David -

I don't see anything else based on what you've said. Your work and
income is your primary focus, and it sounds like you are informed and
attentive to financial planning, and working well with your savings /
investment. "Security Analysis" by Graham, Dodd, & Cottle is a great
book for setting up your own stock portfolio, where you may very well
get better than index funds with lower risk, but read and study before
making investments. Like anything else, once you get the hang of it,
it's not hard. But again, your work and income is your primary focus.

You might want to set up some spreadsheets (income and expense) going
30 years into the future, and revise and improve them over the years.

Btw - I concur with SD - if your return will continue to be higher than
borrowed money, it makes sense to finance the car - in your case, you
won't be over-leveraging your balance sheet. Just minimize your costs
rationally, and make sure you have the right car for your personal
decisions.

news wrote:
- quote -

ahh go ahead and buy it. I would take the loan and make payments rather than
paying for the car upfront because your investments will probably do better than
the car loan.
sd

--
Manage your book collection online at http://www.parchayi.net/bookshelf

thanks for the input, my eleven index funds under ira and individual
account is getting about 10-13% return. i try to keep 10k in checking
accout, i'm self emplyeed so my business account needs to maintain mim
of 5k balance and i try to keep 5k in personal checking account to pay
bills. i keep about 9k in hsbc saving account for emergency and it
yields about 4.25% return. is there anymore i should do?

david



On Wed, 5 Apr 2006 00:55:31 -0500, "dapperdobbs"
<GeorgeCFL[at]hotmail.com> wrote:

- quote -

David -

Conventional wisdom is it wouldn't hurt you financially, but you should
have a number for your utility of capital (i.e. what kind of investment
return are you getting, and what are you giving up for the 33k). Factor
in what inflation may do to money in, say, 30 years when you are at or
near retirement, estimate what your life style and living expenses will
be, estimate how much money you'll have from income, savings, and
investment, and compare the two. A more likely objective for someone
your age would be the purchase of a house 5 to 10 years ahead, and the
expected cost of that. (Btw - You have a lot in checking that could be
in a money market fund.)

For any objective you may have, do the math. E.g. if you save 50k a
year at 8% return for 30 years, how much do you have, divide that by
inflation, and see if that will be sufficient. If you save 50k a year
for 7.5 years at 7%, will that cover a house.

Once you have decent estimates for your numbers, it's a question of
your preference, and, for the car, subject to the comments in this
thread about years of ownership, costs, and so forth.

"Balance" is a big word.

What is it with young women and
- quote -

Ah, yes, you must be careful about bringing flowers to young women. They
will find you romantic and want you to father their children and cause
financial irresponsibility. As for me, I have forbidden my husband to bring
me cut flowers. Although beautiful, I think they are a terrible waste of
money. We are too old to have more children and we need to be financially
responsible.

Elizabeth Richardson

Speaking of buying a car i would like to get some input as well. I'm
buying the acura TL in the next few days. dealer is giving me $33,500
driveout price. I have been driving the same boring honda accord since
i was in college. it's running fine but i'm ready for a new car. i'm
29 and my yearly aftertax income is about 125k, all student loans and
condo mortgage are paid off and i live a pretty low maintainence life
style with no expensive hobbies. i don't have much accumulated since
i've only been working for less than 3 year, i have about 80k in home
equity and 90k in ira and individual mutual fund account, and 30k in
saving and checking account. i plan to sell some of the mutual funds
so i'll have enough fund to pay off the car at once. will buying this
car hurt me financially or am i just being too frugal on myself?

david

Elizabeth - What is it about young men and fast cars? It's hard-wired
genetic-techno, going back millions of years - our compensation for not
having the physical structure and teeth to compete with other
carnivors. Hey - it works, we won. What is it with young women and
flowers? :-)

Don't lose your license the first week.

"bo peep" <cowartmisc1[at]yahoo.com> wrote in message
news:1144163582.398231.282010[at]g10g2000cwb.googlegroups.com...
- quote -

It's been accurate for my entire life. I'm currently happily driving
a 12 year old, low mileage vehicle that I bought last fall for $3,500.
I expect this car to make it to the ripe old age of 20 before I bury
it.

FYI -- I'm prior service myself. You don't know how many
young privates & buck-sergents ruin themselves financially for
the next decade by purchasing a vehicle that is, realistically,
beyond their grasp financially. It happens a lot more than
you would think, and it's really, really sad because when you're
in the military (most of the time, at most duty positions) a POV
is simply an unnecessary expense. POV = Privately Owned
Vehicle.

- quote -

What is it about young men and fast cars? My husband had a '68 GTO he was
restoring when we started going together 17 years ago. There's more to the
story but it doesn't belong in a financial planning newsgroup. Anyway, I'm
glad you've encouraged this young man to get his fast car. I hope it makes
him feel so wonderful that he, too, will still be smiling 40 years later.
Financial responsibility should be somewhere near the top of the list, but
happiness should always be number 1. We have another thread where the poster
is 30 and isn't smiling, though he has been very financially responsible.
Somehow I think maybe he should buy a fast car, too.

