Car prices are still insane.

[redpoint5]

Originally Posted by freebeard

I made the post at #8, but it didn't take. So here it is again

Thanks, I meant to listen, but with infinity competing for my attention...

Write's Law would only be applicable to the cost of the battery, as everything else is either low cost, or a mature process.

Then there's the fact that EV production isn't doubling every year, so that isn't a good assumption.

EVs becoming more affordable over time is precisely why Elon jumped in when he did.

All of the comments seemed to be directionally correct, but I don't buy the optimistic assumptions made.

EVs are likely cheaper from TCO standpoint now. It's that upfront sticker shock people can't get over.

[JSH]

Originally Posted by redpoint5

The median age of a new car buyer is 53. It has always been the wealthier folks purchasing new vehicles.

True. The median income of a new car buyer has always been well above the national median income. (At least in my lifetime)

Originally Posted by redpoint5

Median income has held on.

Median income is keeping up but that 2nd quintile is increasingly struggling and the middle moves in two directions. "professional" workers with degrees are keeping up or even doing better when adjusted for inflation - especially married couples. Those without degrees (or trades) that work in the service sector are not keeping up with inflation. On average of course - there are always outliers.


Looking at the latest census data (2021) of household income by quintile (spilt into 5 groups), those groupings are:

1st $0 - $28,007
2nd = $28,008 - $55,000
3rd = $55,001 - $89,744
4th = $89,745 - $149,131
5th = $149,132 - Infinite

A household needed to make $286,304 in 2021 to crack the top 5%


There are some pretty strong trends.

AGE:

It is a bell shape.

0 - 25 only 26% are in the 1st and only 5% in the 5th
45-55 is the reverse with a whopping 30% of households in the 5th and only 13% in the 1st.
over 65 sadly 31% are in the 1st and only 12% in the top.

I doubt anyone is surprised that people start out with low income and then steadily rise until they hit the peak earning years between 45 and 55. Then people retire either voluntarily or not and income plummets.

Married vs Single:

Again not surprising

33% of married couples are in the top 5th income quintile and only 11% in the bottom 1st quintile.

Single are the opposite with 36% in the 1st and only 8% in the 5th

Urban vs rural

Inside a metro area is almost a flat even distribution with 19% in the 1st and 21% in the top. Rural has a clear trend with 27% in the 1st and only 11% in the 5th.

Rural areas have a greater percentage of poor people in that 1st quintile (27%) than in a city proper (22%). The burbs have the lowest percentage of 1st (17%) and highest in the 5th (23%)

Number of workers.

The data follows logic - the more people working in a household the more that household makes.

Mean number of earners per quintile

1st = 0.4
2nd = 0.9
3rd = 1.3
4th = 1.7
5th = 2.0

Or to look at it a different way - a whopping 69% of households with 2 or more earners are in the 4th and 5th quintile. 46% of households with only 1 earner are in the 1st and 2nd quintile.

It is really hard to get ahead in the USA as a single person or with one partner staying home instead of working.

[redpoint5]

Originally Posted by JSH

It is really hard to get ahead in the USA as a single person or with one partner staying home instead of working.

There's probably a causation vs correlation issue with some of this data.

Poor people aren't poor because they are single, they are single because they are poor.

I'd have way more money if I were single, having roommates take care of the mortgage, taxes, and insurance. I'd be eating less costly food. No child related expenses. Tons of free time to work on profitable ventures...

Our household fits that data precisely, with us being in the 5th quintile and 2 earners. The thing is, the 2nd income doesn't make us anything because we have to hire a nanny and pay taxes on the income earned to pay the nanny. It almost wouldn't matter financially if one of us stayed home.

Anyhow, my only financial goal was to make more money than a prison guard within 5 years of my release, and I accomplished that. I've got all I want that money can buy short of a helicopter.

[Isaac Zachary]

Originally Posted by redpoint5

There's probably a causation vs correlation issue with some of this data.

Poor people aren't poor because they are single, they are single because they are poor.

I'd have way more money if I were single, having roommates take care of the mortgage, taxes, and insurance. I'd be eating less costly food. No child related expenses. Tons of free time to work on profitable ventures...

