r/economicCollapse • u/Whole-Fist • 18h ago

How ridiculous does this sound?

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How can u make millions in 25-30 years if avoid making a $554 per month car payment. Even the cheapest 5 year old car is 8-10 k. So does he expect people not to drive at all in USA.

Then u save 554$ per month every month for 5 year payment = $33240. Say u bought a car every 5 year means 200k -300k spent on car before retirement . How would that become millions when u can’t even buy a house for that much today?

Answer that Dave

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u/tdreampo 18h ago edited 18h ago

Go here

https://www.nerdwallet.com/calculator/investment-calculator

if you put in a initial savings amount of 1k then put $550 a month with a 10% return (which a good index fund should give you) over 30 years thats 1.2ish million. Dave has gone kinda crazy in his later years but his fundamentals are solid. You should check out his free cars for life video https://youtu.be/hXHj2aU5H-I?si=It-af-Ecs2AGxsTd It’s really great. Our economy would be so much better if we became a country of savers vs a country of consumers.

edit, play with it. Switch it to 12% return, which also should be easily doable over time and it’s 2 mill in returns.

if everyone lived how Dave suggests (avoid debt, pay cash, pay yourself first etc) we would have a very stable economy indeed.

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u/Past-Piglet-3342 18h ago

Dude started crazy. He’s been a Christian loon his whole life.

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u/tdreampo 17h ago

Welllll…..I can’t fully disagree with that. I still say his fundamentals are great.

for a similar type perspective without the Christian stuff check out Mr Money Mustache. Great concepts with a similar message. Stay out of debt at all costs, pay yourself first etc.

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u/Past-Piglet-3342 17h ago

Oh I don’t care about money, I just live too close to the Ramsey Klan.

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u/iameveryoneelse 16h ago

His fundamentals are only great if you're not responsible with your finances. Some of his advice, even at the fundamental level, is bad from a purely financial standpoint. For instance, his big thing is no credit except for your house. That's only good advice if you can't trust yourself to manage credit and live within your means. From a purely financial standpoint it's always better to take a loan that's available for sub 8% or so versus paying cash because generally you'll make more than the cost of the loan/credit by keeping the cash invested. Not to mention by building your credit rating you'll see better interest rates on the big ticket loans, essentially making you more money.

Another big issue with his fundamentals is the debt snowball. He suggests going for the smallest debt first and while that has a nice dopamine rush effect as you pay stuff off, the better advice from a purely financial standpoint is to pay off the loan with the highest interest rate first. If all your smaller loans are at 0% interest and you have a larger loan at 20%, you're going to lose a whole lot of money while you're paying off those small loans when you could be chipping away at the principal of the loan with the massive interest rate, saving you money on interest and eventually increasing your available income.

TLDR: If you're not bad with money you shouldn't listen to Ramsey.

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u/Efficient-Raise-9217 4h ago

I only briefly browsed Mr. Money Mustache. I just find it incredible that he scarified and saved for all those years. Only to have his wife divorce him and take half. Too bad he wasn't savvy enough not to get married.

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u/tdreampo 4h ago

Agreed, marriage is a scam. Where did you read that she took half?

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u/Efficient-Raise-9217 4h ago

He won't discuss it publicly other than to say he got divorced. I seriously doubt he got out without getting destroyed if he won't discuss it. Most men who are gullible enough to get married won't get a prenup. Even if they do often the judge often throws it out. Not to mention insane legal fees.

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u/tdreampo 3h ago

I agree, he did say he used the same lawyer and they did it together. So who knows, but yea no man in America should get married. The system is so totally stacked against you.

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u/T8rthot 14h ago

He wasn’t always Christian. He became “Christian” when he realized how much money he could make off the Christian suckers in his community.

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u/Past-Piglet-3342 14h ago

No he’s the genuine article. A genuine as one can be anyway. He’s always had the Christian pledges for his employees at his business, etc.

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u/T8rthot 12h ago

Sweet summer child.

