Depreciation

[Mustangchief]

Wow, a lot of stuff going on there. I don't own a house yet... which is why I'm sort of hesitating on whether I should be using this money I've saved on a down payment for a house or to fund the Mustang purchase. Obviously one of those will hold its value better and I don't want to be renting an apartment forever. I also don't know a thing about investing unfortunately.

http://investor.gov/investing-basics#.U7FUUfldU40 Best thing the government does is teach, few people know the government manages the markets, therefore they must teach citizens how to use them. After you get the basics, you can go to the exchange commission sites and get advanced knowledge.

As for your dilemma with the down payment, if you can afford to buy a small place with a garage and get the Mustang do both. If you have a family now or very shortly, it is a responsibility to take care of them. I'll keep this to just Mustangs because I'm getting away from the original post. When I was 19 and single, I spent almost half my income to get the GT I really wanted. I had to give up many habits and seriously curb date nights. That was 31 yrs ago and I don't regret it a single bit. I did eventually sell the GT due to having two small kids to get a family car. Do what will make you happy.

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[Clink]

Thanks for your ten cents (wow, inflation :().

It's pretty hard for me to pass up the 50th anniversary of a car my dad and I have obsessed over our entire lives just because it's not the best place to put my money :ford:.

As much as I would try to talk myself into getting a LE to match my Dad's if I was in your shoes, a house would be much better PLUS you need a garage to keep the LE in right? No way would I park that outside..

 

[Keyser_Soze]

Anecdotal evidence is anecdotal... you're comparing depreciation on a new, American-made, niche market (v8 and insurance costs / gas mileage make this car unappealing to many buyers who think cars ought to be like toasters - appliances) car to depreciation on a 50k mile car that is perhaps the best toaster ever made? I don't even see the conversation here.

Also anecdotally, I bought a 2002 coupe v6 mustang in 2005 w/ 16k miles on it for 9k, drove it until 172k and sold it 6 months ago at 2700 bucks. I'd say that's a pretty good run, even depreciation wise.

 

[SLVRBACK]

Depreciation? Who cares.

Buy Mustang. Enjoy Mustang.

This isnt the kind of car you worry about that kind of stuff, just like you dont lease it.

 

[Keyser_Soze]

Unless you are rolling in hoards of cash, paying cash for a car is just plain stupid IMO, same with big down payments. Unless you have to because you can't get a 4% or lower rate. If it took you 5 years to save 40K in cash, you wasted many many dollars. If you don't know how to invest, learn. Now, if you are just going to buy the latest gadgets with that down payment/cash for a car, go ahead and put it on the car. Here is something to ponder, if you took your $10K down payment in Feb 2009 and bought Ford stock as well as a 2010 Shelby GT500 at 4% for 5yrs. In 2 yrs, your down payment would be worth $113,750.00 On your car note, you would have paid $21,600 and still owed about $40k on the car. If you paid the down payment, you would have spent roughly $19,200 on payments and owed 31500 on the car. Investing the down payment obviously only works if you invest smartly.

If you don't know how investing works, put your money in the car. There are more shady investors than shady car salesmen. Like car salesmen, you need to be educated or you can kiss your hard earned money good-bye

As someone who knows how to invest, I have no idea where the hell you got your figure of 113.7k or what that number even represents insofar as the 10k down payment. If you're inferring that Joe Schmoe took his 40k down payment and DE-liquidated it 100% in Ford stock, Joe Schmoe still doesn't know how to invest.

Wow, a lot of stuff going on there. I don't own a house yet... which is why I'm sort of hesitating on whether I should be using this money I've saved on a down payment for a house or to fund the Mustang purchase. Obviously one of those will hold its value better and I don't want to be renting an apartment forever. I also don't know a thing about investing unfortunately.

I'm going to assume you have a stable job and plan on living in your current location for >5 years. PASS ON THE CAR. I was in your shoes in 2011 when the 5.0 buzz was at its peak. I easily burnt 100 hours at AFM, TMS, etc just druel-killing keyboard after keyboard, composing my mod lists, etc. I bought a house in Oct 2011 (at <4% mind you, these interest rates are, nearly, historically unheard of) and I've been driving a zero-payment piece of sh*t toaster oven since that time. Actually, I love my toaster oven for what it is. Guess what? I'm comfortably into my mortgage, making extra payments to principal, and I've been stashing some cash toward a ~25% down payment, and, lo and behold, there's a more desirable car about to hit the market! Just like there will be 2 years from now. My house is still as desirable as it was, moreso with the upgrades I've done, and I basically write myself a check every month for the rent (albeit there's a little goblin named Interest that pilfers most of it). Also, do not think of a house as an investment - this is a mistake, even if it tends to be the trend over the last 30 years. A house is a less-expensive long-term way to have a place to live and actually OWN something. Taken solely on this merit, it is a better idea than renting every time, 'investment value' notwithstanding. Your house won't appreciate at the same rate of, say, an index fund.

