1.49% loan for 60 months at Stanford credit union

[Bleedblue82]

Ive been really trying not to pile on but dude a lot of the people in this forum buying a model S are likely millionaires+. No one disagrees with the point that going into deep debt to buy a new car is a bad decision but you’re behaving like you’re the one eyed man in the land of the blind telling us new facts about car depreciation.

And for the record while you don’t need an advanced degree in finance to be an uninformed blow hard on the internet, an advanced degree in finance might help you understand that taking out debt to buy something when you have cash to do so is sometimes a smart arb. I financed my Peloton and I certainly could have bought that in cash; you’ll be glad to hear I didn’t end up penniless on the street.

And I really want to engage on your point about how Americans go into debt, and debate you on systemic poverty, but… I just get the feeling you and I have different feelings about Jan 6 so I’ll let it go.

 

[ct101]

Ive been really trying not to pile on but dude a lot of the people in this forum buying a model S are likely millionaires+. No one disagrees with the point that going into deep debt to buy a new car is a bad decision but you’re behaving like you’re the one eyed man in the land of the blind telling us new facts about car depreciation.

And for the record while you don’t need an advanced degree in finance to be an uninformed blow hard on the internet, an advanced degree in finance might help you understand that taking out debt to buy something when you have cash to do so is sometimes a smart arb. I financed my Peloton and I certainly could have bought that in cash; you’ll be glad to hear I didn’t end up penniless on the street.

And I really want to engage on your point about how Americans go into debt, and debate you on systemic poverty, but… I just get the feeling you and I have different feelings about Jan 6 so I’ll let it go.

Nice, I also financed my Peloton at 0%. Some guy told me I could get just as much exercise with a $25 rusty Schwinn, but I’m loving it.

 

[oktane]

It sure is "fun" to leverage your monthly income to buy crap you can't afford that is depreciating at an alarming rate & stress over what would happen if the economy takes a hit and/or you lose your job.

Or you can live debt-free & buy 95% of the same car for cash & then sell it for a profit a year or two later all while to stockpile genuine & untouchable wealth. Now THAT is fun.

I guess we can agree to disagree & that "fun" is a subjective term.

Debt allows leverage, which allows smart people to accumulate wealth. It's very had to accumulate wealth without leverage. Financing a depreciating asset with other people's money is generally considered a "bad" thing to do, but not when inflation is high and depreciation is low. If you need the money for investing it elsewhere, your strategy makes sense (like starting a new business or investment, etc.) Stockpiling money like you're suggesting, is not very smart in today's economy.

 

[BlackHammer]

But thanks @Av8rrob. Might have to look into this. Will PM you if I decide to go this route.

 

[Ostrichsak]

Debt allows leverage, which allows smart people to accumulate wealth. It's very had to accumulate wealth without leverage. Financing a depreciating asset with other people's money is generally considered a "bad" thing to do, but not when inflation is high and depreciation is low. If you need the money for investing it elsewhere, your strategy makes sense (like starting a new business or investment, etc.) Stockpiling money like you're suggesting, is not very smart in today's economy.

"Leveraging" yourself in today's economy is smart though? Wait until all of these artificial financial bubbles burst like they did in 2008 (worse this time since nothing really "corrected" in 2008 nor did we implement any really measures to prevent it from happening again) and you've got monthly payments coming in and you lose your job. People like me who have no payments don't worry about such things. We don't worry about how we'll make ends meet when the economy tanks or anything unexpected happens. People like me will also be flush with cash when the real estate market turns once again allowing us to snap up property for pennies on the dollar from people like you who get into debt to "leverage themselves to accumulate wealth" because they were so "smart" ROFL

Nobody borrows to wealth. Well, I should say that random people can but you might as well place your life's savings on a single number at the roulette table because your odds are far better. Nobody smart does that though even though your odds of hitting it big are far greater because that's foolish, right? This idea that you have to finance everything in your life is what causes people to lose their ass whenever the economy isn't strong. Meanwhile, people with no debt continue to build even in times of economic strife off of those "smart" people who leveraged themselves.

Tortoise and the hare. The hare seems like the exciting way to go but the tortoise wins 99% of the time when it comes to becoming wealthy. Lots of bankrupt hares though who had all of these bright ideas built on a house of cards.

