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I seriously don't understand how is it possible to overspend on a car. House sure, because many people, conveniently for developers, confuse it for investment,

I seriously don't understand how is it possible to overspend on a car. House sure, because many people, conveniently for developers, confuse it for investment, but a car? Besides, cars are cheap and getting cheaper vs inflation let alone incomes. Are people just trying to buy the most expensive car they can get a loan approved for?

peepee1982 4y ago
I'm baffled by how much people spend on cars. But I get it. Everyone else is driving a nicer car, so you feel left out. Even if your rational side knows it's stupid, you still feel less than. It's the same with homes. But as you say, at least real estate tends to hold it's value somewhat.
- hgsgm 4y ago
  > But as you say, at least real estate tends to hold its value somewhat. Expensive land usually does appreciate (in some areas, only until interest rates go up?), but the house on the land is a money pit.
  - noduerme 4y ago
    In America, the best investments in the past 100 years have been structures like car dealerships built on cheap land around the exurbs of major cities. You get commercial use of the structure, wait 20 years for it to be surrounded by residential development, then sell the land. This, working hand in glove with the driving and commuting culture, had been the middle class gear in the system attached to the resource extraction itself. I'm not here to pass moral judgments on this method of creating wealth, although to me unnecessary mineral extraction for energy is largely fraught with moral hazard. But to say that real estate isn't an investment is to consider the past two centuries of American economic growth to be a temporary aberration, and I don't think you can do that in light of the degree of economic reliance that has grown up around it.
- noduerme 4y ago
  There's a smart side to this, and a lot of people take it: Buy a car that has all the features you want, for almost half the price. Buy a house in a neighborhood that's run-down but improving and that you can help to improve. You don't have to be famous on social media to be a "thought leader" and increase the value of your assets by pulling gullible people into your aesthetics or way of thinking. You can just show up and buy the thing and use your skills to improve the thing, which improves everything else around it. There is enormous financial leverage if you can do that, because most people aren't willing to put in the work.
MandieD 4y ago
Since the vast majority of American car buyers finance them, a lot of them get channeled by salespeople to think in terms of the monthly payment instead of negotiating on the full price. Also, a lot of people go car-shopping when they think they need a new car right away - current one has an expensive problem or just got wrecked, and can’t step back a bit by deciding to spend a few hundred more on Ubers or a rental for a week or two (this is where even somewhat inconvenient public transit can make a huge difference). And since enough of them have $40k+ SUVs and “crossovers”, those become the norm for middle class families who really would have been just fine with small station wagons (if those were actually available in the US market) The best way to escape this cycle is to only buy the car you can pay for up front (even if you then take a loan because the interest rate appears to be in your favor). Do this enough times, and you’ll be ok with plonking down the cash for a $15-20k carefully-researched, moderately-used vehicle with a warranty, but be horrified by the very thought of that $600+ 5-7 year loan so many of your colleagues accept as normal.
NeoTar 4y ago
I think it can be easy to overestimate your requirements for a car. If you mostly use your car for a ten minute drive to work, but twice a year need to drive several thousand kilometers, it may be tempting to optimize for the latter (in terms of size, comfort, velocity), whilst it may be cheaper overall to optimize for the former and hire a vehicle for the latter.
- enkid 4y ago
  Most cars can drive a little over the speed limit just fine, and a cheap minivan has as much space as most expensive three row SUVs. Maybe getting an upgrade with a TV counts as "optimizing?" But you can get portable screens that strap to a seat for under a hundred bucks on sale.
- kwhitefoot 4y ago
  In my case it's not optimization, it's just constraint satisfying. My constraints are: I don't want two cars and when I drive on holiday I pass through eight countries. Most rental companies don't like you to take the car out of the country. So to satisfy all the constraints I have a big car that is comfortable to drive for long distances. Of course not everyone takes long holidays (several months) touring so their constraints would be different and satisfiable with different solutions.
noduerme 4y ago
A house in America is an investment and it's considered a depreciating asset for tax purposes, which means that even if it isn't a good investment, it's subsidized against taxes over a long term. A car is an asset that simply depreciates the second you buy it.

