All Forum Posts by: Randy E.

What would you do if you were in my shoes?

@jdmartin

Sorry, I’ll try to make it more clear so that you can understand my point.  Most of us on this site buy/lease cars we cannot afford because we make payments.  Same is true for RE.  Most of us on this site don’t have enough money to buy RE with cash so we have to borrow money   Most of us cannot be like David Ramsey or Clark Howard who pay cash for RE and are multi millionaires.  The rest of us have to leverage and hope that things work out through calculations and math.    Personally I’d prefer to do it Dave’s way, but since I don’t make his income it would take me forever to pay with cash.  So when you say paying cash is a terrible idea, my guess is your net worth is no where near Dave Ramsey’s.  

 What makes financial sense for the average American - you know, the guy (and girl) that can't cover a $1,000 emergency without trying to find someone to borrow money from - is to own no car at all. I realize that's difficult or impractical for many people, so the next best option would be to own the most economical, least expensive vehicle you can own that meets your transportation needs. Economical means cost to buy it, cost to operate it, and cost to maintain & repair it. So a $1,000 beater with 350k miles might not be the most economical purchase you can make. Maybe if you are by yourself, a scooter makes the most sense. For *most* Americans, a small 4 cylinder economy car of good mechanical quality makes the most financial sense. That might be a Kia Soul or Forte, a Honda Fit, a Toyota Corolla, etc. Now extrapolate that to $16-20k for a new one of those or maybe $10k for one that has 30k miles. If both of the cars can be expected to make it to 200k miles without any catastrophic repairs - and that's reasonable these days - then new Economy car #1 at $20k cost 10 cents per mile to purchase (I'm leaving out maintenance/repair/operation) and used Economy car #2 at $10k cost 5.9 cents per mile to own ($10,000/170,000 miles). 

If you run these calculations, you can pretty quickly figure out what's economical to own and operate. I have had a fairly long commute (45 minutes) for years, and my benchmark was always to try to keep my car ownership costs for my commuter to less than 3 cents per mile. That sounds absurd on the surface but I've exceeded it several times and made money once on a commuter that I paid $1300 for, drove 60k miles and sold for $2500. Those are unique situations - cars are money losers - but my previous commuter to that I spent 1.25 cents per mile to own it over 80k miles. My current commuter I am at 11.7 cents per mile - can you guess why? Yup, I bought it new. Still an econocar - a Kia Soul stick shift that I paid less than $13k for brand new (14k with tax) - but I'm at 120k miles on it so there I am. BUT, if I sold it tomorrow, I could get $5k for it easy, probably $6-7 if I worked it. So if I got $5k, then my cost of ownership would be 7.5 cents per mile. Still not as good as my previous commuters, but I'm getting older and working on my own cars has gotten harder so I trade a little money for a little comfort.

Anyway, the point of all this is never fool yourself that leasing or buying new is a good financial decision. Good compared to maybe just burning the money in the front yard, but financially speaking you are spending money the same way you're spending it going on vacation or playing golf. At the end you have nothing for your expenditure. So from a pure financial point of view, you should spend as little as possible to get as much as possible. You just have to balance that with your needs, wants, abilities, etc. If you drive through a 30 mile desert every day, and can't check your oil by yourself, you probably shouldn't get a 200k mile beater. If your commute is 1 mile each way and you can rebuild an engine, you probably don't need a $30k car with a 100k mile bumper to bumper warranty. 

Welcome to investing.  If its not on paper it never happened.

Agreed. I’ve written her an extensive text message and had a visa gift card i Usually give tenants. Should I still send that or just leave it alone?

We decided to take the house of market until further notice or lease ends in March. I agree I did make the mistake so responsibility lies on me for the pictures. Just sucks she is fabricating a story about how I unlawfully entered the house. When her son opened the door for me.