Most of my readers know I don't really follow any debt advice, for example Dave Ramsey says never buy a new car but this was the best purchase we've ever made. The car has 50,000 miles and it is worth $17,000! somehow our auto debt turned into an asset. We put an average of 10,000 miles per year so our plan is to keep the car for another 5 years and sell for a small profit when the car has 100,000 miles.
After we get rid of this debt, we plan to put the $448 payment towards my auto debt. I have an additiction to Japanese luxury so I still owe a bit more, I don't want to name the brand or model but I will say I love my 300 HP engine :)
HS
7 comments:
Congrats! I just yesterday put down the final payment for my 06 Civic (bought new in Nov 05) - feels awesome!!! Like you, my car has about 50k miles on it, and I plan to keep it for quite some time.
My car payment is now snowballing into my other debts, which I hope to be rid of by Dec2011. Feels good!
Wait, I'm confused, or maybe you just didn't do the math on this:
You feel good about negotiating the price of your new car down by ~13% - but new cars can depreciate by as much as twice that in the first year, and continue to depreciate by as much as 15% each year after.
Now you're patting yourself on the back because it's worth $17,000 -- This isn't a gain! YOU PAID $30,000 in the first place so it means you're taking a $13,000 LOSS.
This vehicle isn't an "asset". Assets make money for you. This is just what you managed to salvage from the black hole of car depreciation and auto loans.
Wow. $448 a month on a car loan. But thank goodness it is almost paid off. Afetr it is keep paying that amount to yourself each month and you will never have to finance a car again.
Thatsmybike,
You are correct, there's some depreciation in the equation but I could have always sold the car at profit and not be upside down on the loan.
2008 4runner with 39k miles is going for 25,000k
http://cgi.ebay.com/ebaymotors/Toyota-4Runner-Sport-2008-Toyota-4Runner-Sport-Edition-/220688526761?pt=US_Cars_Trucks&hash=item33620fada9
I think these vehicles hold their value well. What I meant by asset is 60 months later we have a vehicle worth at the very minimum 17,000 and we plan to keep it for another 5 years, that's where the value comes in. If I can sell it in 5 years for 9,000 that's some nice 'found' money.
Becky- you would be shocked at my car note :( I'll post that one later on.
I probably would be shocked. I am shocked at the $448. But I had my first son at 18, as a single mom. Somehow managed to always pay my bills (without welfare), after tithing, while still being with my son (I was a nanny and did in home daycare.)
So we live in different worlds.
Since then I have made between $10,000-$20,000 a year.
Also God has blessed me in that I have never paid more than $1,000 for a car, plus have gotten some cars for free (including my current car that has lasted over 2 years already.)
The only downside with that is I do not drive my cars more than an hour away and have AAA plus in case of break downs.
I do, however, really enjoy reading your blog. I have learned alot and like to get a glimpse of how my life might have been had I not had a child so young.
Becky- YES lives take different turns I can only say if I had a child as a teenager I would not be where I'm at today.
I must say, the reason is this lifestyle was pushed by our parents, the whole mentality is go to college, get a good job, graduate, finance expensive cars, get married (yes pressure is there lol), buy a house and keep up with the Joneses. We learned this from them!
And as you've read, this lifestyle does not come without debt- and again the pressure is there from our parents and family, it's always about money and who has what, and who's making how much.
So, today since we waited so long to have kids, now we are having trouble conceving them so as you can see there's the trade-off.
Want to trade for a week? You can borrow my kids and I can drive that nice car. lol.
But you can break free of other's expectations of you. I was also expected to go to college, get a good job, etc. Now my family is proud of me anyway. (Not that I recomend to anyone to have a baby so young, I mean you can choose no debt!)
Debt puts you in bondage to the future. That is not fun!
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