The price of new trucks is beyond comprehension!

[BobsYourUncle]

It was 42 years ago today, seems so long ago, yet still a strong memory in my head, a milestone I reached in my humble beginnings into the home renovation industry building solariums and such.

Yes, it was on this day, October ten, nineteen seventy eight when I had been only 4 years into my lifetime career when I worked my way to being able to purchase my first brand new truck!

Yup, 10-10-78 I drove off the lot of Phillips Chev - Olds in Penticton BC driving my nice shiny new 78 Chev 3/4 Ton Camper Special.

As I pulled out of the lot and turned left on to Westminster Ave and headed east towards home, I though I had lost my marbles, that I am a total idiot.

Who in their right mind would pay $7714. For a new truck. All taxes, fees, dealer prep and all the rest of the junk in came to $8,109.70 out the door...... Bob, you are out of your mind! I kept saying to myself. Financed it on the never never plan I did. How will I ever pay for it? I was barely 24 years old.

It was a great truck, I had it for 26 years and about 527,000K on the odometer when I retired it, still in decent shape.

Hmmmmm......

42 years later, my 2007 truck in sig is getting worn out. 408,800K on the clock and I am eyeing the shiny new trucks on the lot.

92 grand $$$$$$$ for something similar with a few more bells and whistles.

No, just no! That's what, about a dozen times the price I paid back then?
Gosh how can they justify that?

Wow! Just wow. Amazing how expensive pickups have become. All these fancy gizzmobops they have, someone has to pay for all that I guess..

Guess I'll just keep fixing what I have. It was $1423.77 yesterday for a water pump and a U-joint. Expensive!

Oh well, that's life! 🙂

My story of the day.

[mkirsch]

If everybody followed that advice and bought used, there would be no used cars to buy.

SOMEONE has to buy new vehicles so that there are used ones. Millionaires are only a tiny fraction of the population so if you're waiting for their discards, you'll be waiting a long long time.

In both of my last NEW truck purchases, I was able to purchase a NEW truck for less than any comparable USED truck. When you look at a used truck the price is the price, but time you get incentives and rebates and whatnot on a NEW truck, it's usually less than the used one. You get a NEW truck, with warranty, and no miles on it, instead of someone's 5 year old castoff with 50-90K miles on it.

[Grit_dog]

****, wish my parents had published their personal finance management strategy that they passed on to me!
Wouldn’t have been too difficult to compose. “Don’t spend more than you have. And save some as well.” I’d be rich!!
Shoot, they were Dave Ramsey when Dave Ramsey was still crappin in his huggies!
(Mom used cloth diapers....only got the fancy throw away ones when we were on vacation....probably because our cabin didn’t have running water and she drew the line at washing diapers in the lake!)

We still live that way, although we spend what would seem to many, stupid money, on our kids, supporting other family members and other things. Save for the house, which may be cash the next go around here, we don’t buy stuff we can’t pay cash for.
Not saying loans aren’t taken, but if they are, it is a calculated decision where the loan is more economical than paying cash.

[wowens79]

4x4ord wrote:

wowens79 wrote:
Rule of thumb on how much to tie up in vehicles from Dave Ramsey, is that no more than half your annual income should be tied up in things with wheels or motors. So if you make $100k only have 50k worth of cars, campers, and boats. Paying cash works fine for me, and keeps me from swapping vehicles every few years, writing a check for $50k is much more painful than signing for a payment for go up $50.

Probably good advice although I think it would be likely that few of us on this forum live by that rule. I believe people who manage their money well can save for what matters to them. I’d like to know if Dave has a rule of thumb for the maximum percentage of a persons net worth that he recommends be tied up in things with wheels or motors?

He recommends not buying new until you have a net worth of $1million, because of the depreciation, lots of great used vehicles that are a few years old out there. I have not heard him give a percentage of net worth to have tied up. He does often tell people that have built up a large net worth to go get what they want.

We've lived his guidance for the last close to 15-16 years, and it was painful at first, but over the years there is so much less stress, and we have seen our savings and networth grow exponentially. We haven't had a payment on anything other than the house since 2006. What we used to spend on vehicle payments goes straight to a vehicle fund for the next one.

[Reisender]

Our accountant used to encourage us to borrow for any vehicle that was a write off for our company.

[blt2ski]

Bob
Something to be said about payments and working. When what I call major repairs, time loss etc, add up to more than a payment. Better to go for the payment.
Been there done that!

Marty

[BobsYourUncle]

When I bought my truck in sig I signed up for a little over 60G of payments.
My monthly payment was $1140.76 for 60 months.
I hated the payment but it was a case of simple math for me.

I was making good money in those days. It varied, but call it an average of about 100K a year. Lots of expenses, the truck, fuel, insurance, supplies, tools and equipment etc as I traveled all over BC and Alberta building sunrooms, but still netting decent money.

Do some math and I was grossing about $1923 a week, averaged out.

But here is the kicker:
Prior to that, in 2003, i was driving a 97 GM dually with that piece of garbage 5.7 diesel. I was losing on average about 3 days of work a month due to mechanical failures and shop time of the truck.
I calculated the loss of wages vs a new truck payment and the choice was clear. I bought a new 2003 truck at $1172. a month for 60 months.

