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Message
New Truck Planning
Posted on 2/1/23 at 6:30 pm
Posted on 2/1/23 at 6:30 pm
I've got a good paid off Tundra right now with 154k miles or so. I'm driving it for a few more years and enjoy the lack of a truck payment. I've started a brokerage account putting $750 a month into until I'm ready to buy a new truck.
When I was looking at the return on the account, the interest doesn't really start to become a meaningful amount until I'll be ready to buy, and even then it's not a full truck payment's amount.
That's psychologically defeating to pull the money just when it starts earning money. But I can't go a lifetime without a new vehicle. So when the time comes, do you empty the nest egg or do you just say eff it and finance the truck?
Is it simply a mathematical decision to figure out if the interest I'm earning is better than the interest rate on the vehicle?
When I was looking at the return on the account, the interest doesn't really start to become a meaningful amount until I'll be ready to buy, and even then it's not a full truck payment's amount.
That's psychologically defeating to pull the money just when it starts earning money. But I can't go a lifetime without a new vehicle. So when the time comes, do you empty the nest egg or do you just say eff it and finance the truck?
Is it simply a mathematical decision to figure out if the interest I'm earning is better than the interest rate on the vehicle?
3
Posted on 2/1/23 at 6:40 pm to WhiskeyThrottle
Take care of your Tundra and it will take care of you if you keep putting $750 a month back. You should easily get another 100K miles out of it.
Posted on 2/1/23 at 6:55 pm to WM_Tiger
My 07 2500 Megacab will be hard to let go. I secured a bulldozer and another tractor with it, then when the market crashed in 20, took the replacement fund and dropped it all in the market. 254k on the clock and hope to get another 50-100 out of it before it becomes a necessity.
Posted on 2/1/23 at 9:10 pm to WhiskeyThrottle
Put the $750 aside in money market (should be paying around 4% right now). That is $9k per year plus 4% compounded.
Always work a positive spread to your favor. If truck financing offers interest rate less that what you are earning (1.9% for example), let your savings (4%) ride while you pay 1.9% and earn net 2.1%.
Over time and across vehicles you are building wealth. Worked for us. Now have cash to pay next vehicle, but do what I am suggesting here. If financing is cheaper, we finance and pay note from the cash over time to milk the positive spread.
Most importantly, we continue paying ourselves the note after it is paid off. If can afford the note, can afford to invest the note.
Good luck.
Always work a positive spread to your favor. If truck financing offers interest rate less that what you are earning (1.9% for example), let your savings (4%) ride while you pay 1.9% and earn net 2.1%.
Over time and across vehicles you are building wealth. Worked for us. Now have cash to pay next vehicle, but do what I am suggesting here. If financing is cheaper, we finance and pay note from the cash over time to milk the positive spread.
Most importantly, we continue paying ourselves the note after it is paid off. If can afford the note, can afford to invest the note.
Good luck.
Posted on 2/1/23 at 9:53 pm to WhiskeyThrottle
You don't have to buy brand new. You can get really nice stuff for half the price with a few years on it. I am not saying don't ever buy new, I like new stuff too, but used is almost always cheaper when it comes to vehicles.
Posted on 2/2/23 at 10:49 am to armsdealer
quote:
You don't have to buy brand new. You can get really nice stuff for half the price with a few years on it. I am not saying don't ever buy new, I like new stuff too, but used is almost always cheaper when it comes to vehicles.
I will most certainly be buying a used vehicle. I've never bought a new vehicle and probably never will.
I also plan on driving the Tundra quite a bit longer. My current goal is 2 more years and re-evaluate then. Current interest rates alone are a big deterrent along with the inflated vehicle prices.
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