mallie
Pearl Clutcher
Posts: 3,253
Jul 3, 2014 18:13:13 GMT
|
Post by mallie on Feb 15, 2019 15:57:26 GMT
Timely thread in that we just saw a new financial advisor and one of his offhand comments was that one of the main ways he sees people overspending is on their cars. He says he is amazed at how much people will spend on their cars and the loans dealers will make to people who really cannot afford them. He said he has tried to counsel people that if they bought a reasonable car and banked/invested/put in their retirement fund the difference between that payment and the payment on an expensive car, they would have a tidy nest egg, but people don't want to worry about the future. I had a young guy at work, turned 18, who was able to get a car loan from the dealer for a massively tricked out muscle car -- brand new. Kid was a college student, worked no more than 20 hours per week and somehow he got a loan for $32K. And that is one way people get into trouble. I also know that people have no concept of math, real cost or the opportunity cost of spending money that could be used for other things. Saw it last year at the store when the tax refunds came in and people are coming in to blow $500+ on crappy discount junior clothes. Even if you ignore the idea of saving the money or paying off a bill, what about wasting that much money on disposable clothes? They also do not get that the tax refund is not "free money" -- I can assure you from listening ot my customers, that the majority of them think it is FREE money from the government. They do not get that it is their money that the goverment is returning to them. No idea. At the heart of it is, IMO, that people are not being taught basic, financial competency or even more basic life-necessary math skills. When a customer comes up to me with two items and asks how much they would cost because they cannot add the two items? And it happens all the time? We have failed generations of people with "new" math. When I say, " Well, you have two items that cost $5 each, so that is $10." They are flummoxed because, "But they are $4.99, no t $5." I say, "Just round up to the nearest dollar--" "What does round up mean?" ANd on and on and on. When people cannot do that kind of math, they cannot understand what their spending choices are going to cost them long term. I have to disagree with part of that last statement in your post. I don’t think we can blame people being dumb on new math. My third grader has successfully learned how to add numbers together (even big numbers), has learned to subtract, multiply and divide, how to round up (and down) and is currently learning fractions all with “new” math instruction techniques. I worked at a bank for almost a decade (in the 80’s and 90’s), and I’ve come to the conclusion that there are just a lot of dumb people walking around out there. I completely agree that there are a lot of dumb people out there. But I also know a lot of otherwise smart people who cannot figure out what 10% is. I also admit to having huge issues about math education having had to tutor a long list of siblings and cousins younger than me who were taught new math. To this day, they all struggle with basic math skills and I don't think they are any less intelligent than I am. The school district here has just passed a resolution to add a required course for graduation that is basic financial literacy and one of the items on the list is being able to figure out a 20% tip on a restaurant bill. I think that is a sign of educational failure early on.
|
|
johnnysmom
Drama Llama
Posts: 5,682
Jun 25, 2014 21:16:33 GMT
|
Post by johnnysmom on Feb 15, 2019 16:00:10 GMT
Timely thread in that we just saw a new financial advisor and one of his offhand comments was that one of the main ways he sees people overspending is on their cars. He says he is amazed at how much people will spend on their cars and the loans dealers will make to people who really cannot afford them. He said he has tried to counsel people that if they bought a reasonable car and banked/invested/put in their retirement fund the difference between that payment and the payment on an expensive car, they would have a tidy nest egg, but people don't want to worry about the future. I had a young guy at work, turned 18, who was able to get a car loan from the dealer for a massively tricked out muscle car -- brand new. Kid was a college student, worked no more than 20 hours per week and somehow he got a loan for $32K. And that is one way people get into trouble. I also know that people have no concept of math, real cost or the opportunity cost of spending money that could be used for other things. Saw it last year at the store when the tax refunds came in and people are coming in to blow $500+ on crappy discount junior clothes. Even if you ignore the idea of saving the money or paying off a bill, what about wasting that much money on disposable clothes? They also do not get that the tax refund is not "free money" -- I can assure you from listening ot my customers, that the majority of them think it is FREE money from the government. They do not get that it is their money that the goverment is returning to them. No idea. At the heart of it is, IMO, that people are not being taught basic, financial competency or even more basic life-necessary math skills. When a customer comes up to me with two items and asks how much they would cost because they cannot add the two items? And it happens all the time? We have failed generations of people with "new" math. When I say, " Well, you have two items that cost $5 each, so that is $10." They are flummoxed because, "But they are $4.99, no t $5." I say, "Just round up to the nearest dollar--" "What does round up mean?" ANd on and on and on. When people cannot do that kind of math, they cannot understand what their spending choices are going to cost them long term. I have to disagree with part of that last statement in your post. I don’t think we can blame people being dumb on new math. My third grader has successfully learned how to add numbers together (even big numbers), has learned to subtract, multiply and divide, how to round up (and down) and is currently learning fractions all with “new” math instruction techniques. I worked at a bank for almost a decade (in the 80’s and 90’s), and I’ve come to the conclusion that there are just a lot of dumb people walking around out there. I agree with that. Also, "new math" hasn't really been around long enough to be blamed for stupid adults.
