx credit cards really didn't become "popular" until 1978 (see page 3 of article).
There are all kinds of “never could have seen this coming” stories in personal bankruptcy courts. “We always paid our bills on time, had decent incomes, etc. etc. etc…”
People don’t plan to fail. Rather, they fail to plan. (not sure who said this)
Not only that, but a lot of this thread seems to be, "Fault of the consumer" Which is all i heard after the collapse in 2008. Granted, there should be more fiscal responsibility than I see now, but banks make it pretty easy to get those large loans now that you couldn't get in past generations.
I can guarantee you, in the mid 70s if interest rates would have been floating where they are now, the ease of attaining credit were the same as it is now and the ability to get a 0% - 4% car loan, the, "Past generations didn't do this." would not be a valid argument at all.
Considering when I was a kid in the 70s, finance rates were closer to credit card rates across the board, is what made it more difficult for my parents to pull the trigger on a depreciating asset. I believe their loan, from 1968 on their home was around 15% or so.
So yes, were past generations less likely to be floating in debt as much as people are today, sure, but it's not like it was the great moral choice they were making. It just wasn't an option. There was a time you had to prove you were good for any amount of money you financed.
Hell even credit cards as they are now are more of a product of my generation than my parents. Sure, they had one, but it wasn't until around the time I started school that they started handing them out to any fool who wanted a free hat for signing up for one. Over all the process of getting credit of any kind was a lot more selective than it is now. It's why "Lay-away" was such a huge thing for generations past.
In the past, you were just forced to act as poor as you were. Hell, think about it, can't remember the comedian, but one of my favorite lines is, "If you are of average intelligence, half the population is dumber than you." Think about that for a minute. There are a lot of dumb people out there, if you allow them to be idiots, they certainly will not disappoint.
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I like paying cash because I know what I can afford at that moment based on my current financial state. If I decide to change jobs 3 years from now or my wife decides she wants to stay home with the kids neither of us will feel tied down due to our cash flow being partially already locked up. Either of us could lose our job tomorrow and other than not investing as much it wouldn't effect our daily lives one bit.
Excellent points that haven’t been brought up yet!
I would just add that gov’t policy is a contributing factor to the ease in providing more and more credit, but yes, it is a bit unfair to put this all on individuals’ backs. We’ve essentially been lead down this path by irresponsible public and private policy.
That said, the personal responsibility comes now. You and your family don’t have to fall for the bait as so many have and continue to.
As I’ve said, the debt families are carrying today isn’t “normal” as compared to historical standards (regardless who is to blame).
It will be a lot harder to make the payments if you have assets that can be liquidated other than the car. If you pump it all into the car, the only way to get the cash out is to sell the car, even if you only need a small chunk of that cash. You're losing the depreciated value either way.
The all or nothing view doesn't work. As has been said numerous times in this thread and others.
Who advocates spending all your savings on a car?
Emergency funds (3-6 months take home pay, for example) are for unforeseen things that come up. You' don't touch that unless it is an emergency and buying a car doesn't qualify .
yes, but you act like there's lots of people sitting around on 30k in cash. That's what I find amusing in this thread. It's similar to a previous thread where someone (maybe you) said that people should have 1 million dollars saved up by the time they retire.
It just makes me wonder what world some of you are living in.
What a loser you should have paid cash or gold coin. Your such a peasant and a waste on society.
I don't worry about fancy emergency funds. That's what available credit lines are for.
$5,500 in a Roth IRA for 40 years at a 7% return, starting from $0 as a new graduate, would yield about $1.1 million by the time you retire. That's no 401k or other savings. A man and wife each contributing $5,500 would be $2.35 million at retirement time.
So it's not out of line to think that.
Reality.
I don't know if it was me or not, but for many (if their desire it to maintain their pre-retirement standard of living) will require a million dollars (or more) depending on their income levels prior to retirement and how long they have to save/expected return on investment.
There are free retirement calculators all over the internet. People can (and should) run the numbers for themselves. How else do you know what to try and save?
It takes a lot of accumulated savings to assure you do not outlive your nest egg before you die.
https://scienceblog.com/484318/one-third-older-americans-feel-financially-prepared-retirement/
lol, you want to care to guess what % of Americans (let alone the rest of the world) could afford that?
I think you take your own situation for granted.
well $5500 a year does buy a lot of fun toys and then add in my wife's 5500 and that's even more fun toys.
