10-08-2002 07:59									#91
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quote: Originally posted by Asher How do you pay more for a car than it's worth when you buy it at the fleet price?

Because it immediately loses value.

quote: You seem to think we're paying more overall to buy it upfront, when it's actually vice versa. At least in my case.

It's not true in your case, or anyone elses.

quote: If you lease a car or a house, you're paying money for something you will never own and won't be able to sell at all when you're done with it...

That's potentialy not a bad thing either, especially if you've paid more money than the car you own is worth at the end of the day.

	10-08-2002 08:02									#92
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quote: Because it immediately loses value.

What are your options? When working it out with a simple calculator, if you lease a car or finance it I end up paying more. In the case of leasing, I don't have ANYTHING left over at the end.

We just sold our 1992 Previa for $6000, and we bought it at $29000 (regularly $40000). That means we paid roughly $23000 for the use of the van over 10 years.

Or $191.66/mo in total.

There certainly was no lease or financing offer to match that...

	10-08-2002 08:31									#93
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quote: Originally posted by WhiteElephants While you may take whatever amount of pride in having bought your vehicles with cash, from a financial standpoint you're both rather foolish. The fact is as you drive your new car off that lot it depreciates in value to the tune of thousands of dollars. In otherwords, you'd purchased something that is worth far less than what you'd paid for it. Hardly a good buy, by any standards. The house, on the other hand may appreciate in value, though the appreciation in real estate the last 10 (?) years has been unprecidented. I believe you're all familiar with the tech bubble, no? Well all bubbles eventually have to burst and a real estate bubble isn't unheard of. The mere liquidity of capital that you both squandered in your purchases is nothing to joke about, but I digress. So, in summary, next time you choose to brag about buying such-and-such in cash realize that the only people you're impressing are people much like youreselves with little inkling of the actually value of money.

W.E., uhhh... well, if you like to pay interest and truly enjoy perpetual, never-ending car payments, well that is fine and dandy with me. Here's how I figure it:

I paid $20k for the car. Had I financed it at 8% interest, I would've paid about (guesstimating here) $25k for the car. Please, oh please tell me which investment vehicle (no pun intended ) that I should've invested the 20k in that would earn me (guaranteed) more than 8% over the next 5 years (assuming I was dumb enough to put a 5 year note on a car)? Stocks? Bonds? CD's?

	10-08-2002 08:38									#94
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Also, WE, your argument assumes that we are the sort of owners who trade in every couple of years... if that were true, your point would be correct and I would've never had paid for the car in cash.

But we don't. We intend on keeping the Rodeo far longer than 5 years, which renders your argument moot. Could we have found a better investment for the $20k? Maybe, possibly... but we played it safe and decided against the -8% r.o.r.

	10-08-2002 08:58									#95
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quote: Originally posted by dv8ed My car...you know, what was being discussed before the threadjacking.

That's relative to whether or not you believe this thread was created out of genuine curiosity in what kind of car you drive, or a chance to foolishly brag you've bought your car with cash.

quote: What are your options? When working it out with a simple calculator, if you lease a car or finance it I end up paying more. In the case of leasing, I don't have ANYTHING left over at the end.

I'll say it one more time you sacrafice your liquidity, capital, and opportunity when you pay cash. The potential financial value of that capital far, far, far exceed the potential financial value of that car that's depreciating daily in your driveway.

The fact that you have nothing left over at the end of a lease isn't neccessarly the bad thing you make it out to be. If you end up paying to drive the car for the value of the car why is it such a bad thing? Whether you have the car to sell at the end of the lease is trivial as you haven't paid as much as you would have to own the car and then sell it. Besides, you can turn around and get another new car and do it all over again.

Asher, your circumstances are slightly different because you're buying cars at below sticker price, but your still losing capital, liquidity, and opportunity to do it regardless.

quote: I paid $20k for the car. Had I financed it at 8% interest, I would've paid about (guesstimating here) $25k for the car. Please, oh please tell me which investment vehicle (no pun intended ) that I should've invested the 20k in that would earn me (guaranteed) more than 8% over the next 5 years (assuming I was dumb enough to put a 5 year note on a car)? Stocks? Bonds? CD's?

Today, or yesterday, you should have bought USLB which closed at $9.80 the day before and closed today and $14.39, a 46.84% increase in value. And you two a pissing and moaning about 8% interest?

Furthermore a growth potential of 8% over five years is aiming quite low, most aim for 15%.

The fact of the matter is there is, the only "gaurantee" you have with your investment in a car is that you are gauranteed to lose money. That's a gaurantee I'm not in favor of and would always choose potential gain over gauranteed loss.

