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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: sizzlinkola on December 08, 2019, 09:20:51 PM

Title: Saving up for car vs Investing and take out car loan
Post by: sizzlinkola on December 08, 2019, 09:20:51 PM

I'll be moving back to LA sometime next year and started saving up for a car. I can save ~$2.5k/mo while maximizing my tax-advantaged accounts, however the problem is timing. I'm basically waiting on my GF to get a job.

Should I lessen my contributions so that I can save more a month, in case I move soon? If so, how much? Or shall I continue investing (perhaps brokerage or front-load) and take out a loan for the car?

Title: Re: Saving up for car vs Investing and take out car loan
Post by: RWD on December 08, 2019, 09:46:37 PM

$2.5k/month is a very good pace to be saving for a car (heck, I've bought running cars for less than $2.5k). I wouldn't stop maxing tax-advantaged accounts just to speed that up. Interest rates on car loans (both new and used) are very low right now so there's not much penalty to taking a loan if needed. And worst case scenario at that pace you can pay it off in just a few months (I'm assuming you'd be buying something reasonably priced).