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How to Afford Anything

kenrockwell.com

111–120 of 121 posts

Re: How to Afford Anything

#111

Earlier quoted context omitted.

This is probably generally true, provided that you reside in the property long enough to recoup the rather high transaction costs. I did the math on purchasing recently and given how long I expect to be in my current area, the math doesn't add up, even assuming relatively low upkeep costs. I'm not sure how long you have to stay somewhere to hit the break even point.

I did the math once and found it was about 7 or 8 years. That can vary quite a bit of course depending on the variables (mostly real estate trends).

There's an excellent "Buy vs. Rent" comparison tool on NYT's website. Looks like I'll be renting for life!

http://www.nytimes.com/interactive/business/buy-rent-calcula...

Re: How to Afford Anything

#112

Earlier quoted context omitted.

> Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying Of course he could. If your rent is paying your landlord's mortgage, you're overpaying. > and (2) he could have invested the difference in some other asset that had a much higher return than appreciation of the condo. Finding an asset with a better than 1% return is not difficult. > If the amoun…

On the "If your rent is paying your landlord's mortgage, you're overpaying" point: sadly, not every market is equal. Over here (Uruguay), rents are way more expensive than an equivalent mortgage... simply put, people (myself included) don't have capital for the down payment (and the mortgage process is expensive in itself, at least U$D 1000 which is not a small sum here), so they don't have an option - it's renting,…

Yes, my comment is very specific to the US.

Re: How to Afford Anything

#113
post #74
post #72

Earlier quoted context omitted.

A lot of people are willing to pay for 'possibilities.' In other words, they derive intangible value by keeping that possibility around, regardless of how often they may actually exercise the option it gives them, if ever. Many people have vacation homes or own boats that they rarely use, and could probably rent (on an as-needed basis) more cheaply, but the value to them is not simply in their actual use of the house…

Sure. These choices are part of what separate the rich from the poor (economically).

Rich people are more likely to have vacation homes. It's unclear that the extra economic cost of that choice explains why they're rich.

Re: How to Afford Anything

#114

Earlier quoted context omitted.

The poverty line in the US is ludicrously low when basic health insurance costs $300-400 a month for the not-fucking-your-life plan, birth control isn't covered, and a gallon of milk costs $5. In Austria, a person doesn't even pay taxes until they earn over 1200 euros a month. Until the whole silly Greek affair, that was the equivalent of $21,000 USD for an individual. And... they still get retirement, maternity leav…

I don't wish to continue this but wanted to point out that the average price for a gallon of milk in the USA is $3.25.

Average, sure. But the federal tax poverty line doesn't vary by state, does it?

When I was leaving MD, after I'd emptied my cabinets of everything, a friend got sick and I wanted to make him cookies. The ingredients for cookies from scratch - a pound of sugar, flour, butter, baking soda, baking powder, 6 eggs, milk, chocolate chips and 1 pack of jell-o vanilla instant pudding mix and one 20 oz bottle of Diet Coke cost me $57.81. At SAFEWAY. Not Whole Foods, Graul's or any fancy store. SAFEWAY.

I still have the receipt, pinned up as a reminder.

Re: How to Afford Anything

#115

Earlier quoted context omitted.

Reminds me of Sun on the Moon by James Taylor: I’ve been talking to a friend of mine He says making money’s just a waste of time He’s a lazy gent, he don’t pay no rent He’s all bent out of shape from living in a tent ... One for a nickel and two for a dime Time may be money but your money won’t buy time

Why won't money buy time? If I had money, I wouldn't have to work and then I would have time.

I don't know about that song, but other one says that "all your money won't another minute buy". And you can't take it with you either.

Re: How to Afford Anything

#116
post #106

His points on older prestige vehicles are true. I own two older BMWs which are in good condition, well kept and maintained. Most casual observers date the cars at 4-5 years old, instead of the actual 10-12 years they are. It is helped that they aren't used for a commute so are able to be kept clean and tidy and mileage low. I have these cars because they are built to a higher standard and are a pleasure to drive and…

Older prestige cars are great, but in my country (Uruguay) they are heavily taxed - you have to pay 2.5% of its calculated value in taxes to the local government, plus a very heavy insurance extra, and maintenance is pretty expensive as well.

Maybe in the US the bigger factor in maintenance is labor rather than parts, so the difference between a better and a cheaper car is not as much? And I understand that government doesn't punish displays of wealth with heavy taxes as much.

