Auto Loan

[DMFA]

Craigy wrote:

If you go by the definition of the word (which is what most people go by as far as words are concerned), if you have the means to purchase or provide, you can afford.

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Except you don't, because embedded in the definition of the word is "to have enough" to pay for something, and what is "enough" is easily interpreted as going beyond simply being able to obtain only the money needed to pay for the thing alone.  Based on that definition, he couldn't afford the truck because he didn't have have the means to purchase it.  He had to enter a finance agreement in order to obtain it which created the means.  You could even extend that argument to anything that's financed - education, housing, etc.  You've opened a can of worms here.

It's also a very myopic view only to focus on one expense when there are numerous other expenses which would have to be paid - rent and food, for instance.  Would you have to qualify every "you can't afford" statement with all the other expenses needed - instead of just "you can't afford a brand-new truck," to say "you can't afford a brand new truck, rent, food, gas, insurance, utilities, a non-austere lifestyle, debt payment, and retirement contributions" - when clearly some things on that list are of greater import than others, and it makes much more sense only to include the one thing in question in the statement.  I would think that the long list of things "you can'd afford X and A, B, C, D, E, F..." would be far more condescending than simply "you can't afford X."

Yes, that's subjective, and focuses purely on semantics other than the ontology of "enough," but you know that it's a fairly absurd argument.

[MPMD]

Craigy wrote:

Donnie wrote:

Please do the math guys. Depreciation and repair costs are well known. Edmunds has a true cost to own schedule that lays out annual costs for 5 years for cars based on make and year.

Yes, depreciation and repairs may be similar or even more for a used car compared to a truck. However the $11k per year payment is a serious hit to cash flow, and I imagine is just the tip of the iceberg of bad financial decisions.

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One thing to point out with the edmunds calculator:  it assumes you haven’t yet bought the car, in our case, he’s already taken most of the depreciation hit.  He’s already sunk that cost, that ship has sailed.  So what he needs to worry about is future depreciation, not total depreciation.  If he swapped into another car, he’s going to start that depreciation clock all over again.

The last bit is easily the most salient.  IMO keeping this truck might not be horrible, in and of and by itself.  That car payment is pretty steep, but it won’t kill him.  But if it’s the first of many poor decisions (another new truck, a second boat, giving up on loan forgiveness, buying too expensive a house, etc), it will absolutely sink him, or at least be the start of a series of lifestyle choices that turn into a doc in his 70s working extra shifts just to keep his head above water.

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That's a very fair point but I think it reinforces the position of those arguing against you rather than your position -- this truck purchase was a very bad decision.

Riding it out and paying finance charges, opportunity cost of investment etc isn't necessarily going to be better and it's probably going to be worse.

At the risk of sounding like a huge Dave Ramsey fan, he runs these scenarios all the time where people are underwater on cars they really can't afford. Sad fact is that you just have to eat the depreciation, call it tuition at Financial Education U, and move on.

DMFA and Donnie are more eloquent at this than me, but this is a wound that is going to keep bleeding.

I mean just take your AGI, multiple by 0.66 and figure out what kind of car this is for you. It's just really not a good idea. This is one of those things that makes more sense when you take it to where a lot of us are rather than a more typical American. Sure there are lots of guys out there who make $75k/year and have a $40k truck or $90k/$65k.

Ok I'm an academic ER doc. That's like if I had 3 new Ford F150 Raptors sitting in my driveway because I like alternating them by day of the week. I can't afford that. That's beyond dumb.

[Kuratz]

 

 

 

 

[Craigy]

DMFA wrote:

Craigy wrote:

If you go by the definition of the word (which is what most people go by as far as words are concerned), if you have the means to purchase or provide, you can afford. 

Click to expand…

Except you don’t, because embedded in the definition of the word is “to have enough” to pay for something, and what is “enough” is easily interpreted as going beyond simply being able to obtain only the money needed to pay for the thing alone.  Based on that definition, he couldn’t afford the truck because he didn’t have have the means to purchase it.  He had to enter a finance agreement in order to obtain it which created the means.  You could even extend that argument to anything that’s financed – education, housing, etc.  You’ve opened a can of worms here.

It’s also a very myopic view only to focus on one expense when there are numerous other expenses which would have to be paid – rent and food, for instance.  Would you have to qualify every “you can’t afford” statement with all the other expenses needed – instead of just “you can’t afford a brand-new truck,” to say “you can’t afford a brand new truck, rent, food, gas, insurance, utilities, a non-austere lifestyle, debt payment, and retirement contributions” – when clearly some things on that list are of greater import than others, and it makes much more sense only to include the one thing in question in the statement.  I would think that the long list of things “you can’d afford X and A, B, C, D, E, F…” would be far more condescending than simply “you can’t afford X.”

Yes, that’s subjective, and focuses purely on semantics other than the ontology of “enough,” but you know that it’s a fairly absurd argument.

