Would you guys pay cash for a used 2002 and above or finance it?

[NRG]

Would you guys pay it straight up cash if you had the money for a used 2002 or would you think it's a stupid thing to do with the money?

I have been told my family member to take the 60K - 70K and invest it in another house. I'm kind of tired of having rental property...just want to treat myself something nice.

Maybe I should just 20K and finance the rest so that I can used the others on investment?

Your input is appreciated.

 

[drew]

This guys says it best:
http://www.bygpub.com/finance/
(read it. Do it.)

I think the golden rule is:
NEVER get a loan on a depreciating asset. Always pay cash.

Next:
Your things own you; they rob you of opportunity and resources to do other things.

Next:
Very small amounts of money, I'm talking hundreds of dollars, when you are young (18-20's) generate huge rewards when you are older (35-40).

To the point where you will have so much money in reserve that you can buy whatever you want later.

Next:
Any car is a money pit. It depreciates, it requires constant maintainence, requires time and insurance. It is darn there as bad as watching TV, but at least you have a little something left over.


IMHO:
Resist the urge to get yourself something "nice" until you have a critical mass of wealth established. Once you have a bit of concentrated wealth you get more in the future with a lot less effort.

I figured that every $5 I was able to save (not 'make' mind you...SAVE, that is money that is left over after all the dust settles) has given me $5,000 a decade later. I saved probably 30% of my gross when I was 18-25 and I wish I would have saved more: it has turned into a small fortune by time I was 35. And I worked minimum wage jobs

And yes, I bought a lot of crappy awful rental property. I cleaned many drains on Friday and Saturday nights and responded to "lock out" at all hours of the night. I replaced a lot of rotted floors and pulled up a lot toilets.

I cashed out most of it during this current real estate spike, I pretaxed/net somewhere between $300-$700 a hour, every hour, that I worked on my awful rentals doing mind numbing menial tedious labor.

Thank Gawd, people really don't want to be rich...or I'd still be slaving away trying to get ahead. Your day job just pays the bills, it will never get you ahead. Most people just want to spend what they have now, hope for better times and have immediate "get it now, pay later" rewards. Don't be one of those folks...

Money = freedom and opportunity.

And while I'm at it: Be generous and kind to friends, family and strangers. Doing this pays back hundreds of times. People like to do business honorable trusting folks.

Drew

/I still have yet to buy myself a new car, though that might change when the Ford GT goes down to MSRP. I'm still a cheap bastard, even though I probably don't need to be anymore. It is just a matter of priorities, I think: I'd rather spend my money on other things.

 

[vtecNSX1]

That article was very interesting but I still dont get how your $5 turns into $5000 10 years later. Im only 19 and have about $2000 saved up that I was going to use for wheels but 2 mil in 10 years sounds better .

 

[NRG]

Thanks for the input Andrew. I guess I should stop looking for an NSX since it's more of a "want" than a "need". I do have a 2004 car that will get me from one point to another. Darn .

I have heard that max'ing out the 401K plan may not be the greatest thing to do. A friend told me that when you take the money out during retirement, your tax might be higher today. For example, your account is over 2million dollars....and you need to take those money out by certain time frame. Is this true?

 

[CokerRat]

Hmmm, a 1000x compound return over 17 years (age 18 to 35) is 50% per year. Great return if you can get it, but I'd hardly say that anyone should be able to get this kind of return.

I agree with Drew that you will never get average returns like 50% / year working for a wage, nor will you get them investing in stocks etc unless you are either Warren Buffet or in-the-know in a particular industry.

However I think its a little presumptuous to think that everyone ought to go out and become entrepreneurs. Entrepreneurs take on a ton of risk to get those kinds of returns. For every "Drew" that succeeds with a small fortune amassed in 20 years, how many are there that barely make ends meet, and how many more go out of business? I'm sure those guys do not have NSXes and won't be posting here.

 

[drew]

Well I might have been overly dramatic. OK, I was. On reflection, the ratio's are inflated by a factor of probably 10-50.

Im only 19 and have about $2000 saved up that I was going to use for wheels but 2 mil in 10 years sounds

The point is that you need to look at every $5 a real unit of opportunity. Don't spend it away thinking "its only five dollars"...it really adds up over time. Besides what did you actually buy with it? Another useless dust collector, a time waster or a resource hog...if so: not only did you NOT need it, you would have been better off with out it.

