Does this make sense to you...? - Page 2 - PeachParts Mercedes-Benz Forum

kerry · #16 12-03-2003, 07:09 PM

John, you're right on the money about time. A person can always get more money or cut back on expenses, but adding to the amount of time in life is very difficult. Many of my colleagues at school work throughout the summer (when it is not required) so they can make their mortgage and car payments. Me, I like to play with my family and friends during the summer. Life's too short not to be able to play with your kids.

It seems to me that there are also broader social implications. Didn't you say your nephew just graduated from business school? Do you think the same kind of thinking is being applied by the managerial class to the businesses they manage? I run my own small real estate rental business on the side and if I applied that kind of thought to my business there's no way it would survive.

Lebenz · #17 12-04-2003, 10:13 AM

Quote:

Originally posted by blackmercedes
This young fellow looks at me like I'm completely "tuned-out" to the "new" thinking concerning automobiles and their financing. I had always thought this to be a less than prudent financial decision, but evidently I am in a shriking group of "old people."

I don't see any issue. A guy graduates from school, even though it’s business school, gets a good job, wants to reward himself, and makes what just about anyone would call a good decision on a car. He’s all but guaranteed little or no down time due to the car being in the shop. It is his money, what’s the problem? Aren’t you asserting an irrelevant and condescending view upon someone who wants a nice reliable toy? After all, if he changes his mind or sense of priorities in the future, he’s not obligated to lease for-ever.

The issue doesn’t have anything to do with “new thinking” or “prudence” rather it is simply a case of preference and opportunity.

As far as time at work, there are a great number of folks who derive the greatest enjoyment in life from their work and the folks with whom they interact. They are neither right nor wrong in this decision. Again, to suggest it is somehow wrong is simply pumping yerself by putting down a target of convenience.

mikemover · #18 12-04-2003, 09:46 PM

Quote:

Originally posted by blackmercedes
A friend of mine's son graduated from university in the spring and started a job with Xerox a few months ago. He's doing okay, enjoying the job and had a ball during training. I had the same job years back and highly recommend it as "get your feet wet" experience for new B-School grads. The training is incredible, and sales training will serve you well in all aspects of business.

However, we got into quite the discussion last evening concerning his newest aquisition: a 2004 Acura MDX.

In Canada, this SUV costs about $55K with taxes. I was a little shocked that someone so fresh out of school would pay so much for a new car. Here's his take on it:

In some B-School class he learned that in lease vs. buy decisions, you generally should purchase appreciating assets and lease or rent depreciating assets. Of course, there is an NPV calculation that takes salvage value and other variables into consideration, but it's a rule of thumb to some extent. So, cars should be leased. Well, that does make some sense. On we go...

Well, the MDX has a very high residual value, so his payments are pretty decent for that price of SUV (about $600 a month with taxes) and he can afford the monthly payment. Here's where we part company. At the end of the four years, he has to pay $30,600 plus taxes to buy the SUV out. He will either re-lease it or simply lease a new one. In the future he sees having to pay $600-$700 a month for a car just as a natural expense that will never end. Kinda like taxes or insurance.

What of this thinking? Am I funny in buying a car, paying it off in 3-4 years, and then driving it for another 5-10 with no payments? Is it normal now just to build a significant payment into your budget and expect that it will be a life-long expense?

This young fellow looks at me like I'm completely "tuned-out" to the "new" thinking concerning automobiles and their financing. I had always thought this to be a less than prudent financial decision, but evidently I am in a shriking group of "old people."

As a rule, younger people no longer think that cars can be a long-term investment, because cars are not built to last anymore. They are considered a disposable asset, with a finite usable lifespan.

Why OWN a car full of troublesome, disposble gadgets and gizmos when you can lease it, then turn it in and lease a new one in a couple of years, letting the old one become someone else's problem when the warranty is expired and all the expensive little problems start showing up?

Mike

drbrandini · #19 12-04-2003, 10:15 PM

I finished school a little over a year ago. It took me a little longer since I put myself through it but in hind sight I'm glad I did. I think I learned more from managing my finances through college than I did from the institution.

I was one of the fortunate graduates that found a very good job. Needless to say I am driving the same old MB I've had all along. While I would like to have a new car and can easily afford it my brains logical thinking steps in and voids any thought I have of the purchase. Sure my 300E has around 265,000 miles but it is in good shape and the repair bills for the month are significantly less than a payment would be.

I've basically made a promise to myself that once I've finished paying off my school loans I may allow myself to buy a used MB. However it will be paid in full at the POS. I might add I am only 3 and half months into my career and I have already paid off half of my student loans.

Sorry just had to add that. I'm siked that I'm almost debt free!!

Botnst · #20 12-05-2003, 08:18 AM

Quote:

Originally posted by drbrandini
I might add I am only 3 and half months into my career and I have already paid off half of my student loans. Sorry just had to add that. I'm siked that I'm almost debt free!!

Gawd, Brandon, I envy you. It took me almost four years to pay-off my loans. (Mine weren't big loans, but field biology pays about as well as elementary school teaching.).

Where did that self-discipline come from? How can I encourage it in my kids? Has this discipline hurt your love life? It seems to me that girls are usually attracted to airhead flakes who blow their money and careers, not thoughtful guys like you appear to be.

drbrandini · #21 12-05-2003, 09:59 PM

Botnst,

Thanks for the compliments.

I think I learned this from putting myself through school and pinching pennies along the way. Don't get me wrong I spend money, but usually it's well calculated. I normally give myself an allowance each weekend and make myself spend it. I just don't blow money very often. But once in a while everyone needs to go to the fair and spend $50 bucks with absolutely nothing to show for it.

I would say it doesn't hurt my love life because I don't believe I come across "cheap". After all I do own a Mercedes.

drbrandini · #22 12-05-2003, 10:05 PM

Quote:

Originally posted by Botnst
How can I encourage it in my kids?

I forgot this one.

Make them work for the littlest things in life. They'll appreciate them and take care of them much more. Something that seems to be missing these days.

Your and intelligent guy so I'm sure you know more about this than I do!

kknudson · #23 12-05-2003, 11:44 PM

Sorry I can't see leasing, although my main ride is an 88 Toyota 4Runner. I don't care what anyone says it's the best transportation I've ever had. Easy to drive, comfy, rides nice and I can throw tons in the back WITHOUT WORRYING ABOUT DINGS, DENTS, THEFT ETC. Even if I leave a trail of rust wherever I go. Even if I toss 500 or a grand into it every year.

I can blow my real money, time and energy on my 90 500SL.

But the real point of this post, I don't know about the leasing side of things. But there have been 2 big things going on with these 0% +/or low cost financing. Some of the big automakers (Mistubishi (???) in front. Chrysler next, then) lost their shirts on people who can't pay. 0% and no payments for 6 months, then the people just toss the keys back.

Also that a huge percentage of people are actually underwater on their loan vs. value. i.e. take out a 6 year loan trade in/up after 4 years and owe more than it's worth. Since a lease is really a purchase with so conditions, I would think they end up similiar.