How much is your truck payment?

[EatDirtFartDust]

That’s not true at all. The wealthy don’t borrow money for a truck. They pay cash for range rovers.

That’s people who want others to think they’re wealthy.
I’ve had many wealthy clients. Truly wealthy. Millionaires. They’ve taught me a lot.
One thing: never pay $150k for a new S-Class when you can borrow the money at 2% interest and then put that $150k in the market and make 5-12% back.

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[Pinabutta]

$24,500 down, financed $37,575 @ 2.18% for 72 months $560/month

 

[gtotco]

That’s people who want others to think they’re wealthy.
I’ve had many wealthy clients. Truly wealthy. Millionaires. They’ve taught me a lot.
One thing: never pay $150k for a new S-Class when you can borrow the money at 2% interest and then put that $150k in the market and make 5-12% back.

I mean to each their own I work in finance and deal with truly wealthy people also and most of them got that way by mitigating risk and maximizing equity. There are people who have done well with leverage, but as soon as their is a hiccup they tend to go sideways. The truly long term players and truly wealthy (I tend to define true wealth as $50-$100MM+ which might be the discrepancy) tend to primarily use debt as a way of access liquidity from non liquid assets. I really don’t know anyone fitting that definition who is going to go through the effort to take out a $100k loan on a car to pick up a few thousand dollars a year in risk adjusted returns. If these people wanted to infinitely leverage their investments they could without having to go through a finance manager at a dealership. The fact of the matter is most people don’t because once you get to a certain point you are focused as much on protecting wealth as growing it.

The other thing that always annoys me about this rationale is it’s used by people who are justifying consumer spending who don’t have the cash available, because they want something now. I know plenty of peers who make significantly more than I do but have far less saved because they spend what they make and also are way more comfortable with debt than myself. We have done well financially the boring way (spend less than you earn invest early and often and minimize debt). I think people often try and justify breaking these axioms by overthinking trying to game returns.

 

[SumGuy]

That’s people who want others to think they’re wealthy.
I’ve had many wealthy clients. Truly wealthy. Millionaires. They’ve taught me a lot.
One thing: never pay $150k for a new S-Class when you can borrow the money at 2% interest and then put that $150k in the market and make 5-12% back.

We have different definitions of wealth.

to me wealthy is someone who can cut a $15M check for a beach house.

If wealthy is people worried about an s-class, then we need to make sure we are talking apples-apples.

 

[EatDirtFartDust]

We have different definitions of wealth.

to me wealthy is someone who can cut a $15M check for a beach house.

If wealthy is people worried about an s-class, then we need to make sure we are talking apples-apples.

You're right.
I guess I was talking about people who care about a couple thousand in interest.
But the people you talk about, wouldn't be talking about their truck payments on an online message board.
So I guess my suggestion for people in this discussion, who pay cash for their truck when they have good credit... don't.

 

[dhrandy]

MSRP $54,285
X-Plan Pricing $50,235.30
Package Discount $750
Build Your Own Discount $1000
Price: $48,485
0% for 72 Months
Down Payment $11,000
6 Year 100,000 Warranty $1730
Monthly Payment $568.94
6 Free Oil Changes

2021 Carbonized Grey Lariat, SCAB, 5.0, 4x2, 500A, CoPilot Assist, 360 Cameras, Trailer Tow Package & Mirrors, 20/40/20, 3.31 Lock Diff, 8 Speaker B&O

 

[F-150 Prius]

We have different definitions of wealth.

to me wealthy is someone who can cut a $15M check for a beach house.

If wealthy is people worried about an s-class, then we need to make sure we are talking apples-apples.

That's an extremely high bar for "wealthy." The US "1%" have a net worth over US$11M.
$15M for a vacation home is 0.01% of US taxpayers … 0.0001% of the world population.
Google says somewhere between 5 to 9 million households have a second home or about 5% of all homes in the USA are second homes … I'd suggest just drop the dollar amount and you've got a starting point for wealth … also, the reason many people are wealthy is their ability to make financially educated decisions and not buy an S Class or borrow beyond their total portfolio planned rate of return on capital. I borrow against assets because the rate of return in the capital markets has been multiples of the cost of money for over a decade. When that changes, I'll be glad to have long term (30 year) money at "free" interest rates.

