I think that a bigger shock will happen when people with a large portion of their retirement in Roth IRAs and 401ks retire. I think that politicians created them to increase tax revenue now without increasing taxes (a political suicide), fully knowing that they'll be long gone when it's time for the younger generation to retire with a larger portion of their retirement in Roth IRAs and 401ks.
Thanks for the info, that margin seems to be close in line with the differences between the KBB trade-in value vs. dealership price for used vehicles. I was able to negotiate $2k off of the sticker price (sticker price was on the low end of the KBB value) the used EB with about 7,600 miles and add $1,000 to my trade-in (the initial offer was middle of the trade in value). I had to shop around but not sure if I got a great deal or if they were motivated to sell since used Mustang EBs and GTs are common around here.
I guess I just don't like to subscribe to the sky is falling philosophy. Always gonna be bad stuff going on. Only time will tell what's going to happen.
Or........ 7 million people are collectively 90 days late. 90 days is 7,776,000 seconds. So maybe each loan is barely over 1 second late.
Good to see from a retiree's point of view. May I ask if you opted for 0% and low-interest financing because you're drawing from tax-deferred investment accounts and withdrawing the entire amount of the cost of the cars would've resulted in tax hits greater than the cost 0.9% financing?
I used to date men. But then the carnival closed down and I couldn't get a job guessing people's age anywhere else.
I'm 57, my wife's 52, and neither of us are retired. We could be, but we like what we do, and more money is always good, right?
The sky isn't falling but it pays to pay attention.....
Thanks for the explanation (I assumed you were retired since you mentioned that you're done saving for retirement) as you have a good specific example of how it can work, already have the house paid off, and are not playing with the retirement money. Probably more risk than I would've taken but I'm usually a little on the conservation side, and when I say cash, I mean short term savings for things that need to be replaced on regularly, like cars, thus capital gains would've not been applied. This is the reason why I don't include cars and other personal belongings for net worth calculations, even though they always have some sort of residual value.I'm 57, my wife's 52, and neither of us are retired. We could be, but we like what we do, and more money is always good, right?
We go with 0% down, 0%, or low-interest loans simply because we prefer to use other people's equity at no, or low cost to us. We have been in the market for almost 30 years, and for the past 10 years have kept most (~ 85%) of our portfolio in SPY, DIA or QQQ ETF's that over a 4-5 year period typically have a much higher annual rate of return than 0-0.9%.
For example, the last 5-year total return for SPY has been 48%. If I would have taken out of the taxable account $40k to pay for a car with cash, I would have realized a $19,200 lost opportunity cost for that same period, not to mention the 15% long term capital gains tax incurred. That's not how to do it.
Unfortunately for many, going into significant debt relative to their income impairs their ability to save and invest much of what they earn. Taking advantage of low rate financing to save a few bucks vs. cash is a different consideration than whether the amount of the debt is an unwise financial decision.