Quote:
Originally Posted by Fulcrum525
The general train of thought is this. They don't plunk down a check for $100,000 on a new car, you make payments like everyone else. The difference is that they invest what they would have spent at a rate that can potentially pay them back more then the interest on a loan would cost. So you set aside say 8% of your yearly income to making car payments. $24,000 on a yearly car payment will still get you a lot of car and what you have left over is enough to make you more money in the long run
(Of course that's very simplified and doesn't factor in living costs but you get the idea)
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Yup, I understand the concept. That's a great way to stay in debt forever and never haver the freedom to leave your $300K job and go accumulate some real wealth.
The guy who uses this logic has also borrowed $800K for his house, $400K for his vacation home, and is paying $40K per year to his country club. He spent $25K redoing his kitchen last month, and owns 25% or a small plane that he doesn't have time to fly. He has two kids in Ivy League schools at $40K/year each, and his wife just booked a $15K vacation for the holidays. Now he's worried because he doesn't know if he will get the usual annual bonus check, and he doesn't want to cash out any stock while the market is in the dumps. He's pushing 55 and would like to quit his job and start a new business, but he's not liquid enough. He's looking at spending $75K on his daughters wedding, but he doesn't have the cash available. He brings home $15-20K per month and still has to pay attention to his spending.
Does anyone want to be this guy, with or without the nice shinny new car?
I would rather live in a modest house, drive an older car, and be able to sleep at night. Just saying.