|
|
|
Post by crazy4scraps on Feb 15, 2019 16:11:52 GMT
I have to disagree with part of that last statement in your post. I don’t think we can blame people being dumb on new math. My third grader has successfully learned how to add numbers together (even big numbers), has learned to subtract, multiply and divide, how to round up (and down) and is currently learning fractions all with “new” math instruction techniques. I worked at a bank for almost a decade (in the 80’s and 90’s), and I’ve come to the conclusion that there are just a lot of dumb people walking around out there. I completely agree that there are a lot of dumb people out there. But I also know a lot of otherwise smart people who cannot figure out what 10% is. I also admit to having huge issues about math education having had to tutor a long list of siblings and cousins younger than me who were taught new math. To this day, they all struggle with basic math skills and I don't think they are any less intelligent than I am. The school district here has just passed a resolution to add a required course for graduation that is basic financial literacy and one of the items on the list is being able to figure out a 20% tip on a restaurant bill. I think that is a sign of educational failure early on. That’s great, and I think every district should have financial literacy as a required course. I never really thought of math as one of my stronger suits, but I know how to do all of that stuff. My DD is really good with it too. Both DH and I have been surprised by how quickly she grasps the concepts of all this stuff. I think part of it though is simple real life practice, such as when we’re in the store and she sees something that’s on sale for a certain percentage off we will have a quick little math lesson right there. How much money off is it if it’s 20% off? 30%? 50%? What percent is it off each item if it’s buy two get one free? That kind of thing. We do the same thing in restaurants when we figure out the tip. Or the difference between calculating how many gallons of paint you would need to cover the walls in a room vs. how many gallons of water it would take to fill that same room? I find we talk about stuff like this all the time in our family.
|
|
|
Post by jassy on Feb 15, 2019 17:02:42 GMT
I think this is an excellent point - many people seem to have that "you will always have a car payment" mentality. It's just not true. Doesn't need to be true in most cases - yes, people like what they like and want what they want and can justify it to themselves many ways, but there really are reasonable and safe car options out there IF you are ok with a more utilitarian approach. Most people seem to want to feel like they are sitting in their living room while driving to work - that's going to cost a lot of money for a long time.
|
|
|
Post by crazy4scraps on Feb 15, 2019 17:24:34 GMT
I think this is an excellent point - many people seem to have that "you will always have a car payment" mentality. It's just not true. Doesn't need to be true in most cases - yes, people like what they like and want what they want and can justify it to themselves many ways, but there really are reasonable and safe car options out there IF you are ok with a more utilitarian approach. Most people seem to want to feel like they are sitting in their living room while driving to work - that's going to cost a lot of money for a long time. I hear what you’re saying. However there are a LOT of people who probably spend more time in their car than they do in their living room so there is something to be said for being reasonably comfortable in their vehicle when that’s the case. My DH drives a big panel truck for work and when he bought it he really went bare bones with the features inside since it’s “just a work truck.” Now almost seven years in, he’s wishing he would have at least splurged on remote start, heated seats and mirrors and a radio that he could plug his phone into. When you’re in your vehicle for as much as 8-10 hours a day the little things matter.
|
|
|
Post by compeateropeator on Feb 15, 2019 17:34:27 GMT
The information in this article does and yet does not surprise me.
No matter what brand and type of car you have there is always someone who has loved that car and never had a problem and there is always someone who had that car and it was the worst car ever, one problem after another. So in my opinion it really is just a crap shoot.
Cars...buying them, owning them, repairing them..suck but at the same time can be a necessity and can make you happy. It is also not a one size fits all situation.