Re: How to Afford Anything

#117
post #106

His points on older prestige vehicles are true. I own two older BMWs which are in good condition, well kept and maintained. Most casual observers date the cars at 4-5 years old, instead of the actual 10-12 years they are. It is helped that they aren't used for a commute so are able to be kept clean and tidy and mileage low. I have these cars because they are built to a higher standard and are a pleasure to drive and…

Older prestige cars are great, but in my country (Uruguay) they are heavily taxed - you have to pay 2.5% of its calculated value in taxes to the local government, plus a very heavy insurance extra, and maintenance is pretty expensive as well. Maybe in the US the bigger factor in maintenance is labor rather than parts, so the difference between a better and a cheaper car is not as much? And I understand that governmen…

What, you have to pay extra on a used car? All countries require registration (which is a tax) but to my experience, it's calculated on engine size or other economy/pollution proxy.

In places like the USA, a 10 year old Merecedes is probably worth 10% of it's original purchase price, but if it has been treated well (and continues to be treated well), is probably only 50% through it's useful service life. The sweet spot is probably at about 6 years old and 60,000 miles, when most buyers would stop considering it as an option. Buying them at about that age and keeping for 5-7 years is my advice, if you know how to sort the pearls from the swine.

The big cost for keeping old prestige cars on the road is a combination of parts and labour, but labour is pretty much the same for all cars (assuming you stay away from the dealer). Finding used/cheap parts and/or doing some of the work yourself is the best way.

I don't ever want to live anywhere where 'displays of wealth' are punished. I'm not rich, but I have no beef with people who are.

Re: How to Afford Anything

#118

Earlier quoted context omitted.

Agreed. Better advice would be "stay behind the curve." Right now, if you want a Wii, it's expensive. If you're happy playing Playstation 2, it's cheap. A Wii will be cheap 5 years from now when something cooler is out. Same kind of thing applies to computers.

I use this method of saving on home electronics. Home electronics depreciate at a stunning rate, and by buying "behind the curve" you can find great deals on things you wanted a year ago. This is why I still enjoy, and buy games for, my (refurbished) PlayStation 2 (actually, I still play games on my SNES too). My workstation was dated, so I built a new machine with parts just below top-of-the-line (Core2Quad rather t…

I did the same thing around 6 months ago, except I refined it into 2-phases. I got a Core2Duo E7500 and overclocked it well with a CM Hyper212+ heatsink+fan, for my worskstation.

Spent the money saved on high quality Power supply, case and motherboard.

The next upgrade is a top-of-the-line Core2Quad when local distributors slash prices on those to dump their old stock.

I'm aware there is a trade-off in Electricity consumption Edit: technical typo

Re: How to Afford Anything

#119

What he mentioned about riding a bicycle instead of using a car is a huge win. The money saved is incredible and you cannot put a price on the health benefits.

Ken lives in California. Climate, dress code, public transport availability, security - all are decisive factors when choosing a mode of transportation.

Car is just like another family member in terms of expenditure and long distance commute by car can be a real time sink baring audio books and pod casts.

Re: How to Afford Anything

#120
post #106

His points on older prestige vehicles are true. I own two older BMWs which are in good condition, well kept and maintained. Most casual observers date the cars at 4-5 years old, instead of the actual 10-12 years they are. It is helped that they aren't used for a commute so are able to be kept clean and tidy and mileage low. I have these cars because they are built to a higher standard and are a pleasure to drive and…

This might have been true 20 years ago, but advances in car technology during the recent decade were really fast. Newer cars accross the board have better handling, fuel economy, more creature comforts as standard. Luxuries that existed only on premium models became mainstream.

In terms of safety, the standards have gone up significantly from where they were 10-12 years go.

And even when an old premium car matches new run-of-the-mill vehicle in terms of safety technology, both passive and active safety features detiorate over time: body looses it's rigidy, original air bags unless replaced which is costly are much less likely to work properly after 8 years or so.

Cars heavily rely on electronic and software and becoming as transient as any other gadgets.

My advice:

   - don't buy new, 3-6 year old car is a much better value

   - exclude makes and models that are not routinely sold with 160K miles on a clock.

   - go for a used car with high freeway, motorway, autobahn mileage (ca 20K miles a year), i.e. 60K-100K overall depending on a year. They are cheap and still very reliable.

   - Regardless of car age, don't buy a car made during first 3 years of model production, i.e. before the first major facelift / upgrade. Cars are just like any other product and it takes about 3 years for a "service pack" to be delivered to a market.

   - Another benefit apart from reliability of getting a car towards the end of the model lifecycle is the number of extras you'll be getting for free as standard.

   - Have a clear exit strategy: sell before a major maintenance is due.
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