Now that Engel07 has a block of real money that he can do something useful with it. Like drive a harder bargain on something, find an opportunity to take advantage of it and so on.

(NSX CONTENT)
I did buy my NSX as an extra car because you do have to "live" a bit, life is short. I bought several years ago for $27K that had to be purchased cash...which knocked out a lot of buyers (and the original price was $32K...but since I had cash and nobody else did: I got to drive a bargain and keep more of my cash.). The Bose was out too...hence my "how to" write up.

But I don't have very much else: the interior of my house is spartan, no cable/TV, minimal furniture, no pictures. When you get married the wife brings all the "filler" with her anyways. I do have a lot of tools, because I find I do the best job and doing it yourself saves money/time.

My advice to Engel07:
Have only one car. The NSX is a fine trouble free car. The TCO is MUCH less than just about any other car out there. It is the best and most INEXPENSIVE car that I have ever had...nothing goes wrong with it, it is fun to work on, depreciates less than other cars and is a lot of fun to drive daily.

If you must have another car: make it a beat up open bed truck. It will help you service the rentals and you can "plead poverty" when you need to drive a bargain.

Armani suits are worth every penny. Otherwise just live out of jeans and free t-shirts.

Drew
/I wish you luck

 

[W]

I won't borrow to buy a car unless I'm investing the money elsewhere. This is going to sound contradictory, but I'm the type who prefers to leverage my investments, so I'd rather buy rental property and pay a car loan than have no rental property and no car payment.

In your case, it sounds like you're better off borrowing since you are planning to buy rental property.

 

[mc-ca]

This thread reminds me of the book "The Millionare Next Door". It's a very good book where the author profiles a large group of people who's net worth is >$1M. They are all like Drew - very cheap. They buy cars that cost on average $25K - usually pickups. Save like crazy and don't have many expensive tastes. He also looks at highly paid people like lawyers and Doctors and typically finds them to be living on the edge and almost no savings.

A point that suprized me was the difficulty of accumulating wealth from wages vs investments. Wages get taxed at huge % - 35% fed, 9% California, and 7% FICA. Capital investments only get 12% when you sell.

 

[NRG]

For all you NSX owners, congratulation. There are many people, like myself, who doesn't have the privileage to drive such a beautiful car (just yet). After 15 years of dreaming, I was like this much (-) from the reach of an NSX, until Drew woke me up from my dream. Thanks Drew j/k. Maybe if i get a bargain like you did, then i'll take the bait.

I think I spent over $40,000 on my CD and DVD up to date. Damnn....my NSX is in the closet! Darnit. I think I should quit my favorite hobby - music CD and DVD movies ....

Overall, I guess the website link answered my question - that I shouldn't get a loan on a depreciation assets (car).

 

[drew]

I think I spent over $40,000 on my CD and DVD up to date. Damnn....my NSX is in the closet! Darnit.

And that is really my point: $5 here and $25 there adds up big in just a few short years. Those years have come and gone....what would you really want to have right now?

Think hard about *any* purchase or expense that costs over $5. Consider: "will it save me time/money?", "give me new opportunity?", "increase my skill set? or "improve my knowledge?" If you have to think for too long: the answer is probably "no, I don't need or really want it".

Go buy yourself another rental instead. And make your $5 decisions at Home Depot.

Drew

Personally: I always wanted an NSX and I got one. I like driving it everyday. One of the best decisions I have made on a car.

Next up is the Ford GT. I discounted the F360 because of the $1200 oil changes that I'm not allowed to do myself. I will admit it is a complete waste of money...but I never have bought myself a new car and life is short.

 

[91 X]

I'm at the other end of your confusion..if that makes sense
I am selling my prized posession(NSX) to get into the investment property game...After seeing what has gone on here in Cali, I don't want to be kicking myself in the ass 2-3 years down the road when the property I passed up on could have paid for a brand new HSC in that time :biggrin:
I subscribe to the theory "Don't work for your money, let your money work for you" Hopefully my sacrifice/risk will pay off and I will have another NSX or HSC in my garage in 2-3 years...
If I were you, I'd buy yourself an early model 91-94 (25-35K) and use your equity to buy it(tax right off interest) and invest the 70K in some more property...save yourself alot of money and still have an NSX and another property..besides, not much difference between a 91 and an 02, except that the 91 looks better up front :biggrin: (not a big fan of the exposed headlights)


Funny side story...last night I was picking up an 18 pack of Miller light on my way over to some friends house. The dude in front of me was buying like 5 or 6 twelve packs of a varity of expensive beer...On his way back in after his first trip out to his car and noticing my NSX, he started saying "Damn...That NSX is sweeet" "I should start buying Miller Light..I drive a bucket and buy expensive beer..what am I thinking" :biggrin:

Not that buying cheap beer has anything to do with my NSX, I just like cheap ass Miller Light..but it was funny just the same...and maybe it does have a little truth :smile:

 

[NsXMas]

While I heartily agree with the sound advice given here, let me be a devil's advocate.

