Author Topic: Help! Financial Dilemma...  (Read 28257 times)

sarah8001

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Re: Help! Financial Dilemma...
« Reply #50 on: July 10, 2014, 01:53:32 AM »
Hi,
I'm new, and not that Mustachian, so I've been lurking, but I know a thing or two about used cars so I wanted to speak up. You seem nervous about buying a used car. I've been driving for 10 years and during that time I've driven approx 300,000 miles. I've owned three cars, and all were at least 15 years old when I got them and the average age of my car at any given time is about 20 years old.
Lots of people are nervous about buying a used car because they are worried it won't be reliable. They think it will either break down frequently, leaving them stranded, or will be a money pit, requiring frequent costly repairs.
Suppose you need to be at a certain place at a certain time and you decide to drive there. There are three basic categories that any delay will fall into: environmental (traffic, closures, weather), driver related (illness, drunk, forgot to get gas), or car related (breakdown, won't start). People spend many many hours each year being delayed by the first two things and think nothing of it. A good used car, well maintained, rarely breaks down. My cars were bought randomly, without much skill, and maintained when I felt like it. I've only been stranded twice in ten years. How many times has traffic delayed you in ten years? Or weather made you stay home? Or you lost a contact or accidently drank too much? Your car would have to break down ALL THE TIME to delay you more than the things you already don't think twice about. Environmental delays are way, way more common than any other delay, followed by driver error, and used cars are a pretty minor cause of delays.
As far as the money pit goes, as long as you don't buy a car that has been tortured by a sadistic driver, you're probably going to be ok. Buying and maintaining my cars has cost me about 20,000 over the course of ten years. I can almost guarentee you've spent more, probably twice or three times that. I also have been told by all my coworkers and many of my friends over the last decade how foolish I was to drive older cars. But I noticed that they took their two or three year old cars to the shop just as much as I did. And they had payments and super high insurance, and they all got more tickets than me.
Your dedication and skill as a driver, plus a little random chance, affect your driving costs far more than how old your car is.

Rebecca Stapler

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Re: Help! Financial Dilemma...
« Reply #51 on: July 10, 2014, 09:21:50 AM »

So, if I understand correctly, below is how much I would save by selling my tsx and buying a civic. 

2011 acura tsx value = $20000
2011 acura tsx debt   = $15000
   
Net profit of sale = $5000
   
2012 honda civic purchase = $13000
   
cost to keep acura = $15000 (across 35 payments)
cost to buy honda = $8000 (upfront cost)
   
Net Savings over 3 years to sell tsx and buy civic = $7000

With that said, buying the civic is an upfront cost and the acura would be spread across 35 months.  I'm assuming 7k is enough evidence that I should do the transaction above.  However, should I consider present and future value of paying it upfront vs. over a period time? 

Edit:  Nevermind if I take future value of 15k into account, selling the TSX would yield a greater savings!  ;)

The flaw in your analysis is that you are saying you're paying $15,000 over 35 payments. But that's just the principal that you owe. Your actual cost to pay over 35 months is higher -- depends on your interest rate. PLUS you are paying more for your insurance (you need to have collision if you have lien on your car).

You're incorrect, most consumer loans are fully amortized with interest included in the payment.

Wow! I didn't realize that (obviously). Sorry, that sucks!

okashira

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Re: Help! Financial Dilemma...
« Reply #52 on: July 10, 2014, 09:47:29 AM »

So, if I understand correctly, below is how much I would save by selling my tsx and buying a civic. 

2011 acura tsx value = $20000
2011 acura tsx debt   = $15000
   
Net profit of sale = $5000
   
2012 honda civic purchase = $13000
   
cost to keep acura = $15000 (across 35 payments)
cost to buy honda = $8000 (upfront cost)
   
Net Savings over 3 years to sell tsx and buy civic = $7000

With that said, buying the civic is an upfront cost and the acura would be spread across 35 months.  I'm assuming 7k is enough evidence that I should do the transaction above.  However, should I consider present and future value of paying it upfront vs. over a period time? 

Edit:  Nevermind if I take future value of 15k into account, selling the TSX would yield a greater savings!  ;)

The flaw in your analysis is that you are saying you're paying $15,000 over 35 payments. But that's just the principal that you owe. Your actual cost to pay over 35 months is higher -- depends on your interest rate. PLUS you are paying more for your insurance (you need to have collision if you have lien on your car).

