Debt Free When You Bought Your Mustang?

[CM581978]

Im not trying to play stupid, but did you pull that money out of an IRA? 401k?

It all depends on how a person looks at their money. For 7 years my "car payments" went in the market. Made a good return. Took some of that money and paid off the car. And now I continue to make that "car payment" into the market. It's a win-win. At no point am I paying any interest on anything.

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[Monster_Load]

I paid cash for mine. My truck is paid for too.

 

[L8APEX]

I own mine outright.

 

[MagneticA]

Im not trying to play stupid, but did you pull that money out of an IRA? 401k?

Forums like this are the last place to get financial advice. I recommend a professional advisor. With that said... Once I paid my last car loan off at $250/month, I opened a separate account with my advisor specifically for my next car and continued to make that $250 payment. 7 years later I had more than enough to buy this car outright. If you wanted to "pull" money out you could do this with a ROTH IRA if you've owned it for more than 5 years. The only thing you can't do is take out any gains. So if you put in $20000 and it's worth $30000, you'd only be able to take out $20000 (penalty free).

 

[Lostz]

You guys are rich! I have debts =)

 

[MagneticA]

You guys are rich! I have debts =)

"Rich" is subjective
My wife and I each make 40k/year.
One of our biggest assets is our spending habits.

 

[CM581978]

Yes, but here on the forums is free I have new car fever, but have alot of debt due to tax and medical expenses. i can pay everything off in 18 months but then Im starting from zero for a car fund.

Forums like this are the last place to get financial advice. I recommend a professional advisor. With that said... Once I paid my last car loan off at $250/month, I opened a separate account with my advisor specifically for my next car and continued to make that $250 payment. 7 years later I had more than enough to buy this car outright. If you wanted to "pull" money out you could do this with a ROTH IRA if you've owned it for more than 5 years. The only thing you can't do is take out any gains. So if you put in $20000 and it's worth $30000, you'd only be able to take out $20000 (penalty free).

 

[MIKESHIP]

NEVER TAKE MONEY OUT OF YOUR IRA/401K OR A LOAN AGAINST IT

 

[dgc333]

Even though I am in a position to write a check for both of our new cars I choose to make monthly payments. With car loan interest rates as low as they are I can make more money by keeping as much of it invested as possible.

 

[Ruby305GT]

I owe my house and 2 cars including Mustang, debt free otherwise. I believe paying cash for a car is a misuse of funds, unless I have plenty of money left to invest it. A car is a depreciating asset, no matter which way you put it. Now take that 40k and buy a 2/2, rent it out and not only make money, but build equity over the next 5 years and you've made money. Just the way I've done things, it's worked out like a charm.
Then again, not all investments are sound, you will lose some along the way, but if smart and lucky in managing, you'll make money.

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[evo8904]

As low as interest rates are on loans, it's dumb not to pay payments, Your money is worth more investing in the market. I'm still averaging a 10-12% return, which is a lot more then the 1% interest on payments.

I completely agree with this. My wife doesn't understand the concept of profitability from debt. She is pushing for me to pay cash for my mustang. For me, paying cash is crazy because that would be a loss of opportunity of buying another investment property. I can get another duplex for $40k and profit around $1000 a month after setting aside money for repairs, taxes and insurance. The only time that I would pay cash for a new car is if we already had payments on 2 cars. 2 auto loans at a time is my limit. However, I didn't clear up any debt to buy my mustang. I own all of my homes and investment properties. I also own my 2014 TRD Tacoma and wife's 2013 Pilot.

 

[MagneticA]

I agree that it is not wise to withdraw from IRAs that are meant for retirement. With a household income of 80k, my wife and I are able to max out all of our IRAs, set aside $/month for rainy days, and make 4 extra payments on our mortgage/year. Purchasing a car outright is done simply with "car money". I was brought up with the idea that you will always be paying money on a car... loans, upkeep, etc. So we set aside and invest that money each month solely for cars. Over the years that $$ grows and receives a nice return. Once every 5 years we buy one new car (we own 2 cars) outright. This car fund ends up becoming another investment vehicle for us because we put 30k in for each car and that 30 usually sees a nice return, plus we rarely pay 30k for a car. By doing this, our monthly "car payments" are $250/car. If we did loans our payments would actually be $325+. So this actually gives us an additional $75+/person/month to devote to other investments.

Again, it's just a different way to look at money. I don't live paycheck to paycheck. I like to buy what I can afford, which means I save up for what I want. While I save for it, I earn interest. Taking out a loan, a person loses the interest/return they could have earned while saving, plus they pay interest on the loan.

But again, talk to an actual advisor - everyone's situation is different.

 

[5.0GT]

I paid cash for my house and cars. Never in debt.

 

[MagneticA]

When getting started, one small step would be to pay your car insurance up front. Different insurance companies work differently, but with mine if I make monthly payments I end up paying $225 more each year than if I make one up front payment. You can see how over the course of a life things like this can add up.

 

[Ruckus]

Interesting thread. I am currently carless and paying my bills off and saving up for a hefty down payment on my next Mustang, hence the 2016 model year in my sights…

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