You only live once. What if you scrape and save, and die tomorrow?

Determine what is important to you, achieve balance, and most of all, enjoy the journey!!

If the 2002 NSX makes you more ecstatic than another rental unit could, then I say it's a wise investment in the NSX.

Whatever choice you make, it will be the right one for you.

 

[len3.8]

While I heartily agree with the sound advice given here, let me be a devil's advocate.

You only live once. What if you save and scrape, and die tomorrow?

Determine what is important to you, achieve balance, and most of all, enjoy the journey!!

If the 2002 NSX makes you more ecstatic than another rental unit could, then I say it's a wise investment in the NSX.

Whatever choice you make, it will be the right one for you.

Ditto. Money doesn't always equal Happiness. And so many of us have wittnessed, here today, gone tomorrow.
I would rather have my fun as a young person, then to be 70 and filthy rich. How vigorous can you be in the older ages. I have a Uncle, that sacrificed everything for his kids to have a great life. They do, he on the other hand constantly talks of thigs he wished he had done. Saved a lot of money, in his mid 70's and leaving the bulk of it to the kids. I would agree with Drew on the saving part. You need to prepare for some degree of comfort. If you work hard you should enjoy hard.

 

[Ko-nsx]

While I heartily agree with the sound advice given here, let me be a devil's advocate.

You only live once. What if you scrape and save, and die tomorrow?

Determine what is important to you, achieve balance, and most of all, enjoy the journey!!

If the 2002 NSX makes you more ecstatic than another rental unit could, then I say it's a wise investment in the NSX.

Whatever choice you make, it will be the right one for you.

Well put. When you have money, you want more. Money is only a tool!!! Some things we sacrifice to get "money" are not worth it in the end. If you save and save, get this mass amount of wealth, but none of your good buddies have any money, that's no fun. If you can vacation every month and do it big, but nobody you roll with can afford to buy a bus ticket, thats no fun either. Being comfortable is a good goal to attain, and can be done within reason. Having am nsx is great! Vacationing at carnival in brazil :biggrin: (with money!!! ) is great!!!! Having watches, cars, bikes, women, plasma tv's, all that other, (i got money) stuff ain't S**t if you can't clean have fun with family and friends, on a regular basis. When you have a bunch of money, investments, property, stock, businesses but everyone you love and hang with has to work 7 days 12 hours to keep the lights on, what fun is that :frown: ??? God forbid you have a stroke, cancer MS or another rough illness, looking at a bank statement will be the last thing on your mind. If you want something, you can ALWAYS get what you what at your price. May not be when you want, but when you can handle it. Live everyday like it's your last(within reason) and plan everyday like you'll be here forever.
My.02

 

[Dave Hardy]

Get a 91-93 NSX. It get's you 95% of a new one for 1/3 the cost, and as a bonus, it is pretty much through depreciating. That is my plan.

I also think Drew has excellent advice.

 

[len3.8]

Well put. When you have money, you want more. Money is only a tool!!! Some things we sacrifice to get "money" are not worth it in the end. If you save and save, get this mass amount of wealth, but none of your good buddies have any money, that's no fun. If you can vacation every month and do it big, but nobody you roll with can afford to buy a bus ticket, thats no fun either. Being comfortable is a good goal to attain, and can be done within reason. Having am nsx is great! Vacationing at carnival in brazil :biggrin: (with money!!! ) is great!!!! Having watches, cars, bikes, women, plasma tv's, all that other, (i got money) stuff ain't S**t if you can't clean have fun with family and friends, on a regular basis. When you have a bunch of money, investments, property, stock, businesses but everyone you love and hang with has to work 7 days 12 hours to keep the lights on, what fun is that :frown: ??? God forbid you have a stroke, cancer MS or another rough illness, looking at a bank statement will be the last thing on your mind. If you want something, you can ALWAYS get what you what at your price. May not be when you want, but when you can handle it. Live everyday like it's your last(within reason) and plan everyday like you'll be here forever.
My.02

Bam!!!
As you get older and experience some of these things, reality takes over. Then you really appreciate all the funs stuff. I can truly say that, most of the things I do that are extremely fun don't cost a thing.

