Payments...

[ddharris]

I find those financial authors to be idiots.

Dependable, safe, efficient transportation is a necessity in today's society. And, people spend a significant percentage of their lives inside their vehicle. Saying that your vehicle should only account for a tiny chunk of your income is stupid and unrealistic.

The price of vehicles is rising quickly because of the EPA and because of government crash testing mandates. It costs billions to develop and produce technologies to meet those goals.

Im glad we have those mandates. No one will Want to buy a deathtrap that gets 6 mpg.
I think simply mandates and markup are equal partners.

 

[PowerJrod]

Im glad we have those mandates. No one will Want to buy a deathtrap that gets 6 mpg.
I think simply mandates and markup are equal partners.

Agreed. Although some markups are a little rediculous. I've been told that after manufacturers cost, the markup on trucks is an average of around 32%. Which means they get $14k profit on each average new pickup sold. ($48k average price for new truck). Crazy if you think about it that way lol.

 

[Aseras]

Agreed. Although some markups are a little rediculous. I've been told that after manufacturers cost, the markup on trucks is an average of around 32%. Which means they get $14k profit on each average new pickup sold. ($48k average price for new truck). Crazy if you think about it that way lol.

Remember you aren't just paying for the truck. It's all the people who work for the manufacturer, trucks profit makes cars that sell for slim margins possible. You also are paying for all the BS dealer and franchises and all their gimmicks and marketing and so on. The vehicle is half the price, the development and delivery and sales in the rest.

Its why dealers are so afraid of Tesla, and It's also why when Tesla screws up a delivery there's no one that can fix it easily.

 

[_StangPGH]

Ditto above. 32% GROSS margin is entirely reasonable for a complex manufactured product. NET margin is much lower.

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[Tazithman]

5 years ago I bought the used, basic, bottom of the line RAM 1500 with a payment that could afford. After lots of hard work/good decisions/and robbing Peter to pay Paul, I could afford the truck that I want. 84 months at 0% with green sheet price and dealer rebates was just too good to pass up.

 

[Paultg]

My wife and I reviewed the Ramsey stuff a few years back and while we didn’t follow it exactly it was really helpful for us to just get on the same page and have common financial goal. She had tons of student loan debt. Over the past 3 years we have aggressively focused on it and happy to say we should be done end of this year. And when I say crazy amounts, I think our focused payments over 3 years is close to $125k, and we are in our mid 40s. I have no idea what the real student loan amounts were with interest , I don’t ever want to know. It be like knowing what your house actually cost at the end of the loan term!

It’s been wonderful to have no car payments & only a small mortgage with the student loan payment over the past few years.

But it’s a real struggle to balance living life now and also planning to live it later.
I wanted to be more on the plan so to speak. But we sort of worked it out that as long as we budget for other things (trips, house stuff, ECT.) and don’t go back into debt for that stuff, that’s works for us. I had a friend not much older than me pass away 2 years ago from cancer. That was a bit of an eye opener. You can’t take it with you and some of the trips / vacations that you say you’ll do when you retire (in 20yrs. . for us) ; all you can do is hope you’ll be healthy enough and able to do so at that time.

So we have a 2014 Subaru with 115k miles and had her 2009 Subaru with 195k miles, it started to have AC issues that I knew would be more expensive than we wanted to spend on it. We were happy to help a friend out who needed transportation and could do the work himself. I also have a 2010 Miata MX5 that is a toy street / track car.

I ordered a new truck earlier this week. It’s the most expensive thing I’ve purchased other than our home. It’s almost 30% of what our home cost! I’m a bit nervous thinking about the costs but reality is I’ve been budgeting for a $700/m payment now for a bit and we can afford it. I’m fully funding my retirement account while she does what she needs for a match, and we have 3 months emergency fund in bank and will continue to grow that to 6 months.

I get what DR says and do believe it is a proper and quick way to get on a plan of no debt. He is talking to a huge audience with different levels of understanding too, so he sort of has to stick to that script. But use that info and decide how long of a journey you want to be on, and apply what works best for you.

I don’t judge folks who are over extending themselves. It’s just a choice and for many they don’t even worry about it which is some way I’m a bit envious (like the person who just drives their car and never hears a noise, because they don’t even know what to listen for, not a care in the world).

