What is your payment?

Times have changed from the golden days of my parents. Cars and trucks represent a bigger percentage of our income than my parent's cars. I remember in 1989 when my Dad bought his brand new Chevy 1500 4x4 loaded up for $18k. Few of us can afford brand new cars every 5 years like many used to do. Now it makes more sense to pay off that car, drive it for 5 years then trade up. The good part is cars are lasting longer now. The average age for a car on the road is around 12-13 years old now. Wasn't like that back in the 60's. Overall I think it makes sense to pull the trigger on that brand new car when you have few other debts to contend with.

 

Cumulative Inflation rate from 1989 to 2015 is about 92.2% so if my math is correct an item valued at 18K in 1989 would be valued at roughly 34.6K in 2015.

 

But have salaries increased to match inflation? I dunno...I don't keep up with that shit.

 

Average Salaries haven't kept up with inflation at all but the biggest issue is that medical care and education costs have outpaced the inflation rate at an astounding rate.

 

I'm leaning towards No. Another interesting comparison my 1968 GTO retailed for about $3,700 (I have window sticker and original bill of sale) in July of 1968 to the original owner. Inflation rate from 1968 to 2015 is 584%... so in today's dollars that's about a $25,340 purchase. (Car has been appraised at ~$35k)

 

Yeah and a loaded up Silverado 2500 (I meant to put 2500 and not 1500 in other post) with gas engine is probably around $50k now, not $34k, which would be actually kind of cheap for a loaded up 2016 Tacoma.

 

I believe they are about even adjusting for todays $. It is anecdotal at this point, will see if I can find numbers to back it up.

 

The trend for last two decades has been rich getting richer, and middle class having more of a strain on them. Used to be you could get get a mortgage with a factory line job. Not as easy now. No, I am not going to blame any President or political party, I think it just an unfortunate effect of a globalized economy.

 

Times haven't changed for those who get an education or better a vocation and can work. Salaries were extremely low when new cars cost $3000. It's all relative. Older people were just more responsible with money and loans were not easy to get. Banks determined if someone could pay back a loan. Today people make that decision for themselves and banks give esy money to those willing to hamstring themselves , many to the detriment of their own futures.

Useless College degrees are the problem. Not enough learning a real vocation like HVAC techs, Medical techs, on and on where there are tons of service needs. People go to college and get a degree in French Literature and expect to find a job with a $40K starting salary. One would be surprised at the unfilled jobs because of the lack of marketable skills. I talk to small business owners everyday and the complaint is the same. Different work ethics and few real skills.

 

Not to mention that the GTO has no advanced electronics, power anything, air bags, or any other safety advances made over the past 30+ years. That would no doubt take the thing into the 35k and up range today.

 

I can see your point there, but also consider all things are relative. Of course back then, the GTO was not necessarily a loaded ride but cars didn't have nearly as much tech available like they do today. It was meant to be a no frills/no gimmicks muscle car as designed and marketed by Pontiac.

 

Absolutely. I just meant that if it were brought up to par with Federally mandated standards, it would not doubt cost somewhere in the range of, say, a Camaro or Mustang today. Which leads back to cars being basically the same price-wise today as yesterday. Quite a few things have changed since then, of course, with other things costing more, and much more useless crap being available to waste money on as well.

 

No offense taken. I have a car worth $25k paid off plus $2k of savings for the Tacoma. $12500 loan at 1.99% is almost like free money. It allows me to get my truck, keep an extremely low payment that I won't worry about if some financial emergency hits me. In addition I usually pay triple the payment $600 but if for some reason I couldn't make the $600 payment, $200 not going to break me; it's not like the interest rate is 8-12% like it was back in the early 1980's. It will be paid off in 24-30 months. If for some really strange reason I don't like the Tacoma I can move on and most likely get a pretty good resale amount for the Tacoma. We are all at different economic strata levels and what makes sense for one person can seem crazy to another. It's what you are comfortable with.

 

Just bought my first ever brand new vehicle (Tacoma). I didn't put any money down and financed the whole lot (32k) from my credit union. Payment is $598, $30 of that is life/disability that will pay off of something happens (I do a pretty dangerous job), $3 per month is in gap insurance. 60 month loan. I'll hopefully have it paid off quicker. It's a big payment but I can afford it and didn't use any cash in the process. Got a good interest rate at 2.2%.
We paid the taxes and fees on my wife's credit card which is interest free for another 10mths and will be well paid off.

 

hahah. $40k a year aint much, unless you are single. Ask me how I know.... Family of 4, no house payment....small car payment of $240 a month....There isn't too much left at the end of the month. Especially for $1000 dollar payments on a ride....

 

Cash doesn't really get you anything anymore. I've heard stories of people walking in to dealerships in the 70's/80's with cash and the dealership moved mountains for them. As far as I can tell cash doesn't mean anything to dealerships anymore. Now if you mean paying cash just so you outright own it instead of making payments... Maybe the person wants the car now instead of saving up?

I bought my first new car when I was 25 years old. (Coming off a Toyota Camry with almost 300,000 miles on it) It was an Infiniti G37x. My payments were $685 a month and it wasn't an issue for me at all. It's all relative to different people I guess.

 

450/month

 

It is, you are correct. But think of it this way. If you pay cash, and have no payment, then the money that you would have been spending on a payment can go to something else, like paying off your house, or retirement, early retirement even. I simply like the freedom of no payment. Im not in anybody's pocket...and the bank doesn't own my truck.

 

I totally get it. Anymore I always take a long loan then begin to pay it off fast with double or triple sized payments. Then in case something drastic happens in my life I have a lower payment because of the longer length. (The Infiniti was the exception) Also, having a payment on a debt usually helps your Credit score which in the long run helps for something like a house payment.

It does make sense to stash more away the closer you get to retirement.

 

While not always possible, if the interest rate for the loan is greater than the earning rate of your investment, pay cash. You receive no tax deductions anymore on auto loans. If you are dependable in paying off a loans, have steady work, qualify for a home equity line of credit, and not be tempted to abuse it, put the loan on your home equity line. That way you can deduct the interest. You must make payments as though you were on a 3-5 year loan or less using a calculator such as this. Try to save for something before you buy it instead of making payments. Yes, your neighbor will have something you don't right now but you'll sleep better and when they turn 70 you'll be the one heading to the golf course as they head off to work.