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Old 08-15-2022, 10:52 AM   #131 (permalink)
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"25%" on housing?? This is just another example of how clueless Dave Ramsey is about the economic lives of the majority of people. He has good advice, but he is on another planet when it comes to the actual numbers.

Putting that aside, I have never purchased a car at a price that exceeded my annual salary. Regardless of payback period on efficiency, that has a way of keeping costs reasonable. But the truth is that most people would be much better off overall if they can manage on far less - even without a car.

If I did not already own my current cars, and consider them a store of value toward the next, I'd be shopping for the cheapest well running POS I could find - and still barely drive it. I'm only looking at the Maverick as an option because I can eliminate the extra vehicle and get into it with cash. I'll likely never be making another serious car payment, not just by necessity, but by choice as well.

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Old 08-15-2022, 11:45 AM   #132 (permalink)
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Originally Posted by Isaac Zachary View Post
The median income for one person in the USA is around $45,000, and for an entire household around $70,000. That means half the population makes that or less. If you factor in taxes, half of individuals take home about $3,500 or less per month. 10% of that is $350 or less. And a household gets about $5,000 or less per month after taxes, so 10% would be $500 or less.

...But even then, the question is, can a person really save money by avoiding old cars and sticking with a monthly payment?
State tax law varies, so I won't comment on that, but federal tax law allows large reductions in tax liability for dependents and lower income families, some of which are refundable, meaning you get the money even if you didn't pay any taxes. Over half of families pay zero federal income tax, meaning it's only the minority of people who pay any at all.

Two people working full time at Taco Bell should be able to afford all the things they need with a bit extra fun money. Adding in kids makes that much more difficult, but then again entry level jobs were meant to introduce new workers to the labor force, not raise a family.

I grew up in a family of 4 with the single income of my father working the frozen food section of Safeway. We didn't eat McDonalds because it was too expensive to eat out, but we had meat every dinner since he had the insider information on discounted meat. Always had at least 1 other non-family member living with us, in our 1 bathroom 0 shower (tub only) house.

There's some point in the vehicle depreciation curve where an older car just costs more to run than a newer vehicle. The very old car market is where people who can't get credit pay cash for a vehicle. A little bit newer car that would need to be financed eliminates those cash buyers and narrows the buying competition.

I sold a Pontiac Grand Prix for $900 cash, and it was junk. The lights sometimes didn't work for no apparent reason (dash would go dim). The trunk couldn't be opened. It had a larger engine but wasn't fast, and got 20 MPG.

Personally, I wouldn't buy a vehicle more than about a decade old unless it had some nostalgic value or otherwise was priced well below market price. The sweet spot for me is around 5 years old where over half the depreciation has already occurred, but 3/4 of trouble-free life remains.
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Old 08-15-2022, 03:11 PM   #133 (permalink)
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Going by the Dave Ramsey's budget (whoever that is, I just found his budget to be interesting when googling) a person should try to spend no more than 25% of income on housing and 10% on transportation. Others say to pay no more than 10% on your car payment and no more than 20% total on total transportation.
Dave Ramsey is a financial adviser popular in many evangelical churches. You could boil down his advice to two basic things - live within your means and debt is bad. ( Prov 22:7: “The rich rule over the poor, and the borrower is the slave of the lender.”) My wife and I used a modified version of his plan to get out of debt in our late 20's while my wife was also going to university full time. However, we never went full Dave cult - we kept our credit cards (we haven't paid a dime of interest since my college days) and we didn't sell our car even though he directly told me to sell it at a book signing.

Dave also says to give 10% off the top to your church so if you aren't one to do that you have 10% extra in your budget.

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Per hour for 40 hours a week for 48 work weeks a year
A month off a year? Generally people are either paid for vacation and holidays or they don't take them.