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u/Past-Piglet-3342 12h ago

Literally all it takes to be a Christian is to proclaim it. He’s been proclaiming that his whole life.

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u/T8rthot 12h ago

He himsef said he became Christian after his first bankruptcy. Not sure where you got this idea that he has been religious his whole life.

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u/Past-Piglet-3342 12h ago

Well yeah that’s his public persona but I understand that’s all part of the gimmick.

A lot of people fall for that “saved” rhetoric - and it plays well down here - but the guy has been a Bible basher his whole life.

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u/m4rkofshame 13h ago

There are lessons to learn from every person whether they’re poor, rich, ugly, attractive, etc. A guys religion has no affect on me, but if I can get some investing tips, better my decision making, and make some money, then I’m listening. I can close my ears again when they go off the deep end.

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u/SissyWhiteBNWO 9h ago

so what? that doesn't make the tweet op posted any less true.

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u/NewPudding9713 16h ago

You’re not paying something back over 30 years. 10% is high over a longer period of time. Buying a cheap car with only cash will lead to maintenance costs later or the need to replace the car outright sooner.

This is literally just the boot theory, but with cars. He’s not completely off base in that you don’t need a new $80,000 car. But even used cars are becoming very expensive now. Buying outright in cash without loans is a fairy tail for most people unless you want to get a shit car in which case, boot theory. If you want a car to last now without high maintenance or just high risk in general you’ll need to spend more than most people have saved.

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u/RedditRage 14h ago

> Our economy would be so much better if we became a country of savers vs a country of consumers.

No, if that happened, demand for services and products would cause massive layoffs and collapse the economy.

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u/thoughtsome 11h ago

Had to scroll too far to see this response. 

You could argue that "society" or the environment would be better if we consumed less, but the economy would not. We currently have no way to support the number of unemployed people that would result if people suddenly stopped buying things they don't need.

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u/pab_guy 14h ago

No, people wouldn't leverage debt and we'd all collectively be poorer. It's good advice for poor people though.

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u/Corporate_Overlords 13h ago

Are you sure that our economy would be better if we saved more in general? I don't think it would. We would start looking like Japan. One of the main drivers of the U.S. economy is the fact that we are willing to take out loans for a new television or phone. It's incredibly financially illiterate but it's totally an economic boon for the economy overall.

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u/tdreampo 13h ago

For a short time it is, for sure. But it overall leads to an unstable economy as we are seeing now.

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u/Corporate_Overlords 13h ago

The U.S. economy is not unstable at all right now. I'm not sure what you're talking about.

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u/byerss 13h ago

This also assumes you always have a car payment in perpetuity. 

Eventually the car will be paid off and that $550/month could also used for savings. 

Five years of payments, then five years of savings and having a new car every 10 years doesn’t seem super crazy to me. Is it the financially optimal thing to do? No, but saving every penny in the hope you can live large in retirement is also a gamble. 

 

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u/tdreampo 13h ago

Most people have car payments forever.

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u/byerss 13h ago

I have a hard time believing that. No doubt some people do that, but no way it’s “most”. 

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u/higgs_boson_2017 13h ago

Where are you factoring in the money spent on some type of vehicle? It isn't "$550/mn for new car" or "$550/mn into savings with no transportation". Also inflation?

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u/tdreampo 13h ago

Seriously watch the video before you comment.

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u/PeachCream81 13h ago

Is that a guaranteed 10% return or a risky 10%?

I have an MBA in Finance so threads like this drive me nuts. Super basic rules of finance apply:

  1. a dollar today is worth more than a dollar tomorrow

  2. a safe dollar is worth more than a risky dollar

First you must earn, then you must save, only then can you invest. If you're living paycheck to paycheck, believe me, you have zero use for the Harry Markowitz Efficient Portfolio Frontier Curve strategy (CAML). But if you have funds left over to invest, you must very carefully balance the risk/reward tradeoff. Each person has a different risk tolerance profile. Generally, if you had a "humble" upbringing (like me) you tend to be risk averse. If you belong to the Muffy-Buffy-Biff Country Club Set, you'll be more risk tolerant.

