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European pro life tip: if you make 200.000/yr don't let anyone lend you money. Buy your car cash, no cc debt. Mortgage would be the only exception. I honestly f

by pokot0 6y ago

European pro life tip: if you make 200.000/yr don't let anyone lend you money. Buy your car cash, no cc debt. Mortgage would be the only exception. I honestly find it crazy how most american are ok with living on someone else money and pay the interests just to have a current year car...

trynumber9 6y ago
Often you can get no interest loans for new cars. In that case, it is cheaper to invest the cash and pay off the loan with less valuable money over the next few years. Of course the car is still depreciating rapidly so I question the wisdom of buying a current year car at all. But it is comforting to have a newer car covered by warranty.
- pokot0 6y ago
  Yes, I agree with you. Specifically is the idea of considering the car a monthly cost instead of a capital investment is all in favour of financial and car companies. You will get a new model if your monthly cost does not change. In my experience, all of my cars were a great value if you own and hold onto them for 10 yrs or more (the first 10 years cars need almost 0 maintenance)
dnautics 6y ago
is it crazy? If you can get terms on low enough interest rate and long enough time horizon (aka, you're rich) it's not a bad choice because you are (safely) gambling that your earnings potential will go up over time, in both real and nominal terms, letting the cost of the debt decrease over time. Moreover, the opportunity cost of that cash not being invested and used for purchases is real.
- pokot0 6y ago
  You assume people are investing that money. What I see is people having a lifestyle that is only possible with lended money. Those are expenses and not investments and put you in a position where a minor change in your expected income growth will deeply affect your lifestyle.
  - dnautics 6y ago
    > if you make 200.000/yr Ok. Let's rephrase this. If you are in that category, you should take the loan on the lambo and invest whatever the principal WOULD have been and come out ahead instead of paying for the lambo in cash in one shot. Also goes for less frivolous purchases. All I'm saying is your suggestion is a poor protip for the wealthy, and a better protip for the middle class e.g. Also note that economists are mostly in the wealthy category and a good chunk of our socioeconomic woes come from economic policymakers (often implicitly [0]) normalizing harmless or good advice for the wealthy onto other stratas of society. [0] e.g. "inflation is good because it decreases the real value of debt and lower classes benefit from that"

by pokot0 6y ago

trynumber9 6y ago

Often you can get no interest loans for new cars. In that case, it is cheaper to invest the cash and pay off the loan with less valuable money over the next few years. Of course the car is still depreciating rapidly so I question the wisdom of buying a current year car at all. But it is comforting to have a newer car covered by warranty.

pokot0 6y ago
Yes, I agree with you. Specifically is the idea of considering the car a monthly cost instead of a capital investment is all in favour of financial and car companies. You will get a new model if your monthly cost does not change. In my experience, all of my cars were a great value if you own and hold onto them for 10 yrs or more (the first 10 years cars need almost 0 maintenance)

dnautics 6y ago

is it crazy? If you can get terms on low enough interest rate and long enough time horizon (aka, you're rich) it's not a bad choice because you are (safely) gambling that your earnings potential will go up over time, in both real and nominal terms, letting the cost of the debt decrease over time. Moreover, the opportunity cost of that cash not being invested and used for purchases is real.

pokot0 6y ago
You assume people are investing that money. What I see is people having a lifestyle that is only possible with lended money. Those are expenses and not investments and put you in a position where a minor change in your expected income growth will deeply affect your lifestyle.
- dnautics 6y ago
  > if you make 200.000/yr Ok. Let's rephrase this. If you are in that category, you should take the loan on the lambo and invest whatever the principal WOULD have been and come out ahead instead of paying for the lambo in cash in one shot. Also goes for less frivolous purchases. All I'm saying is your suggestion is a poor protip for the wealthy, and a better protip for the middle class e.g. Also note that economists are mostly in the wealthy category and a good chunk of our socioeconomic woes come from economic policymakers (often implicitly [0]) normalizing harmless or good advice for the wealthy onto other stratas of society. [0] e.g. "inflation is good because it decreases the real value of debt and lower classes benefit from that"