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Cheapest rent right now that I can find in area:
$1,500 per month (does not include utilities).
Which is the core of the problem that we have discussed before. Your area has gentrified and priced you and anyone making a median income out of it. There are places you could own a 1200 sq ft house for 1/2 of that. Look in the rust belt for reasonably priced homes.

https://www.zillow.com/homedetails/7...67224270_zpid/

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But what if I wait, say, another 5 years after paying off the Avalon and save up $10,000 in that time by saving what I would have put in payments. The Avalon would be worth even less, maybe $5,000 or less. But I'd have that plus the $10,000 I saved. If I put $15,000 down on a 5 year old Avalon then, maybe they'd be a little cheaper than they are now and payments would be about the same as now, or I'd be making a little more then????
Sounds like a plan. You have a car, it is running well, why change anything - especially in today's horrible car market? Drive the Avalon, save some money for the next car or to replace the battery in another 7-8 years.

Personally I drove my VW TDI that Dave Ramsey told me to sell (at a large loss) for 10 years / 235K miles. The car was paid off after 5 years, I saved the money I would have spent on a payment and bought a 2009 Prius with cash.

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Many people share their domicile with their spouse and children.
Yes, and it is expected that every adult in the family will work. Not too long ago the children were expected to work as well. I got my first job at 10 and in the 35 years since then I've had at least a part-time job all but 3 years.

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For me, I put a monthly budget on how much I spend on transportation and try not to pass that budget. If I were to throw a new car or one that's 5 years-old right now, I'd blow that budget quite quickly, unless it were perhaps a small economy car. So I'm thinking I probably should keep my eyes on small economy cars or hope the economy will change for the better soon.
How is the economy going to change for the better? Unemployment is 3.5% - that is the reason that places like Taco Bell are paying people $18 an hour. Unemployment has only been lower than 3.5% for 1 month since the 60s.

Yes, inflation is high but wages - especially entry level wages are WAY up. They go hand in hand. In many parts of the country you can show up at a business and get hired on the spot. I was sitting at the bar in one of our favorite taphouses and the guy next to me told the bartender he was looking for work. The owner came out and talked to him on the spot. $20 an hour to start plus an even share of the tips - he could start the next day full-time or part-time. The guy said no thanks - he was looking for more. (This place serves normal pub food)

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But even then, the question is, can a person really save money by avoiding old cars and sticking with a monthly payment?
Nobody is saying that having a continuous car payment is going to save money. What I'm saying (and redpoint says below) is that there comes a point where it is cheaper to find a new car than to keep dumping money into an old car.

When we first got married and in the early years my wife had the newer / reliable car I drove old junkers. In our first 6 years of marriage I went through 5 cars. The newest was 12 years old when I got it the oldest was 45 years old. My wife got tired of me constantly working on junkers and finally said - "enough- we are going to forget what Dave Ramsey says and buy you a reliable car". This was the 2nd best car decision we ever made. We found a 3 year old Prius off lease, bought it with a 5 year loan that we paid off in 3 and then kept it for 10 years. In that 10 years the only work I did on it that wasn't in the maintenance schedule was to change the 3-way valve for the coolant vacuum tank and replace the lead acid starting battery. All in that car cost us $270 a month (purchase, insurance, maintenance, fuel)


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There's some point in the vehicle depreciation curve where an older car just costs more to run than a newer vehicle. The very old car market is where people who can't get credit pay cash for a vehicle. A little bit newer car that would need to be financed eliminates those cash buyers and narrows the buying competition.

Personally, I wouldn't buy a vehicle more than about a decade old unless it had some nostalgic value or otherwise was priced well below market price. The sweet spot for me is around 5 years old where over half the depreciation has already occurred, but 3/4 of trouble-free life remains.
Excellent advice. To me the sweet spot is to buy a 3 year old car off lease and then keep it until it is 10 years old. Not the cheapest way to own a vehicle but I'm now at a point in life I don't have to focus on what is cheapest anymore.
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Old 08-15-2022, 03:47 PM   #134 (permalink)
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To me the sweet spot is to buy a 3 year old car off lease and then keep it until it is 10 years old. Not the cheapest way to own a vehicle but I'm now at a point in life I don't have to focus on what is cheapest anymore.
Yes, I'd be very tempted by a 3 year old vehicle too. Was looking at '17 Chevy Bolts in late 2020. Kicking myself for not grabbing one.