 

[lbowroom]

"Leveraging" yourself in today's economy is smart though? Wait until all of these artificial financial bubbles burst like they did in 2008 (worse this time since nothing really "corrected" in 2008 nor did we implement any really measures to prevent it from happening again) and you've got monthly payments coming in and you lose your job. People like me who have no payments don't worry about such things. We don't worry about how we'll make ends meet when the economy tanks or anything unexpected happens. People like me will also be flush with cash when the real estate market turns once again allowing us to snap up property for pennies on the dollar from people like you who get into debt to "leverage themselves to accumulate wealth" because they were so "smart" ROFL

Nobody borrows to wealth. Well, I should say that random people can but you might as well place your life's savings on a single number at the roulette table because your odds are far better. Nobody smart does that though even though your odds of hitting it big are far greater because that's foolish, right? This idea that you have to finance everything in your life is what causes people to lose their ass whenever the economy isn't strong. Meanwhile, people with no debt continue to build even in times of economic strife off of those "smart" people who leveraged themselves.

Tortoise and the hare. The hare seems like the exciting way to go but the tortoise wins 99% of the time when it comes to becoming wealthy. Lots of bankrupt hares though who had all of these bright ideas built on a house of cards.

Why do you assume these people are over extended?

 

[Kablaam]

I actually don't drink coffee but thanks for playing. Funny how defensive people get around the subject of finance when you tell them that reckless spending is unwise. Kind of explains why so few people having a savings/retirement and pretty much everyone is in debt. Heaven forbid that someone points out that spending more than you make is unwise because he's the most evil person on the world wide web. Sorry to bring reality to your fairy tail.

Says someone who drives a tesla. If you practiced what you preached you would drive a Corolla or a leaf. I’m sure with your vast financial experience you’ve done a cost analysis on the most financially responsible vehicle to drive. Newsflash, it isn’t a Tesla, even used. Even financial idiots like us can tell you that it’s cheaper in the end to drive either of those cars, new or used compared to a tesla.

Also, where in any of these posts did the OP or any responders say they were buying a car more then their yearly income?

Enjoy your home brewed tea

 

[Ostrichsak]

Why do you assume these people are over extended?

Because they would just pay cash and not be interested in financing a depreciating asset. This idea that you can somehow become rich by playing the spread between interest rates is a terrible plan if your goal is to become wealthy.

 

[Ostrichsak]

Says someone who drives a tesla. If you practiced what you preached you would drive a Corolla or a leaf. I’m sure with your vast financial experience you’ve done a cost analysis on the most financially responsible vehicle to drive. Newsflash, it isn’t a Tesla, even used. Even financial idiots like us can tell you that it’s cheaper in the end to drive either of those cars, new or used compared to a tesla.

Also, where in any of these posts did the OP or any responders say they were buying a car more then their yearly income?

Enjoy your home brewed tea

I'm really not sure where your statement about whether the car is worth more than their yearly income comes into play as I said no such thing.

Your post also assumes that I didn't do exactly that (driving Kias & other econo boxes) for a number of years to get to where I am now.

I also probably wouldn't be buying used Teslas if I didn't find a way to make money on each one. More importantly, I'm not financing the cars that I buy which makes the "risk" that I'm taking substantially less when I don't have a monthly payment or interest to worry about. The fact of the matter is that I have considered selling them and going back to beaters but 1) I can't bring myself to drive gas-powered vehicles anymore and 2) I can't make the kind of money that I've been making buying and selling used Teslas. The only thing better than super low depreciation by buying used vehicles is finding a way to make money on said use vehicles.

 

[Kablaam]

“Heaven forbid that someone points out that spending more than you make is unwise because he's the most evil person on the world wide web.”

what did you mean by that ?

we were talking about cars no?

 

[Ostrichsak]

“Heaven forbid that someone points out that spending more than you make is unwise because he's the most evil person on the world wide web.”

what did you mean by that ?

we were talking about cars no?

Spending more than you make is a generalized statement. Your budget shouldn't exceed the amount of money coming in is another way to look at it. Spending more than you make via financing/loans is what gets people into trouble. Financing depreciating items you can't afford only magnifies the problem If the goal is to become wealthy. If the goal is to just have flashy things and impress people you don't know at the cost of leveraging your future financial security then by all means... go right ahead. Just don't come on here trying to convince others your idea is a good one is all I'm saying.

 

[oktane]

Because they would just pay cash and not be interested in financing a depreciating asset. This idea that you can somehow become rich by playing the spread between interest rates is a terrible plan if your goal is to become wealthy.

Why pay cash when I can easily make more than 1.75% investing? That would be stupid to pay cash. Especially when inflation is more than 1.75%. Apparently you haven't heard of "opportunity cost". And you have to be the world's worst investor to not do better than 1.75%.

 

[BlackHammer]

... Just don't come on here trying to convince others your idea is a good one is all I'm saying.

Aren't you trying to convince others that your ideas / opinions are good ones as well?

