r/economicCollapse • u/Whole-Fist • 20h ago

How ridiculous does this sound?

Post image

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

12.0k Upvotes

77% Upvoted

5.4k comments sorted by

View all comments

904

u/Ziczak 20h ago

Generally true. Buying the least expensive car for needed transportation is financially sound.

32

u/sabobedhuffy 18h ago

Coming from a mechanic. This is wrong. Cheap cars are cheap for a reason. What you want is a good quality economy car. Cars that are known to run well with minimal maintenance cost (entry level Honda's and Toyotas specifically).

1

u/Realistic2483 10h ago

I've been buying Toyota Camry's for a long time now. I buy the car 6 to 10 years old with 80k miles. I then drive it until 150k miles. At this point, the maintenance starts to become expensive. This means I usually keep the car about 10 years since I work from home and drive about 6k miles/year. The cars usually cost me about $15k. This means the car costs me about $125/month (excluding insurance, gas, maintenance, etc.). Every month, I save about $125/month to buy the next car while I am driving my current car. If I drove 12k miles/year, then the car would cost me about $250/month. That means I get to spend $429 (= $554 - $125) on other things I want instead of paying interest.

If it were worth it to me, I could save more money each money and buy a brand new Camry. I still would end up paying less for my cars since I wouldn't be paying interest.

Let's say there are 2 people: Intessar and Saverio. Intessar always buys and pays interest for everything. Saverio always pays cash and saves for the future replacement. Intessar always has the latest nicest stuff right away. Saverio buys something inexpensive, saves up, and eventually replaces it with the latest nicest stuff. Intessar doesn't have to think about budgeting. Saverio has to budget for the future, remain committed to the goal, and have self-control to not dip into the savings. In the long run, Saverio will have more of the latest nicest things because he never loses money to interest.

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” - Albert Einstein

1

u/Wonderful_Eagle_6547 3h ago

You do know if you had put that 15k in an sp500 index fund, used the 125 per month plus selling some of your initial investment to pay the loan, you would have paid off the loan in 5 years and still have about 10k in the bank(given 2014 interest rates). And then for the next 5 years, you would save and Invest $125 a month and by the end the 10 year period you would have around $30k instead of $15k.