Home Brew Forums > Home Brewing Community > General Chit Chat > Economics of new cars
Reply
 
Thread Tools
Old 03-21-2013, 08:39 PM   #21
SpentGrains
Feedback Score: 0 reviews
Recipes 
 
Join Date: Sep 2012
Location: Livermore, CA
Posts: 249
Liked 40 Times on 34 Posts
Likes Given: 8

Default

Quote:
Originally Posted by andycr View Post
Reliable used is always going to make more sense than new. A 3-year-old used car is statistically more reliable than a brand new car, and doesn't lose 20% of its value the second you drive it off the lot. It's best if you're strategic on what brand you buy, and not get attached to any specific car, though.
I like Dave Ramsey's style (I have his book) but that video was WAY too optimistic. It assumes you have a reliable $1500-$6000 car that requires no maintenance or breakdowns FOR YEARS, and are making 12% ROI on your money?

A used car certainly still loses 20% when it goes off the lot, just try to sell it back to the dealer or put an ad out and see how much you can get for it.

I thought about the $1500 well used car option btw, but certain government programs have scrapped them all...
SpentGrains is offline
 
Reply With Quote
Old 03-21-2013, 08:45 PM   #22
Xpertskir
Feedback Score: 7 reviews
Recipes 
 
Join Date: May 2012
Location: Morgantown, Wv
Posts: 2,186
Liked 437 Times on 281 Posts
Likes Given: 23

Default

Quote:
Originally Posted by Yooper View Post
The people that "need" new cars are the same ones who "need" cool smartphones and pay only $350 a month for the car and only $100 a month for the phone. We have a "payments" society.

Same with a house. It's "only" $1300/month. It's not like it's really $300,000.
I didn't see anyone in here saying that they needed a new car, merely that financially speaking it's more equivalent to the cost of owning a used car that a lot of people think. This main driving force is the increased maintenance costs and decreased efficiency of many older cars and that doesn't take into account the hassles of dealing with increased vehicle maintenance and downtime without a car. Another part of this equation is the more attractive financing available for new cars and the impact of TVM over the life of ownership.


I'd be interested to see the financial argument made for people who "need" an electric 3 vessel set up with a control panel and pumps to make a quality of beer that can be made on a more basic system at 1/10 the cost. You cant finance that at 0% and pay it back with less valuable money over time either.


Instead of making blanket statements, I will simply say that it's a case by case situation, and there are situations in which all three car ownership possibilities will make sense from a bottom line financial cost standpoint.
Xpertskir is offline
 
Reply With Quote
Old 03-21-2013, 08:55 PM   #23
Xpertskir
Feedback Score: 7 reviews
Recipes 
 
Join Date: May 2012
Location: Morgantown, Wv
Posts: 2,186
Liked 437 Times on 281 Posts
Likes Given: 23

Default

Dave Ramsey has done more harm to middle America than most.

Some debt is a healthy thing, especially at low interest rates. Clearly, credit cards and other forms of high interest rate debt for items you don't need are unwise. Everyone needs a place of residence and in most cases a car, both of which have some of the most favorable interest rates available. To be clear I'm not advocating overspending your means for these two items. The long and short of what I disagree with Ramsey is this: If you spend all your time paying down your debt you will miss out on a lot of years of building wealth(through compound interest), which is actually what allows financial freedom and retirement.
Xpertskir is offline
 
Reply With Quote
Old 03-21-2013, 09:15 PM   #24
andycr
Feedback Score: 0 reviews
Recipes 
 
Join Date: Aug 2012
Posts: 307
Liked 42 Times on 36 Posts
Likes Given: 20

Default

Quote:
Originally Posted by SpentGrains View Post
A used car certainly still loses 20% when it goes off the lot, just try to sell it back to the dealer or put an ad out and see how much you can get for it.
Certainly not 20%, but that's why you don't buy used cars on a lot. Buying from the owner is the way to go, and make sure you negotiate aggressively. Buy when you're in a position of strength, sell to someone in a position of weakness. You can save money buying, make money selling, and offset a large amount of depreciation if you do this right - but it is hard to do right, which is why most don't do it.


