Wha Wha Wha?!?!? I’m sure most of us have auto loans (I do) and don’t think twice about it. I know I’ve caught myself thinking “when I pay off this car in 3 years, I can turn around and get something else and use the (probably 4 or 5K) equity as a nice down payment.” Would there be anything wrong with my car in 3 years?? No (it would only be like 8 years old), but the thought of a new or slightly used Subaru (R.I.P.) just gets my motor running (bad pun alert).
Thursday, January 8, 2009
Hide the Money Y'all
A few months ago, I moved offices right next to one of our shareholders. Since we’re in one of the quieter corners of our building, I end up hearing a lot of what’s going on in a shareholder’s world. The other night, I overheard him talking to a friend (or somebody, I don’t know, it seemed like a very friendly conversation) about a car he just purchased. He said something that I thought was very interesting. He said someone once told him that “if you drive your car for 10 years instead of 5, you’ll create over $400,000 of wealth in your lifetime”
Since I am an accountant, I thought I’d crunch some numbers and see if that’s true. I bought my (used) car when I was 25 and pay roughly $300/month. Assuming I can make 8% on my investment and I save that $300/month in the 5 off years I’m not making a car payment, I will have saved roughly $407,000 by the time I’m 65!!
Just another example of why we need a MANDATORY Personal Finance class in Middle School, High School and College!