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S t r e t c h i n g To Buy More Than One Can Afford

hpmctorquehpmctorque Posts: 4,187
edited September 2011 in General
It's perfectly legal. Some would say that it's the American way. Who could dispute that living above or beyond one's means was a major factor in getting us into the financial mess we're in? Most of us know someone - a relative, a friend, a co-worker - who bought or leased more car than he/she could afford. Maybe they even had it repossessed. That's when your car owns you.

Do you have an example you'd care to share? Why did they do it, and how did it play out? Did they learn a lesson?
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Comments

  • lemkolemko Posts: 15,145
    There's this pretentious girl at my job whose 29 years-old, still lives with her parents, wears designer clothes, blingy jewelry, carries a Prada bag and drives a leased red 2010 Mercedes C300 with lease terms that cost more than the payments were on my Cadillac DTS Performance. Her mantra is, "Nothing but the best for me!" When I was her age, I was on my own for over 11 years, owned a house, and had a car that was paid for.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,321
    "living above or beyond one's means was a major factor in getting us into the financial mess we're in!".

    Living above the ability to pay is not the American Way. The minor example is the leasing of "over the top" vehicles including pickups.

    The biggest example is the thousands of "wanna be's" who purchased real estate they couldn't afford, thus did not deserve, leading to massive Negatives in the housing section. And when they find themselves under water, they walk away from the mortage. The same agreement that they read, understood, & agreed to the terms, but now do not feel any remorse or guilt by walking away.

    Have these scoflaws learned a lesson? I doubt it. :mad:
  • robr2robr2 BostonPosts: 7,761
    There's this pretentious girl at my job whose 29 years-old, still lives with her parents, wears designer clothes, blingy jewelry, carries a Prada bag and drives a leased red 2010 Mercedes C300 with lease terms that cost more than the payments were on my Cadillac DTS Performance. Her mantra is, "Nothing but the best for me!"

    The classic $30,000 millionaire!!
  • fezofezo Posts: 9,328
    Indeed.

    lemko - in my book you are the one who really "nothing but the best for me" - you own those things you want. One day this girl is going to crash. You won't.

    Of course she could marry a neurosurgeon or something and wreck my whole theory....
  • andre1969andre1969 Posts: 21,902
    "nothing but the best for me"

    This is kinda sad, but whenever I hear that phrase, I think of National Lampoon's Vacation.

    "REAL Tomato ketchup, Eddie?", Clark asks sarcastically at the cookout, when he sees the "ketchup" is nothing but squashed-up tomatoes.

    "Nothin but the best!" Eddie replies, with a proud yet clueless smile.

    And, I guess after leasing that Benz, buying the Prada handbag, maybe "real tomato ketchup" is all that chick can afford. Another word of advice to her... I don't know why they call it "Hamburger Helper when it does just fine by itself! I prefer it to Tuna Helper, myself!"
  • fintailfintail Posts: 33,567
    I thought that line was just Clark trying to make Eddie feel better because there was no meat in the burgers, just the Hamburger Helper :shades:

    I haven't know anyone who took on a vehicle that was too much for their income, but I have known of a few guys with menial jobs driving cars like new STis and EVOs etc...but lazy trust funders don't count, I think.
  • hpmctorquehpmctorque Posts: 4,187
    edited September 2011
    We bought my wife's '07 Audi 18 months ago from someone who needed to downgrade because he'd lost his job. We paid the "private sale" market price for it, since it was exactly what she wanted, including the color, and we didn't want to take advantage of the seller's need to unload it. He replaced the A4 Quattro 2.0T with an '04 Civic.
  • berriberri Posts: 4,159
    When I was growing up we lived near a "new" rich suburb and an "old" rich suburb. The new rich all drove expensive vehicles, where many of the old rich had cars like Olds and Buick. Maybe the old rich learned about depreciation on a non-productive asset. Nothing wrong with driving something fancy if you like it, but it doesn't necessarily make people think more of you either (especially given they can be leased!).
  • hpmctorquehpmctorque Posts: 4,187
    Probably the only vehicles that influence peoples' opinions of you are the extremes. Think Rolls or Ferrari, or something at the other end of the spectrum.
  • lemkolemko Posts: 15,145
    edited September 2011
    ...or very shallow people.