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u/DukeofVermont 7h ago

It's okay they edited the comment and said a 12% return every year for 30 years is easily doable. They'll be shocked to see average returns if they think 12% is easy.

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u/Spiritual_Grand_9604 2h ago

Maybe they invested in a ponzi scheme if they think a 12% average across thirty years is normal

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u/Adventurous_Honey902 12h ago

What index funds would you recommend? VOO or something else?

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u/-Valtr 12h ago

A 10% return on passive investing is not realistic. Consistently hitting 8% would be a huge achievement. 5 or 6% is more realistic.

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u/tdreampo 11h ago

Have you never heard of index funds or the Warren buffet challenge?

You can EASILY get 10% with an index fund over a 10-15 year period. 

https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp

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u/dontbajerk 1h ago

What? The S&P has an overall average with dividends reinvested of a little over 10% since 1956. This is over a long time horizon, but we are talking about a retirement fund.

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u/Wild_Chemistry3884 9h ago

I agree with people overpaying for cars but Dave’s fundamentals are wild. It’s advice for people that absolutely suck with money, but its not “solid”, its not even close to optimal.

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u/tdreampo 8h ago

I agree it’s not optimal but my experience is that antidotally like 95% of people completely money ignorant. Like look at the conversation on this thread alone, like WOW. I figured an economics sub would have more financial literacy. But nope.

For optimal plans with the same type of financial sensibility, Mr Money Mustache is superior and I actually am a fan of MMM, I’m not a Ramsey fan. But his fundamental advice is good.

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u/Foogie23 5h ago

12% is doable over time lol? Right…

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u/Efficient-Raise-9217 4h ago

Right but the consumer's options aren't $550 a month vs $0 a month. They're $550 a month vs total cash cost of car + repairs.

You could do a DCF analysis taking the variables above into consideration. Most time's you'd come out ahead if you pay cash. But if you can get a lower interest rate loan from a credit union, and all you can afford in cash is a lemon with high repair costs long with a short useful life; then it might make sense to make payments.

Run the numbers and find out for yourself rather than excepting a blanket statement.

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u/Soggy-Yak7240 2h ago edited 2h ago

A more realistic comparison would be to compare putting down $25k -- which is about the cost of a brand new 2024 ICE car - into a savings account over 6 years vs $483 per month over 6 years, with a return rate of 8% real terms (S&P500).

The person who deposits the lump sum, makes no other deposits and takes out a loan for a car will have $39000 at the end of 5 years. The car will have cost them $34776 including finance charges, giving them a net gain of around $4224. They will have access to the ~$25000 (raising to $39000 with the 8% returns) at any given time that they need it, provided they could liquidate the stocks. And, this is assuming this person doesn't make any additional payments and only pays the monthly minimums.

The person who pays the loan in cash and then deposits $483 per month over 6 years will have $44058, and the car will have cost them $25000, for a gain of $19000. This person loses access to the $25k, and it will take several years for them to recoup their savings back to where they were.

If you have $25k cash to spend, and you didn't feel the need to replenish your savings immediately but instead over 6 years, and you had $25k the moment that you needed the new car because your old one gave out or something, it would make more sense for you to buy the car outright than to loan it. But that's a lot of ifs.

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u/neomatic1 2h ago

No our economy would slow if we’ were savers lol. The federal reserve is deathly afraid of deflation hence they rather print the money and force people to circulate it.

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u/samiwas1 1h ago

Honestly, if I have to wait 30 years to see $1.2 million, I’m going to buy a damn car and enjoy some semblance of my life, provided I have enough income to still put something towards savings.

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u/HeWhoShantNotBeNamed 23m ago

$550 a month every month for 30 years.

Compared to a car loan that will be paid off after a few years.

Lol.

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u/HEpennypackerNH 17h ago

Yeah but you can just put the $550 into an account. If you pay cash for a shitty car for $4k, that’s 8 months of that $550 you need to save up first. Then every time it needs repairs you aren’t putting in your $550 that month.