Elizabeth Richardson

<<My personal rule of thumb is no more than one third of annual gross
for a vehicle>
That's a little unrealistic in this case - that would be $6,400 or
barely enough to cover gas, insurance, and upkeep, let alone the car
payments. (young, single guys with high performance cars pay a *LOT*
for car insurance). People in the military have low incomes but little
or no housing, food, medical, etc. costs, so your "one third" rule of
thumb would not be accurate in his situation.

John Cowart

On Mon, 3 Apr 2006 04:02:45 -0500, "eastwardbound2003[at]yahoo.com"
<eastwardbound2003[at]yahoo.com> wrote:

- quote -

As you have no doubt read, most financially savvy people have
reservations about spending serious money on cars because 1) they
depreciate and 2) they monthly payments reduce the ability to build
wealth through investing. And as a financial consultant, I agree with
them.

But I also remember a young Lieutenant back in 1968, single, standing
in the Pontiac showroom gaping at a '68 Yellow GTO with black leather
interior, bucket seats and a monster 400 cubic inch engine. I didn't
have diddly squat for money, and less than that in common sense. But
I bought the car on payments.

Within 8 months I shipped out to Vietnam and took a bath selling the
car. As I recall, I was upside down on the loan. But one of the good
things is that I was young, and learned from it.

The other good thing is that every time I think about that hot GTO and
the rush it gave me out on the boulevard, I still smile.

So I say get the car. If you are lucky you're learn a lot about
personal finance in the process.


-HW "Skip" Weldon
Columbia, SC

www.edmunds.com estimates that the "True Cost to Own" an S2000 for five
years is $47,648, under the assumption that you drive it 15,000 miles
per year. The true cost to own is composed of the following:
Depreciation: $15,582
Interest expense: $6,388
Insurance: $9,406
Taxes and Fees: $2,707
Fuel: $8,633
Maintenance: $4,269
Repairs: $663

This works out to be 64 cents per mile for that 15,000 miles per year.
More miles per year probably will bring the cost to own up and the cost
per mile down, but the total already represents half of your pay at the
current rate for the next five years. Actual out-of-pocket costs would
be the above list minus the depreciation and interest plus the car
payments, which still totals about half of your pay for the next five
years.

Here's a strategy for you to consider: save your pay as fast as you can
to get to a 20% down payment in addition to any savings you have right
now. That would be about $7,000. There are two advantages for this:

1. If you can put aside half of your pay, $800 per month, it will take
you less than a year. By that time, you will know whether you can
afford to continue paying that amount for the next five years.

2. You will avoid being "upside down" -- owing more on the car than it
is worth. If you are upside down, you cannot sell the car without
taking a pile of money with you. This is a very risky position to be in
if you don't have other assets that you can use to bail yourself out.

Before you go to buy your car, here are two more things to do:

1. Get your credit report and find out what your FICO score is. Make
sure your credit report is correct. If you have a low FICO score, work
diligently to get it above 700. This means making all of your payments
on time and paying down any balances on your cards. Having a high FICO
score will help you secure the best possible interest rate and loan
terms.

2. Read the book "Don't Get Taken Every Time" by Remar Sutton. This
should be required reading for anyone who is about to buy a car,
although the automobile industry will never tell you this. His concept
of "available cash" will keep you out of trouble when you do shop. He
also suggests you join a credit union for the best loan.

Dave

East -

First, thanks for serving, hope you are enjoying it, and I wish you a
long and distinguished career.

As for the car ... sounds like love! :-) Love can lead to trouble: the
way to avoid that is planning - which is what it sounds like you're
doing. Can't help you with USAA, but call them and get your questions
answered.

With due respect to Sgt. Sausage, I'd look at something other than the
face value of the car versus annual income. Your disposable income
approach is probably closer as a measure of affordability. I understand
the Sgt.'s viewpoint - something akin to a % of home value (a Rolls
Royce is a nice platform, but looks dumb parked in front of a 200k
condo, even if the colors match).

One question that comes up in my mind is how much time you are going to
be State-side, to drive it, and where you'd park it when you're
overseas. You want to measure the relative utility of your choices.
Seeing that you're a careful guy, I'm sure you've checked your
retirement planning, average return on your investments, and so forth -
that's a major alternate use of your funds. Also consider that any car
is going to cost you - I'd say $12,000 minimum - so compare the costs
(insurance, estimated repairs). Something else to keep in mind is that
you might change your mind about having a live-in girl. They are far
more fun than a car, and cost a lot more to keep up. Make sure you have
a pre-nup or live-in agreement - a divorce or separation can end up
costing you ten times the price of the car, easy.

