BlueBellThunder

If hypothetical everyone decided to only buy what they can afford or need the economy would collapse. The people that can afford 2 or more cars and are financially secure should just be glad their in that position, and stop preaching to everyone else.

m05fastbackGT

Also bear in mind that part of the reason for the previous 13-14 models not selling like Mustangs usually do are due to 2 factors..

Prior to 2008, Mustang had no real competition to go up against, as in the Challenger and Camaro respectively.. IIRC during the 2005 model year, Ford sold a total of 161,000.00 units followed by 166,500.00 for the 2006 model year and then tapered down to 135,000.00 by 2007..

By the time the Challenger was re-introduced in 2008 ! Sales dropped from 91,250 in 2008 to 66,500 units in 2009 and didn't rebound again until 2010 just slightly following the arrival of the 2010 Camaro at just 73,000 units and then increased to 83,000 units for the 2012 model year..

Then on top of that, the financial meltdown that took place was also a contributing factor which really didn't help matters either..

At any rate, I'll just address your prediction by stating the S550 had sure better outsell the previous generation in 5 years, especially now that Ford is selling this new Mustang globally

2011 Kona Blue

Yes sir, My point exactly. In order for an economy to be strong, we need consumers spending and buying products. Without people buying , economy collapses. Its economics 101.

If people waited till they had 30k just laying around in the bank to buy a car, almost nobody would have a car in America. If people waited till they had the cash for vacations, electronics, houses, jewelry, cars, very few would have them which would help continue with the economy to collapse.

So to say don't buy a car unless one has the cash in the bank to pay in full , is completely stupid and insane. Now its smarter to keep with a car budget and don't take on more car payment than one can afford.

Get out there and support the economy. Spend baby , spend. Man I miss the 80's. Lol

m05fastbackGT

I could not agree more John

m05fastbackGT

Perfectly well put Kona.. Here's to you

IndustryLeech

Check out Mr. Sanctimony!

FlyTexas

Oh sure, I get your point... the "rule of thumb" of not buying any car that you can't write a check for is just an easy "rule to live by" for people who perhaps aren't quite as good at money management.

At current interest rates, financing often does make sense. I can't borrow money at 1.9% to buy a house, much less invest in my business or stocks, so if I can borrow money at 1.9% for a truck and use my cash for those other purposes, more power to me.

Amen... And leasing is generally quite expensive, but that varies from state to state (due to tax treatments) and sometimes when the manufacture does a subsidized lease, those can make sense.

Ford has been doing some $199 a month sign and drive deals on the Fusion and Escape in the past year. It is a 36 month lease with only the first payment due at signing. If you need a basic stripped car for transportation, that is not bad... Buying it and selling it in 36 months is not likely to be cheaper than that deal. But it is the exception, not the rule.

You put more than I do... but I also pay $800 a month extra to my house... which my financial adviser keeps telling me costs me money since my mortgage is 3.5% and I write it off. But there is peace of mind in knowing that my home will be paid off in 7 years.

FlyTexas

Sure there would, but there might be fewer of them...

If people saved their money more, they could buy them just a bit later, people still need cars to drive...

FlyTexas

Thanks for asking for me to explain (so often on the Internet, I just get attacked without that chance!)

What I'm suggesting is that if you don't have savings in the bank (IRA, savings account, stocks, etc.) equal to the price of the new car, then you shouldn't buy a NEW car.

By all means, buy a used one. If you need a car for transportation, then you need one. If you have to finance it because you don't have the money, yet you have to drive to work. Well, that's life and I understand.

That happens, it isn't a crime... if you bought a 3 or 4 year old reliable used car and simply had to finance it because of your situation, then so be it. We all do what we have to do.

If it was a NEW car, then I would say that was a poor decision... You don't *need* a new car, you *want* a new car...

Paying off the car is not the issue, most people do pay for them because they want to keep the car.

The real issue is... if you didn't have the money in the bank, that should have been your first priority.

Just as a simple example:

New car: $40,000
Used car: $20,000

You have to finance both, you simply don't have the cash for either (fair enough, that is reality).

Payment on new car - $500 per month
Payment on used car - $250 per month

If you had bought the used car, you could have put the $250 left over money into the bank as savings.