I don't have a hard rule I follow. The most recent car I still own is the 2006 Acura TSX I bought in 2010. Not a single issue with it except that the parking brake line was damaged, which allows water to accumulate, which can freeze and keep the parking brake on. I've got the replacement line, just haven't crawled under yet to replace it.
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Old 08-15-2022, 04:37 PM   #135 (permalink)
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Quote:
To me the sweet spot is to buy a 3 year old car off lease and then keep it until it is 10 years old
That's what my son did.



My strategy was to drive something that had made at least one pass through a junkyard:



I had a visit from an architect I knew, and when we stepped out on that porch, he was daily driving a black 1950s Bentley about a half-block long.

Lately, I lean toward buying new to get one less wheel and tandem seating. And the warranty.
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Old 08-15-2022, 08:00 PM   #136 (permalink)
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Dave Ramsey is a financial adviser popular in many evangelical churches. Dave also says to give 10% off the top to your church so if you aren't one to do that you have 10% extra in your budget.
Yipes! I kind of wondered why it said 10% for giving... Maybe I should find another financial adviser's list. But I do like having a percentage list with several categories. I put money in free banking accounts and prepaid debit cards for specific purposes, all with the inability to overdraft. When one runs out, it runs out.

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A month off a year? Generally people are either paid for vacation and holidays or they don't take them.
In my own opinion I don't see much point in working every day of my life and not stopping to smell the roses once in a while. Which I guess is why I'm so frugal. I'd rather work hard a few months and then take a week or more off and take the family camping or see their grand parents or cousins or something, then repeat. Saving really helps for that.

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Which is the core of the problem that we have discussed before. Your area has gentrified and priced you and anyone making a median income out of it. There are places you could own a 1200 sq ft house for 1/2 of that. Look in the rust belt for reasonably priced homes.

https://www.zillow.com/homedetails/7...67224270_zpid/


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Originally Posted by JSH View Post
Sounds like a plan. You have a car, it is running well, why change anything - especially in today's horrible car market? Drive the Avalon, save some money for the next car or to replace the battery in another 7-8 years.
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Yes, and it is expected that every adult in the family will work. Not too long ago the children were expected to work as well. I got my first job at 10 and in the 35 years since then I've had at least a part-time job all but 3 years.
Not everyone has a wife that can work... The boys are already starting to work though.

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How is the economy going to change for the better? Unemployment is 3.5% - that is the reason that places like Taco Bell are paying people $18 an hour. Unemployment has only been lower than 3.5% for 1 month since the 60s.
I was referring to used, 5-year-old car prices being about 10% less than brand new car prices (of course of new cars that also have a waiting list for who knows how long).

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Nobody is saying that having a continuous car payment is going to save money. What I'm saying (and redpoint says below) is that there comes a point where it is cheaper to find a new car than to keep dumping money into an old car.
Sounds good! I've done that before, spending lots on an old clunker. But I think things can be different case by case rather than average blanket statements that sound like cars have some sort of expiration date on them. I think there can be fairly new lemons that could cost an arm and a leg tomorrow, and an occasional old clunker that just won't die with a little TLC. The boys are starting to work. What car should they drive?

The beginning of this conversation began with the question of what would happen if every car were a hybrid. Well, all the older cars would eventually need a fairly expensive battery, or you throw in a cheaper one and sell it asap before that one dies. I think that's what would happen. Definitely not an end-of-the-world scenario, but different than now where you can have a car occasionally get 300K or 400K miles and live +20 years without ever needing a repair over $500.

My first couple of cars were cheap, $250 and then $600, and didn't hardly need any work I couldn't do for cheap. I drove the first car 3 years and the second for 7 years, and both got over 30mpg. My most expensive purchases were tires.

The Avalon's battery is $ 3,098.50 if I drive to Denver for it. (Assuming I install it).