    These good-looking, well-dressed guys were at a club and met some very attractive girls. The girls asked what kind of cars these guys drove and they told the girls they took the bus. The girls immediately ditched the guys. The same girls later saw these same guys leave the club's parking lot, one in a Porsche 911 and the other in a Mercedes S63 AMG. Their jaws dropped. I guess these dudes wanted nothing to do with a bunch of materialistic gold diggers.
  • hpmctorquehpmctorque Posts: 4,187
    Those guys played that one right, assuming they didn't drive off alone.
  • lemmerlemmer Posts: 2,676
    A person commenting on an article stated that only posers trying to look rich drive 5-10 year old luxury makes. In my neighborhood, 95% of the time it means somebody bought a nice car brand new and they are determined to get as much value out of it as they can.

    I am so cheap that I bought my Lexus only after one of the doctors in the neighborhood drove it for 10 years. And I am not really expecting it to help my image one way or another.
  • fintailfintail Posts: 33,567
    I think a pristinely maintained old luxoboat is more impressive than a new one (which are often filthy and neglected themselves) - to keep an old one going and to show pride of ownership takes work and dedication, to simply buy one is easy. The neglected old cars show who has gotten in too deep.
  • steverstever YooperlandPosts: 40,153
    edited November 2011
    We have food stamps - why not "Car Stamps"?

    "About 1 in 4 needy U.S. families do not have a car, according to the Annie E. Casey Foundation. That's a serious handicap for the millions of Americans who don't have access to robust mass transit.

    A nationwide survey of 353 people who bought cars with help from a nonprofit group called Ways to Work found that 72% reported an increase in income. Of those who were on public assistance when they acquired a car, 87% were no longer receiving it a few years later.

    It's just a no-brainer that low-income families need cars.

    If anything, the government has hindered the working poor's access to cars. The 2009 Cash-for-Clunkers program, for example, put 690,000 running vehicles in the junkyard, making the used cars that remained more expensive."

    A hard road for the poor in need of cars (LA Times)

    Give everyone a Tata and watch the unemployment rate drop (just think of all the new jobs that would be created for people fixing those rigs ;) ).

    The article seems to think that welfare lasts forever, but most people get cut off after four years since the reform legislation back in the late 90s.

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  • fintailfintail Posts: 33,567
    Or make a cheapo disposable car in the US rather than patronizing one that aids the less than ethical and progressive Indian government...
  • hpmctorquehpmctorque Posts: 4,187
    Great idea for converting welfare recipients into tax payers! By the way, I'll take two tatas.
  • michaellnomichaellno Posts: 4,300
    I read all three parts of that series on BHPH lots - the article cited just looks at the issue from the car-needy point of view.

    The first two parts talked about the business side of the industry - the corporations (like JD Byrider) who have dozens or hundreds of lots across the country, and the financiers on Wall Street who look at the returns these companies are getting and encouraging them to expand even further.

    The one think I took from the articles is that there are quite a number of non-profit organizations whose goal it is to get folks into their own transportation at low or no cost. There was a lady down South who bought a car for $1 so she could get to school to support her two young kids. She is now finishing a Masters in Nursing, is happily married and owes pretty much everything she's obtained to the car she got.
  • steverstever YooperlandPosts: 40,153
    Thinking about how the grocery stores and food industry embraced food stamps, I'd think the car dealers would be all over this. The mouse-houses that resell the same car 6 or 8 times, and charge 18+% interest, not so much.

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  • corvettecorvette United StatesPosts: 4,086
    "...according to the Annie E. Casey Foundation."

    It's probably my sick sense of humor, but every time I hear their sponsorship on NPR and the blurb about helping children, I think their name is the Casey Anthony Foundation.
  • steverstever YooperlandPosts: 40,153
    I had to go look that up. But that's okay, I don't know who Annie E. Casey is/was either.

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  • graphicguygraphicguy SW OhioPosts: 7,137
    Not sure what it's like getting a car loan these days. I know a couple of years ago, I kept reading that no one was offering leases because of the collapse of GM and Chrysler. Not sure about loans, either. If financial institutions are really tightening the reins, those who are trying to get a Benz on a Corolla income maybe SOL.
  • robr2robr2 BostonPosts: 7,761
    I had to go look that up. But that's okay, I don't know who Annie E. Casey is/was either.

    Annie E. Casey was the mother of Jim Casey who founded UPS. He had no children and started a foundation in his mother's honor (a widow in the 1890's/1900's raising 4 children).