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If he is able to secure the financing and make the payments, he is able to afford it.  By your can-of-worms definition, you can't afford anything you can't pay cash for on the spot.  Nobody can afford to buy a house.  Most people can't even afford to pay rent since they're depending on an employer to pay them money in the future.  Etc etc.  But to avoid continuing down the semantics hole, I will let you and whoever else have the last word on this.

As for the second bit, it's easier IMO to avoid telling people they can't afford things in the first place.  Much easier, and kinder, to say they shouldn't buy something, or that buying something is a bad idea, than to say that they literally can't buy it.   

[Zaphod]

Kuratz wrote:

My father drove a Honda for nearly 23 years and racked up hundred of thousands of miles. The amount of satisfaction he got from driving that ************************ thing was undoubtedly more than any sports car. It was like a game to him and honestly part of the mindset which led him to be effectively retired since his 40s. He bought me a gently used Honda in college and I still love it. If nice cars are your jam then that’s cool but for folks who don’t particularly care I can’t imagine having a significant car payment every month.

 

 

 

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The annoying part for people that dont care is the threshold cost level for any decent/safe car. Its crazy. Already feel like the one car we have sits depreciating 95% of the time. Cant do to much if you're unwilling to accept small, v. high miles, or more than 10 years old. Nbd in the end, but cars spendy.

[Jfleenm16]

We’ll guys I really appreciate all of the great advice. Very poor judgment on my part for an item that I only needed to get from Point A to B. (And pull a boat, albiet major overkill). Could I have kept the truck? Sure, but depreciation would have set in hard after a few years and the money going into it plus interest plus lost opportunity cost would be well into six figures. Think I would have been pulling my hair out in three, six , ten years from now.

I traded for an immaculate used 2003 Toyota Tacoma with 75,000 miles for $14,000. Paid cash. Plan on keeping forever

Got 54.5K for my truck and will get 5k back for warranty and maintenance plan.

Humbling experience and hopefully one I will not repeat. What’s lost is lost. Thanks again guys for the perspective and slapping some sense into me.

PS: the HSCP is different from HPSP. I was paid active duty E-6 pay through Med school and accrued 4 years time in service. Trade off is I paid for my own tuition, hence school loans

[Jfleenm16]

I could and did “afford” payments on the truck, but could not “afford” the truck as a whole. That’s why the bank keeps the title.

[adventure]

Jfleenm16 wrote:

Toyota Tacoma with 75,000 miles

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Enjoy the new ride!! (and getting closer to your financial goals!!)

[MPMD]

Jfleenm16 wrote:

We’ll guys I really appreciate all of the great advice. Very poor judgment on my part for an item that I only needed to get from Point A to B. (And pull a boat, albiet major overkill). Could I have kept the truck? Sure, but depreciation would have set in hard after a few years and the money going into it plus interest plus lost opportunity cost would be well into six figures. Think I would have been pulling my hair out in three, six , ten years from now.

I traded for an immaculate used 2003 Toyota Tacoma with 75,000 miles for $14,000. Paid cash. Plan on keeping forever

Got 54.5K for my truck and will get 5k back for warranty and maintenance plan.

Humbling experience and hopefully one I will not repeat. What’s lost is lost. Thanks again guys for the perspective and slapping some sense into me.

PS: the HSCP is different from HPSP. I was paid active duty E-6 pay through Med school and accrued 4 years time in service. Trade off is I paid for my own tuition, hence school loans

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Solid move dude, you are able to admit a mistake and learn from it. You are on the path!

And heck man, you might be back in a brand new F150 paid for with cash before you know it as a reward for hitting a $1M NW.

 

[Craigy]

Congrats!  Sounds like you did good on the second buy.

[Matas]

Good choice with the Taco!  I've never seen one that year with anywhere near those low miles. I doubt you'll see much if any depreciation. My daily is a 2016 Tacoma. And like everyone else has written - nice financial move and learning experience.

[Jfleenm16]

Finding the Tacoma was like it was meant to be! Was a single owner old man who finally decided to trade. Truck was still getting detailed when I pulled into the dealership.

Still lit about 13k on fire after all said and done. One plus though is through the process I used an AMEX card for all the down payments and just paid it off and racked up flight miles. Lol.

Huge burden off my chest knowing that I no longer have 50k debt, a depreciating asset and paying the bank interest. Glad I posted on the forum.

[Matas]

Jfleenm16 wrote:

Still lit about 13k on fire after all said and done.

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Nice double entendre!

Don't sweat it. The decision along with it's financial attitudinal adjustment will more than pay off.

[MPMD]

Matas wrote:

Jfleenm16 wrote:

Still lit about 13k on fire after all said and done.

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Nice double entendre!

Don’t sweat it. The decision along with it’s financial attitudinal adjustment will more than pay off.

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High chance you will look back in 20-30 years at that 13k as the best money you ever spent.

[FIREshrink]

OP gets some sympathy from me, since I just bought a new full ton truck, diesel, loaded, all the bells and whistles, for zero down. I also love my truck and use it tow something big. The difference is the OP and I are in really different financial situations. I think OP can find a used 3/4 ton truck for $20k that will meet his needs.