Sadly that LB7 Duramax turned out to be a lemon and it too let me down a lot. About 93,000 K on it I got fed up and drove onto a car lot in Calgary and drove away with my current truck.

Now i was in business. No breakdowns, it never left me stranded on the side of the road until 373,000K later in August of 2018 when I overheated it and blew a head gasket.

12 years of trouble free driving, with the exception of an injector pump at 300,000K. That didn't leave me stranded, and I had time to plan the repair. I did put one glow plug in it during that time, that was all.

So in my case I was able to justify my heavy payments because it saved me a lot more money than the cost of a new truck. And I lost zero work time for 12 years running, saving me a pile of money over 12 years.

[4x4ord]

wowens79 wrote:
Rule of thumb on how much to tie up in vehicles from Dave Ramsey, is that no more than half your annual income should be tied up in things with wheels or motors. So if you make $100k only have 50k worth of cars, campers, and boats. Paying cash works fine for me, and keeps me from swapping vehicles every few years, writing a check for $50k is much more painful than signing for a payment for go up $50.

Probably good advice although I think it would be likely that few of us on this forum live by that rule. I believe people who manage their money well can save for what matters to them. I’d like to know if Dave has a rule of thumb for the maximum percentage of a persons net worth that he recommends be tied up in things with wheels or motors?

[wowens79]

Rule of thumb on how much to tie up in vehicles from Dave Ramsey, is that no more than half your annual income should be tied up in things with wheels or motors. So if you make $100k only have 50k worth of cars, campers, and boats. Paying cash works fine for me, and keeps me from swapping vehicles every few years, writing a check for $50k is much more painful than signing for a payment for go up $50.

[ShinerBock]

4x4ord wrote:

ShinerBock wrote:


I have never seen that kind of interest rate on land or mortgage loan and I have an 830 credit score.

Type in Alberta mortgage rates into your browser ..... you’ll likely be surprised.

I keep forgetting you are in Canada. It appears it is because they compound it semi-annually there, but have stiff penalties for breaking your mortgage. Although, due to the exchange rates, a 1.8% interest there is equivalent to a 2.4% interest here in terms of interest US dollars paid.

[4x4ord]

ShinerBock wrote:


I have never seen that kind of interest rate on land or mortgage loan and I have an 830 credit score.

Type in Alberta mortgage rates into your browser ..... you’ll likely be surprised.

[ShinerBock]

Lynnmor wrote:
Land is a good investment? I have paid more in property taxes than a very nice new truck would cost.

While taxes on undeveloped land in certain zones is not that high. They range from $75-$200 a month on the plots I have owned which are written off in taxes.

[Lynnmor]

Land is a good investment? I have paid more in property taxes than a very nice new truck would cost.

[ShinerBock]

time2roll wrote:

A1ARealtorRick wrote:

Groover wrote:
I keep reading complaints about how much the Limited versions costs but you can still buy the XL version if that is what you want. It is as nice as my fully loaded 1991 Ford pickup and it is generally heavily discounted.

However today, buying a base model (for example, the XL), come resale time, the market for such a vehicle will be colder than a mother-in-laws love.

Compared to the buy price you will still save money.
The real issue is that these base models are often beat down hard and put away wet on a daily basis. Take care of it same as your King Ranch and you will do fine with a base model.

A1ARealtorRick is correct. It is much harder to resale a base optioned vehicle versus one that has higher trim packages and engine options. Dealerships give you next to nothing on trade-in because they will have a hard time unloading it. I believe Autotrader had an article about this not to long ago.

[ShinerBock]

4x4ord wrote:

ShinerBock wrote:

4x4ord wrote:
Shiner I agree with you that land is often a good investment so I might borrow money to buy land but not to buy a truck.

That is not a wise decision. It is better to pay cash for the land since land loans are generally around 5% with excellent credit. Auto loan's are around 2-3% with excellent credit. So it would be best to pay cash with the land since you are paying more interest. The standard return on investment in a low risk stock/bond market account such as 401K. IRA, and so on is 6-7%.

So the land will cost you 5%, the vehicle will cost you 2-3%, and the investment will gain you 6-7% on average. Paying cash for the land will save you more money than paying cash for the truck, but they both will not save you enough to overcome the standard amount ROI you would make on investing the money.

Of course this all assumes that you have excellent credit above 700 and can get the very best rates. If not and the interest rate is greater than standard ROI, then it would be better to pay cash. However, if this the case then you have other issues that might need to be addressed.

The last land purchase we made was at 1.8% interest... The previous owner held the mortgage. It is not likely that I'm going to be borrowing money at 5% interest ever.

I have never seen that kind of interest rate on land or mortgage loan and I have an 830 credit score.

[time2roll]

A1ARealtorRick wrote:

Groover wrote:
I keep reading complaints about how much the Limited versions costs but you can still buy the XL version if that is what you want. It is as nice as my fully loaded 1991 Ford pickup and it is generally heavily discounted.

However today, buying a base model (for example, the XL), come resale time, the market for such a vehicle will be colder than a mother-in-laws love.

Compared to the buy price you will still save money.
The real issue is that these base models are often beat down hard and put away wet on a daily basis. Take care of it same as your King Ranch and you will do fine with a base model.