Ford Bronco Savings Plans

[beachztt]

I ask my CFO if I can afford it. If she says yes... I but it.

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[Dlerojo]

I live alone, so I'm renting out 2 rooms in my house, and piling the cash up for a down payment. If the timing works out, and the money is enough, I may take a loan from my 401k, pay cash for it, and pay the loan interest to myself instead of a bank.

Don't do it, not a good idea.

 

[pat86323]

Don't do it, not a good idea.

Which part? I've rented rooms before, and bought vehicles with my 401k lol. Neither seemed to be a problem.

 

[MadMan4BamaNATL]

Am I the only one who does this level of planning for vehicle purchases?

View attachment 19408

.... YES!

 

[Mountain Goat]

.... YES!

Thanks for confirming what I already suspected.

 

[Dlerojo]

Which part? I've rented rooms before, and bought vehicles with my 401k lol. Neither seemed to be a problem.

The 401k part. You lose more money than you realize. You lose out on any market gains for the money you withdrew and you have to pay back your pre tax loan with after tax funds.

 

[KosmicKid]

My thoughts on this... if you have to go to this much effort, drive something much, much cheaper for a while (a long while) until you feel more comfortable paying $50K for your new car.

There is NO justifying a depreciating asset such as this from a logic, financial advisement standpoint.

This is a luxury, not part of a financial plan.

?Exactly.
We spent many years driving cheap used cars and saving for this or that plus raising 5 kids.
Now it's our turn and want to get all our toys paid off prior to retiring.

 

[MadMan4BamaNATL]

The 401k part. You lose more money than you realize. You lose out on any market gains for the money you withdrew and you have to pay back your pre tax loan with after tax funds.

Your advice on this topic has been just great. Not sure he is, but if young, don't think that under 40 you consider all of the variables like us old guys tend to.

The early withdrawal penalty, plus the lost of gains like you point out actually compound as the principle is declining as well as the level of gains from interest.

Hope he takes the time to think about and research the good advice you've shared here.

I thank you for doing to as it will hopefully benefit other readers as well.

 

[siggy]

I don’t do anything like that, and I’m an accounting controller for a large company. In fact, your spreadsheet doesn’t make much sense to me. In addition, it’s not necessary if you’re living well within your means, as you say. That’s the whole essence of living well within your means, so you’re not spending time making a poorly formatted Excel sheet on a damn Nissan Versa.

 

[pat86323]

The 401k part. You lose more money than you realize. You lose out on any market gains for the money you withdrew and you have to pay back your pre tax loan with after tax funds.

I get it, but with how bad my 401k is doing, I might actually make money. We will see, when the time comes.

 

[Toccoa]

Am I the only one who does this level of planning for vehicle purchases?

Usually there is a comparison chart between 15 or so vehicles, comparing 5 and 10 year costs of ownership, but when I saw the Bronco I knew it was the only one I would consider this time around. And I also know (or at least most fervently hope) that this is a vehicle I can keep and love for a lot more than 5-10 years anyway, so those charts became meaningless.

Next is the budget/savings plan. For example, here's how I plan to get into my 4-door Black Diamond with just a few key options. And to justify the purchase, I've categorized it as an early midlife crisis

View attachment 19408

Wow! That’s quite the spreadsheet you got there (you misspelled payment in the last column). I hope you can get out of the Versa and into a Bronco.

 

[DeltaBravo]

Im just dumping all my extra cash into fords Stock. I expect their dividend to be re-established before the bronco launches

 

[pat86323]

Your advice on this topic has been just great. Not sure he is, but if young, don't think that under 40 you consider all of the variables like us old guys tend to.

The early withdrawal penalty, plus the lost of gains like you point out actually compound as the principle is declining as well as the level of gains from interest.

Hope he takes the time to think about and research the good advice you've shared here.

I thank you for doing to as it will hopefully benefit other readers as well.

I'm no idiot haha, there is no withdrawal penalty on a loan, and the payback interest is relatively high, I calculated it all when I used my 401k to pay for my 94 bronco, and I dont remember the actual number, but I only ended up losing like forty something dollars on the 401k, and I paid all the interest to me, instead of a bank, when I calculated it, even with losing 40$ in my 401k, I saved what would have been equivalent of like 300$ on the interest on a personal loan.

 

[Mountain Goat]

Wow! That’s quite the spreadsheet you got there (you misspelled payment in the last column). I hope you can get out of the Versa and into a Bronco.

Good eye on the typo. Yes, that is the goal (and I'm realizing this post made me look a little dumb, but oh well).

 

[Dlerojo]

I get it, but with how bad my 401k is doing, I might actually make money. We will see, when the time comes.

I don't mean to beat you up or anything. You can do whatever you want, but here's an example for anyone else considering doing the same:

You make $25 an hour and your tax rate is 25%

You work 4 hours for a total of $100 and you get to put all of that into your 401k since its pretax funding.

You take out a loan for $100 and now you have to pay it back.

Since you pay it back with after tax funds you have to work roughly 5.25 hours to pay back the $100 you borrowed. Not including any additional interest thats just the principle.

Don't take out loans or touch your 401k unless its an absolute emergency.

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