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Smart Shopper Percentage of monthly income spent on a car?
390 messages, Last post on Mar 21, 2009 at 5:50 PM
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Replying to: qbrozen (Feb 27, 2008 6:34 am) When you say 50 cars in 30 years, you have to be buying a lot of junkers in the mix (even if you have several at a time).
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Replying to: jlawrence01 (Feb 27, 2008 5:33 pm)  Actually I've owned cars for over 40 years. When I mentioned fire insurance I was talking about cars, not houses. I paid 15,000 for the car I'm driving now, a 1996 Mercury Grand Marquis. When I bought it in 1999 I carried collision/theft on it for 2 or 3 years, but because the amount I would have gotten had the car gotten stolen had gone down, and the insurance premiums had not, I dropped it. People who finance a car for 7 years have to carry that kind of insurance for 7 years, even though what they'll get if the car is totalled or stolen might not even pay off what they owe on it. People all the time try to trade in their car and find out they owe more on it than its worth. Today kids will get their first job, and go out and buy a new car with payments almost as high as a week's check, plus they're paying more for insurance because of all the coverage required. If they get laid off, then what happens? I listen to talk radio where people call in for advice about their bad financial situation. They almost always have 2 car payments, a house payment, they're making 50,000 a year but they can't pay their credit cards. The best advice I can give is ALWAYS pay your credit card bill in full to avoid the finance charges, even if it means you have to miss some meals, and don't make car payments.
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Replying to: joesmith2 (Feb 27, 2008 8:26 pm) Well, now that makes MUCH more sense than your original blanket statements. When I mentioned fire insurance I was talking about cars, not houses. How odd. Your insurance company sounds a bit fishy. I have never been offered fire insurance as an independent option on any car on any policy I've ever had or even read. (???)
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Replying to: qbrozen (Feb 28, 2008 8:08 am)
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Replying to: kyfdx (Feb 28, 2008 10:33 am) Its odd to refer to it as fire insurance, IMHO, since that is probably the least likely of all the scenarios it would cover. Fyi: I just looked it up and my Hagerty policy has 2 categories only (other than PIP and property damage): Collision and Other Than Collision. So that "other" category obviously covers a heck of a lot of potential problems.
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Replying to: qbrozen (Feb 28, 2008 11:45 am) Not that I'm all that young... I can still remember a Herman comic strip panel, where he is sitting in the insurance office, and says, "I need all the fire insurance I can get, by next Friday". Oh well.. No car payments is still a good thing..
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Replying to: kyfdx (Feb 28, 2008 2:22 pm) 
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Replying to: joesmith2 (Feb 26, 2008 9:51 pm) Older cars carry higher liability premiums than new cars with the new safety doo-dads. Prime example, full coverage with $100,000 policy on the 2005 Honda CR-V is $640/year, but a liability only coverage on the 1988 Prelude is $450/year. The $200/year difference is not enough for me to not have the better vehicle. I own the Prelude outright, and financed the CR-V for 5 years in 2005 at 2.9%. Had I paid cash for the CR-V, I would have had lost an opportunity to earn risk free 5.05% on that stash. So, by financing I was basically given money to buy the vehicle at a rate lower than what risk free rate was at the time, and until recently. Even now, the risk free rate is at 3.5%, 0.6% higher than what I am paying in interest to Honda. When you try to justify personal choices with numbers, you have to take into account the cost of lost opportunity for your money that you sunk into a depriciating asset. So, you bought the Grand Maquis for $15,000. Had you financed it through Ford Credit you would have probably gotten 0% rate on it. Hence, you lost the opportunity to make more money with this $15,000, and now it is worth nothing because it depriciated. Had you finainced at 0% you would have still had the $15,000 plus the earnings, and you would have had the vehicle fully paid off. My advice: DON'T MAKE CAR PAYMENTS. You can not make categorical statements like that until you evaluate the whole situation, rather than focusing on just the small part of the whole grand of scheme. I am only half your age, so I may have missed something.
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Replying to: joesmith2 (Feb 29, 2008 9:46 am) Joe, I don't want you to think that I am picking on you. But.... Define what is a foreign car. Is a Chevy made in Korea a foreign car? Is a Honda made in Ohio a foreign car? Most of the "foreign" cars are actually made here in the USA out mostly US components, so the dollar fluctuations will not affect them as much as the "domestic" cars which are either made in Mexico or Korea out of Mexican or Korean components. Even the vehicles assembled here in the USA by the UAW workers are made of Mexican, Korean and Chinese components. As to buying a Honda and selling it in 6 months, if you are talking about inflation, then yes, you will get the same monetray number, but the purchasing power of that same amount will be less than what it was 6 months ago, so you are just fooling yourself. However, Hondas do retain most of their value for a long time. I bought a 1999 Civic for $15,000, sold it 2.5 years later for $12,000, then bought a 2002 Civic for $14,500 and sold it 2 years later for $12,500. If you were to take the difference between the price I paid and the money I got back, it was cheaper than leasing, since it works out to about $80/month.
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Replying to: blueiedgod (Mar 04, 2008 11:35 am) The only thing I will take issue is the cost of money. I can always get 4% on 15k. 4% of 15k is $600/year, or another $50 per month. So, it cost you $130/month, which is still cheaper than leasing (but not by that much). |
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