RamseyFollower wrote:
FakeKnews wrote:
The headline is misleading. Those people aren't without car expenses even if they don't have a car payment. They are going to have to buy a cheap car or two, more than likely they'll have more repair and up keep costs.
Unless this scenario is set up to where someone invests their $350 a mo and take a bus the rest of their lives, then yeah.. no car expense.
You could play that game with anything. If people never eat out and invest that money, they'll have X million dollars in Y years.
If you never ran, but instead took the money you spend on running shoes, gear, travel and race entries you could have a million dollars blah blah blah.
i get the overall point, but having been poor and with unreliable transportation (and in many cities and towns there is virtually no public transport) there is very little more frustrating than dealing with a car that is constantly in the shop or one that is breaking down on you (usually at the worst times.) I see why people chuck it and go get a reliable car and a monthly payment.
The headline is not misleading. The point is that if you determine how much car you can afford by the monthly payment the dealer offers you, you get fleeced over the long term. Example, if you make $30k/year, while you may be able to make the payments on a $30k car, doing so will cost you your retirement.
Dave offers the following guidance on how much car you can afford. It is this:
1) The total value of all the vehicles you own (cars, boats, motorcycles, etc...), should not exceed 1/2 your annual income.
2) You need to be able to pay cash
3) You need to have a fully funded emergency fund of 3-6 month of living expenses on top of the cash you are using for the vehicle.
If you don't have a fully funded emergency fund, then you are in the beater market. This means that you buy cars for cash from people (not dealers) who are selling their cars. You do your due diligence on the cars you buy and trade up every year or so. Since you are buying from people, not dealers, you don't lose much money every time you trade.
If you can never save enough cash to buy a car that isn't in the beater category, then there are probably other areas of your life where you are living outside your means.
In your example of making $30k/year, that’s costing you the retirement. No matter how little you spend on the car, your net worth is not going to grow fast.
If you want financial independence, it’s simple, make more money and spend less. Figure out ways to maximize both and then you will have much more peace of mind.
Also, I don’t think it’s good to be shopping for a beater car. First, many of them are not safe. It’s hard to grasp for younger people here with no kids or have never been in a serious accident, but you should not take safety of cars lightly.
Second, with a beater car, you’re always having to think about if your car is going to be reliable or not. It may be better to spend a little more on quality so you can keep it much longer which would benefit financially.
Anyways, this whole thing is kinda stupid. Everyone needs to choose how to use your finite resource of money the best way for you. If you love cars but don’t care much about other things like traveling, spend your money how you want.
Going off tangent here, but it’s funny how people may criticize on material things that people buy, but spending money on traveling is very acceptable. Spending money on experiences is something that people are okay with.
Spend your money how you want. Most of us work for it so spend it. We’re all going to die someday.