Cloud's car stuff

[glatt]

Yeah Cloud, I'm not talking about you. I'm confident you have your head screwed on right with this purchase. You've given it a lot of thought, and I think it's a good car you are looking at.

Classic, for me, a shit car is a car that is so old, it costs about a grand a year in repairs to keep running reliably. Even at a grand a year, it's still much cheaper than buying a new car. Once the body rusts out, then it's over, but until then, you can keep a car going for much cheaper than buying new.

Bruce, you're right. The hard part of what I'm talking about is getting that first car. I inherited my grandfather's car when I started out, and got a few years out of it. Enough time to buy my first real car with the money I had been saving.

The other option is to spend a couple grand on a car that will cost a grand a year to maintain. Many don't have the funds for that.

[tw]

Originally Posted by xoxoxoBruce

Because they need the car to get to work and earn the money to pay for the car,

Yes, a home equity loan also makes no sense for same reasons. Rare exceptions may exist due to abnormal events. But we are not discussing the abnormal. We are discussing a majority who foolishly and repeatedly buy cars with loans.

Why would the exception need a car loan? To never waste money on car loans in the future. To get out of debt and never need a car loan in the future. An exception.

One can buy a Honda or Toyota for $4000. Why apply for a car loan for a $25,000 car (or a $41,000 Chevy Volt) when the owner can only afford $4000? Because he wants to pay more money for every future car?

Consumer Reports is full of inexpensive seven year old cars that are reliable.

Borrowing money to buy something that does not depreciate makes sense (ie a house). Borrowing money to create an income source makes sense (ie a business). Borrowing money to only remain in debt on something that loses value quickly makes little sense.

Why do so many have balances on credit cards? Same 'need'. Makes so sense. But then many (is it a majority?) also do that mistake.

Ironically (and this never made sense to me), many know this is illogical. And still do it. Why borrow money to almost double the cost of a product?

[tw]

Originally Posted by glatt

Classic, for me, a shit car is a car that is so old, it costs about a grand a year in repairs to keep running reliably.

Once I got rid of a new Ford, I never put anywhere near a grand per year into any car. That even includes the Chevy that required a new timing belt every 40,000 miles (+/- 500 miles). Driving a car for 12 and 14 years has been routine.

Probably my biggest maintenance expense was new exhaust pipes (and then a cement truck took out that car). BTW, did you know insurance will reimburse for recently replaced parts?

[classicman]

Originally Posted by glatt

Classic, for me, a shit car is a car that is so old, it costs about a grand a year in repairs to keep running reliably. Even at a grand a year, it's still much cheaper than buying a new car. Once the body rusts out, then it's over, but until then, you can keep a car going for much cheaper than buying new.

A grand a year? I wish. I've put over $2000 into my (college student) daughter's "shit car" just in the last few months. It cost about $4000 when she bought it a couple years ago. (without my consult)
If I look at the numbers now, I think I would have been better off spending more and getting a loan for a better car. There would have been far less worry about her safety. The "shit car" is now breaking down more frequently and needs more repair than she can afford. The money saved for the newer car has already been spent on repairing the "shit car."
Conversely, I could have had and planned in advance for a fixed payment instead of having the "shit car" breakdown and/or need repairs at inopportune times where it requires large sums of money on hand to fix it.

[glatt]

The grand a year is an average. You might put 2 grand in one year, and just have to do oil changes the next. You also have to be intelligent about it and not buy a Pinto, for example.

And monster, nice try with the attempt to go way off topic on cell phones. You're absolutely right, or course, but that's too far of topic.

[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. With that you can walk away from a job if you need to ("fuck you money") save yourself from being homeless, pay insurance deductibles and medical expenses if you're injured, etc. That should be everyone's first saving goal. You don't want to spend your entire wad on the car.

Unfortunately, in most places in the US, a car is a necessity. I know I went without one for 5 years, taking the bus to work everyday in 100 degree heat in the summers--absolutely miserable! I finally bought a car through a windfall. I'm better prepared now, thank FSM.

In addition, not everyone can handle the stress of dealing with "shit cars." I'm terrible at car stuff, as you guys know. I freak out whenever my car's in the shop or unavailable. I live alone. Having an up to date, safe, and reasonably reliable vehicle is a requirement.

[classicman]

I hear you, glatt. I was giving my experience. FWIW - I've owned a grand total of 1 new car in my entire life. I will never do that again without money to burn. (which will be never, given my new life situation)

I can still see where it is basically impossible for some/many to buy a car outright without a loan. Too many do NOT have the discipline to force themselves to save that monthly amount either. I'm not saying its right, just that it is.

And I think monster is more right than not. For example, I know of a family that spends over $600 a month on their cell phones and a couple hundred more on their TV/internet. They have the latest phones all the time and even their youngest kids <10yrs old have phones.
Yes, between phones internet and tv, they spend about $1000 a month.
They are losing their home. The foreclosure should take place mid December.

[glatt]

Originally Posted by Cloud

I don't know that it's realistic to require everyone to pay cash for a car.

Oh, there is no requirement, and there never should be. I'm just talking about what makes sense in a perfect world. Every situation is going to be different, and everyone is going to have different priorities.

[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.

[Cloud]

that's the best way--in theory. Has anyone here actually done that? I'm pretty proud of myself that I've managed to save up nearly 50% down in cash.

[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.

[tw]

Originally Posted by Cloud

that's the best way--in theory. Has anyone here actually done that?

I have very few (if any) friends who have car loans. What Pete has posted is what most everyone I know did.

Saving 50% for the next car is a good start. Then the car after that is paid for without any car loans. The car after that is easily bought AND your have another $25K of spare cash. Maybe it takes longer. But the ultimate goal is to always buy a card without any loans. Some can do it on the next car. For others, it may take two cars. But to have money means owning cars without car loans.