Interesting conversation

**dczech09** · 08-20-2012, 04:10 PM

I do not know if there is a single one of us who frequent this forum that would do that deal.

But sadly there are a lot of people who pride cars above many other things. Despite the fact that cars like that lose so much of their value the moment they are driven off the lot. Such a material mindset and entitlement mindset that plagues our society.

There are two things that I see wrong: a new car and a lease. But he is not asking for our advice, so we cannot expect him to listen. I mean he can certainly do as he wishes with his money, but ugh

**YLTL_Dan** · 08-20-2012, 04:30 PM

Most people learn about personal finance when they screw up so bad with money that they have no other option - a breaking point if you will. If they don't go through this breaking point, they'll usually just continue living broke and just getting by.

Once I hit my breaking point, I finally decided to clean things up. I even studied Finance in college, but I didn't really learn how to apply it to real life until I went through the debt clean-up process. If you can learn about money before you go broke, you'll be in even better shape!

**dczech09** · 08-20-2012, 06:23 PM

Originally posted by YLTL_Dan View Post

I even studied Finance in college, but I didn't really learn how to apply it to real life until I went through the debt clean-up process. If you can learn about money before you go broke, you'll be in even better shape!

Thats a great point. Trial and error if you will.

I studied Finance in college as well. The funny thing is that my friends assume that I am good with money because of that. But there are a lot of finance graduates who are horrible with money.

College level finance prepares you to work in corporate finance, banking, accounting, and investing, but it does not prepare you for "real world" personal finance. In fact, no of my classes in college taught personal finance.

**maat55** · 08-20-2012, 06:38 PM

IMO, earning money and spending money are two different animals. Someone good with his/her finances may still make the same choices on how to earn it, but will usually differ in how they use it.

**jpg7n16** · 08-20-2012, 07:50 PM

In kind of an odd twist, the reason I'm so into financial planning is because I grew up in a family that didn't plan financially.

When I saw the hardships that my family went through that could have been avoided, I decided to do something about it. And have studied finance ever since really. My degree is in Finance, like others have mentioned, but I went out of my way to learn about personal finance -- which is it's own subject area, like Dan and dczech said, is different than your college finance classes. And now I help others with their finances for a living (and post on here for fun

)

**bjl584** · 08-21-2012, 03:10 AM

[QUOTE=jpg7n16;332612]In kind of an odd twist, the reason I'm so into financial planning is because I grew up in a family that didn't plan financially.[QUOTE]

jpg, I'm like you. My family was loving and close, but not very educated in finances. I decided to teach myself about money, and I have been interested in it ever since. My Stepdad is really the only one in my immediate family that knows about money and investing, and from him I have learned a ton.

**Gailete** · 08-22-2012, 08:09 AM

We grew up poor and whether she realizes it or not, my mom raised us up with the mentality to continue to be poor. There was something nasty about the thought of getting a high class well-paying job, but working a McDonalds wasn't the deal either. I learn to live frugally out of nessecity.

What I can't comprehend is why lease a car and then buy it at the end of the lease. Wouldn't it cost less to buy it outright at the beginning? I've never leased a car so wouldn't know.

**bjl584** · 08-22-2012, 08:17 AM

Originally posted by Gailete View Post

What I can't comprehend is why lease a car and then buy it at the end of the lease. Wouldn't it cost less to buy it outright at the beginning? I've never leased a car so wouldn't know.

Imagine a new car that costs $30,000. A 5 year loan at 4% would be around $550 a month. Now, imagine leasing that same car for $300 a month for 3 years and then buying it at the end of the lease. The car is now 3 years old and probably has around 35,000 miles on it. It might be worth somewhere around $20,000 or so. Now, you can finance it for about $350 a month, or close to what the lease was. It's an over simplified example, but it's basically a way to buy something that you really can't afford in the first place. At least, that's how I see it.

**Gailete** · 08-22-2012, 08:52 AM

So in other words, for $550/month in 5 years it is yours. The other way is you pay $300 a month for three years and then $350 a month for another 4-5? Seems silly to me!

**bjl584** · 08-22-2012, 09:41 AM

Originally posted by Gailete View Post

So in other words, for $550/month in 5 years it is yours. The other way is you pay $300 a month for three years and then $350 a month for another 4-5? Seems silly to me!

Yes. But most people think in terms of cash flow and monthly payments. Not in terms of total cost of ownership. That's why when you go to a dealership to buy a car one of the first questions that they ask is,"What do you want your monthly payment to be?"

**Gailete** · 08-22-2012, 12:24 PM

We had to go get a new (used) car last week as our 13 year old rust bucket bit the bullet. Hubby spent two days on the phone tracking down the best deal he could find. So by the time we walked in the door, we already were pretty much knowing what we would be getting- a 6 year old van with 53K miles, one owner (a woman), that had several nice details like working AC and a CD player. We paid $6000. I found the purchase receipt in the glove compartment from the prior owner, she had paid $26K 6 years before. We will drive that car for hopefully another 7-8 years. She probably never got it paid off and turned around and bought a new car to replace the old one. I guess what I'm saying is we love our new car, but I can't imagine why it would have been traded in in the first place? Why not keep it once it was paid off and not have payments for the next 6-8 years? Doesn't make sense to me at all. We know we could have found cars for cheaper, but because of being so tall with artificial knees, I can't bend them well enough to get into short cars.

**JoeP** · 08-22-2012, 12:42 PM

Originally posted by Gailete View Post

I guess what I'm saying is we love our new car, but I can't imagine why it would have been traded in in the first place? Why not keep it once it was paid off and not have payments for the next 6-8 years? Doesn't make sense to me at all.

This has come up before. Some people just get tired driving the same old thing over and over and need a change. (No, I'm not talking about marriage, get your minds out of the gutter!)

In all honesty, my car is priceless. It is a 2001 with 52k miles, comfortable, roomy, safe, efficient, quiet, and easily has another 10 years of life. While it is only "worth" around $3200, someone would have to pay me at least $10k for me to find an equivalent vehicle. But fortunately, it is not for sale!

So in your case, you found a car that someone rejected for some odd reason, and likely has the recurring joy of car payments. Hang on to it!

**Gailete** · 08-22-2012, 03:57 PM

I hate changing out car and trying to remember where all the buttons and gadgets are! LOL.

**ecoadapt** · 08-22-2012, 04:31 PM

But there are a lot of finance graduates who are horrible with money.

Absolutely,there are also people who aren't degree holder yet they are good at handling money.

Interesting conversation