Assuming your utility numbers and estimates check out, I'm not good at
cars and financing, but it's pretty simple math. You want to compare
the present value numbers under different financing plans. Make sure
you get the total cost to you. Whenever you pay interest in excess of
inflation, you are making the purchase more expensive. According to
John, the $613.77 payments makes the face value cost $44,191 - a
$10,000 premium you pay to "have it now". See if you can get some kind
of accelerated principal paydown e.g. make the payments closer to
$1,000 for 36 months, or get terms that allow you to pay down principal
without a prepayment penalty. If your return on the cash is less than
the interest you would pay, then best would be to save the money and
pay cash. I did a one-pay lease on a car, paid half up-front, the other
half (plus about 12.5% of the due) three years later, and the lease
carried insurance.

Some other standard factors to consider are: a) How many years would
you keep the car, b) estimated repair and maintenance, c) residual
value, and of course d) estimated annual mileage, and e) divide total
net cost by number of years. I bought a 2nd hand Mustang GT cv with
9,000 miles on it in '87 for $15,000, spent about $4,000 on repairs and
maintenance, and junked it in 2002 - make it about $1,400 bucks a year.

Hope this helped.

<eastwardbound2003[at]yahoo.com> wrote in message
news:1144033876.811940.42520[at]t31g2000cwb.googlegroups.com...
- quote -

'nuff said right there. My personal rule of thumb is no more than one third
of annual gross for a vehicle (and better if you can get by with less) --
including
insurance and scheduled maintenance over the expected lifetime of the car.
Unless the military's been paying soldiers $100K(+), then the car's too
expensive.

Just my opinion. A car gets me from here to there -- no more no less. I
wouldn't
spend 34K on a new car, no way, no how. Find something used that will cost
you
less than 1/3 of your annual gross. I haven't met anyone yet who's asked the
question
"can I afford it" who hasn't been miserable with the MonkeyOnMyBackPayments
needed over the next 3 to 5 years to pay the darned thing off.

<<The cars MSRP is $34,050 brand new>
With a (highly unlikely) 0% percent loan for 72 months, the payment
would be $472.92 monthly.
With a 6% loan for 72 months, the payment would be $564.31 monthly.
At 9% it goes up to $613.77 monthly.

<<The problem is my monthly disposable income for now is $1,600 which
will go up through the years from promotions>
Are you a first-termer? Are you sure you will be selected for
reenlistment? Are you likely to get stationed overseas, and if so, do
you have somewhere suitable to store the car while you are gone?

John Cowart

Honda is fantastic car but...

I driving CR-V but last jer I have many problems with my Honda.
yesterday at paying point at car-road my window drop and I must
demontage whool door to fix window and continue driving.

Also I have from first year of buying new car rust in car on one place.

I hope tha You will have more luck with Honda.



<eastwardbound2003[at]yahoo.com> wrote in message
news:1144033876.811940.42520[at]t31g2000cwb.googlegroups.com...
- quote -


======================================= MODERATOR'S COMMENT:
Posters are requested to remember that this is a financial planning group. Non-personal finance comments on autos should be directed to more appropriate newsgroups.

I am a member of the armed services in the states. I would love to
aquire a new or used Honda S2000 sports car/roadster soft top.

The problem is my monthly disposable income for now is $1,600 which
will go up through the years from promotions.

The cars MSRP is $34,050 brand new. I want it in the silver blue with
most all the options.

With the help of USAA will I be able to afford this car? It is to my
understanding that USAA stationed in San Antonio helps active duty
serivce members like myself take house home and car loans and have a
car insurance they can offer.

If I buy used I can probably find one in great condition for around
$28,000 more or less.

I do not plan on buying a house in the future since I'll probably
almost never be home and I hate gardening and cleaning. A far less
expensive condo or town house would be in order. I'm 22 y/o. I've
decided I would never marry and raise kids as I want to see the world.

Food, Housing, Health, Dental, retirement, college savings, and the
like are already included so I won't have to spend any of my disposable
income on such.

Needless to say though I'm in love with the Honda S2000 roadster. 0 to
60 in 5.8 seconds, 1/4 mile in 14 seconds. 12lbs/hp power to weight
ratio. I test drove one and honest to god the car fit my body style
perfectly. Stepping into the car was like trying on a glove. The seat
was as comfortable as it gets, the rag top goes down at the touch of a
button. Instead of turning the key to start, one would press a big
round button on the dash. The car matched my personality so well it
was as if we were ment to be together. I got to have it, my car has
always been one of the most important things in my life. I spend more
time with my car than I do with friends an family. Cruising around,
going from point A to point B. Plus my car can never talk down on me,
or do things behind my back the way a significant other might do.

Certainly the car I drive is a really important thing for me. I have
always wanted a high performance car all my life for as long as I can
remember and I believe that this is it.

How hard would it be for me to purchase and insure such an awesome
vehicle?



Thanks in Advance.
East-