Monthly budget

[Redmt]

Another note: as you go forward beware of keeping your emergency fund in a CD, or really any money you may need "short term". From when I was researching CD's vs a high yield saving's account, the penalty for pulling money from a CD before maturity was often well above the difference in interest rates in CD vs. HYSA.

The penalty is a severe reduction in interest payout. In an extreme case, your money could be deposited in a CD and you get no interest at all if you remove it too soon. You will loose the interest but not the principal.

 

[Nick87]

The penalty is a severe reduction in interest payout. In an extreme case, your money could be deposited in a CD and you get no interest at all if you remove it too soon. You will loose the interest but not the principal.

Yah I'm comfortable with losing 3 to 6 months interest in a worst case scenario situation.

 

[Pucky Freak]

No vehicle debt:

A. You buy more than you can afford when you take a loan.

B. You have more money to spend on a vehicle. Take the total amt of loan origination and interest and subtract that from your purchase price. Do you want a 24k vehicle or a 20k vehicle?

C. Car payment ties up your cash. I’d rather save $700 a month that I can skip for an emergency and make it up later rather than a car payment I cannnot miss. Put your car savings fund in a high yield savings account - you don’t miss out on earning money on your money.

D. Broader selection of vehicles. Some small sellers won’t finance.

E. Vehicle is totaled your payout is less than what you owe. Now you just have debt with zero corresponding asset.

This year my wife bought a Traverse with 76k miles for 14k cash. Joe Blow bought the same thing from the dealer for 18k and pays another 4k in interest and loan fees.

The reality of the matter is people take vehicle loans because it’s incredibly convenient at the moment, and then try to reverse justify that it was a better decision.

YMMV. I’ve never financed a car. I’m 42 and the TOTAL net expenditures on new-to-me vehicles in my lifetime is $26,000. Repairs are more frequent because they’re older vehicles but I also do my own maintenance and repairs.

 

[thomas89]

I’ve never financed a car.

I think this is one of the most overlooked pieces of (I hate this term) "financial freedom" in todays society. It's become so normal for people to have car payments (and big ones at that) that it's almost rare to find someone without one.

I have made a point to save/invest at minimum a car payment a month for the last 15 or so years. It was not overly difficult, but I cannot imagine not having the little nest egg I've got just because I wanted to have a nicer/newer car every few years.

 

[Nick87]

A. You buy more than you can afford when you take a loan

I dont think thats the case for every situation. Probably most though.

D. Broader selection of vehicles. Some small sellers won’t finance.

I guess that would only apply if your financing your vehichle strictly through a dealer?

I just feel like sometimes there's more than one way to do it where the outcome is minimal. Buying a used vehichle 3 or 4 times over 15 years thats cheaper and taking the risk of buying someone else's problems they unloaded vs buying new or newer and knowing what you have as far as maintenance and all that goes and holding onto that for the same 15 or so years.

Either way it is a gamble of sorts because you never know what your repairs are going to be over that long of a stretch of time. But if you are going to be replacing every 3 or 4 years then no way would I want a vehichle payment if that was the case. Either way vehichles suck. Gonna cost you either way.