Average auto loan now over $30k

[DurangoCy]

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 was arguing with Clark that people who made 52k couldn't save 10% of their income and that we shouldn't feel sorry for them, but now we're BFFs.

Also, 3Truefans needs more pants and since I have bunch of them now, I'm going to get his address and send him some.

 

[CyArob]

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.

It's pretty simple. Don't pay for food until you can buy a car with cash.

 

[throwittoblythe]

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.

We have not done it, but I know it can be done. We started out of school with a TON of debt (6 digits worth), but over the past 7 years, we have knocked that down to almost nothing. We both had newer cars when we graduated and we're still driving them to this day. My wife has a 2005 CRV with 95,000 miles and I have a 2008 Altima with 115,000 miles. We'd love to get a bigger car with an expanding family, but we will not do it until we can pay cash for the upgrade. That's what works for us, though. As you can see in this spirited debate, personal finance is just that, personal. What works for you may not work for me, him, her, etc, etc.

What I tell people is if you just think about this stuff, you're ahead of the game. Be intentional with your money. Think about what you want to have financially and make a plan to get there. Then, stick with the plan. Don't just go through life buying whatever feels good at the time and then look up to realize you have nothing saved for retirement.

 

[00clone]

I was arguing with Clark that people who made 52k couldn't save 10% of their income and that we shouldn't feel sorry for them, but now we're BFFs.

Also, 3Truefans needs more pants and since I have bunch of them now, I'm going to get his address and send him some.

****, now he'll never leave. Thanks...thanks a lot, Durango.

 

[drmwevr08]

I just bought a car and got them to pay me 3%, plus at every oil change they invest the cost of the service into my 401k. Thats how you do it when you read Dave and books about hypnosis. If you haven't done this, you are wasting money.

 

[capitalcityguy]

I won’t even pretend that I’m this disciplined, because I’m not. I’m fine paying for a lot of conveniences that I’d rather not do myself. Because of that, I accept it means I may work a few more years than I would have had to otherwise. That said, check out Mr Money Mustache (yes, that is his moniker) as he provides a ton of advice and encouragement on his blog to help people find money they didn’t realize they already had and cut unnecessary expenses.

A few quotes (caution, some of you seem easily offended in hearing advice contrary to what you may have thought was conventional wisdom to this point in your life, so you may want to avoid this and go back to your happy place instead).

The bottom line is this: by focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States today (and most of the other rich countries). Happiness comes from many sources, but none of these sources involve car or purse upgrades. No matter what the herd or the TV set tells you, this is the truth

Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more.

Is that all too fluffy and philosophical? OK, fine. Here’s how to cut your life costs in half. Start by getting rid of your Debt Emergency if you have one. Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bikewherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism.

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

 

[Cyclonefan710]

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.

Our household income is roughly 140k but our current monthly budget is alittle under 2k. That includes rent, utilities, insurance, Internet, food, gas and entertainment. Our only debt is my wife's school loans. Once that is paid off we will buy a house.

 

[cycloneworld]

Is that all too fluffy and philosophical? OK, fine. Here’s how to cut your life costs in half. Start by getting rid of your Debt Emergency if you have one. Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bikewherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism.

That sounds ******* miserable.

So in order to save some money, all I need to do is:
1. Move away from my friends and family.
2. Drive a crappy car or ride a bike.
3. Cancel TV.
4. Don't buy groceries.
5. Ditch my cell phone.

Is that all?

 

[DurangoCy]

That sounds ******* miserable.

So in order to save some money, all I need to do is:
1. Move away from my friends and family.
2. Drive a crappy car or ride a bike.
3. Cancel TV.
4. Don't buy groceries.
5. Ditch my cell phone.

Is that all?

I've read a few of his blog posts and generally agree.

 

[SoapyCy]

That sounds ******* miserable.

So in order to save some money, all I need to do is:
1. Move away from my friends and family.
2. Drive a crappy car or ride a bike.
3. Cancel TV.
4. Don't buy groceries.
5. Ditch my cell phone.

Is that all?

in theory he is correct.

i've always wondered why people in san francisco don't live like homeless people for 5 years, bank all their income, then move to the midwest where they can buy a palace in cash.

 

[Clonefan94]

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).

Not disagreeing with you at all. But that was my point with the dumb people part. There are a lot of dummies in the world and a lot of them aren't concerned with personal responsibility. This stretches far beyond financial issues. Hell, go to an all you can eat buffet and count how many skinny people are usually eating there (counting the skinny is a lot easier than adding up all the obese).

I'm not trying to justify it by any means, I'm just trying to make the point that you can talk to people until you are blue in the face, in the end, the dumb do what the dumb do. The days of personal responsibility are long gone. Hell, most of the people who who buy cars they can't afford are hoping the repo man comes and takes their car, then they will sue him for shaming them.

 

[CarlHungus]

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.

I bought my last car almost two years ago, paid in full with cash. It wasn't anything fancy at all; a 2002 Saturn with 110,000 miles that I paid just under $3000.00 for. I did my research on consumer reports and other outlets to make sure I was getting a mechanically good car, and I also did quite a bit of shopping around. Married, so combined annual salary with my wife at the time was probably a little over 70k, but a single person should be able to save up $3000.00 if they're disciplined enough. It's not a fancy car by any means, but it runs fine and gets me to work.

 

[runbikeswim]

To me I have less of an issue with car loans than I do with eating out. I bet there are great deal of families spending $500 a month or more on convenience eating, what would cost them $150 in groceries.

