re: Would a $500+ car note break the bank for you?

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it is a thread in which the OT can pretend to be rich while also arguing who is the smartest with money

it was guaranteed to go at least 10+ pages

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I know this thread is dead, but I did the math anyways and I'm going to just bookmark this post for future reference in the "finance vs pay cash debate".

To measure opportunity cost, I used BALCX, which is a balanced C-share mutual fund that has information back to July 1975. In lieu of paying $50,000 cash, I assumed you invested $50,000 and took the car payment out of that balance at the end of each month. I ignored taxes, but they wouldn't impact the numbers in any significant way.

At 3.5% for 60 months payments(withdrawals) would be $910/mth

Rolling 60-month periods: 468
Periods where cash was better (periods where investing ran out of money before 60 months): 51 (11% of the time)
Periods where investing was better: 417 (89% of the time)
Average ending balance: $11,332
Median ending balance: $11,545
Average ending balance when cash was better: -$5,144
Worst ending balance when cash was better: -$12,386
Highest ending balance: $48,723

For those who say financing for 84 months is asinine - 84 months @ 3.5% would be $672/mth withdrawals

Rolling 84-month periods: 444
Periods where cash was better (periods where investing ran out of money before 84 months): 54 (12% of the time)
Periods where investing was better: 390 (88% of the time)
Average ending balance: $18,449
Median ending balance: $19,012
Average ending balance when cash was better: -$4,050
Worst ending balance when cash was better: -$11,116
Highest ending balance: $65,703

What if you financed $50,000 @ 6% for 84 months?

Rolling 84-month periods: 444
Periods where cash was better (periods where investing ran out of money before 84 months): 87 (20% of the time)
Periods where investing was better: 357 (80% of the time)
Average ending balance: $11,475
Median ending balance: $12,295
Average ending balance when cash was better: -$7,374
Worst ending balance when cash was better: -$18,295
Highest ending balance: $57,408

In fact, since 1975, an argument can be made for financing for 84 months up to 10%. Paying cash was better in more than 50% of rolling periods when the rate got above 10%.

20 more pages

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but Dave Ramsey said

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to be fair to Dave Ramsey, his schtick isn't that slackster is wrong on the math, but that human behavior rarely works that way, i.e. people aren't borrowing for 84 months to invest the same amount, but rather because they don't have the money and are focused on a monthly payment they think they can afford.
Everyone on the ot is the exception to the statistics, so his advice isn't prudent here.

Bingo