"A BRONCO IS A BRONCO" - Buying a new Bronco, making payments, and affordability!

[Pancho Kornwallace]

I've seen a number of posts that people say something like, if the base model is $x.xx cheaper I can afford it. In fact, that is the complete definition that you cannot afford if you are stretched that thin.

The financial decisions you make early in life will set the trajectory of your entire life. In this first example below, a 25 year old started saving $500 per month, by retirement age they will have $1.52M with an average stock market return of 7% (with the money sitting is a broad based market ETF, such as VTI, https://investor.vanguard.com/etf/profile/VTI).

The second person waited until age 35 to start saving for retirement with the same inflation reduced $500 per month. Due to this later start at serious, responsible, savings, the second person will only have half as much as the smart 25 year old, $714K, with an average stock market return of 7% that is $807K less.

The future quality of life for your family, your children your emergency savings and your retirement are based on the choices you make early in life. Save vs Toys, the choice is yours, if you able to afford both, that is wonderful, but make sure you really can and it is just not a toy you feel you must have when lower cost transportation may be the more responsible choice at this stage of your life.

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Broncos range in price from just under $30K to over $60K. The Base is literally HALF THE PRICE of the FE loaded one. There is an affordability price point for EVERYTHING. From ordering a $50 steak dinner v. getting the $20 appetizer as a meal, to getting the CostCo flannel shirt instead of the LL Bean one. This has little to do with literally being stretched to thin.

For me, I am measuring the cost of the Bronco v. an average new vehicle that I would have been driving. It will be a little bit more, but the incremental costs will not be astronomically higher.

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[North7]

Broncos range in price from just under $30K to over $60K. The Base is literally HALF THE PRICE of the FE loaded one. There are a large segment of people that can afford the base model but not the one that costs double.

For me, I am measuring the cost of the Bronco v. an average new vehicle that would have been driving. It will be a little bit more, but the incremental costs will not be astronomically higher.

Sound reasoning, glad you considered your options.

 

[rugbysecondrow]

When advice hits to close to home, or it is something people don't want to hear, it is easier to try to reject or discredit the advice than to take it under advisement.

Agreed. This is the same type of "expert" advice people used to peddle in the early 2000's.

"Buy your house with a 5 or 7 year ARM or interest only mortgage, pay a low interest rate, invest the balance into the market, sell your house for ##% more or refinance when the note mature's, make $$$ selling or just refinance again...it's basic math and you are foolish and throwing away your money if you don"t"

Raise your hand if you kept your boring 30 or 15year fixed mortgage, with cash down and you didn't get upside down on your home when the whole market crashed in 2008-09. ?‍ Raise your hand if you know people who lost their home because of this risky type of "financial planning". ?‍

I understand the math and reasoning behind the opportunity cost conversation, but I think the math is sometimes a poor substitute for "planning" which requires the value and acceptance of risk and "sleep at night" stress, which math can do a poor job of accounting for.

 

[gigidaho]

Good advice! Slightly embarrassing fact: I rode my bike until I was 30 years old. It felt like every other person in the country could afford a car except me but staying out of debt has paid off later in life and it was worth the struggle.

There’s not hard rules to what you can afford, if it’s something you value you can make it happen and cut back in other areas. But too many people don’t cut back in other areas. This year sure laid that bare: It was really shocking how many brand new cars you would see in line at the food bank one month into quarantine.

 

[rugbysecondrow]

Good advice! Slightly embarrassing fact: I rode my bike until I was 30 years old. It felt like every other person in the country could afford a car except me but staying out of debt has paid off later in life and it was worth the struggle.

There’s not hard rules to what you can afford, if it’s something you value you can make it happen and cut back in other areas. But too many people don’t cut back in other areas. This year sure laid that bare: It was really shocking how many brand new cars you would see in line at the food bank one month into quarantine.

This. I think about it like this, "Plan for bad times when times are good". I own two business that were hit hard by the pandemic, but I was able to sleep at night because I had lived this mindset.

 

[North7]

Good advice! Slightly embarrassing fact: I rode my bike until I was 30 years old. It felt like every other person in the country could afford a car except me but staying out of debt has paid off later in life and it was worth the struggle.

There’s not hard rules to what you can afford, if it’s something you value you can make it happen and cut back in other areas. But too many people don’t cut back in other areas. This year sure laid that bare: It was really shocking how many brand new cars you would see in line at the food bank one month into quarantine.

Don't ever be embarrassed for making smart decisions, you will get the last laugh.

I saw a guy in a brand new BMW delivering DoorDash to the neighbors in the beginning.