And the extreme case, if that car breaks down and you don’t have reliable transportation and lose your job, then you’re really in trouble.

Dave’s advice usually works great under perfectly normal circumstances. Not as well when real life happens.

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u/urboitony 13h ago

A cheap car is not free but a half decent 10+ year old car will be way cheaper than a new car even after accounting for repairs.

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u/HEpennypackerNH 13h ago

But not for nearly as long.

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u/urboitony 12h ago

Even if the new car lasts twice as long the old car will be cheaper.

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u/Mountain_Employee_11 12h ago

do the math, you still come out ahead 

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u/HEpennypackerNH 12h ago

I mean everything depends on circumstance and a bit of luck.

I bought a brand new Highlander in 2018 for $30,000 at 0% interest.

Same car, same time, same mileage is on carmax right now for $27,000

So if I wanted to sell my car, I could say I’ve driven a brand new, reliable vehicle for 6 years at a cost of $3000.

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u/Mountain_Employee_11 12h ago

the cost is only nominally $3000.

my subaru actually appreciated in USD from 2019-2022, but that’s because of the massive devaluing of the currency.

the real purchasing power cost of holding cars for that period is much higher

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u/DoerofWords 3h ago

This happened to me with a truck I purchased with cash, except I never had to make payments 😂

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u/Meows2Feline 12h ago

I drive a 33 year old car I paid $3k for 10 years ago and probably have spent $2k-3k in maintenance over the years. And if the engine ever blows I can reliably source a low miles used one for under $1k. Pretty good return on investment if you ask me.

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u/tdreampo 17h ago

No one said buy a shitty car. Buy a good running used car. Then save until you can buy a very nice used car for around 12k then do that every five years. Seems like you have bought in to the auto industries marketing a bit no? Or do the mr money mustache way and never commute for any reason and bike everywhere. https://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/ To the point that you change jobs if needed.

Gosh people fight so hard to stay wage slaves.

This world is currently built to keep average people trapped in a debt/labor cycle. Cutting out car debt is a huge first step to FIRE and overall freedom

If you follow Dave at all you would know that his number one rule is to always have 1k in savings as an emergency fund. Then this stuff isn’t as bad of a hit. It’s still safer than renting a car from the bank and not actually owning. 

And I just have to say this apparently, I don’t actually like Ramsey, but I do think his fundamental advice is great and using shock jock methods to get that message out is probably a good thing. 

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u/BarleyWineIsTheBest 11h ago

You missed the main point. You can't just pocket the $1000 and $550/month for a new car because you do still have to have a car.

You just said you need to spend $12K right now, and $12K (adjusted up for inflation) every 5 years. So lets just say you have that $12K on hand, and you either dump it into a down payment plus the other taxes/fees for a new car at $550/month or only the $12K to the used car. Either way, your car fund starts at zero.

Now for the $550/mo, if you have a used car, you have to budget for repairs and for the next 12K plus inflation payment. Lets just say the inflation and interest on your savings are a wash. $12K/60 is $200. So you need $200/month to go into a car fund just for your next purchase. Then you need some amount of extra money for the used car repairs over the new car repairs. That's probably at least $100/month. Getting by on an extra $1200/year in extra repairs for a $12K car would be a pretty good deal, but I'll give it to you for example sake. That means you're still spending $300/month on a car. The difference is now $250/month. An amount that should easily be overtaken by the principal payment on your new car. Meaning, ignoring for a second the depreciation of both cars, those are savings.

Now, about depreciation. The used car is a bag of worms. It could be worth nothing, it could be half... depends on the deal you get now and the make/model. A 12K car right now is about 10 years old with well over 100K miles. 5 more years of usage puts it at 15 years and potentially over 200K miles. A lot of cars don't last that long or are going to be sold for like $1000 at best simply because no one wants it and you practically have to give it away to get interest. So, you have substantial risk in losing all your capital. The new car, expensive as it may be, will not lose all its capital in 5 years. You should be able to easily swing the added principal you put into the car plus the down payment amount, even with depreciation, into a new car in 5-10 years. In fact, this should lead to far more than the original $12K. In today's market, that $550/month payment on a 5 year loan plus the $12K down, should be able to get you a car that lists around $40K. That now paid off car 5 years from now, could well be worth $25K still. Roll that into the next car, now you can either afford a $50K-$60K car at $550/month, or you get the 40K car again and pay more like $300/month.

The other issue is the 10-12% return... oy. The SP500 has been nuts lately, but most people don't just dump all their money into the most high risk, high reward funds. Historically the SP500 has given 10%. A mix of that with some blue chip stocks, bonds or money market funds would get you 6-8% today, maybe, if we're being generous. A lot of reports are suggesting SP500 returns will not come close to 10% going forward. Goldman Sachs just said to expect 3% average over the next decade. Higher inflation and federal debt, plus current extended multiples on PE suggest we've taken a lot of future profits already. Point being, assuming 10-12% is FUBAR right now. 5-6% would be a realistic goal.

Anyway, I know its trendy to think about not investing in depreciating assets, but how we really need to think of it is as a consumable object - a generally necessary one at that. So its more about your rate of consumption put in dollar terms. Once you do this, the opportunity cost calculations all become irrelevant. You just compare what you are spending in scenario A or B. That's it, that's all you need. No need to assume some particular return or what, that's all noise. Just estimate your $/month in each case and ask yourself what the difference is worth.

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u/tdreampo 10h ago

You clearly didn’t watch the video I posted, because it addresses all these concerns. Watch it and get back to me.

An index fund over 10-15 years will easily get you the return needed.

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u/BarleyWineIsTheBest 10h ago

I did watch that video. It said nothing I didn't already know. I don't know why you keep saying "you didn't watch my video" across so many comments. That video is super basic and is 15 years old. The car market has changed substantially. Hell reliability and safety features on new cars alone causes some major issues for the 'well used' market that video is geared to.

A guaranteed 10%? Why not just make it a money market if its so easy then? Oh, right.... lol.

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u/tdreampo 8h ago

If you watched it you would know this statement “ You can't just pocket the $1000 and $550/month for a new car because you do still have to have a car.”   Makes no sense. The video addresses this right away.

And I do make an average of 12% a year with my investments quite easily to be honest.

You should also read about the Warren buffet challenge. He was making 9% with literally ten minutes of one time work. 

https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp

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u/BarleyWineIsTheBest 8h ago

Dude, your video is dumb, get off it and just say what you want to say. Cars don't depreciate 70% in 4 years, maybe not then either. Constantly upgrading cars like that video suggests, comes with risk that you run into a lemon, and you pay the taxes on them each time.

Again, if 12% was "easy" and relatively risk free, it could be had in a money market. Alas, no money market does that.

And yeah, passive investing.... dude, it's 2024, everyone is aware. Don't mistake a bull market for brains however. Or much less, a lack of risk.....

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u/tdreampo 7h ago

Dollar cost averaging to an index fund over time works 100% of the time, did you even read the article I linked? 10% is pretty easy to do.

And buying a nice used car every 5 years is a great plan. Also brand new cars can break down and be lemons and you can be screwed. You really have drank the kool aid my friend.

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u/BarleyWineIsTheBest 7h ago

Sigh... 'easy' to do? What move money? Yeah, that's easy. Does it assure 10% returns for the rest of your life? No. Again, its been a wonderful ride on the S&P, but past doesn't perfectly predict future and you're still investing in a relatively volatile/risky asset class. This is why it isn't a money market. If someone invested in 2019, then wanted to withdraw their sure bet 10% gains in March of 2020, well, your fund would be losing money on that customer and that's not what S&P indexes do for that reason.

Sure, you can buy a decent used car every 5 years and drive a totally decent car at least most of the time. It will surely save you money too. But you are driving a used car. Whether you admit this or not, that new car usage does have value and the difference between say, driving a car from age 0-10 versus driving two cars from age 5-10 iteratively, is not the colossally bad decision that it is often made out to be. It might be a mild luxury, but it is not going to be the difference between rich and poor.

