NO ONE but the rich or stingy can save 15-30K for a car
The statement was prompted by a post titled “Car Payments are Bad”
it went on to explain that you could put the same amount of money that would go to a car payment into a mutual fund and you can have xyz amount in 40 years!!
Is it possible to save 15K? in addition to having an emergency fund and making payments on other bills- such as housing, daycare, medical, and other obligations.
Or is this task possible only for the rich or stingy?
Some would argue that it’s better to finance a car at 0% instead rather than paying cash for a car because of the leverage.
Side note: I financed my car and paid it off in 2 1/2 years instead of 4 years. If I had to do it all over again, I would have done the same.
For those of you that have car notes, if you had to do it all over again would you have save the cash to pay it off in full??
August 14th, 2008 at 12:11 pm
uhhhhhh….so they can afford a car payment, but they can’t afford to save the SAME amount of $$ and apply the cash to a car??
I don’t get it. OF COURSE if you can pay off a car loan you can save the cash!
We just bought a used van and financed it for 48 months. This was not our first choice, but with our 3rd kid coming we really needed to buy a car before we were “ready” to. We own our other car outright. Once we pay off the van we’ll apply our car payment to a savings account until we have enough $$ to buy the next car in cash. By my math that will take around 3 years. Long, long, long before we’ll need to replace wither of the cars we have now.
And no, we are not rich OR stingy.
August 14th, 2008 at 12:18 pm
I think it’s all about behavior. Some people find ut easier to finance because it’s a payment coming in your mailbox every month saying “pay me”
However, with saving it’s so easier to get sidetracked because the money is easily avaiable.
August 14th, 2008 at 12:22 pm
Absolutely! And it has nothing to do with your affluence, just your self-discipline and ability to delay gratification. Maybe then the by-line is that only the rich or stingy are self-disciplined
August 14th, 2008 at 12:30 pm
I have a car note now and when I pay it off my plan is to keep putting the same amount in savings until I can afford to buy another one without financing.
August 14th, 2008 at 12:31 pm
And I’m not rich. Stingy is relative, but even if I am (I don’t think so), I have no problem with it.
August 14th, 2008 at 1:29 pm
What difference it makes, paying off a car in 4 year or saving for 4 years and paying it in cash.
Either way both will have a paid for car in the same amount of time
Only difference one will be riding in it while their paying it off.
I rather leverage.
August 14th, 2008 at 4:02 pm
Of course it’s possible and you don’t need to have a high income to do it. I’m very frugal and i paid cash for a new car 9 years ago, and intend to do the same in another few years.
Of course, the new ccar i bought last time was a $14,000 Honda, not a $35K Lexus.
August 14th, 2008 at 4:57 pm
Thing is, Matt, by the time I will have paid my car off using financing, I will have paid much more for it than I should have because of the financing AND the depreciation. At least if I save while I’m still driving and happy with my old car, when I pay for the new car, I’m not paying any financing. I personally don’t know anyone who has a 0% loan. I like the idea of leverage too, but in this case, I want to avoid finance charges.
August 14th, 2008 at 5:07 pm
I guess I don’t have the discipline to save 4 years for a car. I rather finance it. However I will pay extra to shorten the finance period, to pay less interest.
August 14th, 2008 at 6:29 pm
In principle, of course I think you can save enough to buy a car. In practice, I think it’s a little more dependent on timing and circumstances. For example, when I bought my first car, I was young and silly and didn’t have enough saved. Since then, I’ve been able to save a large chunk of money in an emergency fund, so I should be able to apply the same saving practices to a new car fund. Also, I don’t think it’d take nearly as much time to save (1.5 years) as it did to pay off a new car (3 years).
August 15th, 2008 at 9:17 am
It all depends on how u look at things. If u don’t want to wait, buy a used car no more than 4,000(meaning a clunker, meant to take u frm point a to b)
Save on the side, When the car gets to have of what is worth. With the combined selling and savings, u can continue to upgrade your car.
August 15th, 2008 at 10:09 am
I don’t understand what is going on. Are we talking about buying a car for fun or buying a car because you need one. If you need the car then you have no choice to finance if you don’t have the cash.
I was fresh out of school and got a job where I had to have a car. Travel was part of the job and it was not reimbursed. Due to (visa issues, not being american)a number of things I had to take the job or I would be illegal or get booted out of the country.
There was no wait and save up for the car issue. I needed to have the car so I financed one.
In some cases you need to have the vehicle so how are you supposed to make it through the 2-4 years then?
It is easy to say get a $1000 car…but what about those people who do not even have that in cash? It might be hard to believe but there are people who really do not even have that amount of money in the bank and still need the car to get to work because there is no public transportation, they don’t know anyone or do not live where they can carpool and it is too far to walk.
August 15th, 2008 at 12:00 pm
When I got my car, I needed it to commute so I financed it. So when I talk about saving for my next car, the thought is that I’m getting a new car because something is wrong with my old one, and the hope is that by that time I will have saved what I need to buy another with no financing. But if my car blew up today, and I needed another I’d have to finance, though.
August 18th, 2008 at 6:38 pm
Saving for a new car here, but if current one gives up the ghost before all funds are saved, will pull from money on the Balance Sheet to pay for gap between what’s in Car Fund and cost of new car.
Drive a 16 year old Acura Integra now with $160k on it, hoping it lasts a couple more years.
August 19th, 2008 at 10:39 am
It depends. My DH had a car loan but no student debt. I had student debt but no car loan.
But we weren’t exactly living large with a Ford Focus and Toyota Corolla
August 22nd, 2008 at 11:06 pm
I like Websy’s idea. I understand people buying a car on time if that’s the only way to do it and they simply can’t wait, but I would prefer to go late model used and save the money on both car and insurance costs. If you start with a decent but not fantastic car and keep saving on the side, then before long it can lead to driving something you would really like… as opposed to what you are locked into driving because you bought it on time 5 years ago.
Jerry
http://www.leads4insurance.com
January 24th, 2010 at 6:23 pm
If I had to do it again…I would continue driving my old car and worked towards building a solid financial foundation.
I I would have done this I would probably be almost out of debt by mid-year instead of paying down deb for an additional one and a half years.
February 19th, 2010 at 8:02 pm
How easy it is to save $15-30K for a car depends on your income, no? If you're earning $250,000, not so hard.
A more universal question may be what percentage of your salary can you save? I've gone as high as 50%, and could easily have saved for any car I'd want to own. (That's another story!)
February 20th, 2010 at 1:02 am
How easy it is to save $15-30K for a car depends on your income, no? If you're earning $250,000, not so hard.
A more universal question may be what percentage of your salary can you save? I've gone as high as 50%, and could easily have saved for any car I'd want to own. (That's another story!)