Car Loans - keeping America poor?

[TheWhitetailNut]

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And

This thread will expose many more people that dont understand how money and interest rates work and how to use it to your advantage.

Most of the folks who barf out this trope are totally broke playing credit card roulette whilst pretending to be a real estate mogul. No matter, there is no play to use credit to buy a depreciating asset that makes anyone wealthier.

 

[Tahoe1305]

Just because you have no dependents doesn’t mean you have to claim 0.

I bet if you filed Single and 2 dependents it would work out better for you.

He’s right. I claim 10 exemptions and have for most of my career. It used to allow me to zero out my return. Now it underestimates a bit and I have to pay a penalty. This doesn’t bother me because in my eyes I’m getting an almost free loan on taxes till the end of the year. I do pay a large amount in April vs getting a refund, but again that is almost free money for me, vs it being a free loan to the government.

That last fact is why “zeroing” out your taxes by adjusting your exemptions greater than zero is important.

Many think it’s illegal, but it’s a resource on their IRS page to help calculate what you “should” claim to zero it out. 100% legit.

 

[desertdwellerdyl]

@cnelk @Tahoe1305 You guys have certainly caught my attention, I'm going to look more into it today/tonight. May send a PM as well. Appreciate it.

 

[2531usmc]

Well, 85% of middle and upper middle-class retirees die with 90% of their retirement money intact and unspent. They could have lived a better life all along but didn't for 2 reasons....they were too thrifty and/or they were afraid to spend the money "in case they need it next year". Moral of the story...either you enjoy your money or somebody else that didn't work for it will enjoy it for you. That, and the tax man is getting his share no matter what.

You absolutely can live a very good life, save for kids college, have a nice home, go on family vacations, have nice new or newer auto's and save for a comfortable retirement without sacrificing and squeezing the buffalo shit out of every nickel. I live an upper middle-class life and I did it. Retired 6.5 years ago at 58. Debt free and living very comfortably....but not vise-gripping every dollar "because I might need it next year". Last summer I bought a new F450 CC 4x4 and a new Kubota SVL 75-3 track loader to putz around with. I'm going to try and not cash in the chips with 90% of my money unspent while I live like a pauper. I suspect many here will be the 85% doing just that.

May be true for the 85%, but really, really gonna suck for the 15%

 

[Reburn]

And

Most of the folks who barf out this trope are totally broke playing credit card roulette whilst pretending to be a real estate mogul. No matter, there is no play to use credit to buy a depreciating asset that makes anyone wealthier.

Thanks for showing you dont understand. You are right I'm broke and a loser and I have a small penis and live in my moms basement. Hell I don't even have a job.

 

[CorbLand]

Thanks for showing you dont understand. You are right I'm broke and a loser and I have a small penis and live in my moms basement. Hell I don't even have a job.

Lucky.

 

[go_deep]

Thanks for showing you dont understand. You are right I'm broke and a loser and I have a small penis and live in my moms basement. Hell I don't even have a job.

 

[Marbles]

Thanks for showing you dont understand. You are right I'm broke and a loser and I have a small penis and live in my moms basement. Hell I don't even have a job.

More time to hunt.... I mean argue on RS.

 

[KenLee]

In theory… prolonged 7% should soften the market and prices should come down some… seen it a bit around me. But in the high demand zip codes places still trading about 2022 prices and only lasting a week or so…

Rent prices keep skyrocketing due to ballooning non owner occupied property taxes, homeowners insurance and repair prices.
Some folks are desperate to own a home vs paying $2500 rent for 1200sf rental.

 

[juju]

To paraphrase something someone somewhere: "Rich people have investments. Poor people have debt."

 

[pods8 (Rugged Stitching)]

My withholding is 0. It's just the fact that I file single & claim zero dependents. If anything it says I should withhold a little more (it's off by a couple hundred dollars).

There's only one fix to this lol.

Did you plug in everything correctly like 401k, etc? I don't understand how you get a large refund in reality and yet the calc is saying you should withhold more than you currently are. You plugged in something wrong.

 

[pods8 (Rugged Stitching)]

A little off topic but on the subject of withholding

Many companies give a bonus. If you are lucky enough to get a big bonus at the end of the year, change your dependents to 9 for that one paycheck.
You will be taxed less and get more in your pocket.

Just be sure to change it back the following month

Mine hits in Mar/April so gives me plenty of time to adjust withholding and 401k contributions to target things for the remainder of the year.