 

[North7]

Agreed. This is the same type of "expert" advice people used to peddle in the early 2000's.

"Buy your house with a 5 or 7 year ARM or interest only mortgage, pay a low interest rate, invest the balance into the market, sell your house for ##% more or refinance when the note mature's, make $$$ selling or just refinance again...it's basic math and you are foolish and throwing away your money if you don"t"

Raise your hand if you kept your boring 30 or 15year fixed mortgage, with cash down and you didn't get upside down on your home when the whole market crashed in 2008-09. ?‍ Raise your hand if you know people who lost their home because of this risky type of "financial planning".

I understand the math and reasoning behind the opportunity cost conversation, but I think the math is sometimes a poor substitute for "planning" which requires the value and acceptance of risk and "sleep at night" stress, which math can do a poor job of accounting for.

Yes, boring fixed mortgage here ?‍, paid off early. I bought my last California house, a bank foreclosure, in the depths of the 2008 crash. The previous owner who lost it to the bank was a real estate agent trying to flip it, he had fully gutted it but ran out of money.

My wife and I started with empty walls and designed it how we wanted it. I did the full remodel myself with a couple of hired helpers, we moved in a year later when we finished the remodel. Eight years later we sold it for a 60% gain and it allowed us to pay cash for our brand new Texas home.

 

[Roger123]

Agreed. This is the same type of "expert" advice people used to peddle in the early 2000's.

"Buy your house with a 5 or 7 year ARM or interest only mortgage, pay a low interest rate, invest the balance into the market, sell your house for ##% more or refinance when the note mature's, make $$$ selling or just refinance again...it's basic math and you are foolish and throwing away your money if you don"t"

Raise your hand if you kept your boring 30 or 15year fixed mortgage, with cash down and you didn't get upside down on your home when the whole market crashed in 2008-09. ?‍ Raise your hand if you know people who lost their home because of this risky type of "financial planning". ?‍

I understand the math and reasoning behind the opportunity cost conversation, but I think the math is sometimes a poor substitute for "planning" which requires the value and acceptance of risk and "sleep at night" stress, which math can do a poor job of accounting for.

?‍ Bought my house in "05, LOL. Would the "math" people take out a loan on their paid for house to invest in the market? I'll bet they wouldn't, but why not, the math says that you'll come out ahead but the heart says, NO!

 

[NotApplicable]

What was "dogmatic" about the post? Why does basic advice, which so many people avoid, ignore, or never learned, rub you the wrong way?

Dogma: a point of view or tenet put forth as authoritative without adequate grounds

(Pretty clear to me but I’ll bite and explain again)

I’m simply pointing out that almost everything in financial decision making should be highly individualized and incorporate many variables. As such, there is no universal good advice. Much of what is parroted as “the right way” to manage money (by those who have no real credentials to be making such blanket claims) aren’t even based on the most objective criteria possible (such as statistics, mathematics, historical data points). Instead they are based on things like the assumption that the reader lacks will power or the ability/desire to become their own advocate and make their own financial decisions with confidence. I think this sells people short.

I don’t know why this would be so controversial, but it does seem to have hit many of you close to home!

I admit that the “fattest part of the bell curve” of society does currently lack the education and will power to make educated decisions about their own finances. I’d like to encourage these people to, if they’re willing, become educated about it themselves and decide what the best strategy for them. Or, if they even have enough cash flow and funds to make it worth it, hire an expert to help them make these sorts of decisions.

 

[Lilj4425]

Just like a taco is a taco. Oh wait...

 

[Roger123]

I’m simply pointing out that almost everything in financial decision making should be highly individualized and incorporate many variables. As such, there is no universal good advice. Much of what is parroted as “the right way” to manage money (by those who have no real credentials to be making such blanket claims) aren’t even based on the most objective criteria possible (such as statistics, mathematics, historical data points).

I'll bet most people that are offering advice here credential's involve actually having money.........

 

[Roger123]

Just like a taco is a taco. Oh wait...

I had a Taco once, '06 Access Cab Pre-runner, loved that truck.

 

[NotApplicable]

I'll bet most people that are offering advice here credential's involve actually having money.........

Donald Trump, Jeffrey Skilling, and Bernie Madoff had money. But if that’s the criteria you would apply...

 

[Roger123]

Donald Trump, Jeffrey Skilling, and Bernie Madoff had money. But if that’s the criteria you would apply...

No, I am not and if you think that then you're missing the point. Thinking of everyday normal people here, but you already knew that.

 

[Beachin 74]

Or make the decision to not have kids and eat steak every night?

Yup, the wife and I are "Dinks". (double income, no kids)

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