Of course, now I'm wondering S550 or an extra year for C7, or if this excitement deriving from cars is really worth it, and it's more worth waiting for the midlife (I'm 27). You can always spend money, you can never unspend it. Put the money in a safe place, sit on your couch, crack a beer, and think hard about how efficiently you're going to use said money. I whimper a little when my Kona Blue 2012 w/ Brembos and a glass roof goes roaring by with its Borla S-Types, but the pain is dulled quite a bit when cracking a nice IPA in my newly-furnished gameroom before Tony Romo blows another game. I also have the added comfort of making a (relatively) better investment while I wait for my chips to stack up. I know this isn't the place/thread for this, just wanted to share my experience.

Then again, have you SEEN the f****n* GUARD with BLACK PP WHEELS? :ford:

 

[Keyser_Soze]

Let me break something down for you guys who think 40K is a lot of money.
Cable $133 ( I rarely watch TV, but it is tied to internet)
Family Cell phones with data $250
Friday night eat out (date night) $200+ a month
Beer $100 a month
Ipad Data $40 monthly
Pool Chemicals ($50)

That's right 733 dollars on junk I can do without. $43,980 over 5 years. A brand spanking new Mustang GT with PP.

I have many more luxury items I can do without also, but I just wanted to illustrate when you look at what you pay for things, getting a car isn't that bad of a deal. Of course if you are only bringing home $18K a year, then you might want to focus on a focus.

$100 on beer a month? I drink some pretty fancy beer and would have trouble breaking 65 bucks. Or is this at the bar? If you dropped the cell phone plan AND cable AND date night (probably your wife's entertainment values), wouldn't she just leave you and thus take away your entertainment value in the process? :headbonk: If not, please tell me your secret as the wife seems to enjoy the Facebook time and the Real Housewives of who-gives-a-****.

 

[Johnnybear]

I am seriously in love with the new 2015 and want one very badly-and as luck would have it I am wrapping up some financial bumps in the road of life (divorce) and think next spring would be a great time to buy a car. The thing is that being in Minnesota and having two kids and two dogs necessitates me keeping the wagon-nipping the fun car budget down a bit. As luck would have it, I would be perfectly happy with a 2012/13 CS Convertible in Race Red or Black (The colors my boys and I have agreed upon). The value I would be getting used would be great for me and my kids to enjoy the car together. One just has to be patient and a little lucky when buying a used car. Those of you who will be getting the 2015 I just want to say congrats! Don't leave it in your garage, I will want to be drooling over your car as it drives by!

 

[Brent302]

I am seriously in love with the new 2015 and want one very badly-and as luck would have it I am wrapping up some financial bumps in the road of life (divorce) and think next spring would be a great time to buy a car. The thing is that being in Minnesota and having two kids and two dogs necessitates me keeping the wagon-nipping the fun car budget down a bit. As luck would have it, I would be perfectly happy with a 2012/13 CS Convertible in Race Red or Black (The colors my boys and I have agreed upon). The value I would be getting used would be great for me and my kids to enjoy the car together. One just has to be patient and a little lucky when buying a used car. Those of you who will be getting the 2015 I just want to say congrats! Don't leave it in your garage, I will want to be drooling over your car as it drives by!

Just wait for used EcoBoosts to start showing up

 

[tbonez3858]

Hi there.... At the risk of getting off topic and incurring the wrath of the Moderator, let me just quickly put my ten cents in and say that as a property owner, it is still one of the few viable, long-term and secured investment that a person could make in this current climate and economical uncertainty. Not without it's risks but the fluctuations are variable. The value goes down, like now and then they go up (sorry about my wording; I like to keep things simple). Cars on the other hand, for most sane people are a necessity, from A to B..... For the NOT sane individuals, like myself and most of the others in the forum (and maybe you), it's all about the LOVE (and yes! I'm using that tone to describe that word; as many can imagine) and the feeling that we get when we see that Mustang on our driveway. You COULD buy a second-hand car; you could walk and use public transportation; but EVERYTIME I got behind the wheel of a Pony car, I just smiled like an idiot. Can't seem to recall any other vehicles other than a Main battle tank doing that to me.

If you ever get that feeling, then depreciation doesn't/wouldn't matter. And if you are very uncertain about buying a brand new Mustang right now, then as you might have been reading, the value of the previous models, maybe up to the current SHELBY GT500, is getting lower as each day gets closer to the release of the 2015.....

Someone please tell me to shut-up...spouting off again! Sorry:headbonk:

In my personal opinion real estate is a great long term investment but not necessarily a home. People spend emotionally when it comes to a home and they dont when it comes to real estate. Most people that invest in real estate put just enough money back into the property to keep it in order and keep it from losing value...Not so in a home. The only way you make any money in a home is to move into an area at the right time that is being revitalized or the area happens to explode with higher end growth.


Im an older guy and I've owned two homes for long durations. I've kept the receipts for every penny I've spent on both houses. Even if I was to pay the houses off by the time you subtract the house payment, interest, taxes, up keep, etc I guarantee you at the end of it I would be so deep in the hole it wouldn't be funny. I've dropped 6k alone this year in maintenance and still more needs to be done. I could probably recoup my investment 20 years after I paid the house off at this rate. If I invested the same money in the market or precious metals my returns would be much greater over the same duration. Due to that I've never considered my home and investment. I consider it "rent" for my housing.

