Quote:
Originally Posted by krhodes1
Whatever mate, you run your finances your way, I will run mine my way. Why would I take $35K out of the market where it is earning me 5% (and have to pay 15% capital gains tax on some portion of it) to save .9% interest? I certainly COULD have paid cash for it, but having more than a couple thousand laying around in a non-earning account would be foolish. Even my emergency fund money is making more than .9%. Millionaires also did not get that way by being foolish with their money.
Your argument makes perfect sense if interest rates were at the historical norms of 7-9%. Particularly if one was planning to be in an endless cycle of trading one car for another. I have no intention of doing that, this car will be paid off in a couple years, and I plan to keep it for the foreseeable future. After all, BMW seems disinclined to sell me another one - I don't do automatics. I may keep this car so long it starts to appreciate - I have owned one of my cars for 19 years now.
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Your most powerful wealth building tool is your income. If it is tied up making payments then you can't use it to build wealth (even on 0% loans.) If you have debt then its a pay now or pay later situation and somebody else is getting your money and its not working for you. And you're making payments on a very expensive throw away item. People crack me up when they think going into debt playing spreads financing car loans is the smart way to go. The big picture of the whole scenario is laughable. I'm not calling anyone stupid but they are wrong regardless of being ignorant or not.
The smart play is to pay cash for a car you can afford and move on. People hate hearing this because the reality is they don't actually have any money. But somehow they can justify making payments!!!