I guess. I would have to qualify it though. I am 39 and did the "Blow all my cash thing" Before 25. After growing up and getting married, I became a little more Drew-like :smile: Invested and saved, because now I had responsibilities. Now I concentrate on providing a nice life for my family, as we have defined. We simply buy what we want; we don't get caught up in other people's definition of success. As KO has posted, It’s no fun when you have no one to share it with.

One of my keys to happiness; ** Marry a woman that grew up in a grass hut with no running water, no sewer, no shoes, and use to living off the land. Pretty hard not to exceed that standard of life! I always smell like Roses to her. :smile:

I guess in a long-winded kind of way, I am saying define your own life; don't ask people what to do, when you are deciding on something that equates to your happiness. If you are a reasonable person, a responsible person, you most likely will do the right thing.

Myself I would never tie up that much cash in a Car. Simply because if the bottom were to fall out. I could walk away from one that is financed. Someone could walk away with yours if it is paid for.

If a small interest rate is applied, I have no problem. There are other opportunities for that cash. Talk to a financial advisor; see what is the best way for you to afford such a car. I would buy it in a fashion that looks at the most possibilities of insuring my financial situation.
JAO

 

[steveny]

Hmmm, a 1000x compound return over 17 years (age 18 to 35) is 50% per year. Great return if you can get it, but I'd hardly say that anyone should be able to get this kind of return.

Easily done if one is diligent and not afraid to do things they would rather not do.
I have turned 25 cents into 860 bucks by selling a cap pistolon ebay I bought at a yard sale for a quarter. Had I been watching football or hanging out at a water park all day I would not have had time to read that book on antiques which helped me to know the value of the cap pistol.

I have a friend who is going through some financial problems right now. I loaned her RDPD. I called her three days after I loaned her the book. I asked her if she read the book. She says American idol was on so she didn't have time to read the book. I am thinking if you have the book you don't have time for American idol. Not being able to set priorities IMO is the number one reason people fail.
I want reward without any effort, the masses scream.

 

[steveny]

Ditto. Money doesn't always equal Happiness. And so many of us have wittnessed, here today, gone tomorrow.
I would rather have my fun as a young person, then to be 70 and filthy rich. How vigorous can you be in the older ages. I have a Uncle, that sacrificed everything for his kids to have a great life. They do, he on the other hand constantly talks of thigs he wished he had done. Saved a lot of money, in his mid 70's and leaving the bulk of it to the kids. I would agree with Drew on the saving part. You need to prepare for some degree of comfort. If you work hard you should enjoy hard.

If you ask most entrepreneurs you will find they don't do what they do for the money, I don't do it for the money.
Most entrepreneurs, myself included, do it for the free time. I could not care less about money, it is the not having to have a job and work for someone else that I care about.

There is a lot of nice stuff one can buy with money. I can not think of one thing I would be willing to give up my time at a job to earn money to buy something with. Just seems crazy when you think about how much of your life you have to give up to acquire something as meaningless as a Plasma TV or something similar.



If I needed to have a huge pile of banana peels to be able to pick and chose myself what time I get out of bed in the morning than banana peels is what I would be trying to acquire. Banana peels, money = freedom = happiness.

 

[nsxprimetime]

This is a good discussion....
....as a gearhead since day 1, I spent all of my $ on bikes, motorbikes, and eventually cars for years.....always had the coolest bike or coolest car(or both). Then one day after I graduated college way in debt, it hit that I was just spinning my wheels and needed to change my ways...now I have an old reliable Honda with 222k on it and now I'm glad to know that I'll be paying cash for my NSX when I get to the point where it won't hurt me. For now, I'm thinking about buying a 2nd apt. building in Chicago(closed on my first in '04).

I agree wholeheartedly that [money = free time] and that's more important than having a bigger TV or another car. I don't have a TV, don't even want one! My best experience ever was riding a bicycle from the West coast to East coast in 48 days sleeping in a tent! My only expense was food(and bike tires/tubes)...but I never would have had the FREE TIME if I had been stuck working to pay bills on stuff I don't need. I can't wait to do the same kind of trip in an NSX someday(minus the tent). Hey, speaking of cross-country drives, is anyone on Prime a fan of "Death Race 2000". Great flick!

