"...I like to buy what I want, when I want it. ..."

I do to. Because I have focused on increasing assets and cash flow I can now buy most things I want when I want them....with cash.

It would be very difficult for a person to take on say three to four car loans if they didn't want to wait for what they wanted and purchased multiple cars. I can buy numerous cars with cash if I didn't want to wait.

I want to keep it that way and fund the vehicles in advance.

I'll most likely will be buying a car for my daughter here very soon. I am funding that right now so that when she turns 16 I won't have to wait.

Con_alma... you sound like you have your head on straight with finances. I have some questions that I'd like to run by you. Care to PM me your email address? If not, I will just shoot you a PM with my questions.

Con_Alma, if you don't mind, a few questions re saving for a car: do you actually set up a separate account to do it? Or do you simply put extra money in savings each month and designate it toward that? Do you put it in a money market account? CDs? Or just a simple savings account?

We're likely going to finance our next car purchase (could put it through the HELOC at a lower (albeit variable) and tax deductible rate, but we like keeping that clear to rely on in an emergency), but we'd like to start saving for the car purchase after that (though at this point, we may just focus on eliminating student loans @ 6.8% instead).

...liquidity and safety since they are designated funds that will be used in less than five years.. Mostly MM but I do have a 24 month CD in there right now.

This was not a calculated financial decision as much a practice and lifestyle habit.

The auto funds are separate from other cash equivalents but each of the allocations for the respective cars are combined together meaning the funds for my daughter's car and the next replacement we will make are all together.

fan_from_texas wrote: Con_Alma, if you don't mind, a few questions re saving for a car: do you actually set up a separate account to do it? Or do you simply put extra money in savings each month and designate it toward that? Do you put it in a money market account? CDs? Or just a simple savings account?

We're likely going to finance our next car purchase (could put it through the HELOC at a lower (albeit variable) and tax deductible rate, but we like keeping that clear to rely on in an emergency), but we'd like to start saving for the car purchase after that (though at this point, we may just focus on eliminating student loans @ 6.8% instead).

don't put a car through a HELOC unless it's short term just to stay liquid for a short while. There is no reason to put a depreciating asset against a stable or appreciating asset.

Basically, lets say you both lost your jobs and you need to liquidate your assets. You have a 30k on your HELOC for a car that will sell for 25k. Now in order to sell that house, instead of having a small payment you can probably manage, you just lost a large chunk of cash when selling your house.

My wife and I bought a house in late 2006, I don't think we could sell it for more than we owe on it by now with the economy. Not an expensive house, 200,000 but a nice home to start our family. Our payment isn't bad but our job hours have both been cut a little now and hopefully it is only temporary. We really don't have much more debt, have 8 months left on one car and that is really it. We would like to make extra payments on the house but not in the budget the past 18 months or so. One thing I don't understand is people who don't have credit cards. I have 2 awesome cards that pay me money. I hate bringing cash with me and writing a lot of checks, I pay just about everything online and write only 2 checks a month. We pay our credit cards off every month on time, they don't have an annual fee and give us points every year for using them. We bought a water softner and tires for one car last year with our points, its about finding the right one and keeping up with your payments.

se-alum wrote:

Precisely. Unless he gets one of those zero percent loan's, A $20,000 car loan over 5 years of payments at 5.9% interest really means you're paying $25,900 for that car. So he saves $5,900 dollars over a five year period of time that he can use for anything and everything.

5.9% on $20,000 doesn't equal $25,900, at least not where I bank, probably closer to $23+. I see the point though, there is some small money savings in paying cash. Like I said, it's just a difference in preference. I like to buy what I want, when I want it. I just don't have the patience to save that much money for something I want. I'll take the $50/month hit on the interest to have what I want. I'm not saying paying cash is wrong or stupid in any way, just not the way I prefer to do things.

$23,141 exactly.

queencitybuckeye wrote:While there's nothing wrong with that (it's your money after all), the problem with it is that it leads to living hand to mouth at age 50 and beyond. It's remarkable how little one actually has to sacrifice when they're young to ensure comfort if not actual wealth in their middle years and beyond.

I can easily see where that can be a problem for many people. I've been lucky to be able to set myself up quite nicely for retirement(which is a long way off, as I'm only 29), though it took alot of hard work. Every check I've received since age of 18, has had a small amount put into savings(sometimes only $5 or $10), then at a certain point was put into long term planning. I was lucky to have the guidance from my parents at an early age. I think that's a big problem today, students should be thoroughly taught finances in High School and College. If i hadn't gotten the guidance from my parents, I would likely have nothing set up for my future.

se-alum wrote:

Precisely. Unless he gets one of those zero percent loan's, A $20,000 car loan over 5 years of payments at 5.9% interest really means you're paying $25,900 for that car. So he saves $5,900 dollars over a five year period of time that he can use for anything and everything.

5.9% on $20,000 doesn't equal $25,900, at least not where I bank, probably closer to $23+. I see the point though, there is some small money savings in paying cash. Like I said, it's just a difference in preference. I like to buy what I want, when I want it. I just don't have the patience to save that much money for something I want. I'll take the $50/month hit on the interest to have what I want. I'm not saying paying cash is wrong or stupid in any way, just not the way I prefer to do things.

Math never lies!

5.9% compounded monthly = .491667% per month
60 months
$20,000 loan

60 * (20,000*((.00491667(1.00491667^60))/((1.00491667^60)-1))= 60 *(20,000 * .019286) = 60 * 385.73 = $23,143.61

You're correct sir.

$35,000 total and that is what is left on the house.