You're incorrect, most consumer loans are fully amortized with interest included in the payment.

Wow! I didn't realize that (obviously). Sorry, that sucks!

I don't think this is true at all......




My 2c on everything else:
Get rid of both cars and get used cars 2003-2008 year.


Rekon

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Re: Help! Financial Dilemma...
« Reply #53 on: July 20, 2014, 10:48:48 AM »
Just an update:  I ended up selling my 2011 Acura TSX!  With that car sold, I am planning on saving an extra $700 monthly!  That includes payment, gas and insurance.  :)

daverobev

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Re: Help! Financial Dilemma...
« Reply #54 on: July 20, 2014, 10:57:31 AM »
I'll look into breaking the lease and selling the expensive car.  A 2006 civic is roughly 13k (I wonder if a dealer would buy back my two cars if I offered to buy a used one).

Wut? I got our 2004 Civic for $5k... 4 years ago. A 2006 is showing $5k to $8k on Autotrader here in Ontario... and cars here are, AFAIK, more expensive than most places in the US.

surfhb

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Re: Help! Financial Dilemma...
« Reply #55 on: July 20, 2014, 11:08:19 AM »
BTW OP.....I live in Huntington Beach and have a 2007 Civic with 59,000 miles on it.   I'm asking $11k if you're interested.    I'm in the same position as you...I already have my truck so this car is a waste :)

Pm me if you're interested

surfhb

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Re: Help! Financial Dilemma...
« Reply #56 on: July 20, 2014, 11:11:28 AM »
Thank you everyone for all of the feedback!!  Re: selling the TSX, it's still a little hard to justify...  I've found a few priuses for sale on craigslist under or about 10k.  However, these cars have well over 100k miles!  Keep in mind my acura may be 5k more expensive but it only has 24k miles!!! TBH selling the TSX doesn't make sense to me.

You're still PAYING for a $34,560 TSX even though it's currently worth $20,000. It's good you're not underwater on it but you really can't afford it.

Here:
2012 Honda Civic LX - $13,999 - 24,000 miles
Permalink: http://cargur.us/1hYk0

2012 Honda Civic LX - $13,900 - 30,440 miles
Permalink: http://cargur.us/1lXt4

You can do it man!! These are practically brand new! Newer than what you're driving, amazingly luxurious autos.  (PS the TSX is an Accord, ILX is a Civic).

I'd be wiling to bet those are salvaged vehicles :)

mm1970

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Re: Help! Financial Dilemma...
« Reply #57 on: July 20, 2014, 11:17:29 AM »
Just an update:  I ended up selling my 2011 Acura TSX!  With that car sold, I am planning on saving an extra $700 monthly!  That includes payment, gas and insurance.  :)

Great job!

Sorry that your wife's boss is the FU type.

Rekon

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Re: Help! Financial Dilemma...
« Reply #58 on: July 20, 2014, 11:29:35 AM »
BTW OP.....I live in Huntington Beach and have a 2007 Civic with 59,000 miles on it.   I'm asking $11k if you're interested.    I'm in the same position as you...I already have my truck so this car is a waste :)

Pm me if you're interested

Thanks - I'm going to try to get by with only one car for a while - eventually my thoughts are to buy a truck cash.

Rekon

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Re: Help! Financial Dilemma...
« Reply #59 on: July 20, 2014, 11:41:18 AM »
Just an update:  I ended up selling my 2011 Acura TSX!  With that car sold, I am planning on saving an extra $700 monthly!  That includes payment, gas and insurance.  :)

Great job!

Sorry that your wife's boss is the FU type.

Thanks!  I can't stop looking at my $0 balance on mint!  It feels good!

Yeah my wife went to an interview recently but the opportunity was limited and pay was about the same. So, not worth it in our opinion. 

She is still looking/applying.  Dilemma is she wants a job that is close to home (< 10 miles) and the better paying jobs are usually in downtown LA (approx 30 miles).  We live about an hour from there (x2 - if there is an accident).   I'm still helping her look...

surfhb

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Re: Help! Financial Dilemma...
« Reply #60 on: July 20, 2014, 11:46:17 AM »
The reason I'm moving to Pasadena is to take the subway to work

Isn't there a line going in to Canoga Park(red line) directly downtown?

Rekon

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Re: Help! Financial Dilemma...
« Reply #61 on: July 20, 2014, 11:56:58 AM »
The reason I'm moving to Pasadena is to take the subway to work

Isn't there a line going in to Canoga Park(red line) directly downtown?