Listen to Drew....less IS more!

 

[SCS2k]

Whenever I see a topic like this I think of two things I was once told:

"A rich person invests his/her money and spends what is left over. A poor person spends his/her money and invests what is left over."

And:

No one lies on their death bed and says "I wish I had worked more."

 

[nsxtasy]

I have heard that max'ing out the 401K plan may not be the greatest thing to do. A friend told me that when you take the money out during retirement, your tax might be higher today. For example, your account is over 2million dollars....and you need to take those money out by certain time frame. Is this true?

Yes and no. I think this is VERY bad advice. Maxing out your 401(k) - either contributing the maximum allowable by law, or the most money you can afford to contribute, whichever is lower - is, for most people, the very best investment you can make. Let's say you put $14,000 into a 401(k) in 2005 (I think that's the maximum for 2005). The alternative to doing that is to take it as income, in which case you pay tax on it - around $4,000 in tax at a 28 percent tax rate, possibly more or less depending on your income. So you have $14,000 invested, and making a return, instead of $10,000 in your pocket. That return compounds over time. Sure, you will eventually have to pay tax on it... but for most people, the tax rate is NOT higher when they retire than when they are working. And even if it IS, the compounded earnings are likely to more than offset (by far) the higher tax rate itself.

However, it is true that your tax rate at the time you withdraw money from your 401K may be higher or lower than it is today, due to tax law changes as well as changes in your level of income. It is also true that you need to start taking money out by a certain time frame. (You can start withdrawing money at age 59 1/2 without penalty, and you MUST start withdrawing money by age 70 1/2.)

 

[Doc C]

I know this has been hashed and rehashed before, but why wouldn't you take advantage of the ridiculous lease on this vehicle?? Buy your rental property. Lease a new NSX. You're only paying <2% interest on this lease. Your rental property will appreciate much better than that per year. I would never lease another car unless the deal were this good. A lot of entrepreneurs prefer to use other people's money rather than their own. I invested my money into my business and put an addition on my building. I will make more money from that. I leased an NSX and I get the use of Acura's asset for 2%. Granted, I build little or no equity in the NSX, but when (or if) a new NSX comes out, I won't want this car anyway. If it doesn't, then I can by my car at a decent price with a known owner history. With the NSX at the end of it's production cycle, if a new one comes out and the current models depreciate like rocks, then I can dump it for a new one. If no new model, and the value of current model goes up (so to speak), then I can by mine at a guaranteed residual which should be below market value. It seems like a win-win situation. Just my $.02.

 

[milz50]

If you are considering investing in real estate, you may want to consider the impact of financing the car. Financing the car could lower the amount of money a bank will lend you for purchasing real estate substantially more than the amount of the car note.

 

[mc-ca]

Yes and no. I think this is VERY bad advice. Maxing out your 401(k) - either contributing the maximum allowable by law, or the most money you can afford to contribute, whichever is lower - is, for most people, the very best investment you can make. Let's say you put $14,000 into a 401(k) in 2005 (I think that's the maximum for 2005). The alternative to doing that is to take it as income, in which case you pay tax on it - around $4,000 in tax at a 28 percent tax rate, possibly more or less depending on your income. So you have $14,000 invested, and making a return, instead of $10,000 in your pocket. That return compounds over time. Sure, you will eventually have to pay tax on it... but for most people, the tax rate is NOT higher when they retire than when they are working. And even if it IS, the compounded earnings are likely to more than offset (by far) the higher tax rate itself.

However, it is true that your tax rate at the time you withdraw money from your 401K may be higher or lower than it is today, due to tax law changes as well as changes in your level of income. It is also true that you need to start taking money out by a certain time frame. (You can start withdrawing money at age 59 1/2 without penalty, and you MUST start withdrawing money by age 70 1/2.)

To build on this endorsement of the 401K - many employers match the first couple of percent contribution - a huge return on simply saving your money. The reason they do this is because most employers canceled their retirement plans - no more pensions. The modern pension is the 401K. It also is a good supplement to life insurance as it gets bigger and you have a family.

 

[awsomr1]

I agree with Doc C, I lease my 04 NSX with intention to buy it at the end of the lease, I do not know any other program that allows me to drive a 89k car for 860/month including tax with less than 4k to start the lease.

:biggrin: