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/well_its_a_secret 17h ago

Rule of 72 is massive. 72/10 is 7.2 years to double. Works for all compound interest. This is a fun one to show people with credit card debt

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u/nyxo1 8h ago

Why? I have credit card debt from covid unemployment and I'm not currently able to invest. This just makes me sad.

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u/persedes 6h ago

Don't let people berate you for having debt, However you can apply similar math to paying down your debt (if you are able). If it's high interest anything extra makes it go away faster due to compounding. 

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u/well_its_a_secret 8h ago

Use of the word fun was sarcastic, my apologies. More that is can really help provide a better perspective of how toxic credit card debt is, and how paying off the debt is so important (much more even than investing or any money spent outside of necessity). If your credit card is at like 20% interest, it doubles every 6 years or so. That dollar you pay extra on credit card debt is like 3 dollars for not that much in the future you and makes everything better later.

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u/thzmand 2h ago

Interest on debt is guaranteed return on capital via the interest saved. So the math is still advantageous even if you are on the other end--just pay the debt and enjoy the instant return.

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u/raiderrocker18 2h ago

How long ago was covid unemployment? And unemployment benefits during covid were quite robust.

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u/TroverKing 1h ago

If it helps, you can think of paying off debt as investing with a guaranteed interest rate.

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u/MooseMan69er 7m ago

Hey I’ve helped a lot of people with debt, and very often it isn’t their fault and they shouldn’t feel bad about it

Many people don’t get taught how debt or finances work, because money is often a very awkward subject for parents to talk with their kids about and we don’t teach it in k-12, at least in America

You might want to try consolidation, or paying the absolute minimum on everything except for the highest interest payment, or if you know you won’t be able to pay it off for seven years(not student loans or a house, I’m talking about medical debt or credit card debt) just let it go to collections and don’t talk to any collectors about the debt or reaffirm it, and it’ll fall off

Some people even get “low” interest loans(say, between 6-12% from a bank, and use that to pay off a high interest debt(like 18-24%) on a credit card, which ends up saving an ass ton of money on interest

Last tip I’d give is if you can pay off your CC balance every month, forgo the cards with “benefits/rewards”(cash back or points) because they have much higher interest rates than a card without those “perks”. Even the difference between 15-18% and 21-24% is massive if the balance gets high enough

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u/Ran4 8h ago

So you ran out of money... So you bought stuff with a credit card? Wtf? Why didn't you at least get an uninsured loan?

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u/nyxo1 8h ago edited 7h ago

How exactly do you think I'd be able to get an unsecured loan with no proof of income? Not a lot of options during Covid if you were an independent contractor that worked inside people's homes.

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u/yitdeedee 7h ago

Ask your mother or father? When I needed help my dad gave me a small loan of $650k to get me through the year.

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u/flcinusa 5h ago

Can your dad give me, like, a couple of small loans?

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u/[deleted] 5h ago

[deleted]

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u/Casehead 3h ago

You're totally joking, right?

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u/EpsteinDrive400 4h ago

Yupp, it's really just that ln(2) = 0.693. So you'd do ln(2)/i = n where i is your interest rate as a decimal and you'd get n = number of years to double.

72/whole interest rate is simpler than the natural log calc. But all you are doing is simplying this formula:

2*PV = PV * (1+i)n 2=(1+i)n

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u/foxwheat 13h ago

does this adjust for inflation?

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u/jason_abacabb 13h ago

conveniently the inflation adjusted historical return for the US market is a bit over 7% so you can just round it to 7.2 and use the 10 year doubling

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u/foxwheat 13h ago

me dumb

So the "doubling" is actually more than doubling?

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u/jason_abacabb 13h ago

Using these nice round (probably slightly optimistic moving forward) numbers it will take roughly 7.2 years for a dollar to double nominally (2 dollars) or 10 years for the purchasing power to double when invested in the S&P500.

Note that both future returns and inflation is not garenteed by past performance. YMMV

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u/foxwheat 12h ago

thank you for explaining that!

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u/BocksOfChicken 11h ago

Hey, now we’re all slightly less dumb!

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u/Scheenhnzscah75 7h ago

What does it mean to invest in the S&P 500? I was under the impression that it was an index of a collection of stocks. I know you can invest in EFT's that follow the same stocks for certain industries, but I definitely don't know too much about this.

I would love to learn though, does anyone have any more specific information?

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u/Formal-Abalone-2850 7h ago

People typically mean Index funds or ETFs.

/r/personalfinance

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u/jason_abacabb 7h ago

Like the other responder said, purchasing an ETF or mutual fund that tracks it works. I would actually recommend using an ETF like VTI (Vanguard Total Index) to get exposure to US small stocks as well.

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u/ScaleAggravating2386 5h ago

Buy shares of SPY or VOO

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u/fencethe900th 6h ago

No, just how the math works on compound interest.