    According to aecf.org:

    "The primary mission of the Foundation is to foster public policies, human-service reforms, and community supports that more effectively meet the needs of today’s vulnerable children and families. In pursuit of this goal, the Foundation makes grants that help states, cities and neighborhoods fashion more innovative, cost-effective responses to these needs."
  • steverstever YooperlandPosts: 40,153
    There you go - need to get a truck guy to get cars into the hands of the working poor.

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  • My other half took delivery of the new KIA Sportage top 3 spec with Satnav & the 'rest'.

    Our thoughts were around getting 'everything' we wanted, rather than what we needed. However, we did spend half an hour on the motorway, trying to get the cruise control to work. So far, it still does NOT work!

    While Matin played with the 'switches & knobs', I had my head lost in the driver's manual which genuinely is bigger than the local telephone directory!

    When KIA delivered the car, it was a case of 'here's your spare, here's your ignition, here's the lever to fill up, here are your keys, enjoy your car!'

    Oh, and don't forget, 'press this switch to fold your mirrors!'

    Yeah, so maybe buying the top spec was not such a good idea if we can't even get the cruise control to work!

    Will chat with KIA on Monday - no way for us to know if the cruise control simply does not work, or if it is so complicated to set it, that you need instructions on the windscreen!

    Will keep you informed on how things work out!
  • qbrozenqbrozen Posts: 17,206
    It's not that I can't "afford" my cars, but I do feel somewhat guilty that I blow so much money on them. Granted, my primary car cost all of $15k, but I do have 2 others to supplement. Add in my wife's T&C and 25-year-old Benz and we have a bit over $50k tied up in these vehicles and depreciating every day (some more than others). BUT, on the other hand, that's an average of $10k per vehicle. So it all depends on how you look at it.

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • andre1969andre1969 Posts: 21,902
    It's not that I can't "afford" my cars, but I do feel somewhat guilty that I blow so much money on them.

    Same here, and I'm finding that the older I get, the more adverse I am to spending large amounts of money on cars. Psychologically, it feels like the $7500 I spent to buy my Park Ave two years ago "hurt" more than the $22K that my Intrepid cost me, twelve years ago!
  • michaellnomichaellno Posts: 4,300
    Psychologically, it feels like the $7500 I spent to buy my Park Ave two years ago "hurt" more than the $22K that my Intrepid cost me, twelve years ago!

    Yeah, but didn't you make payments on the 'Trep ($347.xx) and wrote one big check for the PA?

    I'm guessing that if you decide to sell the PA to the roommate, dump the Silverado and get a newer DD you'll make payments, since everything you've been looking at has been between $15-25K.
  • fezofezo Posts: 9,328
    I think this is part of the aging process. I thought little of the $400 a month payment on the Windstall but now dislike going over $300 a month on a car when I have more money.
  • andre1969andre1969 Posts: 21,902
    Yeah, but didn't you make payments on the 'Trep ($347.xx) and wrote one big check for the PA?

    Yep, the Trep was $2000 down and $347.66 (that number will probably stick in my mind for life) for 60 months. I was also able to psyche myself into justifying the Intrepid. I had just refinanced my mortgage a few months before, saving around $200 per month. And I estimated that, compared to the '89 Gran Fury police guzzler I had been driving, the Trep would save around $125-150 per month in fuel. So, right there, that just about covers the monthly payment. Of course, there were other factors, such as insurance on the Trep, and the fact that while the mortgage was ~$200/mo cheaper, that was also ~$200/mo less that I could write off on my taxes.

    I was also still delivering pizzas back then, and in a good week, would make roughly that monthly payment. And I had the option to pick up more nights if I really needed to.

    So, in the overall scheme of things, the Intrepid really didn't affect my monthly expenses, other than the initial hiccup of the $20000 down payment.

    I'm guessing that if you decide to sell the PA to the roommate, dump the Silverado and get a newer DD you'll make payments, since everything you've been looking at has been between $15-25K.

    Yeah, and I'm still procrastinating on that. I really don't want to get back into monthly payments. Plus, my automotive tastes have been all over the map lately. Heck, my most recent fixation is a 2006-2007 Lucerne V-8...even though initially one criteria was that whatever new car I get has to get better fuel economy than the Park Ave!
  • fintailfintail Posts: 33,567
    I'm that way. Even in 2006 when I bought my current car, I didn't really wince when I put the money down and made the first payment. But the final payment 4 years later had me never wanting that monthly liability again. I passed the big 3-0 right around the time I bought the car, maybe that did it.
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