Not directly, you have to take the orange line and then take the metro that goes downtown.  I'd rather her work close to home - in case i need the car i will drop her off at work and take the car.  Plus, she is not a big fan of LA's public transportation.

KBecks2

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Re: Help! Financial Dilemma...
« Reply #62 on: July 20, 2014, 02:44:21 PM »
Cut these two in half:

Restaurants = $200.00 (this varies every month... $200 is on the higher side)
Personal care = $160.00 (this includes my hair cuts and wifes nails etc.)

Get rid of this:

Cable = $70.00

I agree w this.  Dump cable.  Get Netflix.  Learn to cut your own hair, wife can do her own nails, with occasional pro jobs as a treat.

Acuras are marvelous cars.  Lose the lease and consider getting older cars that you can afford more easily. 

Take care w house shopping.

KBecks2

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Re: Help! Financial Dilemma...
« Reply #63 on: July 20, 2014, 02:50:53 PM »
Don't get a civic.  Get an older Acura that you. An afford.

We have a 2001 Tl that is rocking 230,000 miles and is still running very well.  We are original owners and I am looking forward to more years out of it.  The leather seat has taken some damage and it is worn, but the engine is awesome.

See if you can find something used that is a good value that you can afford.  Get out of the lease. 

Rekon

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Re: Help! Financial Dilemma...
« Reply #64 on: July 20, 2014, 02:53:15 PM »
Thanks but I think I'm going to stick out the lease until I have to turn it in.  Once I get closer I will look into buying something cash. 
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Daleth

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Re: Help! Financial Dilemma...
« Reply #65 on: July 20, 2014, 04:30:40 PM »
BTW OP.....I live in Huntington Beach and have a 2007 Civic with 59,000 miles on it.   I'm asking $11k if you're interested.    I'm in the same position as you...I already have my truck so this car is a waste :)

Pm me if you're interested

Thanks - I'm going to try to get by with only one car for a while - eventually my thoughts are to buy a truck cash.

Why would you buy a truck in LA? The gas mileage on trucks is the pits, you're not a contractor in need of a vehicle to drive big pieces of drywall and whatnot around, and you live in a sprawling metropolis with terrible traffic. A small, high-MPG car seems like the right fit.... assuming you do NOT want to spend an extra $1000/year in unnecessary gas...

Rekon

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Re: Help! Financial Dilemma...
« Reply #66 on: July 20, 2014, 05:04:55 PM »
For mountain biking/dirt bikes.  I would hardly drive the truck as I ride my bike to work/school!

Mazzinator

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Re: Help! Financial Dilemma...
« Reply #67 on: July 20, 2014, 05:52:19 PM »
Just an update:  I ended up selling my 2011 Acura TSX!  With that car sold, I am planning on saving an extra $700 monthly!  That includes payment, gas and insurance.  :)

Quote
Thanks - I'm going to try to get by with only one car for a while - eventually my thoughts are to buy a truck cash.

Impressive!!!

I disagree with pp, I would say Civics are GREAT cars. But take your time and think about if a truck is worth it to you or not... Either way, being a one car family is great progress!!!

Rekon

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Re: Help! Financial Dilemma...
« Reply #68 on: July 20, 2014, 05:55:59 PM »
Thanks!!  For now I'm just going to keep the Acura lease.  When the lease is up we are buying a older civic cash.  I do a lot of sports with my friends.  Mountain/road biking, atv/dirt bikes, surfing etc. etc.  I just think a small v4 truck would be practical on the weekends.  Obviously I would still ride my bike to work instead of driving.  The truck is not immediate but eventually I would like one.
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daverobev

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Re: Help! Financial Dilemma...
« Reply #69 on: July 21, 2014, 05:26:38 AM »
You need a trailer, not a truck!

Rekon

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Re: Help! Financial Dilemma...
« Reply #70 on: July 21, 2014, 04:47:35 PM »
You need a trailer, not a truck!

Not a bad idea - but I don't have the space for a trailer.   

boarder42

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Re: Help! Financial Dilemma...
« Reply #71 on: July 21, 2014, 04:58:42 PM »
Ok just gonna be a devil advocate here BC that's what I do. How can you have space for a truck and not a trailer. Put a roof rack on the civic or trunk rack for your bikes. Both these make more sense than a truck. And if you have room r
For a f
Truck you ha e room for a trailer.