Move the numbers around as needed, perhaps it is a $20K new car and $10k used car, the point remains... it is what ELSE you could have done with that money besides make a car payment.

You had a trade worth $12,500. Lets say that you looked at the first two numbers above:

New car: $40K - $12.5K trade = $27.5K for new car
Used car: $20K - $12.5K trade = $7.5K for newer used car

Payment on new car - $350 per month
Payment new newer used card - $100 per month

Again, $250 difference that could have gone into savings.

If you're 30 years old and spend $250 less per month on a car over 30 years and you invest that money in the stock market and earn the long term historical rate of 11% per year (it rises and falls, but 30 years is long term money).

That $250 a month will give you $632,320 when you're 60 years old.

That is a lot of shiny....

BTW, compound interest is a powerful force... Do it from the age of 20 (as I should have done), and it would be $1,848,071

---

Side note, I have three kids... When they were born, $10,000 each was put into investment accounts for them (Thanks Mom!). We add $100 per month for each child. The goal is to teach them to save first, spend later. If they keep up the same $100 investment each year, they'll have over $11 million dollars (each) when they are 60.

The lack of savings in the US is embarrassing.

FlyTexas

I thought about this sentence again and thought I'd offer some clarification.

If you paid off the car, then clearly you can afford it, and that is your choice to spend your money there.

Just understand that paying $250 a month extra on a car over 30 years is costing you 2/3 of a million dollars vs. putting that same money into long term investments.

If that is where you want to put your money, more power to you. We all need SOME fun in our lives or we become Scrouge McDuck swimming around in our money.

I am well aware of the cost of my fancy truck, but it is a reward to myself and my family for working hard.

---

Note: If you already have savings and investments, if you're on track for a comfortable retirement, then by all means, go buy the new shiny and have fun! The issue is that way too many Americans have nothing saved for retirement and they go out and buy new cars.

FlyTexas

That is what the finance companies want you to think...

If you saved your money first, then bought the car.... the same car would get sold, just at a different time...

The car companies and economy would be better off if we all had less debt and more savings... (to a point, I understand the economic theories behind TOO much savings, which is a fair point, but we're far from THAT).

RunNgun

Or just think, keep saving until you're 80! Of course by then you'll be dead but hey, saving is saving!

JeffreyDJ

I think the point here is to retire and stop working and help ensure you're not relying on SSN which may/may not be there.

FlyTexas

^ This...

A friend of my parents had to retire early at 62 recently... He gets about $850 a month from SS...

It is a nice supplement, but he has less than $100K to his name, so he is going to be poor for the rest of his life.

My parents are worth several million, they'll be just fine. My Mom is 70 and my Father is 67, both are retired in paid for houses with a monthly income from their investment accounts that will last for the rest of their lives, with the remaining money to be paid to their grandchildren when they die.

The key? Both saved about 15% of their income for several decades and let it grow.

Do that, pay yourself first, and then buy whatever you want with whatever is left over.

m05fastbackGT

Which is exactly why I always ask questions first ! Although I can't deny that some of your comments were taken as offensive by some of the other members, especially the comment regarding not to buy a new car unless you have 30-40k sitting in the bank.. As you need to take into consideration that not everyone on this website is as fortunate as yourself that has 30-40k of disposable income sitting around in their bank accounts, including myself..

I was able purchase/finance my car without IRA, Stocks ect and I surely don't have 30-40k of disposable income in the bank, but yet I had no problems qualifying for my car loan, because I have excellent credit due to being responsible when it comes to paying my bills/expenses and so forth always on time..

Btw : My car was not used, in fact it was a 2005 GT which was factory ordered new..

So I assume this means that I made a poor decision ?

Actually, yes it is the issue.. If you're able to pay the car off ? You are therefore able to afford it..

That's the purpose behind banks/financial institutions running background checks during the application/qualifying process..

My car new was: $27K - 12.5K trade in with finance rate = 17.5K

Payment on car - $262 per month for 60 Months

As you can see, I did just fine and yet was able to stay well within my budget without having to dip into my savings/IRA/checking accounts ect..

Although I understand where your coming from in regards to purchasing newer used cars ? I've been there and done that, and will never buy a used car again unless I know who the original owner was and how well the car has been maintained and taken care of..

m05fastbackGT

Okay ! I understand where your coming from, however there's a very huge difference between a long term 30 year investment over a short term 5 year car loan which isn't even the main point, as nobody here is suggesting they dip into their IRA accounts or whatever in order to finance their cars ..