 

[SumGuy]

That's an extremely high bar for "wealthy." The US "1%" have a net worth over US$11M.
$15M for a vacation home is 0.01% of US taxpayers … 0.0001% of the world population.
Google says somewhere between 5 to 9 million households have a second home or about 5% of all homes in the USA are second homes … I'd suggest just drop the dollar amount and you've got a starting point for wealth … also, the reason many people are wealthy is their ability to make financially educated decisions and not buy an S Class or borrow beyond their total portfolio planned rate of return on capital. I borrow against assets because the rate of return in the capital markets has been multiples of the cost of money for over a decade. When that changes, I'll be glad to have long term (30 year) money at "free" interest rates.

thus my comment on making sure we have a definition of what "wealthy" means. to me, wealthy is generally my definition. To you it sounds like someone having a second home is your definition of wealthy. I know plenty of people with second homes up in the mountains and they make $150-200k/yr. That is not wealthy, just someone with a little extra spending money.

 

[saluki1969]

I put $45,000.00 down in cash and $11,000.00 for my trade-in. I financed at 0% through Ford for 36 months. My monthly payment is $353.42. I round the payment off to 500.00 per month. Easier to balance check book.
First payment was July. Want to get it paid for before this administration sets a date for terminating ICE vehicle on US roadways.

 

[RoccoL]

My Tremor build was $70K. Xplan brings it down to $65k. Traded in a 2018 Jeep Wrangler JKUR Recon. I paid $44k (off the lot) for the Jeep in 2018, and got $46K for trade in June...that's a free car for 3.5 years.

I am still financing the remaining $19K and have secured my financing through a local CU, 0.9% for 5 years. The entire loan (should I actually pay for 60 mos) will cost me $450.

Not to start a Dave Ramsey bash sesh (keep in mind he filed bankruptcy and couldn't get a loan if he wanted to), or a finance 201 lecture, but "cash is king" sure AF didn't create the investments that made the 1% the 1%. Putting your money to work for you does. Its been said previously in this thread, a $60k loan over 6 years will cost you ~$3k at these current (great) rates, but a A $60K investment can make you triple that in the same timeframe, covering not only the interest of your payments but also 35%+ of your principal. Don't be afraid to finance if you are utilizing your capital to grow your wealth (even if its just contributing more to your 401K!). 10 years from now we will look back on 3% rates and think "shit, that was free money"...

I appreciate this, thank you. I always struggle with taking on additional debt but you make perfect sense, would rather invest my $$$ for a greater return, than pay cash for a vehicle in todays economy. Especially with the low interest rates we are now seeing.

Best,
Rocco

 

[RoccoL]

I am not sure what you're talking about. If you invest in VOO, you are in the S&P500, clean. They are not taking half your returns. Their fee is .03%. Pennies, just pennies. No one can consistently beat the S&P500, which is why IT is the benchmark that everyone compares to. So if you cannot consistently beat the 500, just buy the damn 500.

https://investor.vanguard.com/etf/profile/VOO

VOO all day!?

 

[F-150 Prius]

I appreciate this, thank you. I always struggle with taking on additional debt but you make perfect sense, would rather invest my $$$ for a greater return, than pay cash for a vehicle in todays economy. Especially with the low interest rates we are now seeing.

Best,
Rocco

That's solid advice and I think you get the gist of it. If you do borrow to buy a truck, stay comfortably within your means and be sure to put your capital to work.

 

[F-150 Prius]

VOO all day!?

Normally I'd argue in favor of "self-directed" investment rather than buying products from any of the funds gatherer broker corporations. The last many years of continued price increases in the S&P (and Dow and NASDAQ, the Russell being the only pauper) may well continue in 2022. I'd still want to be ready to react and not leave capital in Vanguard's VOO or anything 100% at risk and 100% long bullish.
But I'm just a passerby on the Web. Continue to do your homework and work with trusted advisers (not corporate employees) to make informed decisions.

 

[UGADawg96]

Due to needing to get a few house improvement/repairs done, wanting to use capital for those, and with all the inflationary trends we're seeing, we reversed course a little and decided to take advantage of the 0% for 60mos that was offered last month and financed a whole 60k to make a flat 1k/month payment and paid cash for the little amount above that in the OTD price. This allows us to handle the house wants/needs while the truck is on "free" money for five years. By the way, we added in the 8yr/100k ESP with all options into the deal during purchase. Had interest rates been more than 0%, we may have gone in a different direction. Everyone's situation is different, but after consultation with a couple advisors, we felt this was the best decision for us. ymmv.

 

[LRK]

2021 Lariat…. 0% for 72 mo. (Ford credit) 0 down (use their money) $986/mo. Saved up about 5 years of payments, just in case..

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