 

[Fenderaddict2]

In my experience only property outside of your prime residence can really be considered an investment. If you can't afford a second (or third) property you can often get further ahead by renting and investing the money saved in the market.

 

[Gman11Gt]

In my personal opinion real estate is a great long term investment but not necessarily a home. People spend emotionally when it comes to a home and they dont when it comes to real estate. Most people that invest in real estate put just enough money back into the property to keep it in order and keep it from losing value...Not so in a home. The only way you make any money in a home is to move into an area at the right time that is being revitalized or the area happens to explode with higher end growth.


Im an older guy and I've owned two homes for long durations. I've kept the receipts for every penny I've spent on both houses. Even if I was to pay the houses off by the time you subtract the house payment, interest, taxes, up keep, etc I guarantee you at the end of it I would be so deep in the hole it wouldn't be funny. I've dropped 6k alone this year in maintenance and still more needs to be done. I could probably recoup my investment 20 years after I paid the house off at this rate. If I invested the same money in the market or precious metals my returns would be much greater over the same duration. Due to that I've never considered my home and investment. I consider it "rent" for my housing.

Yes, that's what most smart people would think about real estate, except the new generation has been pigeon holed into thinking real estate is the way to get rich and when it crashed during the housing bubble, they have a rude awakening. The ones that bought an extra house or the ones that thought they could make a buck are now underwater. Real estate has recovered, but it certainly shouldn't be a nest egg in hopes to retire off of.

 

[Mustangchief]

As someone who knows how to invest, I have no idea where the hell you got your figure of 113.7k or what that number even represents insofar as the 10k down payment. If you're inferring that Joe Schmoe took his 40k down payment and DE-liquidated it 100% in Ford stock, Joe Schmoe still doesn't know how to invest.

As someone who knows, then you know Ford was a Penny stock in Feb of 2009 and a super bargain at $1.44, hence why I bought 7500 shares. It peaked at a little over 17, but I decided it hit the ceiling and sold at $16.71, after fees my pre tax net was 113,750 after a 10,800 investment (thats where the figure comes from) I was hoping for a few hundred %, and got lucky. Part of it was heart for Ford and the other half was the financials indicating they could stave off bankrupcy. I have plenty of Ford still in my funds, but this was a one time buy. Sure, you can't do it everyday with a major player, but using thinkorswim and staying ahead of big money you can hit it a few times a year. BUT as I said, you have to know what you are doing or you will lose your donkey along the way.

And my Becks Sapphire is $24.00 a case X 1 per week. I don't drink it all, I do share with our friends and the wife drinks some.:cheers:

I would love to drop all of those plans, and I'm sure she wouldn't leave me, just bug the heck out of me. I look at those expenses as a way to keep her busy and out of the garage. You're still too young to understand that. She does the facebook, but has to have cable for football, racing and hockey.(I enjoy those too!) :amen:

 

[Keyser_Soze]

As someone who knows, then you know Ford was a Penny stock in Feb of 2009 and a super bargain at $1.44, hence why I bought 7500 shares. It peaked at a little over 17, but I decided it hit the ceiling and sold at $16.71, after fees my pre tax net was 113,750 after a 10,800 investment (thats where the figure comes from) I was hoping for a few hundred %, and got lucky. Part of it was heart for Ford and the other half was the financials indicating they could stave off bankrupcy. I have plenty of Ford still in my funds, but this was a one time buy. Sure, you can't do it everyday with a major player, but using thinkorswim and staying ahead of big money you can hit it a few times a year. BUT as I said, you have to know what you are doing or you will lose your donkey along the way.

The down payment of a car coinciding with a skyrocketing penny stock is a once in a lifetime occurrence, and probably isn't prudent advice for those who aren't moonlighting in financial research, however lucrative it may be anecdotally. Most people would lose their donkey and be better off in safer investment vehicles. That's a hell of a score, but nothing I'd base any advice for the masses upon.

I would love to drop all of those plans, and I'm sure she wouldn't leave me, just bug the heck out of me. I look at those expenses as a way to keep her busy and out of the garage. You're still too young to understand that. She does the facebook, but has to have cable for football, racing and hockey.(I enjoy those too!) :amen:

Leaving you was just hyperbole :headbonk:. I definitely understand w/ the garage thing as I spend most of my Saturdays cutting up wood while I wait for the right moment to get a wrench-worthy car, though I'm not sure which I'll enjoy more. CFB is the only thing that has kept me from axing the cable subscription :frusty:

 

[Mustangchief]

but nothing I'd base any advice for the masses upon.
/QUOTE]

You are 100% correct, in no way shape or form should anyone invest with that kind of expectation. However, just the basic knowledge and 5 minutes a day keeping an eye on the major markets, there is no reason you can't profit 10% annually over 5 years vs putting 10 grand into a down payment. There is 0 equity when you depreciate 10% as soon as you sign the paperwork.

Lack of investing knowledge is a really good reason to find a great FP or learn how to use the financials to make your own decisions.

Buying down an interest rate with a big down payment is a wise decision if your credit score is poor and you can't get a sub 4% rate. All I'm saying is there is no need to waste money on depreciation.

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