I own a 21' 3000 lb inboard boat and I don't have a truck. I think you should seriously reevaluate your truck needs.

Rekon

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Re: Help! Financial Dilemma...
« Reply #72 on: July 21, 2014, 05:42:53 PM »
In he building I live in they are not allowed (violation of hoa).  Some fire safety BS.  So if I wanted a trailer I'd have to pay for storage.  Although a bike rack might be OK.
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Daleth

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Re: Help! Financial Dilemma...
« Reply #73 on: July 21, 2014, 06:00:51 PM »
In he building I live in they are not allowed (violation of hoa).  Some fire safety BS.  So if I wanted a trailer I'd have to pay for storage. 

What a completely stupid rule. I hate HOA's.

For mountain bikes you don't need a truck--you're right, a bike rack would work. Much cheaper too.

whiskeyjack

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Re: Help! Financial Dilemma...
« Reply #74 on: July 21, 2014, 11:36:41 PM »
You can get all kinds of bicycles onto either a roof rack or a tow-hitch mounted bicycle rack (you don't need to intend to actually *tow* anything with it).  I drove a Mazda 323 for years and hauled around a crazy amount of stuff in or on it.

Rekon

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Re: Help! Financial Dilemma...
« Reply #75 on: July 25, 2014, 10:55:44 AM »
I just bought a nice bike rack for the Acura.  Bought it off nashbar for $120. 

I'm thinking of getting rid of the lease and buying a used accord or CR-V cash.  What do you guys think?  I initially thought about a civic but we would like kids in the future and I'm not sure if a car seat fits in a civic.  Thoughts? 

TrulyStashin

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Re: Help! Financial Dilemma...
« Reply #76 on: July 25, 2014, 11:21:07 AM »
I just bought a nice bike rack for the Acura.  Bought it off nashbar for $120. 

I'm thinking of getting rid of the lease and buying a used accord or CR-V cash.  What do you guys think?  I initially thought about a civic but we would like kids in the future and I'm not sure if a car seat fits in a civic.  Thoughts?

I LUV my 2007 Prius (128,000 miles).  It's known in my family as the "Mighty Prius."  Seriously.  Plenty of room for people/ kids/ cargo.  With the back seats flipped down, it is practically a truck.  I've hauled kitchen cabinets and cinder blocks in mine.   I've also camped in it.  http://www.habitents.com/

I very much suggest you expand your search to include a Prius.  The 46 to 50 MPG means my gas cost is about $110/ mo.

boarder42

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Re: Help! Financial Dilemma...
« Reply #77 on: July 25, 2014, 11:39:23 AM »
if you're thinking small SUV .. .go with a ford escape hybrid ... things are great... i get 45 MPGs in mine.. people slam it on here still... but guess what your tiny little car is getting worse mileage than my SUV so shove it....

oh and first question is always battery replacement.  I called ford ... they said they have never had a battery fail before the engine.  in NYC these were used as taxi's and some ran up over 500k miles and are still going.  they sold 95% of the cars still running with over 350K miles on them

zippyc

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Re: Help! Financial Dilemma...
« Reply #78 on: July 25, 2014, 12:13:41 PM »
I haven't been reading all of the posts, so I might be repeating...

Wait a couple years for the baby. You'll be 28, which is still a great young age to have a child. Not only will the baby take a lot of money, but they will suck up all of your concentration too (lack of sleep, constant needs). Finish school and completely clean up your debt and save some money. You will be so glad you did. Testing when you've been up all night with a crying baby will not be fun. I love being a parent, but I feel like my life is a series of constant interruptions. (My daughter has been chattering constantly in my ear the whole time I'm typing and she's 8!)

I feel like your car choices have a lot to do with the influences around you. CA is a car and vanity heavy culture. It takes a lot of effort to fight against that, but you can get your smug feeling from knowing that you aren't drowning in a ton of debt like most of the people around you. Sell the car you are purchasing and either break the lease, or use that car until the lease is up. Once you buy a car, sometimes buying something funky will make you feel like you're comparing to others less, ie: a Civic or Corolla can feel like a small sedan (and can be hard to fit a backward facing car seat in the back, whereas a Scion XB can feel more like something different and fun - just a thought.

Your feelings about a lot of your lifestyle choices will change a LOT after you have kids. I thought I would be happy going back to work with my Mom as the nanny after I had babies. That choice haunted me everyday for 6 years until I was able to stay home. I also found that my stress and unhappiness with working so much while having babies at home caused me to spend a lot more money. I didn't have time, so I threw money at all my problems and did too much retail therapy (it was for the baby, of course!).