As for your 's, I'm the one laughing all the way to the bank on the profits I've made in just this week -- how about you two, how profitable was your vehicular investments this week?

Both of you are approach the situation from a stand point of, "What am I gaining?" All the while failing to consider what is being lost.

	10-08-2002 09:01									#96
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quote: Originally posted by WhiteElephants but your still losing capital, liquidity, and opportunity to do it regardless.

This tends to happen when we buy things, yes...
I lose capital, liquidity and opportunity whenever I buy food too, but I need to do it regardless.

Not everyone looks at cars in terms of an investment and what kind of return we get on it. Some of us just like to buy cars that are comfortable to be in, reliable, and get you where you want to go.

	10-08-2002 09:01									#97
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quote: Originally posted by JohnT Also, WE, your argument assumes that we are the sort of owners who trade in every couple of years... if that were true, your point would be correct and I would've never had paid for the car in cash. But we don't. We intend on keeping the Rodeo far longer than 5 years, which renders your argument moot. Could we have found a better investment for the $20k? Maybe, possibly... but we played it safe and decided against the -8% r.o.r.

No, it doesn't. What my arguement assumes is that there are far more profitable ventures out there to invest in rather than tie up capital in an automobile and because those conditions exist you two are both foolish braggards for patting yourselves on the back for having paid cash for a car.

	10-08-2002 09:03									#98
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quote: What my arguement assumes is that there are far more profitable ventures out there to invest in rather than tie up capital in an automobile

So what you're saying is never buy a car?

I've heard the term penny pincher...but wow...

	10-08-2002 09:07									#99
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quote: Originally posted by Asher This tends to happen when we buy things, yes... I lose capital, liquidity and opportunity whenever I buy food too, but I need to do it regardless. Not everyone looks at cars in terms of an investment and what kind of return we get on it. Some of us just like to buy cars that are comfortable to be in, reliable, and get you where you want to go.

Hey, I pay cash for food too, you don't see me plastering it all over the internet do ya? And if I could take out low interest loans on food I'd be doing that too.

It's fine that you don't look at cars in terms of investment, but don't go around proudly touting you've paid cash for it unless you're prepared to look rather foolish.

	10-08-2002 09:10									#100
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quote: Originally posted by WhiteElephants Hey, I pay cash for food too, you don't see me plastering it all over the internet do ya? And if I could take out low interest loans on food I'd be doing that too.

Very very strange man, WE...

Why you'd want to pay interest on anything is beyond me. Perhaps you'd invest the money otherwise, but I'm staying out of the stock market for a while myself, and I'm not interested in playing with low-return bonds or the money market...

	10-08-2002 09:10									#101
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quote: Originally posted by Asher So what you're saying is never buy a car? I've heard the term penny pincher...but wow...

Real funny... of course that's not what I mean.

Is this all you have left? It's painfully obvious to me you've reached the end of your rope.

	10-08-2002 09:12									#102
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quote: Originally posted by WhiteElephants Real funny... of course that's not what I mean. Is this all you have left? It's painfully obvious to me you've reached the end of your rope.

WE, the problem here is you assume everyone is stupid enough to play the stock market right now, or make some other worthwhile investments.

I don't see any investments that will guarantee me anything near the money I'd save by paying cash for a car, or avoiding a mortage, and I'd prefer the peace of mind of not having hundreds of payments ahead of me for the forseeable future.

Different strokes for different folks...
The strong minority use the money they save by doing a lease to invest, though. Most people would just buy a bigscreen or something instead.

	10-08-2002 09:14									#103
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quote: Originally posted by Asher Very very strange man, WE... Why you'd want to pay interest on anything is beyond me. Perhaps you'd invest the money otherwise, but I'm staying out of the stock market for a while myself, and I'm not interested in playing with low-return bonds or the money market...

Yes, strange indeed. I assume you believe the Fortune 50 companies stay away from loans becuase they don't want to pay interest?

I'll tell you what, there hasn't been a better time in 15 years to get into the stock market, but if you want to use your money like a poor man don't be suprised when you become one.

	10-08-2002 09:17									#104
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quote: Originally posted by WhiteElephants Yes, strange indeed. I assume you believe the Fortune 50 companies stay away from loans becuase they don't want to pay interest?

You're comparing buying a car with cash to loaning millions of dollars as a successful company?

quote: I'll tell you what, there hasn't been a better time in 15 years to get into the stock market, but if you want to use your money like a poor man don't be suprised when you become one.

Don't be stupid, you're not going to become poor by paying with cash for cars.