I am 55 and I bought my first new car after I finished college. I always buy new and I am only on my 4th car. I started with small cars with very basic amenities and have moved on to a SUV low midrange. (Chevy Nova, Ford Escort, Mazda3, and now a Subaru Forester)
My parents always instilled it in me that you shouldn’t have a car payment over 3 years - because then you will still have a payment and be spending money for repairs. My last 2 cars I went 5 years on my loans to get a little better of a car (and I mean little) with a payment between 325 and 350...no luxury car here. They agreed that with the crazy prices of cars nowadays it is not really unreasonable. I went all 5 years on my Mazda but will payoff the Subaru in about 3 years because I had a very small windfall that I put toward it.
For me a car is not a luxury. I am single, I work 2nd shift at a medical center, and in a rural state that has winter. Public transportion is not an option and there is no backup car if mine is not drivable. I have inched up in my car choices over the years, but really more for the winter driving benefits than for greater luxury.
Sorry that got long.
|
|
|
Post by gmcwife1 on Feb 15, 2019 17:39:18 GMT
I think this is an excellent point - many people seem to have that "you will always have a car payment" mentality. It's just not true. Doesn't need to be true in most cases - yes, people like what they like and want what they want and can justify it to themselves many ways, but there really are reasonable and safe car options out there IF you are ok with a more utilitarian approach. Most people seem to want to feel like they are sitting in their living room while driving to work - that's going to cost a lot of money for a long time. Dh used to think that early in our marriage. Until we paid off our first car early and I refused to replace it until I had to. Now we only have short term car payments that we always pay off early.
|
|
|
Post by FuzzyMutt on Feb 15, 2019 17:59:13 GMT
This was us a couple years ago, and I’ll tell you why. DH had been driving a 2004 Silverado with a diesel engine that would easily run for another 150K miles that we bought new back in the day. He maintained it well the entire time, kept it clean, etc. In spite of all that the cab corners were rusted through, brake and fuel lines needed to be replaced, injectors were on the way out, and, and, and. When it was all added up the cost to fix it was between $5-8K depending on which things we picked to repair. Before doing anything, we took the truck in to our friend at the dealership and asked her what the retail on it would be if we fixed it. The total retail value of the truck wouldn’t even be worth the cost of the repairs! And the worst part is, the truck was 13 years old, so spending that money wouldn’t be the end of it because with something that old there is always another shoe waiting to drop. We ended up keeping the old truck because it has a plow on it that we still use occasionally, spent some money getting the brake and fuel lines replaced but that was it. He bought a two year old truck for something like $53K which we both thought was absolutely insane, new it would have been over $70K. When we were in the looking phase, we’d be driving down the road and he would say, “There’s fifty grand, and there’s fifty grand, and THERE’S fifty grand...” every time we passed a truck. It’s totally nuts. Our first HOUSE was $55K! This is my parents too Their 2003/2004 truck just died. The estimates to fix it was over $6,000. The truck isn’t worth putting that much into. It’s great on the outside, but really high milage. They’ve driven it from Washington state to North Carolina twice and toured the US on the way back both times! I think they’ve also driven it to Arizona a few times. My mom doesn’t overpay for anything. They just bought a newish car to replace the truck. Trading the truck in was the best way to get rid of it. In my town we see more small houses and nicer cars. We bought a smaller house so we wouldn’t be house poor and could afford other things. We don’t have fancy cars (2005 Toyota Tacoma, 2007 Toyota 4Runner, 2013 VW Jetta), but we do each have a car. We bought both Toyotas used and have had them for many years. The Jetta was also used and our price was $3000 under blue book. For me it’s not a one size fits all situation. I remember being so poor I owned a beater car that didn’t even have working reverse. Dh and I take very good care of our cars, many people have no idea how old they are. My mom had a 1980 Oldsmobile Toronado (LOVED that car!! I wanted them to sell it to me) that didn't have reverse for about 3 years before it finally went into it's grave. I think dad spent $500 for it in 1990ish. I remember we used to have to plan out parking before even pulling into the parking lot. More than once my siblings and I had to get out and pust it backwards if need be. *Memories* <3
|
|
|
Post by sleepingbooty on Feb 15, 2019 18:09:14 GMT
This thread gave me anxiety. I've never owned a car or had a credit or loan for anything. This doesn't make me want to start if I can avoid it (so far have managed to navigate that path but I know I've been lucky). (I'm not American: we don't have to build up credit here)
|
|