 

[KenLee]

I have a 04 GMC Yukon XL, which I keep in excellent shape inside and out. I recently had it painted, I got a deal from a friend who does it for a living. Had the front seats recovered, the back seat seldom gets used. I figured I can put 5k in it a year if needed, and I would still be money ahead. It only has 125K miles on it. I had a work truck the entire time I work, sorry for the use of the four letter word. I can afford a new truck, but I keep asking myself, WHY?

Burbs and Yukons are great til you get to 2007. Factory motors sour and plastic bumpers from 07 onwards

 

[KenLee]

Okay financing a house or vehicle to keep up with the Joneses is one thing. But what do y'all think about financing a pair of Swaros to keep up with the WKRs??

Totally legit

 

[KenLee]

Agreed.

That said its much better to spend money on things you enjoy. My hunting gear is worth far more than what I drive, for example.

Yes sir when I went to Leica Magnus I 2.4-16x56 and Swaro 8x42 NL I thought to myself and told others that I should have bought alpha glass 20 years earlier.
A big house, new truck, suburban, car, or atv NEVER felt anything close to that "wow" first evening hunting.

 

[Speaks]

To paraphrase something someone somewhere: "Rich people have investments. Poor people have debt."

Really rich people have both. Get paid mostly in stock options, borrow against stock at low interest rate to fund cost of living, service debt with small salary, dividends, and occasional stock sale. Pay a lower tax rate while letting assets appreciate at a much higher rate then the interest on the loan against them.

Your advice is good for middle class wage earners trying to break into upper middle class, falls apart as you approach actual rich. And no I am not saying I am actual rich or even remotely close.

As a side note and one more realistic for a well to do rokslider would be how debt becomes more useful in an inflationary economy (unless interest rates are also high). Generally assets (and investments) are appreciating quickly and wages are rising while the debt service stays static. Your payment relative to income goes down while assets appreciated much faster. On paper it makes even more sense to take a low interest loan and invest the cash. Now this only works if you invest the cash and dont just spend it on other stuff, and it introduces an element of risk though with a low enough rate this can be very minimal.

 

[Speaks]

And

Most of the folks who barf out this trope are totally broke playing credit card roulette whilst pretending to be a real estate mogul. No matter, there is no play to use credit to buy a depreciating asset that makes anyone wealthier.

I mean mathematically there is..... I broke down a detailed example of it. But thats only true if you had the cash to start, the interest rate is low, and you invest the money and dont just spend it elsewhere. Those are a lot of conditions that most people will not meet.

General advise to most people to not take out car loans and drive a beater while they save is quite prudent. That does not mean it applies to everyone, though those that can afford to make the loan make sense generally dont need advice on it.

 

[Billinsd]

This might have something to do with it as well. Saw this at a sportsman show last weekend and had to snap a picture. Twenty years of payments totaling $150k for a camper that will be worth almost nothing in 20 years. But zero down!
View attachment 871098

Zero down and I can make those payments. All that matters is down payment and monthly payments, right? Lots of Sarcasm.

 

[Fetty Wapiti]

Even the wealthiest folks in our country are driving used vehicles. They aren't buying or driving new vehicles. Even without a loan a new vehicle is a very poor financial decision whether you are rich or poor.

 

[Marshfly]

Really rich people have both. Get paid mostly in stock options, borrow against stock at low interest rate to fund cost of living, service debt with small salary, dividends, and occasional stock sale. Pay a lower tax rate while letting assets appreciate at a much higher rate then the interest on the loan against them.

Your advice is good for middle class wage earners trying to break into upper middle class, falls apart as you approach actual rich. And no I am not saying I am actual rich or even remotely close.

As a side note and one more realistic for a well to do rokslider would be how debt becomes more useful in an inflationary economy (unless interest rates are also high). Generally assets (and investments) are appreciating quickly and wages are rising while the debt service stays static. Your payment relative to income goes down while assets appreciated much faster. On paper it makes even more sense to take a low interest loan and invest the cash. Now this only works if you invest the cash and dont just spend it on other stuff, and it introduces an element of risk though with a low enough rate this can be very minimal.

It gets even more complex for those of us that use "cash" to make income rather than invest for later. As a full time trader, it makes zero sense for me to take a huge chunk of cash out of my business (trading account) to fund a purchase. I beat every interest rate on the planet each year by multiples.

What I do is put healthy down payments down so if anything ever needs to go away fast (fire sale) I am never remotely upside down on it. Then I pay things off rather quickly through income.

This is the exact same mindset as buying a piece of real estate to cashflow the payments on something a la Kiyosaki.

I do buy slightly used stuff though. Let some other poor schmuck take the first year or two bath and shake out the kinks. Saved 25% on the 18k mile F350 I bought last fall buying like that.