You could be less rich, providing you invested wisely, but then again you could be much poorer since you were an idiot and invested thousands of dollars into Enron the day before the scandal began.

	10-08-2002 09:19									#105
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Well, given that my net worth is well into the 6 figures, I really don't have any complaints on that score. But to say that I shouldn't have paid for a car in cash in the year 2001 because US Labs went up 46% on 8-9-2002 doesn't really make sense. Sure, the opportunity cost is/was high, but given that I am not prescient (nor do I have an ear on the Bureau Veritas BOD) this isn't a true assessment of how personal finance works for us non-day traders/stock professionals.

	10-08-2002 09:21									#106
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quote: Originally posted by Asher I don't see any investments that will guarantee me anything near the money I'd save by paying cash for a car, or avoiding a mortage, and I'd prefer the peace of mind of not having hundreds of payments ahead of me for the forseeable future.

There is no gaurantee out there, no or ever. The only gaurantee you choose to take was to gaurantee you'll lose money.

Your thinking about right now, not next year, or the next five years, or the next ten.

quote: WE, the problem here is you assume everyone is stupid enough to play the stock market right now, or make some other worthwhile investments.

Stupid enough? There hasn't been a better time in 15 years. The only people who were stupid are the ones who hopped on the tech bubble just before it burst. You realize there are people out there who invested in the market in the 90's and are millionaires now, yes? The problem you guys have is that neither of you understand it and are therefore scared of it. There are hundreds of mutal funds buying and selling in the stock market everyday and you mean to tell me you have more foresight and knowledge than they do to not invest in the market right now. If you were correct don't you think those companies would just close up shop? You realize how rediculous you sound?

	10-08-2002 09:24									#107
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quote: Originally posted by JohnT Well, given that my net worth is well into the 6 figures, I really don't have any complaints on that score. But to say that I shouldn't have paid for a car in cash in the year 2001 because US Labs went up 46% on 8-9-2002 doesn't really make sense. Sure, the opportunity cost is/was high, but given that I am not prescient (nor do I have an ear on the Bureau Veritas BOD) this isn't a true assessment of how personal finance works for us non-day traders/stock professionals.

It's not that you shouldn't have it's that you sound like a idiot braging about it.

	10-08-2002 09:26									#108
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quote: Originally posted by Asher You're comparing buying a car with cash to loaning millions of dollars as a successful company?

I'm talking about interest rates you dunce, and your irrational fear of them.

quote: You could be less rich, providing you invested wisely, but then again you could be much poorer since you were an idiot and invested thousands of dollars into Enron the day before the scandal began.

You're an idiot period if you're investing in the market to make a quick buck, or choose to not diversify your portfolio.

	10-08-2002 09:27									#109
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Uh, please don't lump me in with Asher (at least when it comes to stock market philosophy) as I have been increasingly aggressive in my stock purchases over the past few weeks... buy low, sell high, yadda, yadda, yadda. We all have differing investment strategies and it is both my joy and my burden that my strategy is (obviously) less aggressive than yours. It was how I was taught... never finance what you can pay in cash. Given that the person who taught me that died with an 8-figure asset base (while never making more than $20k/year in salary his working life), I am quite comfortable with following his strategies.

Thanks for your concern, though!

	10-08-2002 09:31									#110
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quote: Originally posted by JohnT Uh, please don't lump me in with Asher (at least when it comes to stock market philosophy) as I have been increasingly aggressive in my stock purchases over the past few weeks... buy low, sell high, yadda, yadda, yadda. We all have differing investment strategies and it is both my joy and my burden that my strategy is (obviously) less aggressive than yours. It was how I was taught... never finance what you can pay in cash. Given that the person who taught me that died with an 8-figure asset base (while never making more than $20k/year in salary his working life), I am quite comfortable with following his strategies. Thanks for your concern, though!

I'd hardly call my strategy aggressive, rather conservative. If you're buying and selling more that weekly you're treading dangerous waters.

So, it's beyond your ability to reason that the person who taught you to not finance what you can pay for in cash might have been wrong on that point? The Fortune 50 are all making terrible business decisions then?

	10-08-2002 09:33									#111
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	10-08-2002 09:34									#112
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quote: Originally posted by WhiteElephants I'm talking about interest rates you dunce, and your irrational fear of them.

Irrational? You're guaranteed to pay more. It's irrational to dislike a guarantee to pay more?

And we're at a period where the stock market crashes 3 days in a row, surges 1 day, crashes 3 days in a row, surges 1 day -- and it's the "best time to buy"?

