Cloud's car stuff

[tw]

Originally Posted by Cloud

I don't know that it's realistic to require everyone to pay cash for a car. Most people do not have 25K they can slap down, even if they save for years. Especially since i think it's more important and essential to have an emergency fund of a few months' expenses.

That is the point. One should be saving for many years so as to slap down $25K.

The emergency fund is not a bank account. The emergency fund is credit cards. Just another reason why no one should ever have a balance on their cards. Otherwise they have even spent their 'emergency fund'.

If one does not save that $25K for a new car, then the new car ends up costing closer to $40K. And that one remains a debtor his entire life. I have friends who love this. Therefore they do little work. And reap serious incomes from so many who never learn how to save that $25K over many years.

We can all appreciate your experience with a 'shit' car. But in your case, it was not the car. It was a mechanic who could not think for himself - kept replacing a perfectly good computer rather than the obviously defective valve.

I do have an advantage. I learned in the early 70s by not just fixing the cars. But learning why failures happen and how to make sure my mechanic has basic intelligence. Your bad experience was directly traceable to a mechanic who did not know how to think. Not due to the car.

One solution to a bad mechanic - never have a car that fails. Therefore start in places like Consumer Reports.

[Cloud]

Originally Posted by tw

The emergency fund is not a bank account. The emergency fund is credit cards.

Absolutely, positively NOT! Credit is great to have in an emergency, but not as your sole resource. Plus, you need to have some extra cash for periodic and expected expenses that are not emergencies; vet bills, new tires, gifts. Why pay interest on this stuff? I'm sorry, but I don't think that's a wise strategy.

furthermore, you cannot expect to get credit cards if you pay cash for everything. It's a screwed up system, but that's the way it is.

http://www.thesimpledollar.com/2010/...mergency-fund/

[tw]

Originally Posted by Cloud

Credit is great to have in an emergency, but not as your sole resource. Plus, you need to have some extra cash for periodic and expected expenses that are not emergencies; vet bills, new tires, gifts. Why pay interest on this stuff?

One does not pay interest on those daily, weekly, and monthly expenses. Vet bills, tires, new exhaust system, etc are normal expenses also paid for in cash (or in less than 30 days on a credit card). One must meet those expenses while saving $25K for a car. Those are not emergencies. Those are normal obligations that everyone must meet while also saving money for a new car.

Emergency fund of last resort is credit cards. Other emergency funds may also exist - investments. Which is why some investments must not be locked in - must be liquid.

One who is meeting his financial obligations meets those daily obligations while also saving $25K for the next car. Anyone who cannot pay for a car is simply paying for the car twice - and will always remain a debtor. Those people need car loans due personal financial mismanagement.

Exact same problem with credit card balances. If one cannot pay for it, then one did not need it. Or it is an 'emergency of last resort' meaning that all other luxuries - a deli sandwich for lunch - are no longer permitted.

Brown bagger – the guy who does not want to spend $50K for a $25K car.

[Pete Zicato]

I suspect that most people need to buy their first car on credit. You need a car as soon as you start work and probably don't have the cash to buy even a clunker.

But if you buy a decent car and don't extend the loan payment out forever, then you should be able to buy your second car for cash - if you've been putting the same money into savings once the loan has been paid off.

[tw]

Originally Posted by Cloud

furthermore, you cannot expect to get credit cards if you pay cash for everything. It's a screwed up system, but that's the way it is.

The $300 brake job is not an emergency. That is a normal expense in life. We just don't know which normal surprise will happen. But we know a $300 surprise will often pop up - normally. Because I never have car loans, I now have cash for those other routine obligations.

Looks like I will be spending $hundreds soon to fly to a funeral. Also not an emergency. Just another daily obligation. Some days, life costs $10 a day. Other days, it costs $hundreds. And none of those expenses are an emergency.

Meanwhile, I also must be saving $25K for the next car while meeting all those other obligations.

A credit card is an excellent emergency fund. A second function: it also replaces checks and money clips. But only if paid off in 30 days. It not paid in 30 days, the expense must be a real emergency. A $300 brake failure is a routine obligation in life. We don't know which surprise will happen but we know these surprised will occur routinely - another normal obligation.