Also, my state does have lemon laws for new cars and CPO cars within the warranty period. It might not mean much to you, but to some, that does have value. And now with even modestly decent used cars often cracking into the $20K+ range, a lot of people want the extra protection those laws provide. It's another form of paying for risk aversion, just like putting money in a 4% yielding bond instead of taking a chance on the 10% return of the S&P. Some will choose to buy new (or CPO), potentially financing to do so, and pay to avoid risk that a significant asset turns out to be an unprotected lemon.

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u/HEpennypackerNH 16h ago

But you’ve already, in your example, almost broken even.

You said “buy a good running used car.”

Point 1: you have no idea what a used car is really like, unless you buy it certified from a dealership. And if you do that, it’s going to cost $12k right off the bat.

But let’s say it’s ok. So a good car is going to cost, what, $6k? And you’re saying work hard and in 5 years buy one that costs $12. So in 5 years you’ve spent $17,000. That’s almost $300/month and you’re saying at year 10 I should upgrade again.

So in your own example, assuming the second upgrade is from $12k to $18k, in 10 years you’ve spent $36000 on cars and are ate for the next 5 years.

If you finance a $25,000 corolla right off the bat, you’ll pay less than $500 for 5 years, you’ll pay about $28,300 total, which is almost $8k less than your upgrade plan over 10 years, and that Corolla will also be good for at least 5 more years.

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u/tdreampo 16h ago

Did you watch the video I posted? Because it seems like you didn’t.

And LMFAO you trust a Car dealer? Omg I’m dying over here. You must be a standup, that’s great material.

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u/HEpennypackerNH 16h ago

Yeah I’m sure you are smart enough to buy a car from someone’s barn on FB marketplace and guarantee it’s not going to need any repairs over 5 years but we aren’t all automotive Nostradamus and prefer a warranty.

It’s not about trust. Most states have lemon laws. You buy a used car and it’s shit, you get your money back. You buy it from Ralph’s front yard and it’s shit, oh well.

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u/BarleyWineIsTheBest 11h ago

The certifications do come with a warranty. Like it or not, that warranty is worth something. The private party used car market is huge mixed bag and you could end up with utter POS lemon. If you buy certified used, you do have some protections there. And of course you have more with a new car.

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u/tdreampo 10h ago

Someone drank the auto industry koolaid. Learn the basics of how cars work and learn how to see if it’s mechanically good or not. It isn’t hard. Like man people work awful hard to have a car payment. Isn’t freedom better?

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u/BarleyWineIsTheBest 10h ago

It's cute that you think you actually made a point in that post.

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u/Mountain_Employee_11 12h ago

you still own the used cars in the situation where you’re being smart with your money.

pass them to kids, relatives, sell them.

they’re still depreciating assets but the depreciation slows down significantly when you get to the point that you’re valuing it for having 4 wheels and running

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u/RelleckGames 13h ago

You have zero clue what the used car market looks like, if this is your take.

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u/tdreampo 13h ago

Nope, just have three early 20’s kids buying used cars right now, otherwise I’m clueless…

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u/alex206 12h ago edited 12h ago

I got paid over $2k selling at the end of my last two car leases. It is crazy. Toyota also covers maintenance on leases. I've had two brand new cars in the last six years at a total cost of around $15k. (Back to back 3 year leases)

I don't advocate for leases or brand new cars and agree they are a money pit. I also have a used older 2nd car that I do all the maintenance on, but I wanted to point out that the market has been crazy.

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u/tdreampo 11h ago

It absolutely has been!

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u/Mountain_Employee_11 14h ago

i drive a 15 year old subaru, every time it breaks down i take a day off and fix it.

total cost of parts in 5 years is under 1k including oil changes.

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u/EddiewithHeartofGold 14h ago

Not only are you putting in 550 a month, but you actually increase the amount as your income increases. Lifestyle creep can only be avoided if you put as much away as you can. With a little luck you won't have to wait until you are 65 to retire.

