In the state of today's economy, buying a beater, or even a used car doesn't necessarily make financial sense. It's like going to the grocery store and buying the smaller bottle of ketchup because it's cheaper, even though you are paying more per ounce. New car prices are within 10% of used cars up to 3 years old these days. Try to buy a 10-year-old car and you'll likely pay half of what the original owner paid for it with some models close to 100%. If you consider the value of a car to be cost per mile driven and you need a car today, that new car makes the most sense when you consider depreciation, cost of maintenance and repairs, insurance, and reliability. All new cars come with a 3 to 7 year warranty and the reliability of any new car far exceeds cars from just 10 years ago. Maintenance schedules have been stretched out in the new cars and un-worn mechanical components will make your tires last longer. This doesn't even take into account the safety of the newest cars vs. older models. To build on that, insurance is actually cheaper in some states for the new car. I pay more for my 2008 Ram than for my 2017 Ram because of the safety features (without collision). If you are not paying cash, you'll get a lower interest rate on a new car and with many credit unions offering great low rate deals, I'd argue it makes better financial sense to borrow and keep your money invested, especially since that $1000 beater will cost you $10k today. If you need another car now, buy a lower equipped new car. If the state of the industry is the same in three years, you can get another new one before you have to replace the tires or the battery. If things return to the way they used to be pre-pandemic, then you'll have that used car you can drive for many years and still pay less per mile driven while having enjoyed those worry-free years and all the new technology and safety features.
The number one thing to look for when buying a house is patience. The biggest mistake home buyers make is to rush into a purchase which is often fueled by the fear of wasting money on a rental. This is especially true for those moving to a new area where identifying the neighborhood you want to live in is difficult and you have to accept whatever inventory is available at the time. Closing costs and realtor commissions on buying the wrong house can cost you a lot more than rent for a year or two. While most of what makes up the right house for you depends on personal factors such as first house vs. retirement home and family status, make sure you have a list of needs and wants based on your budget. Don't accept a house that doesn't meet your needs and patience will allow you to find as many wants as you can. If you have the intestinal fortitude for it, build, but this is not for the faint of heart. Building will get you the closest to what you want with the quality of materials you want but there are disadvantages that might not be obvious such as there has been nobody there before you to build storage shelves, a backyard shed or that immaculately landscaped backyard. Personally, I would never buy a new spec home since you get the disadvantages of a brand new home without the advantage of getting exactly what you want. Finally, make sure the home you buy is in the condition you want. Buying a fixer upper because it's cheaper will cost you more in the long run if you are not handy or don't like/don't have time to work on a house. You will end up spending more on contractors than you saved and there's always that hidden problem you weren't expecting. While it can be lucrative for some to perpetually rotate through remodels, most people should approach home buying and home ownership as a way to create your personal space and your happy place and not as an investment.
Comments:
In the state of today's economy, buying a beater, or even a used car doesn't necessarily make financial sense. It's like going to the grocery store and buying the smaller bottle of ketchup because it's cheaper, even though you are paying more per ounce. New car prices are within 10% of used cars up to 3 years old these days. Try to buy a 10-year-old car and you'll likely pay half of what the original owner paid for it with some models close to 100%. If you consider the value of a car to be cost per mile driven and you need a car today, that new car makes the most sense when you consider depreciation, cost of maintenance and repairs, insurance, and reliability. All new cars come with a 3 to 7 year warranty and the reliability of any new car far exceeds cars from just 10 years ago. Maintenance schedules have been stretched out in the new cars and un-worn mechanical components will make your tires last longer. This doesn't even take into account the safety of the newest cars vs. older models. To build on that, insurance is actually cheaper in some states for the new car. I pay more for my 2008 Ram than for my 2017 Ram because of the safety features (without collision). If you are not paying cash, you'll get a lower interest rate on a new car and with many credit unions offering great low rate deals, I'd argue it makes better financial sense to borrow and keep your money invested, especially since that $1000 beater will cost you $10k today. If you need another car now, buy a lower equipped new car. If the state of the industry is the same in three years, you can get another new one before you have to replace the tires or the battery. If things return to the way they used to be pre-pandemic, then you'll have that used car you can drive for many years and still pay less per mile driven while having enjoyed those worry-free years and all the new technology and safety features.
Post: Getting From A to B
Link to comment from August 19, 2023
The number one thing to look for when buying a house is patience. The biggest mistake home buyers make is to rush into a purchase which is often fueled by the fear of wasting money on a rental. This is especially true for those moving to a new area where identifying the neighborhood you want to live in is difficult and you have to accept whatever inventory is available at the time. Closing costs and realtor commissions on buying the wrong house can cost you a lot more than rent for a year or two. While most of what makes up the right house for you depends on personal factors such as first house vs. retirement home and family status, make sure you have a list of needs and wants based on your budget. Don't accept a house that doesn't meet your needs and patience will allow you to find as many wants as you can. If you have the intestinal fortitude for it, build, but this is not for the faint of heart. Building will get you the closest to what you want with the quality of materials you want but there are disadvantages that might not be obvious such as there has been nobody there before you to build storage shelves, a backyard shed or that immaculately landscaped backyard. Personally, I would never buy a new spec home since you get the disadvantages of a brand new home without the advantage of getting exactly what you want. Finally, make sure the home you buy is in the condition you want. Buying a fixer upper because it's cheaper will cost you more in the long run if you are not handy or don't like/don't have time to work on a house. You will end up spending more on contractors than you saved and there's always that hidden problem you weren't expecting. While it can be lucrative for some to perpetually rotate through remodels, most people should approach home buying and home ownership as a way to create your personal space and your happy place and not as an investment.
Post: What should you look for when buying a home?
Link to comment from April 22, 2023