My feeling about the city I'm in changed dramatically as I watched my kids grow. I Never wanted to live in the suburbs, but now I feel done with the city. So, my advice here would be, stay in your condo (that is a good price for where you live and you don't have to pay for homeowner upkeep) and keep renting. After your child is one to two years old, you might begin to feel differently about where you live. This way you won't be locked in. I also highly doubt that you could afford a turnkey home for the cost of your rent in CA. I have done nothing but sink money into my house since I purchased it (fixer). The house and the kids stopped our savings cold.

No matter how tight things are for us, we still contribute more than necessary to my husbands 401K. I suggest you do the stock purchases, as long as you have a good feeling about staying put until vested and the strength of your company.

Finally, when you do have kids, for gods sake buy your stuff used!! All those big clunky plastic pieces that you need, will not be needed for all that long in the scheme of things. Buy it used and sell it for the same price you bought it for - free rental of bouncy seats, pack and plays, and exersaucers. Also, what you think you might need and everyone else uses, might go unused by you and your kid. All those fancy clothes just end up covered in spit up and poopy blowouts (that's a pretty picture!).

Use this time to focus, get your education wrapped up, pay off debts and save save save. Once you have kids, your life changes forever so this is a great time to get yourselves set up for success.


Rekon

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Re: Help! Financial Dilemma...
« Reply #79 on: July 26, 2014, 12:15:52 PM »
I haven't been reading all of the posts, so I might be repeating...

Wait a couple years for the baby. You'll be 28, which is still a great young age to have a child. Not only will the baby take a lot of money, but they will suck up all of your concentration too (lack of sleep, constant needs). Finish school and completely clean up your debt and save some money. You will be so glad you did. Testing when you've been up all night with a crying baby will not be fun. I love being a parent, but I feel like my life is a series of constant interruptions. (My daughter has been chattering constantly in my ear the whole time I'm typing and she's 8!)

I feel like your car choices have a lot to do with the influences around you. CA is a car and vanity heavy culture. It takes a lot of effort to fight against that, but you can get your smug feeling from knowing that you aren't drowning in a ton of debt like most of the people around you. Sell the car you are purchasing and either break the lease, or use that car until the lease is up. Once you buy a car, sometimes buying something funky will make you feel like you're comparing to others less, ie: a Civic or Corolla can feel like a small sedan (and can be hard to fit a backward facing car seat in the back, whereas a Scion XB can feel more like something different and fun - just a thought.

Your feelings about a lot of your lifestyle choices will change a LOT after you have kids. I thought I would be happy going back to work with my Mom as the nanny after I had babies. That choice haunted me everyday for 6 years until I was able to stay home. I also found that my stress and unhappiness with working so much while having babies at home caused me to spend a lot more money. I didn't have time, so I threw money at all my problems and did too much retail therapy (it was for the baby, of course!).

My feeling about the city I'm in changed dramatically as I watched my kids grow. I Never wanted to live in the suburbs, but now I feel done with the city. So, my advice here would be, stay in your condo (that is a good price for where you live and you don't have to pay for homeowner upkeep) and keep renting. After your child is one to two years old, you might begin to feel differently about where you live. This way you won't be locked in. I also highly doubt that you could afford a turnkey home for the cost of your rent in CA. I have done nothing but sink money into my house since I purchased it (fixer). The house and the kids stopped our savings cold.

No matter how tight things are for us, we still contribute more than necessary to my husbands 401K. I suggest you do the stock purchases, as long as you have a good feeling about staying put until vested and the strength of your company.

Finally, when you do have kids, for gods sake buy your stuff used!! All those big clunky plastic pieces that you need, will not be needed for all that long in the scheme of things. Buy it used and sell it for the same price you bought it for - free rental of bouncy seats, pack and plays, and exersaucers. Also, what you think you might need and everyone else uses, might go unused by you and your kid. All those fancy clothes just end up covered in spit up and poopy blowouts (that's a pretty picture!).

Use this time to focus, get your education wrapped up, pay off debts and save save save. Once you have kids, your life changes forever so this is a great time to get yourselves set up for success.

Thank you for your excellent advice!  This is great.  Our thoughts are to wait a few years to have a kid as well.  Once school is done and debt is gone.  We would be able to save money after that.  We are re-thinking buying a house in LA.  Not sure if makes sense as the property values are really expensive.