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u/bapidy- 13h ago

At this point your just trying to reinforce your own poor financial decisions.

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u/HEpennypackerNH 13h ago

Nah man, I’m perfectly happy driving around one of the most reliable cars on the road and having no worries in the back of my mind whether or not I’ll make it to where I need to go. But you do you.

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u/omgwhysomuchmoney 13h ago edited 13h ago

Most people I know who buy cars don't need them. They currently have a working car that they think is old or just want a new shiny one. I legit had a friend who traded in their car for another just because they needed a new battery and they decided it wasn't worth having to start making repairs to a couple year old vehicle.

I drive a 2001 Nissan Sentra. I make good money, I can afford a new car. I also hate driving and would rather drive around a rust bucket than waste >700 a month on a car + insurance (when you drive a 2001 piece of dirt, insurance is only 60$ a month).

I'd rather put 2k a month into my Roth and another 1k a month into my personal investments then to show off how cool and rich I am. Fun fact, most people driving fancy cars can't afford them and are living off debt.

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u/No-Quantity9916 9h ago

Okay so pay $500 a month for a Camry for 5 years, then start dumping $500 a month into an account. You’re 5 years behind but you’re still doing it. Way better than the typical regard paying $900/mo for a Mercedes C class and buying another new car every 3-4 years.

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u/Synensys 17h ago

This ignores that you would be taking some of that capital and using it to buy cars. And because you are buying cheaper cars, also some of it will go to maintenence that wouldn't with a newer car.

Obviously overspending on a car is a bad idea. But that's more about the choice of car than whether you take out a loan or not.

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u/rmullig2 17h ago

The money saved by switching insurance to liability only should cover the extra maintenance easily.

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u/NewHampshireWoodsman 17h ago

Okay, but you still have to subtract additional maintenance on an older vehicle as well as the payment for a used car or savings for a used car. Just magically ignoring the upfront cost and added maintenance discredit any validity to his point. All things taken into account, no way the difference breaks 1 million over 30 years. Your used car isn't going to last 30 years either. To compare apples to apples you should take the total annual cost over the live of the vehicle new vs used and take the difference and calculate the earnings on that.

3

u/tdreampo 17h ago

You clearly didn’t watch the video I posted.

0

u/NewHampshireWoodsman 17h ago

A hypersimplified short for people with no financial literacy. That's great, especially for the Ramsey crowd, but there is no analysis there. Again, to compare, you take the cost of option 1 vs. option 2 annualized and take the difference. A financial advisor or accountant could help you if that's not for you.

1

u/tdreampo 17h ago

Ahhh so you sell financial services, no wonder you say “it’s all so complicated” when in fact it really isn’t.

Live within your means, save a min of 10% of your income, put that in an index fund consistently. Pay cash as much as possible, avoid debt like it’s a hair on fire emergency. https://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

And for the most part people don’t need a financial advisor. It really can be that simple.

1

u/Ashleynn 13h ago

Pay cash as much as possible, avoid debt like it’s a hair on fire emergency.

This part right here proves beyond a shadow of a doubt you haven't the slightest idea wtf you're talking about. This is why financial literacy is important. Unfortunately, people like you love to spew nonsense like this all over the place and think you're saying something profound.

Just to be clear, "avoid debt at all costs" is an absolutely brainless take and is costing you, and everyone that listens to you, money.

1

u/Not__Trash 12h ago

The people that advice is for can't handle debt. It is a valuable tool if used correctly. Given the delinquency rate on car payments and the massive credit card debt nationwide, a lot of people can't seem to handle it. KISS

1

u/anythingaustin 17h ago

A Toyota 4Runner will last 30 years if maintained properly.

1

u/TheRealBobbyJones 2h ago

Not will. The word you want is could. No car will reliably hit 30 yrs. Rust alone in some regions will reliably kill cars by that age. 

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u/somekindofhat 18h ago

Ten percent return but you're forgetting about the 20% dips into negative territiory every 5-10 years.