I’ve always worried, so getting on a budget and planning for things has really helped my quality of life. We will focus on paying the truck off as quick as we can and enjoy it at the same time. We try to purchase things well too, so if a life situation were to happen, we could easily sell my Miata, the Forester, or the truck if needed.

 

[SpeedyV]

My wife and I reviewed the Ramsey stuff a few years back and while we didn’t follow it exactly it was really helpful for us to just get on the same page and have common financial goal. She had tons of student loan debt. Over the past 3 years we have aggressively focused on it and happy to say we should be done end of this year. And when I say crazy amounts, I think our focused payments over 3 years is close to $125k, and we are in our mid 40s. I have no idea what the real student loan amounts were with interest , I don’t ever want to know. It be like knowing what your house actually cost at the end of the loan term!

It’s been wonderful to have no car payments & only a small mortgage with the student loan payment over the past few years.

But it’s a real struggle to balance living life now and also planning to live it later.
I wanted to be more on the plan so to speak. But we sort of worked it out that as long as we budget for other things (trips, house stuff, ECT.) and don’t go back into debt for that stuff, that’s works for us. I had a friend not much older than me pass away 2 years ago from cancer. That was a bit of an eye opener. You can’t take it with you and some of the trips / vacations that you say you’ll do when you retire (in 20yrs. . for us) ; all you can do is hope you’ll be healthy enough and able to do so at that time.

So we have a 2014 Subaru with 115k miles and had her 2009 Subaru with 195k miles, it started to have AC issues that I knew would be more expensive than we wanted to spend on it. We were happy to help a friend out who needed transportation and could do the work himself. I also have a 2010 Miata MX5 that is a toy street / track car.

I ordered a new truck earlier this week. It’s the most expensive thing I’ve purchased other than our home. It’s almost 30% of what our home cost! I’m a bit nervous thinking about the costs but reality is I’ve been budgeting for a $700/m payment now for a bit and we can afford it. I’m fully funding my retirement account while she does what she needs for a match, and we have 3 months emergency fund in bank and will continue to grow that to 6 months.

I get what DR says and do believe it is a proper and quick way to get on a plan of no debt. He is talking to a huge audience with different levels of understanding too, so he sort of has to stick to that script. But use that info and decide how long of a journey you want to be on, and apply what works best for you.

I don’t judge folks who are over extending themselves. It’s just a choice and for many they don’t even worry about it which is some way I’m a bit envious (like the person who just drives their car and never hears a noise, because they don’t even know what to listen for, not a care in the world).

I’ve always worried, so getting on a budget and planning for things has really helped my quality of life. We will focus on paying the truck off as quick as we can and enjoy it at the same time. We try to purchase things well too, so if a life situation were to happen, we could easily sell my Miata, the Forester, or the truck if needed.

Thanks for sharing. Like you, I try not to judge those that seem to be overextending themselves. We’re all trying to make the best decisions we can based on our own abilities and priorities.

I will admit that it’s difficult for me to reconcile a reported median household income of $4X,XXX when I see newly-constructed “starter“ homes ($500K and under) popping up like blades of grass on the prairie, complete with new or newish cars in every driveway. I worry about the pervasiveness of debt.

My wife and I have made mistakes along the way, but we are also very blessed/fortunate in our careers. If our neighbors and friends knew what we bring home, most would think of us as “rich”. But we have been conservative for a long time now, and we’re seeing the benefits. While continuing to tithe, we are aggressively paying down remaining debts, with the goal of having just about everything wiped away between 2021-‘23. We’re in our mid-40s, have no kids (a big factor, I know).

What’s next? We have traveled much of the world over the past 10+ years, often taking advantage of work trips to do so. I’m sure we’ll continue to do that once COVID-19 fades away. We invest pretty heavily and will continue to do so. And we’re thinking about a lake cabin / future retirement home “up north”. Once current debts are gone, we can get serious about those things...

 

[Paultg]

Thanks for sharing. Like you, I try not to judge those that seem to be overextending themselves. We’re all trying to make the best decisions we can based on our own abilities and priorities.