FlyTexas

Yes, I know... I get that response in real life as well sometimes, but it does help when the message is delivered with a compassionate tone which doesn't come across on the Internet very well.

No judgement, harshness, or anything else is intended in these posts, rather I'm just trying to share what I think is sound financial advice. At least in my opinion.

I do fully understand that.

That being said, the 30-40K shouldn't be considered "disposable income", it should be called retirement savings.

I never said you should pay cash, I said you should be able to, that's all. If you're on track with savings to retire comfortably, then by all means, buy the new car and have fun with it.

My concern is that a lot of people are buying new cars and they DON'T have any savings to speak of.

I have no doubt that you can get financed. I also have no doubt that you can pay for the car.

Neither of those are the point of course. The point is, just because they'll give you the loan doesn't mean you should take it.

From a financial point of view, assuming you don't have savings in the bank equal to the price of the car, then yes you did. (if you DO have savings and simply choose not to use them, then this doesn't apply)

They only care that you'll pay for the car, which most people do.

They don't care if you have money saved for retirement nor how well you'll live in retirement.

If you have plenty of savings and are on track to retire comfortably, then forget what I said, buy away and enjoy.

---

Let me put this another way... Most Americans in their 40's don't even have 6 months of income in savings, yet they go buy new cars because they can cover the debt payments...

Maybe it is fun today, but it is a really poor financial decision.

I understand that too...

You could always do what my Mother does... She just bought a brand new Lexus RX last month... her last one was a 2006 Lexus RX, she had it just over 9 years...

If you take what she paid and subtract what she got on trade, the per month cost to have a nice vehicle to drive, it isn't so bad. This one might be her last car, she is 70 years old and she doesn't drive that much, so odds are she'll never get another one.

My Father takes it to extremes... He recently had to break down and buy a new Cadillac, which he had been avoiding for awhile because he hasn't cared for much of the style in recent years. Why? Because his prior Cadillac he purchased brand new... in 1984... He bought a maroon Eldorado in 1984 with his first big bonus check at work and owned it 29 years... he had it repainted twice, the engine and transmission done once, and the interior done about 10 years ago. Sadly it needed a complete restoration, he offered it to me if I wanted to have it done. We got it priced out and it was going to cost about $20K to have it done right top to bottom and once done, be worth about half that. Even the restoration shop said, "unless this specific car means a lot to you, it would be cheaper to scrap it for parts and go out and buy a nice redone 1984 Eldorado that someone else paid for".

In the end, I decided to pass on it, even if it is made to look like new, it is still a 1984 car with all the issues attached... To upgrade the systems to modern (brakes, transmission, engine, etc.) would have been another $7K or so.

FlyTexas

I'm simply suggesting that you should HAVE an IRA before you buy a new car. Lots of people don't have one and they spend all their money on shiny stuff that doesn't hold any value.

If you don't have a retirement account setup, the very last thing anyone should be doing is buying a new car. Take that money and setup a retirement account, pay yourself first each month, THEN once that is done, if you have the money left over, go buy your nice new car and have fun.

Does that make more sense?

2011 Kona Blue

Buy those cars and the other stuff. Let's keep the American economy good. People don't buy stuff, then jobs are lost, more jobs are lost and no one can save for anything or have things. Enjoy life peeps. Very few people would have anything in this world if they waited to have the cash for it.

Now, I certainly wouldn't recommend one buying a Shelby Gt500 if it means that your family will be needing to sleep in it because you can't pay the mortgage. With that mentality, the economy would collapse and peoples investments would go down the drain. Everybody knows a solid economy is when people are spending money. People woukd be pulling there money out of the stock market.

Buy those toys and stuff peeps

BlueBellThunder

I don't undersatnd your math. You can't borrow $27.5k for $350 a month unless you borrow for 7 or 8 years at 0% interest which is impossible. I think it's nice that you can put away so much for retirement. But I the real world so many people just make enough each month to pay the bills, but I don't won't to get into a political discussion on this board. I'm also a believer in if you want something and can afford it just get it. Life is to short to worry long term.