Quote:
Originally Posted by Xpertskir View Post
Dave Ramsey has done more harm to middle America than most.

Some debt is a healthy thing, especially at low interest rates. Clearly, credit cards and other forms of high interest rate debt for items you don't need are unwise. Everyone needs a place of residence and in most cases a car, both of which have some of the most favorable interest rates available. To be clear I'm not advocating overspending your means for these two items. The long and short of what I disagree with Ramsey is this: If you spend all your time paying down your debt you will miss out on a lot of years of building wealth(through compound interest), which is actually what allows financial freedom and retirement.
I went through that phase. You end up feeling like a monk stoically sacrificing to pay off debt to the detriment of the rest of your life.

That said, I don't want to build assets that may get taken away if my position in life changes. It's great that your investments are growing at 8% while your debts are growing at 6%, but if there is a disaster, your investments wither, your income dwindles, your debts feel like immovable objects, and you're utterly screwed. I feel better if I just don't have debt, and while Ramsey's way is aggressive and headstrong to an extreme I find hard to take (only $1000 on hand while paying off debt? I'm self-employed, my risk tolerance would send me into a heart attack if I followed that), it certainly sends you in the right direction.

I can't say any debt is a healthy thing, but foaming Ramsian evangelism isn't great either. It's all about balance...
andycr is offline
 
Reply With Quote
Old 03-21-2013, 09:20 PM   #25
TyTanium
Feedback Score: 0 reviews
Recipes 
 
Join Date: Nov 2011
Posts: 3,949
Liked 549 Times on 387 Posts
Likes Given: 418

Default

Quote:
Originally Posted by Xpertskir View Post
Dave Ramsey has done more harm to middle America than most.

...The long and short of what I disagree with Ramsey is this: If you spend all your time paying down your debt you will miss out on a lot of years of building wealth(through compound interest), which is actually what allows financial freedom and retirement.
Are you advocating a form of interest rate arbitrage? Borrow for 5% and invest at 10%?
TyTanium is offline
 
Reply With Quote
Old 03-21-2013, 09:48 PM   #26
brewkinger
HBT_LIFETIMESUPPORTER.png
Feedback Score: 0 reviews
 
brewkinger's Avatar
Recipes 
 
Join Date: Sep 2012
Location: East Podunck, Vermont
Posts: 1,916
Liked 249 Times on 210 Posts
Likes Given: 285

Default

Quote:
Originally Posted by Xpertskir
The long and short of what I disagree with Ramsey is this: If you spend all your time paying down your debt you will miss out on a lot of years of building wealth(through compound interest), which is actually what allows financial freedom and retirement.
Those of us that have never been in debt and have never spent all my time paying it off would strongly disagree.
I have spent the last 24 years raising a family of 3, buying used cars and investing everything else into wealth and college funds for the kids.
My wealth is due to corporate greed and in no way shape or form has my middle class America been harmed.
__________________
Blackbird Brewing

PRIMARY: SNPA Clone v2.0
SECONDARY: Only if I need to....
BOTTLED: Razapple Wine- Vintage 2014
KEGGED: Spring Thaw American IPA
PLANNING: Columbus Pale Ale (for AHA BBD)
PLANNING: Blackbird Haus Pale Ale
PLANNING: A Lil' Less Ordinary
Do not mistake my kindness for weakness. I am kind to everyone, but when someone is unkind to me, weak is not what you will remember about me.
brewkinger is offline
 
Reply With Quote
Old 03-21-2013, 10:00 PM   #27
fbold1
Brew Nut
HBT_SUPPORTER.png
Feedback Score: 0 reviews
 
fbold1's Avatar
Recipes 
 
Join Date: Dec 2011
Location: North Coast, Ohio
Posts: 250
Liked 7 Times on 7 Posts
Likes Given: 5

Default

Quote:
Originally Posted by HeiferRichter View Post
I've never understood the economics of new cars and how they can be 'affordable' to the common person.