No offense, but not everyone is out there to invest every penny they find in the street.

How much money have you lost in the past year in the market, WE?

Having a diverse portfolio doesn't mean much when the entire market has been down.

Like JohnT, I've also always been taught to never finance what you can pay for with cash -- and it's work out extremely well for the person who taught me that as well. And yes, he invests quite heavily in the stock market as well -- just not every single penny like you want to do. Many people think it's unwise to invest everything you can.

	10-08-2002 09:36									#113
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quote: Originally posted by WhiteElephants I'd hardly call my strategy aggressive, rather conservative. If you're buying and selling more that weekly you're treading dangerous waters. So, it's beyond your ability to reason that the person who taught you to not finance what you can pay for in cash might have been wrong on that point? The Fortune 50 are all making terrible business decisions then?

I know his track record. OTOH, IIRC, this is the first time we've ever "spoken." Honestly, WE, who's advice do you think I'm going to take?

	10-08-2002 09:40									#114
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quote: Originally posted by Asher How much money have you lost in the past year in the market, WE?

Again, with the poor mans logic. Last year is inconsequential to what I'll earn in the next 50. But if you must know a few hundred dollars, but considering this week and last I've porbably made up my losses and maybe even more so.

Here's a little story for you. When my father started investing in the market the DOW was at 700 points, today it's over 8700 and at its height it was over 11000. Over the course of his investing he has nearly doubled his money, now he lost money this year, last year, and the year before, but that hasn't stopped him from investing in the market because he isn't using poor man's logic.

	10-08-2002 09:42									#115
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Do you take into account that when you buy a car for cash upfront you have extra money for every month AFTER that to invest into the market, WE?

In fact, you will have MORE money overall to invest into the market since you're not pissing it away in interest.

	10-08-2002 09:42									#116
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quote: Originally posted by JohnT I know his track record. OTOH, IIRC, this is the first time we've ever "spoken." Honestly, WE, who's advice do you think I'm going to take?

Hey, my advice ain't worth hard dog turds, but you ought to consider the advice of every other accountant/CFO/business man out there.

	10-08-2002 09:47									#117
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Hmmmm. Interestingly enough, our company's CFO advised a co-worker who received a nice inheritance to pay off their house. IIRC, his words were "It's the best investment you can make."

So, maybe not every.

Anyway, I'm bowing out of this discussion. Have fun yelling at Asher!

	10-08-2002 09:49									#118
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what WE is talking about is the time value of money. In any investment decision it is always preferable to pay later if that is an option since 20,000 today is worth more than 20,000 five years from now. If you lease or finance you trade an immediate outflow for a much smaller periodic outflow. In purely " finance 101" terms the best decision would be determined by mathematics and would depend entirely on the discount rate.

If the discount rate ( the rate of return you rxpect to make on your capital) is higher than the interest paid on the lease/ loan, then it does make financial sense to borrow/lease. Since car loans and leases have had some very very low rates I think WE could be correct since there are opportunities to get a car loan for less than what a GIC will pay you


Oh and Asher and Sneak-- play nice

	10-08-2002 09:49									#119
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quote: Originally posted by Asher Do you take into account that when you buy a car for cash upfront you have extra money for every month AFTER that to invest into the market, WE? In fact, you will have MORE money overall to invest into the market since you're not pissing it away in interest.

Do you take into account that your liquidity is serious damaged and that your 300 dollar investment could have turned over a 3000 dollar profit had you invested more now and not five years from now. Granted you need to look to the future and consistently invest, but waiting around buying 5 shares at a time isn't what I'd call serious investing. You have to also consider that if I invest now I may very well make profits every month that in the long term far exceed the what I would have saved by paying cash.

It's all about liquidity, capital, and potential, which has rather intangible values. You want a gaurantee, well too bad there isn't one. That's life, there's no gaurantee you won't die in your sleep tonigh, but presumably you're going to go to bed sometime, yes?

	10-08-2002 09:56									#120
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quote: Originally posted by JohnT Hmmmm. Interestingly enough, our company's CFO advised a co-worker who received a nice inheritance to pay off their house. IIRC, his words were "It's the best investment you can make."

Hey, that's the same thing Enron CEO was telling his employees with regard to Enron stock, are they related or something?

Ironically enough he was saying that before the bottom fell out, your companies CFO is making the same mistake as those who rode the tech bubble and got dumped on believing the whole time there was no bottom. It's risk vs. reward, I myself would diversify my investments rather than dump a load of it into a house when the real estate market may very well take a dump. But who am I to say such nonsense.

When I said, "every", I meant to consider them all.