DISQUS

Matt · 2 years ago

I agree with your take on #3. That may make a good rule of thumb, but that's not really looking at the big picture. For instance, I spend somewhere between 25% and 30% of my net income on my car payment. While this may seem like an absurd amount on the surface, it means I'll have it paid off within the next 6 months. Right now, it only has 14,000 miles on it, so it's likely to last me close to 7 or 8 more years after I've paid it off and I'm avoiding a lot of interest by paying it off so early.

kurt · 2 years ago

I would use the "True Cost to Own" setup they have over at edmunds.com to look at all costs of car ownership, not just the financing fee. One of the mistakes people make (including Matt) is to assume that once they pay off their car, it's free. If you paid cash, you still have to look at the opportunity cost of doing so. Remember, you could have earned 6%-12% on that money, but instead you dumped it into a car.

We all need cars (well, most of us anyway), so there's no need to feel bad about paying for them, but to think that once you pay it off it's "free" is wrong.

Ben · 2 years ago

#8 Skipping Insurance
If you don't have the proper home, automobile, health, disability, & liability insurance, your net worth may take a big hit when bad luck comes your way.

moom · 2 years ago

Interesting how now that the housing market is stagnating or going down in many regions there are all these articles saying "don't buy too much house" :)