A reliable car is needed for living in our world.

When we needed to cut back, it was amazing how much we saved by limiting our monthly eat out budget.

 

[agardini]

Annual Income = $52,000
Effective Tax Rate (Assuming no deductions) = 17%
Post-Tax Income = $43,160

Post-Tax Monthly Income = $43,160/12 = $3600

Monthly Expenses:
Mortgage/Ins./Taxes = $900 (25% of income)
Health Insurance = $300
Utilities = $150
Internet = $50
Cell Phones = $150
Groceries = $600
Retirement Savings = $5500/12 = $460 per month

Total Month Expenses = $2600
Total Remaining = $3600 - $2600 = $1000

That assumes no employer contributions and no tax exemptions and still leaves you an extra $1000 per month. What am I missing?

Didn't see anywhere in there where you actually pay for any medical costs. For a majority of people paying the premium is not the end of their medical bills. For instance myself, my family plan premium is $220/month. I have to pay $5,800 out of pocket first before my insurance actually pays anything. I contribute $400/month to my hsa to compensate for this cost. Also for anyone with a kid there are more expenses, it. Daycare, formula, diapers, clothes etc.

I am also very fortunate that my work contributes a significant amount to my 401k match and also has a pension.

I am of the philosophy to save what you can for retirement, but also live a little during your life. Living like you're poor just to save for retirement may seem great, but if you get hit by a bus tomorrow it does absolutely no good. Live a little, buy a car with a loan you can afford, finance a house, go on vacation, so fun stuff because you only live once.

 

[cycloneworld]

in theory he is correct.

i've always wondered why people in san francisco don't live like homeless people for 5 years, bank all their income, then move to the midwest where they can buy a palace in cash.

For sure he is correct. You could save a lot of money doing that.

But you could also save a ton of money by moving to Bouton, Iowa, renting a studio apartment for $200 per month, eating ramen noodles everyday while only drinking water, riding your bike to work, not socializing with anyone (going for drinks, out to eat, etc), never going on vacation, etc, etc.

But what kind of life is that?

I'm not advocating that anyone should live above their means. Spending wisely, having an emergency savings, contributing to your 401k, having other investments, not racking up CC debt, are all good things to do. But advocating that you should be a hermit because you can bank a few bucks - who follows that? We should live and experience life.

 

[wxman1]

For sure he is correct. You could save a lot of money doing that.

But you could also save a ton of money by moving to Bouton, Iowa, renting a studio apartment for $200 per month, eating ramen noodles everyday while only drinking water, riding your bike to work, not socializing with anyone (going for drinks, out to eat, etc), never going on vacation, etc, etc.

But what kind of life is that?

I'm not advocating that anyone should live above their means. Spending wisely, having an emergency savings, contributing to your 401k, having other investments, not racking up CC debt, are all good things to do. But advocating that you should be a hermit because you can bank a few bucks - who follows that? We should live and experience life.

This is one thing that Dave Ramsey doesn't get enough credit for. Yes he has a strong personality but he fully advocates enjoying your money once you are out of debt and your kids college and your retirement are taken care of.

 

[KnappShack]

in theory he is correct.

i've always wondered why people in san francisco don't live like homeless people for 5 years, bank all their income, then move to the midwest where they can buy a palace in cash.

People from California cash in all of the time. I moved from SoCal to Dallas a few years back. Got a home 3 times the size of my CA place for about half price. That included a pool and hot tub.

But I didn't like living in Texas. So I moved back. A home isn't everything. A lot of variables go into finding a great place to live

 

[capitalcityguy]

For sure he is correct. You could save a lot of money doing that.

But you could also save a ton of money by moving to Bouton, Iowa, renting a studio apartment for $200 per month, eating ramen noodles everyday while only drinking water, riding your bike to work, not socializing with anyone (going for drinks, out to eat, etc), never going on vacation, etc, etc.

But what kind of life is that?

I'm not advocating that anyone should live above their means. Spending wisely, having an emergency savings, contributing to your 401k, having other investments, not racking up CC debt, are all good things to do. But advocating that you should be a hermit because you can bank a few bucks - who follows that? We should live and experience life.

I think you illustrate here why people tend to to not be as careful with their money as maybe their pocketbook suggests they should. When they think of the prospects, they take it to the extremes.

No one on here has suggested the things you say here or to live like a hermit. It is clear, you didn't read anything on the Mr Money Mustache site because if you did, you'd see that while he is very, very frugal, he also travels, eats out, has one of nicest homes in his neighborhood. Oh...and was able to retire in his 30's due to his disciplined lifestyle so I'm pretty sure he is having a more enjoyable life at his age than your or I are working for the man 40 hrs + a week.

It may not be for everyone, but try and at least paint an accurate picture. If is is so terrible, you shouldn't have to continually exaggerate to try and make your point(s).

 

[drmwevr08]

I would love to be as responsible as some here, although perhaps not as smug. Anyone ever convince someone who didn't care about debt to start caring? Otherwise, as long as I'm married I'll be the anti- dave in many respects. We aren't extravagant but we're in debt like crazy. Sometimes things happen though I guess. 6 years of lost income due to illness and other factors really jacks up a budgetary effort. Special congrats to those who can manage even in those circumstances (in theory we certainly could have).

 

[JY07]

A few quotes (caution, some of you seem easily offended in hearing advice contrary to what you may have thought was conventional wisdom to this point in your life, so you may want to avoid this and go back to your happy place instead)

Are you including yourself in that group? every other post in this thread is yours arguing with someone's point you don't agree with