With that said, we also need to make more $!  My wife has been looking/interviewing but hasn't had much luck.  Either employers want to pay her the same or she doesn't have the experience required.  Do you Mustachens' think we make a good enough income to succeed?  I see a lot people on this forum with 100k salaries and it's a little discouraging that we are on the salary lower end (in a high end market).

CDP45

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Re: Help! Financial Dilemma...
« Reply #80 on: July 26, 2014, 01:20:53 PM »
Yea it's pretty scary, I don't know how people average people make it. I think the only way they do is by not saving at all and living paycheck to paycheck. I live in a city with $50,000 household income and $1000 ave rent and $300,000 ave house- how that add up?? Especially with state income tax and high property taxes, insane.

daverobev

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Re: Help! Financial Dilemma...
« Reply #81 on: July 28, 2014, 07:58:09 AM »
I just bought a nice bike rack for the Acura.  Bought it off nashbar for $120. 

I'm thinking of getting rid of the lease and buying a used accord or CR-V cash.  What do you guys think?  I initially thought about a civic but we would like kids in the future and I'm not sure if a car seat fits in a civic.  Thoughts?

Wife just left for the day with our baby in her car seat in our Civic.

The previous owner had two car seats in it.

Rekon

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Re: Help! Financial Dilemma...
« Reply #82 on: July 28, 2014, 07:59:29 AM »
Cool! -- thanks for sharing!
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tomsang

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Re: Help! Financial Dilemma...
« Reply #83 on: July 28, 2014, 08:21:14 AM »

I will take on the company stock deal.  Stock has been historically increasing over the past 10 years.  How much do you think I should put in each month?

Earlier on you said that your company was giving you a share for each share you buy.  If this is the case and you are at a reasonably stable company I would be buying as many shares as they let you. I would put them on the Visa if I had to as your return is 100%. I would look into the details of this plan as it seems too good. Max it out if it is doubling your money.

nawhite

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Re: Help! Financial Dilemma...
« Reply #84 on: July 28, 2014, 11:40:14 AM »

I will take on the company stock deal.  Stock has been historically increasing over the past 10 years.  How much do you think I should put in each month?

Earlier on you said that your company was giving you a share for each share you buy.  If this is the case and you are at a reasonably stable company I would be buying as many shares as they let you. I would put them on the Visa if I had to as your return is 100%. I would look into the details of this plan as it seems too good. Max it out if it is doubling your money.

I agree with tomsang. It depends on the specific terms but, if there were no restrictions on selling, the right move is to BUY EVERY SHARE YOU CAN!!! To the point that you should absolutely be taking out credit card loans/borrowing money from friends, cutting every single expense you can to the absolute minimum so you can BUY MORE SHARES!!! That situation would literally be a "money making machine." Step 1, buy 1 share. Step 2, get second share from company. Step 3, sell 2 shares. Step 4, repeat as fast as you possibly can.

That being said, its likely that you have to hold onto the shares for 3 years or something similar. In that case, assuming the shares wont be worth 50% of their current value in 3 years (you know better than us), you should BUY EVERY SHARE YOU CAN AFFORD! You'll still need an emergency fund and living expenses, but if you aren't planning on buying the house for at least 3 years, then this is by far and away the best saving vehicle you have available to you.

Daleth

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Re: Help! Financial Dilemma...
« Reply #85 on: July 31, 2014, 08:06:58 AM »

I will take on the company stock deal.  Stock has been historically increasing over the past 10 years.  How much do you think I should put in each month?

Earlier on you said that your company was giving you a share for each share you buy.  If this is the case and you are at a reasonably stable company I would be buying as many shares as they let you. I would put them on the Visa if I had to as your return is 100%. I would look into the details of this plan as it seems too good. Max it out if it is doubling your money.

I agree with tomsang. It depends on the specific terms but, if there were no restrictions on selling, the right move is to BUY EVERY SHARE YOU CAN!!! To the point that you should absolutely be taking out credit card loans/borrowing money from friends, cutting every single expense you can to the absolute minimum so you can BUY MORE SHARES!!! That situation would literally be a "money making machine." Step 1, buy 1 share. Step 2, get second share from company. Step 3, sell 2 shares. Step 4, repeat as fast as you possibly can.