I will admit that it’s difficult for me to reconcile a reported median household income of $4X,XXX when I see newly-constructed “starter“ homes ($500K and under) popping up like blades of grass on the prairie, complete with new or newish cars in every driveway. I worry about the pervasiveness of debt.

My wife and I have made mistakes along the way, but we are also very blessed/fortunate in our careers. If our neighbors and friends knew what we bring home, most would think of us as “rich”. But we have been conservative for a long time now, and we’re seeing the benefits. While continuing to tithe, we are aggressively paying down remaining debts, with the goal of having just about everything wiped away between 2021-‘23. We’re in our mid-40s, have no kids (a big factor, I know).

What’s next? We have traveled much of the world over the past 10+ years, often taking advantage of work trips to do so. I’m sure we’ll continue to do that once COVID-19 fades away. We invest pretty heavily and will continue to do so. And we’re thinking about a lake cabin / future retirement home “up north”. Once current debts are gone, we can get serious about those things...

Totally agree, and we are very similar. Traveled a lot for great weddings and vacations. Want to do more. Don’t want to be house poor.

My wife and I are still in our first home, a townhouse for $165k back in 2003.
She has a 3 mile commute and I work from home most of the time.
Housing around here is crazy, all new homes are huge and over $500k.
Even 55+ places are expensive. Anything in the $300k range is a 30+ old house that has never been updated. I’m Not home handy either.

I know what we mae (no kids either) and I get queasy thinking about a $500k+ mortgage. Then I see folks 1/2 my age making those purchases and scratch my head, but again no judegement. I use to think “what am I doing wrong”. Really worked to try not to be like that.

Our plan now is to sit tight in the townhome and work towards not having the need for mortgage when we can do a 55+ place. We have also considered a 2nd property up north but for now it’s still cheaper to just get hotels when visiting family in VT. Our we could do a camper and keep it on relatives property.

 

[SpeedyV]

Totally agree, and we are very similar. Traveled a lot for great weddings and vacations. Want to do more. Don’t want to be house poor.

My wife and I are still in our first home, a townhouse for $165k back in 2003.
She has a 3 mile commute and I work from home most of the time.
Housing around here is crazy, all new homes are huge and over $500k.
Even 55+ places are expensive. Anything in the $300k range is a 30+ old house that has never been updated. I’m Not home handy either.

I know what we mae (no kids either) and I get queasy thinking about a $500k+ mortgage. Then I see folks 1/2 my age making those purchases and scratch my head, but again no judegement. I use to think “what am I doing wrong”. Really worked to try not to be like that.

Our plan now is to sit tight in the townhome and work towards not having the need for mortgage when we can do a 55+ place. We have also considered a 2nd property up north but for now it’s still cheaper to just get hotels when visiting family in VT. Our we could do a camper and keep it on relatives property.

My wife and I were in and out of way too many properties when we started out; between strange contractual issues and bad contractors, we have often joked that we’re cursed when it comes to houses. We finally found our current modest home in 2011. It was affordable on one income, which was a good thing; we’ve bought it almost three times now (additions and renovations). Like you, I’m home-based (my wife suddenly finds herself in the same boat for 2020 due to COVID-19), and we’re comfortably situated in a tree-covered national historic district near downtown, close to everything. We don’t take any of this for granted. But I am also a farmboy that feels called to a peaceful four-season locale...

 

[PowerJrod]

Ditto above. 32% GROSS margin is entirely reasonable for a complex manufactured product. NET margin is much lower.

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Actually the 32% I mentioned is the NET profit. That's after expenses lol. Although I can't disagree with the cost factors regarding marketing, etc, but it also explains why the Designers, CEOs and software developers are making $200k per year which in the auto industry was unheard of 20 years ago. (I know... advancements in tech, blah, blah) but you have to admit...markups on everything are getting worse and worse. Eventually a base model regular cab truck is going to cost $50k soon.

 

[z0n3]

This was my first new vehicle and second vehicle ever after my 02 Durango that I drove for 10 years. I saved up $23,000 for my down payment right after college for this truck specifically so I wasn’t paying a crazy payment. It’ll be paid off in a few years and my payment is extremely comfortable for me. That being said, I also got a Bighorn as Laramies were just a smidge out of my comfortable range of payments and price range. But I’ll be damned if I haven’t made this truck perfect for me!