From my lowly point of view, my used vehicle costs, on average, $150 per month to drive, I'm not sure a new car could be had for that.

How are the majority of new vehicles introduced into the market? Who purchases them? How are they 'afforded'?
Because buying a used car is like buying something that someone couldn't wait to get rid of, get a good warranty.
__________________
"Whoever makes a poor beer is transferred to the dung-hill." Edict in the City of Danzig, 11th Century.
fbold1 is offline
 
Reply With Quote
Old 03-21-2013, 10:04 PM   #28
PapsD
Feedback Score: 0 reviews
Recipes 
 
Join Date: Apr 2012
Posts: 284
Liked 21 Times on 18 Posts

Default

I'd also say affordable is relative. Atleast from the prices I've seen in the Chicagoland area, a used car costs almost as much as a new car. Because of the body rot from salt and the beating cars take on the roads here, I'd say a new car is the better value compared to a used car.

Any car you buy is a losing proposition money wise anyway. You're basically blowing that money out of your ass on a vehicle every month.

Which is why I drive beaters.
PapsD is online now
 
Reply With Quote
Old 03-21-2013, 10:12 PM   #29
andycr
Feedback Score: 0 reviews
Recipes 
 
Join Date: Aug 2012
Posts: 307
Liked 42 Times on 36 Posts
Likes Given: 20

Default

Quote:
Originally Posted by fbold1 View Post
Because buying a used car is like buying something that someone couldn't wait to get rid of, get a good warranty.
Buying a warrantee on a used car is gambling - to stay in business, the only way they can offer them is if most people don't get their money out of them. The trick is to not buy so far out of your price range that you can't afford the maintenance, and you'll statistically save money.

The only time you should do something like that is on something like car insurance for collision, or health insurance - something where, in the unlikely case you need it, you simply wouldn't be able to afford paying cash.

On anything else, you're just gambling on yourself having bad luck.
andycr is offline
 
Reply With Quote
Old 03-21-2013, 10:19 PM   #30
fbold1
Brew Nut
HBT_SUPPORTER.png
Feedback Score: 0 reviews
 
fbold1's Avatar
Recipes 
 
Join Date: Dec 2011
Location: North Coast, Ohio
Posts: 250
Liked 7 Times on 7 Posts
Likes Given: 5

Default

Quote:
Originally Posted by andycr View Post
Buying a warrantee on a used car is gambling - to stay in business, the only way they can offer them is if most people don't get their money out of them. The trick is to not buy so far out of your price range that you can't afford the maintenance, and you'll statistically save money.

The only time you should do something like that is on something like car insurance for collision, or health insurance - something where, in the unlikely case you need it, you simply wouldn't be able to afford paying cash.

On anything else, you're just gambling on yourself having bad luck.
We are not talking maintenance cost here, we're talking catastrophic failure!
__________________
"Whoever makes a poor beer is transferred to the dung-hill." Edict in the City of Danzig, 11th Century.
fbold1 is offline
 
Reply With Quote
Reply


Thread Tools


Similar Threads
Thread Thread Starter Forum Replies Last Post
need help with economics kosmokramer General Chit Chat 13 02-11-2013 03:56 AM
Trickle down economics good. Fire BAD cheezydemon3 Debate Forum 259 08-16-2012 04:43 PM
interested in the economics of fermenting gerpils1 Introductions 2 11-23-2008 12:21 AM
Bush Economics TxBrew Debate Forum 33 10-19-2008 02:58 AM
A Beer Allegory- Barstool economics skinfiddler General Chit Chat 17 02-07-2008 05:49 PM


Forum Jump

Newest Threads

LATEST SPONSOR DEALS