You must be putting a substantial amount down or buying cars under $20,000. A $30,000 car will cost you $550 a month for 60 months.

 

Depends on the interest rate....and, if applicable, how the rate is compounded.

 

Not really. At 0%, it's be $500. So lower, but not by a ton. To be substantially lower than the figure Kense posted for a $30k loan would require the loan to have a negative interest rate. If you find one of those, do let me know.

 

Investing the money that would been borrowed and getting a higher return on the investment than the interest rate on the loan itself could (?) be looked at as a negative interest rate, but IMO could be risky, and people should think twice before doing it. Also, one can take out a home-equity loan for the vehicle and deduct the interest payments on their taxes...in some cases, that might also bring one out in (effective) negative territory. But, IMO that is also risky, and something I wouldn't recommend.

 

Well now you're talking about nominal vs real rates.

Different subject.

 

To take a step back, it comes down to long run and short run. imho a great % of society today is making decisions, with the immediate and short run in mind.

Has anybody here purchased a stock, perhaps IPO, and have the principal go to $0? I have several times. Has anyone purchased a stock, and have it multiply 2,3,5,10,20X? I have had that happen as well. But at the end of the day, the above were all plays, they were not long term investments. With those, for the most part, I still have, they were never sold. To me, very few automobiles are shot when they become 36 mos. old. So to get rid of a vehicle that age, is more of a choice and discretionary, not a necessity.

My wife told me so and so's mom is really sad, she's moving out of her house and into an apartment--there are so many memories having lived there since the late 70's. I thought, I totally get that the property taxes are not worth it, I mean her son is in his 50's now, so nobody is using the school system and hasn't in 3 decades. But if it makes her sad, why not continue to live in the house, I don't get it. Another friend mentioned in passing, yeah it's sad, they still owe money on that house so she has to move. I made a wrong assumption that because the mom was 80, the house was long paid off, like 30 years ago. I may not know all the details, but I know there is no such thing as a 55 yr. mortgage (or is there). What likely happened was constant refi+heloc to live, and one day, years down the road, there is still a principal owed with income being fixed and less...

 

no there's no 55 yr mortgage at all, but the number of people who, when refinancing, increase the principal is HUGE. they do it to get a new car, do some remodeling, take a vacation, help pay for the kid's college, medical bills, etc. don't judge. i have a neighbor with multiple properties (worth millions and millions) but was also shocked to find they had little equity in their primary residence, as the wife continued to refinance and increase debt (either primary or secondary mortgages, heloc, etc.) to pay for things she wanted to do (clearly including plastic surgery). the husband gets an 'allowance' from the wife that is very minimal, while the wife keeps all financial details from him... hey if it works for them, more power to 'em, but ...

 

I just think that many don't really think the day will ever come where anything catches up. But I use the example of the person we know as a very real outcome. So that even living for today, you can't take it with you, leave nothing to charity and heirs, it could lead to something as basic as not being able to afford to stay in one's home, if you end up living longer than you thought or planned (who wants to not live as long as possible?). And it is so easy to borrow, as mentioned, I stopped for over 2 years, but I just took a Wells Fargo offer, 0% for 15 mos. get $200 when you spend $1000 in 90 days. At least it's a 1.5% rewards card with 1% extra at Walmart = 2.5%. My Fico 9 got dropped by 12 points from 2 mos. ago as a result of a single hard inquiry. My wife came from a different background (wealthy) so it would be really nothing for this card to go all the way up to its limit in 15 mos. (happened once before and I learned)--so, there is no 2nd card.

 

 

I figure that when a person reaches 80, they want to be living the best life they can, and have more choices than 40. Probably many don't see it that way, they want to have the best choices at 40, and 80 will happen when it happens.

So, if staying in the home where she raised her kids, would make her happy, at 80, I think that's ok. But it's not doable because there is still a loan on the property. My point is that I think a person should be able to live in their own home until they physically cannot do it. This person line dances, has tons of friends (we went to the party at the VFW), actually drives fast, goes to the gym, i.e. is very much active and alive. That's why I was surprised she would have to move into an apartment if it made her sad. Meaning I was rather shocked that the house was not long paid off.

Technically, let's say her property taxes are $11,000/yr. (it's in delco and in the ballpark, that might be steep for montco) And an apartment is $1500/mo. If the house were paid off, why not live in it? (although with the new tax reform there is an incentive to move to an apartment as the taxes are no longer fully deductible). In the worse case scenario, take out a reverse mortgage (they are pretty bad but I actually learned how they work, it's actually not the best risk profile for the lender which is why there aren't that many that offer it). In other words, living a better life if it means less to heirs imho is fine, but not when one is forced to make a decision they don't like.

edit nobody does everything consistently including myself. To lose 100% of my investment on a stock is not good for the long run, but it was "play money." That play money also got me a BMW 335i when it went the right way. But we all know there is a tendency to reduce our net worth the more we play.