4x4ord wrote:
^^^Here is a couple different scenarios that could play out with different truck purchases.
He could buy the new $72k truck and flip it every year for say $9000.
He could buy that $72k truck and keep it 10 years sell it for $36 and buy a new one again for $95k. As well he could put $7600 per year into a tax sheltered savings plan.
He could buy a 10 year old Duramax with 100,000 miles on it for 22000 and in 10 years sell it for 2000 and buy a 10 year old lariat for 36k and put $13k per year into savings.
Option 1. After 10 years he has a $95000 truck in his driveway and it has cost him 192000 to get there.(I'm saying about $30k in interest)
Option 2 After 10 years he has a $95k truck in his driveway and $106,000 in savings (assuming a 6% return) it has cost him 72+29+15 (interest) + $76k savings = $192k.
Option 3 After 10 years he has a 10 year old $36,000 truck in his driveway and $182,000 accumulated in a tax sheltered savings plan. It has cost him $22k (10 year old Duramax) + 36 (10 year old Lariat) -$2k (salvage value on the 20 year old Duramax) + $3k (interest) and $3k (repairs) + $130k (savings)= $192k to get there.
If he continued to follow option 3 for the next 20 years he could even reduce his savings contribution to $10k per year and he would still have $1,000,000 in his bank account at retirement.
Wow! That's waaay too much thinking for me...lol! I just buy what I want if I feel I can afford it and go on. $9000 to go up a year for something better and nicer probably isn't so bad if he feels he can afford it. It all boils down to the fact most don't really care what other people think about their purchases or finances because as others stated, its really none of their business anyway so they just buy what they want when they want.