That being said, its likely that you have to hold onto the shares for 3 years or something similar. In that case, assuming the shares wont be worth 50% of their current value in 3 years (you know better than us), you should BUY EVERY SHARE YOU CAN AFFORD! You'll still need an emergency fund and living expenses, but if you aren't planning on buying the house for at least 3 years, then this is by far and away the best saving vehicle you have available to you.

Uh... do you remember Enron, by any chance?? There's a reason we have this proverb: "Don't put all your eggs in one basket."

t-rymz

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Re: Help! Financial Dilemma...
« Reply #86 on: July 31, 2014, 08:24:14 PM »
Sell the cars and buy a Fit/Yaris/Fiesta. Get the match in your 401k, then max out Roths.

Rekon

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Re: Help! Financial Dilemma...
« Reply #87 on: August 01, 2014, 08:42:29 PM »
Thanks!  I got the max 401k match already.  Should I max IRA next or the sharematch at my company?  I just got more information today regarding the sharematch.  Basically, it's 1 free share for every 2 shares I buy (maximum $3,000/yr).  Also, if I sell before 3 years I keep my principle shares but I loose the free shares.
« Last Edit: August 01, 2014, 08:46:45 PM by Rekon »

Rekon

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Re: Help! Financial Dilemma...
« Reply #88 on: August 04, 2014, 11:50:33 AM »
Should I max my IRA or Company Share Program?

Cpa Cat

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Re: Help! Financial Dilemma...
« Reply #89 on: August 04, 2014, 12:27:54 PM »
I'll look into breaking the lease and selling the expensive car.  A 2006 civic is roughly 13k (I wonder if a dealer would buy back my two cars if I offered to buy a used one).

Wut? I got our 2004 Civic for $5k... 4 years ago. A 2006 is showing $5k to $8k on Autotrader here in Ontario... and cars here are, AFAIK, more expensive than most places in the US.

Yeah. I'm confused. I drive a 2006 Civic Hybrid and I've priced out my car. I bought it new and has about $50k miles. It's worth maybe $8,000. At the high end. If I could get 12k for it, I would probably dump it for a Prius. Mine only gets 36 mpg.
« Last Edit: August 04, 2014, 01:59:12 PM by Cpa Cat »

Chrissy

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Re: Help! Financial Dilemma...
« Reply #90 on: August 04, 2014, 01:23:56 PM »
The company share match has a better "baked-in" return than the tax advantage on the IRA.  I vote for the share match next.  Just commit to cash out once you've held onto them for the required time.

CDP45

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Re: Help! Financial Dilemma...
« Reply #91 on: August 04, 2014, 03:41:47 PM »

nawhite

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Re: Help! Financial Dilemma...
« Reply #92 on: August 05, 2014, 08:44:28 AM »
Should I max my IRA or Company Share Program?

Always max 401k first (true for most W2 workers).


http://forum.mrmoneymustache.com/investor-alley/max-out-401k-or-open-roth-ira/

http://www.bogleheads.org/forum/viewtopic.php?t=109107&f=1

No, it depends on income tax today and expected income tax in retirement, and whether or not this share match program is worthwhile.

Thanks!  I got the max 401k match already.  Should I max IRA next or the sharematch at my company?  I just got more information today regarding the sharematch.  Basically, it's 1 free share for every 2 shares I buy (maximum $3,000/yr).  Also, if I sell before 3 years I keep my principle shares but I loose the free shares.

This isn't as good as I originally thought. Its still pretty darn nice though! My answer on whether to max the IRA/401k or the sharematch would depend on:

A) How much of your net worth/investments is $9,000 (3k/year for 3 year holding period)? If you have 100k in retirement accounts, 9% being wiped out isn't THAT big of a deal. If you have 18k in retirement accounts, 50% being wiped out is a huge deal.
B) How stable do you think the company (and the stock price) is? This is a MUCH more risky bet than Indexing a 401k for all sorts of reasons. How likely is a 33% stock price cut in the next 3 years?
C) Would I be investing in my company if I didn't work here? Does the company have a dividend? Does the price match your expectations for revenue targets or is it overpriced?


Personally, with the company I work with now and my current net worth, I would absolutely be doing the share match to the max before filling out my 401k (granted I'd be maxing both as I max my 401k and have leftover saving funds to work with). But we have different situations. Honestly though, neither choice is a bad one.

Rekon

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Re: Help! Financial Dilemma...
« Reply #93 on: August 11, 2014, 12:20:56 PM »
I ended up signing up for the sharematch program.  My company is global and is doing well per the financials.