quote:
I am currently in law school (too late to talk me out of this) wife makes great money, we are looking to get a new car in the next few months. By new I mean used and under $20k. we can pay cash and still be fine financially, but I am debating putting 10k down and financing 10k at 2%. The reason for this is to keep cash on hand for purchasing investment properties as soon as I graduate. Is my reasoning flawed here? I don't feel good about losing this, but haven't talked myself out of it. I have no other debt.

So my flash thoughts:

2% is fantastic. Why not finance 15K if you can do that? My note on financing 16K on a new car at .9% was $295/month for 60 mo term. That's an outstanding monthly note amount if you ask me. Especially if you're going to be making more money shortly thereafter.

But what about the investment property deal? You're essentially going to be leaving yourself with zero nest-egg if you plow it all into that, and with the student loans coming due, while you're going to be making money, the lack of a safety net there with Sallie Mae, the car note and costs with rental units is fairly worrisome if you ask me.

This post was edited on 4/16/15 at 2:03 pm

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Posted by hungryone

river parishes

Member since Sep 2010

11987 posts

Posted on 4/16/15 at 2:08 pm to GFunk

quote:
This all makes logical sense to me, I just need to get over it. I intend to pay cash for the investment property upon graduation.

This may be a dumb question, but when a hard pull is done for an auto loan do you have a Grace period where The additional pulls do not have an effect? Similar to a hard pull for a mortgage.

Stahp already with the worry about the impact of the pulls on your credit. You need to establish a payment history with someone, somewhere, on something. Borrowing $15K for a car is not going to hugely impact your ability to borrow other monies based on your credit score/number of inquiries...what will matter is your income & assets.

Again, start reading some personal finance books/quality websites if you don't want to take a whole class. You need a better grasp of how credit works before you dip your toes into real estate investing (or practicing law). And you can break up your bar exam study with some personal finance study, LOL.

Borrow now, start paying it off. You'll have it paid off before you know it and your credit will improve as a result. Having no debt doesn't make you better or smarter than anyone else. Plenty of extraordinary successful people borrow money all the time: it is hard to grow a business in a pure cash circumstance.

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Posted by Creamer

louisiana

Member since Jul 2010

2817 posts

Posted on 4/16/15 at 2:13 pm to GFunk

I worked for several years between undergrad and law school and saved enough for law school, then was given a scholarship. So I will not have any debt upon graduation, my wife's income covers all expenses as well as a reasonable amount of additional saving.

My plan Is to work for a couple of months and build up a new emergency fund and spend the money I saved for law school on another property.

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