thoughts on car choice/payment?

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Woodlake
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thoughts on car choice/payment?

Post by Woodlake »

we currently have a SUV with ~$700 monthly payment, and a small 2 door that we are leasing at ~$550/month

I always think thats too much money spent on car, and im trying to convince my wife that we should buy the 2 door car when its lease ends, but she want to get another SUV

her argument is that we are making good money and we are young, why not enjoy what we can afford now

my argument is $1200+ a month on car is crazy, and the SUV she want to lease next is probably even more expensive than $550/month, and i personally feel that car is just for commute

i wonder what bogleheads think about the cars and what you guys do with it
denovo
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Re: thoughts on car choice/payment?

Post by denovo »

You guys don't have a financial issue. This is a relationship issue in regards to lifestyle expectations that is manifesting itself as a financial issue. I would suggest printing out the opening post of this thread written by one of the Forum's Founders and most respected members and showing it to your wife. It's certainly eye-opening.

viewtopic.php?f=10&t=214509

But yes, P.S. I would consider that way too much to spend on cars unless you guys are already maxing out your 401k's (i.e. 18k a year a each)
"Don't trust everything you read on the Internet"- Abraham Lincoln
bubbadog
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Re: thoughts on car choice/payment?

Post by bubbadog »

Too expensive for me and I suspect most Bogleheads would agree. Can you purchase a reliable used car outright? Is that an option? Hard to accumulate any real assets when all of your money is going out in monthly payments on depreciating "stuff".
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Crimsontide
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Re: thoughts on car choice/payment?

Post by Crimsontide »

My advice would be to break this monthly payment mindset as soon as possible. You don't have to have a car payment forever. Save up and pay cash for good, reliable transportation.
Last edited by Crimsontide on Sat Apr 01, 2017 4:21 pm, edited 1 time in total.
Jags4186
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Re: thoughts on car choice/payment?

Post by Jags4186 »

Sounds like a lot of money to me. A whole lot of money. It's $1200 in payments, plus insurance, plus gas. I bet you're paying at least $1600/mo on cars.

How much money do you bring home a month? How much money do you spend and how much do you save?
bloom2708
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Re: thoughts on car choice/payment?

Post by bloom2708 »

Read "The Total Money Makeover" by Dave Ramsey. Both of you read it.

Your car payments are likely much too high. We don't know your income and other facts about your retirement saving progress.

The sooner you alter your path the better off you will be. Dig in here and read.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
fishmonger
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Re: thoughts on car choice/payment?

Post by fishmonger »

I can't fathom spending a mortgage payment on cars every month. If you want to be young and blow money, spend it on travel/experiences
poker27
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Re: thoughts on car choice/payment?

Post by poker27 »

Depending on your financial situation maybe $1200 monthly is cheap? Without knowing more, we can't really give educated opinions.
RoadHouseFan
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Re: thoughts on car choice/payment?

Post by RoadHouseFan »

If possible, always pay cash for vehicles.
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BL
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Re: thoughts on car choice/payment?

Post by BL »

How about she drives the current SUV and you drive the small car?

And no, you can't afford these until you save up enough to pay cash for them.

Are you maxing your 401ks and Roth IRAs? Your future selves will thank your present selves.
czr
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Re: thoughts on car choice/payment?

Post by czr »

How much more in payments/loan amount do you have on the vehicles? Depreciation on vehicles the first 3 years is the highest so you are just throwing money out the window whenever you drive compared to a used vehicle. Buying new only makes sense if you plan to keep it for a long time.
PFInterest
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Re: thoughts on car choice/payment?

Post by PFInterest »

sounds like your stuck on the treadmill. good luck getting off!
dbr
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Re: thoughts on car choice/payment?

Post by dbr »

We have always followed a rule for cars and anything else excepting a home mortgage that if we couldn't afford to pay cash we didn't do it. That goes up to and including that none of our children have had student loans and we never, ever had credit card debt. All of that could be easier in some circumstances than in others.
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dm200
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Re: thoughts on car choice/payment?