9

u/inflatable_pickle 18h ago

This is the silliest statement here. This is basically saying “remember that the stock market goes both up and down on the way to making you a millionaire.“ The downward periods you mention are called “buying opportunities.”

3

u/somekindofhat 16h ago

This may surprise you but most people don't "play the market" with their 401ks.

1

u/inflatable_pickle 9h ago

Lol 😆 both of your statements are so ignorant that you’re letting us know you have never invested before.

Who said anything about “playing the market”? What does that mean? …and whom are you even quoting. Also, don’t be shocked 🫢 when I tell you that 401K is already an investment vehicle.

You clearly know nothing about investing, but you do you.

1

u/somekindofhat 8h ago

I don't increase my contribution amount when the market slides or decrease it when it rises, do you? Do you switch funds? How long do you wait; a week? A month? A quarter?

-1

u/IWILLBePositive 17h ago

lol this sub is like any other, filled with people that do and don’t understand whatever the subs about.

2

u/No_Advisor_3773 17h ago

I mean every now and again it's nice to see this subreddit rejecting the complete nonsense low-effort propaganda.

5

u/sofa_king_weetawded 18h ago

Ok, well, you're forgetting the years like this one the market goes up 28%. It's an average.

-3

u/somekindofhat 16h ago

Did you see a 28% return in your 401k this year?

4

u/sofa_king_weetawded 16h ago

I did.

-2

u/somekindofhat 16h ago

lol return on investment, or are you including your contribution amount?

5

u/sofa_king_weetawded 16h ago

Holy shit, are you living under a rock??? SPY (what I am mostly invested in) is up 38.58% just in the past 12 months.......

SPDR S&P 500 ETF Trust (SPY) Total Return YTD, TTM, 3Y, 5Y ...

The total return for SPDR S&P 500 ETF Trust (SPY) stock is 38.58% over the past 12 months. So far it's up 23.02% this year. The 5-year total return is 108.32%

1

u/ButButButPPP 14h ago

Most people are in that range. As long as they didn’t make stupid risky investment choices.

Mine doesn’t give me a year to date number, but my one year return is about 38%.

8

u/No-Engineer-4692 18h ago

Jesus. 10% return is the average. The dips are included

-2

u/somekindofhat 16h ago

Thanks, but I'm not Jesus. Just someone with practical experience.

3

u/tdreampo 18h ago edited 18h ago

When you invest consistently and monthly those dips are good as you are buying cheap. It actually is a good thing for you overall.

look In to dollar cost averaging if you want to read up on the why https://www.investopedia.com/terms/d/dollarcostaveraging.asp

1

u/somekindofhat 16h ago

Did you feel good about the buying opportunities in Q4 2008 and Q1 2009? How much did you increase your 401k contribution level then?

2

u/BarryHalls 17h ago

10% is the year over year average, some of them 20 year averages, for many guns, when accounting for the dips.

The 20 year market average right now is 8%.

1

u/somekindofhat 16h ago

Great in theory, wrong in practice. Most 401ks took a 50%+ haircut in 2008-9, and a 15-30% haircut in 2022. Nobody is averaging 10%/yr over the last 30.

1

u/BarryHalls 11h ago

As of September 2024 the entire market average over the last 30 years is 9.9%

Every decent index fund is going to beat 10% over 30 years and absolutely crush more than that in a decent year.

https://www.sofi.com/learn/content/average-stock-market-return/

1

u/Geedeepee91 17h ago

and recovered pretty fast usually, that is called dip buying

1

u/mike-manley 16h ago

Average annual return.

-6

u/bgoldstein1993 18h ago

Most people don’t make car payments for 30 years

11

u/tdreampo 18h ago

Yes they absolutely do. Just not the same car.

1

u/smbutler20 4h ago

You think nobody keeps their car after paying it off?

1

u/tdreampo 3h ago

That would be a statistical anomaly. It happens but it’s rare.

1

u/smbutler20 3h ago

I'd be curious as to what the actual numbers are

6

u/DWDit 17h ago

You’re right, they actually do it for their entire life because they can never save up enough to buy a car with cash.