peepee1982 4y ago

I'm baffled by how much people spend on cars. But I get it. Everyone else is driving a nicer car, so you feel left out. Even if your rational side knows it's stupid, you still feel less than. It's the same with homes. But as you say, at least real estate tends to hold it's value somewhat.

hgsgm 4y ago
> But as you say, at least real estate tends to hold its value somewhat. Expensive land usually does appreciate (in some areas, only until interest rates go up?), but the house on the land is a money pit.
- noduerme 4y ago
  In America, the best investments in the past 100 years have been structures like car dealerships built on cheap land around the exurbs of major cities. You get commercial use of the structure, wait 20 years for it to be surrounded by residential development, then sell the land. This, working hand in glove with the driving and commuting culture, had been the middle class gear in the system attached to the resource extraction itself. I'm not here to pass moral judgments on this method of creating wealth, although to me unnecessary mineral extraction for energy is largely fraught with moral hazard. But to say that real estate isn't an investment is to consider the past two centuries of American economic growth to be a temporary aberration, and I don't think you can do that in light of the degree of economic reliance that has grown up around it.
noduerme 4y ago
There's a smart side to this, and a lot of people take it: Buy a car that has all the features you want, for almost half the price. Buy a house in a neighborhood that's run-down but improving and that you can help to improve. You don't have to be famous on social media to be a "thought leader" and increase the value of your assets by pulling gullible people into your aesthetics or way of thinking. You can just show up and buy the thing and use your skills to improve the thing, which improves everything else around it. There is enormous financial leverage if you can do that, because most people aren't willing to put in the work.

MandieD 4y ago

Since the vast majority of American car buyers finance them, a lot of them get channeled by salespeople to think in terms of the monthly payment instead of negotiating on the full price. Also, a lot of people go car-shopping when they think they need a new car right away - current one has an expensive problem or just got wrecked, and can’t step back a bit by deciding to spend a few hundred more on Ubers or a rental for a week or two (this is where even somewhat inconvenient public transit can make a huge difference). And since enough of them have $40k+ SUVs and “crossovers”, those become the norm for middle class families who really would have been just fine with small station wagons (if those were actually available in the US market) The best way to escape this cycle is to only buy the car you can pay for up front (even if you then take a loan because the interest rate appears to be in your favor). Do this enough times, and you’ll be ok with plonking down the cash for a $15-20k carefully-researched, moderately-used vehicle with a warranty, but be horrified by the very thought of that $600+ 5-7 year loan so many of your colleagues accept as normal.

NeoTar 4y ago

I think it can be easy to overestimate your requirements for a car. If you mostly use your car for a ten minute drive to work, but twice a year need to drive several thousand kilometers, it may be tempting to optimize for the latter (in terms of size, comfort, velocity), whilst it may be cheaper overall to optimize for the former and hire a vehicle for the latter.

enkid 4y ago
Most cars can drive a little over the speed limit just fine, and a cheap minivan has as much space as most expensive three row SUVs. Maybe getting an upgrade with a TV counts as "optimizing?" But you can get portable screens that strap to a seat for under a hundred bucks on sale.
kwhitefoot 4y ago
In my case it's not optimization, it's just constraint satisfying. My constraints are: I don't want two cars and when I drive on holiday I pass through eight countries. Most rental companies don't like you to take the car out of the country. So to satisfy all the constraints I have a big car that is comfortable to drive for long distances. Of course not everyone takes long holidays (several months) touring so their constraints would be different and satisfiable with different solutions.

noduerme 4y ago

A house in America is an investment and it's considered a depreciating asset for tax purposes, which means that even if it isn't a good investment, it's subsidized against taxes over a long term. A car is an asset that simply depreciates the second you buy it.