If the Avalon's battery dies the same time the Prius' battery did (similar driving conditions, same battery type, similar mileage), it will happen in about 4 years and 4 months from now at the end of 2026. I have the tools though I could just put a $30 used module in it and either keep playing whack-a-mole with the battery modules or sell it at that point. Saving for whatever seems like the best option then is good advice.
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Old 08-15-2022, 08:49 PM   #137 (permalink)
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Your point about hybrids having a ticking time bomb as far as repairs are concerned is worth discussing. My Acura is 17 years old with no issues so far. I think it's reasonable to expect a car to go 15 years with relatively minor repair needs. That would mean gen I Prius would just now be needing a new battery. As it is, Gen II are needing batteries already.
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Old 08-16-2022, 01:11 AM   #138 (permalink)
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Your point about hybrids having a ticking time bomb as far as repairs are concerned is worth discussing. My Acura is 17 years old with no issues so far. I think it's reasonable to expect a car to go 15 years with relatively minor repair needs. That would mean gen I Prius would just now be needing a new battery. As it is, Gen II are needing batteries already.
The 1st gen for the Prius (XW10) was first sold in Japan in 1997

We got the 1st gen from 2001 - 2003. The oldest of our early Prius is 21 years old and the newest is 19 years old. All of them are well past your expectations of 15 years old. (An engineer that sits a few desks away has a 1st gen with the original battery)


The 2rd Gen was sold from 2004 - 2009. The oldest is 18 years old and the newest is 13 years old. Yes some have needed new batteries - others soldier on with the original battery.
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Old 08-16-2022, 01:47 AM   #139 (permalink)
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The 1st gen for the Prius (XW10) was first sold in Japan in 1997

We got the 1st gen from 2001 - 2003. The oldest of our early Prius is 21 years old and the newest is 19 years old. All of them are well past your expectations of 15 years old. (An engineer that sits a few desks away has a 1st gen with the original battery)


The 2rd Gen was sold from 2004 - 2009. The oldest is 18 years old and the newest is 13 years old. Yes some have needed new batteries - others soldier on with the original battery.
I assumed I'd get called out, specifically by you. My original statement was 20 years of trouble free operation, but then it seemed ambitious even to me...

There's some non-sequitur as a result, but my assertion being that hybrids should have an expectation of lasting a reasonable duration without need of battery replacement. In my view, that's somewhere in the 15-20 year timeframe.

... I'm a bit biased in that I drained the fuel from a 1976 Buick Riviera that had sat for 15 years, put new fuel in (and a battery), and she ran fine. There's no 40 year old EV that just needs a charge and runs just fine. There is a discussion to be had around this difference in expectation and capability.
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Old 08-16-2022, 08:07 AM   #140 (permalink)
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Your point about hybrids having a ticking time bomb as far as repairs are concerned is worth discussing.
New thread...

The hybrid ticking time bomb - Ecomodder.com

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The 1st gen for the Prius (XW10) was first sold in Japan in 1997

We got the 1st gen from 2001 - 2003. The oldest of our early Prius is 21 years old and the newest is 19 years old. All of them are well past your expectations of 15 years old. (An engineer that sits a few desks away has a 1st gen with the original battery)


The 2rd Gen was sold from 2004 - 2009. The oldest is 18 years old and the newest is 13 years old. Yes some have needed new batteries - others soldier on with the original battery.
My Prius is a 2006 with 215,000 miles and it's battery went two years ago. My Mazda and Golf had more miles and were older and didn't need repairs over $300.

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... I'm a bit biased in that I drained the fuel from a 1976 Buick Riviera that had sat for 15 years, put new fuel in (and a battery), and she ran fine. There's no 40 year old EV that just needs a charge and runs just fine. There is a discussion to be had around this difference in expectation and capability.
This is true of 1950's, 30's or even older vehicles that have been sitting for decades. Change the oil and throw some new fuel into them and 9 times out of ten you can get them to start and run without anything major.

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