Post by dm200 »

Sure seems like a lot to me as well.

Why do you need TWO SUVs?

I would also get off the leasing (and frequent vehicle change) merry-go-round. Purchase (and finance at low rate) vehicles that can last a long time.
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dm200
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Re: thoughts on car choice/payment?

Post by dm200 »

czr wrote:How much more in payments/loan amount do you have on the vehicles? Depreciation on vehicles the first 3 years is the highest so you are just throwing money out the window whenever you drive compared to a used vehicle. Buying new only makes sense if you plan to keep it for a long time.
Generally agree. If "buying new" can get you the exact vehicle that meets your needs/desires (and what you want/can pay), then buying new can make sense IF YOU GET A GOOD DEAL. The key, though, is keeping vehicles for a long time.

Newer vehicles have higher insurance costs, financing costs and related.
dbr
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Re: thoughts on car choice/payment?

Post by dbr »

dm200 wrote:Sure seems like a lot to me as well.

Why do you need TWO SUVs?

I would also get off the leasing (and frequent vehicle change) merry-go-round. Purchase (and finance at low rate) vehicles that can last a long time.
People need two SUVs when that is the minimum acceptable vehicle type for either driver. There are lots of reasons and preferences to exclude sedans altogether, especially small sedans. Whether people can afford their preference is another issue. Getting off the lease/payment merry-go-round is good advice.
lomarica01
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Re: thoughts on car choice/payment?

Post by lomarica01 »

I remember when I had just purchased my first house and our friends had 2 car payments equal to our house payment, I thought that was crazy. Then we caught the car bug and was looking at the Infiniti Q45 when they first came out. Yes this was a long time ago. But instead of buying the car we bought our dream house at age 30 and kept the other house as a rental. So now we have a paid off rental and paid off dream house now have 2 nice cars that have been paid off for years and we can buy whatever new car we want with cash. I wonder how much $$ we are actually ahead by not buying that luxury/sport car 25 years ago, maybe 10X the price of the car?

Also if you buy really nice cars when you are young, you will have nothing to look forward to when you want to upgrade.
Vanguard Fan 1367
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Re: thoughts on car choice/payment?

Post by Vanguard Fan 1367 »

I like the advice to pay cash for cars. When I was poor that meant that I drove used VW Beetles and VW Bus's and similar cars.

Like Dave Ramsey says, if you live like no one else, later you get to live like no one else.

I appreciate the savings and investing mentality I find here on the Bogleheads forum.

I have a loved one who has a large truck payment followed by a financial reversal. I also know someone who couldn't afford an Infiniti but went ahead and financed it and is having financial problems.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."
Gill
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Re: thoughts on car choice/payment?

Post by Gill »

Check out OP's earlier posts. It's mentioned they have not previously maxed out 401(k)'s. Says a lot.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
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dm200
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Re: thoughts on car choice/payment?

Post by dm200 »

One "difficult" lesson I learned as a young man (single, about 27) was to NEVER "fall in love" with a car! I did and that car "broke my heart".

While I certainly see the benefits (and think this way) of paying cash for cars, for those with good credit the interest rates for auto financing are relatively quite low. If you do not overspend on vehicles, I can see that financing vehicles at low interest rates and carrying NO credit card debt, maximizing investments and retirement savings can make a lot of financial sense.
smitcat
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Re: thoughts on car choice/payment?

Post by smitcat »

"Generally agree. If "buying new" can get you the exact vehicle that meets your needs/desires (and what you want/can pay), then buying new can make sense IF YOU GET A GOOD DEAL. The key, though, is keeping vehicles for a long time."

It is also possible to purchase larger SUV's and pickups over #6,500 gross weight if you own a profitable business and have a great cost basis dependent upon taxes and your exact situation. For those that do have a business it is worth a few minutes to talk to your accountant and see what the real costs to you would be.
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cfs
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Re: thoughts on car choice/payment?

Post by cfs »

"my argument is $1200+ a month on car is crazy"

Concur, and this is NOT an April Fools Joke.

Thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~
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