...The thing is, the 2nd income doesn't make us anything because we have to hire a nanny and pay taxes on the income earned to pay the nanny. It almost wouldn't matter financially if one of us stayed home...

If it's total household income, then I'd say that yes, being married and having a wife that works so you can pay a nanny still makes it look like you're richer on paper. Your overall household income is more.

Would the money from roommates be considered income? Or it could be that if you have several roommates in a house you have more earners in your household, or so I would think. It depends on what you consider a household to be or what you consider income, or at least what the person think's who's putting together that income table.

[redpoint5]

Originally Posted by Isaac Zachary

Would the money from roommates be considered income? Or it could be that if you have several roommates in a house you have more earners in your household, or so I would think. It depends on what you consider a household to be or what you consider income, or at least what the person think's who's putting together that income table.

Rental income from roommates is income. That said, I never claimed the income because it's pointless. I'd then have to keep track of all the expenses related to the "business" of maintaining the house, deduct 100% of the rental income with those expenses, and end up in exactly the same spot of having paid no taxes on the rental income.

Not all of my roommates have been income earners during their stay. One guy was taking classes to be certified to skipper a larger class of ship. He took classes in the winter when Alaska was frozen over, and went back to work in the spring. A couple others were attending college.

[Isaac Zachary]

A quick spreadsheet shows that at 9% interest (which interest can vary wildly, depending on who's getting the car) if one follows the 20-4-10 rule (20% down, for no more than 4 years, no more than 10% of income for payments and insurance), for each $5,000 the car costs adds $100 to the monthly payment. A $20,000 car would be about $400 per month, for an example. That doesn't include taxes, fees, insurance or gas, which can vary wildly depending one many factors. But assuming it all works out to $100 per month (except fuel, maintenance and repairs which seem to be in addition to the 10% of the 20-4-10 rule) then for every $12,000 a person/household makes per year they can afford $5,000 more car or $100 per month. For an example, someone making $60,000 could afford no more than a $20,000 according to that rule, assuming their insurance and tags don't amount to more than $100 per month and their interest rate is 9%.

The Dave Ramsey rule is all vehicles shouldn't be worth more than 50% of total income, So a $60,000 earner can "afford" a $30,000 according to Ramsey. IIRC, Dave Ramsey also doesn't approve of getting an auto loan, so it's $30,000 max, but not more than what you have in cash. Which if that's $1,000 in cash, then you can only afford a $1,000 car.

Sam Dogen’s rule is only 1/10 of annual income?! (A $60,000 per year earner only can afford a $6,000 car!?, Who is this Sam Dogen?!)

https://walletbliss.com/how-much-car...0%20in%202019.

[redpoint5]

I don't budget because it's extra work for no benefit, but hardly anyone has the aversion to spending I do, so it doesn't work for most people.

My rule of thumb is to spend the least I can on a rapidly depreciating asset that accomplishes the task I need it to. I splurged 13 years ago and spent $17k on the Acura I still have. I financed it because the interest rate was something like 2%. So long as the interest rate is well below my expected rate of return on investments, there's no problem financing. The real reason I financed is that I was simultaneously purchasing a house, and had my mom "buy" the car so it didn't appear as a liability for the purposes of getting a mortgage approval. I wanted the largest mortgage I could get approved for because I wanted to purchase the biggest house... because I wanted more rooms available to rent out.

Dave Ramsey is good to follow if you're like most people who enjoy spending and are prone to getting into debt trouble.

The only debt I've ever had that exceeds the cash I have in the bank to cover is mortgages.

[freebeard]

Originally Posted by redpoint5

I've got all I want that money can buy short of a helicopter.

Have patience. That is another technology that is still sorting out. I forget the name of the company, they're in Washington State.

[Isaac Zachary]

Originally Posted by freebeard

Have patience. That is another technology that is still sorting out. I forget the name of the company, they're in Washington State.

I always wanted to fly an autogyro or an airship.

A helicopter would be cool too.

[redpoint5]

I pick helicopter because it's insanely difficult to learn.

Also because of the TV show Airwolf when I was a kid.