 

[Ostrichsak]

Why pay cash when I can easily make more than 1.75% investing? That would be stupid to pay cash. Especially when inflation is more than 1.75%. Apparently you haven't heard of "opportunity cost". And you have to be the world's worst investor to not do better than 1.75%.

No, the "world's worst investor" would suggest borrowing against a depreciating asset to invest in "the spread" to gain wealth.

I love the insinuation that I don't know what a simple phrase means in an attempt to make me look like I don't know what I'm talking about since that's the only play that you have. Let's examine the numbers a little deeper since you can't seem to do so yourself given the outline I've provided, shall we?

How much money do you think you would gain borrowing $250,000 @ 1.75% interest to play the spread? That $250k is going to be worth $125k in 4 years which means you're out the other $125k right off the top. There's also the interest which is going to cost you about $10,000. Don't forget about sales tax and registration which will set you back another $20,000 give or take depending on what part of the country you live in. This means that you would have to make over $155,000 in a 4-year window just to break even playing the spread.

Oh, don't forget, this also insinuates that the market remains strong for that to happen and there are no hiccups or downturns during the entire time. Nobody alive can guarantee that and if they say they can, you're talking to a liar. That's an awful lot of risk for even less reward and anybody who truly understands finance can see it with their own eyes.

Even if I gave you a VERY generous guaranteed 12% return on your $250k investment for four years even with compounding interest you won't make that $155k you're out due to depreciation, interest (even at 1.75%) and sales tax & registration. You'll "make" a little less than the $155k you lost, give or take. That reminds me, I wonder what it would cost to insure the worlds fastest exotic hyper-car. ROFL Such a great investment strategy! Why isn't everyone doing this?!

Oh, and that assumes that everything goes perfectly and there's no hiccups to the plan like a loss of income, medical expense or economic collapse that derails your ability to pay. That would be the risk factor that you seem all-too-comfortable with ignoring like it isn't a thing. You're also the same guy who thinks that going to Vegas to gamble is a great investment strategy because nobody ever loses, right?

You tout "opportunity cost" and yet you don't talk about the flip side to that same coin which is (in part) investing that same $5,000 every month that you would be spending on a car payment in the same funds. That same interest rate & compounding interest yields more than DOUBLE that amount over four years and puts you in the $314k range of profit. This is also investing that YOU control because if life happens you can simple decrease your investment for that month or two and not have to consider bankruptcy.

But no, please, continue talking to me about opportunity cost as if I'm the one who doesn't understand.

 

[Ostrichsak]

Aren't you trying to convince others that your ideas / opinions are good ones as well?

No, I'm pointing out that math isn't that difficult and just because you talked to one guy that hit it big in Vegas doesn't mean that the odds aren't stacked against you greatly.

 

[lbowroom]

Hang on, are you just trying to say that most people shouldn’t buy a Tesla? Just checking….

 

[lbowroom]

No, I'm pointing out that math isn't that difficult and just because you talked to one guy that hit it big in Vegas doesn't mean that the odds aren't stacked against you greatly.

The odds of earning more that 1.5% on investments is stacked against us greatly? As bad as Vegas? Really?

 

[Ostrichsak]

The odds of earning more that 1.5% on investments is stacked against us greatly? As bad as Vegas? Really?

Reading comprehension isn't your strength, is it?

 

[mc14]

Spending more than you make is a generalized statement. Your budget shouldn't exceed the amount of money coming in is another way to look at it. Spending more than you make via financing/loans is what gets people into trouble. Financing depreciating items you can't afford only magnifies the problem If the goal is to become wealthy. If the goal is to just have flashy things and impress people you don't know at the cost of leveraging your future financial security then by all means... go right ahead. Just don't come on here trying to convince others your idea is a good one is all I'm saying.

I actually DO have an MBA in finance and own multiple financial services practices while being a fully licensed fiduciary financial advisor. The funny part to me about reading this thread is neither side is ever going to convince the other they are wrong or right, but oddly enough both sides are correct. Financing a new vehicle can absolutely make a ton of sense if you have significant capital gains in a non-qualified account you choose not to pay tax on at the moment until more clarity regarding the new tax law is released. Many wait to tax loss harvest at the end of the year. You bring up risk in a way that means absolutely nothing depending on folks time horizon.

Not justifying financing over 110% of a vehicle ever - and you are correct in that 98% of folks out there don't subscribe to any budget, and live outside their means. This however doesn't correlate with a member listing a good auto financing rate for other members.

Point: Financing a new vehicle is not "always" a bad idea, but it depends on folks financial situation. Albeit true that most buy cars they can't truly afford and finance it so it looks like they can. It is odd you are trying to prove your point to people on a Tesla thread.

 

[lbowroom]

Reading comprehension isn't your strength, is it?

Reading between the lines certainly is…