The Titan has been parked!

[helomech]

Originally Posted by rtc1184

i have been putting 10% in my 401k for the past 5 yrs. i am only 24, but i have a best friend who is 30 and he helps me out finacially alot(savings, investment, planning, ect.) so for my age im in a crunch sometimes, but in the long run it will(or atleast some) help out with my retirement.

You got started before me, if you keep it up you will have a nice nest egg when you are ready to retire. I was putting in 12%, and my employer was matching 6%. Keep it up, and don't worry about the ups and downs. You have time on your hands, and it the market will recover.

[arcitech1]

I just found a better job and got a great pay raise!! The Titan will ride!!!!

[HudsonValleyTitan]

Originally Posted by rtc1184

well it is hard, i left home at 17 with the intentions of being able to take care of myself and have done so in many different ways. i have a degree in radiology, but i currently work in the oil field cause of the money. i make enough to get by and then a little here and there. i am just thrilled when i see other people my age trying to make for themselves instead of mommy and daddy's money. you will never appreciate what you have no matter how big or small if you dont have to work your tail off for it. i dont have alot but what i do have is all mine, bought and paid for by myself. once again that is what makes forums like this one a great thing is when people dont gripe or be biast to one thing or another and help fellow americans out so maybe they dont have to go through the same trials and tribulations that they went through. people can have different opinions and both of the opinions be right. like i have always heard and said myself, "different strokes for different fokes."

With that attitude, you'll be just fine. You sound like a smart guy who knows you have to work for what you have. It is hard, but it pays off in the end. I've always put 16% into my 401k and my company matches about half of that. DON'T TOUCH IT! I can retire within the next 5 years but probably won't yet because,,,heh, what the hell else am I gonna do....lol. But I can well afford to.

[rtc1184]

Originally Posted by HudsonValleyTitan

With that attitude, you'll be just fine. You sound like a smart guy who knows you have to work for what you have. It is hard, but it pays off in the end. I've always put 16% into my 401k and my company matches about half of that. DON'T TOUCH IT! I can retire within the next 5 years but probably won't yet because,,,heh, what the hell else am I gonna do....lol. But I can well afford to.

well thank you hudson. the company i am with match 5% penny for penny so with the 10% i put in they match my first 5, so it isnt that bad of a deal. but back on the subject of titans being parked. mine still rolls up and down the road on a regular basis for the time being. i have though cut out any excessive driving. if i dont have to drive there i wont. started calling more or paying bills over the internet to cut back on some of the gas cost

[PRJ]

Originally Posted by Pops

Actually, it's money and I'm just really interested in seeing what others are doing, especially everytime I see one of these threads come up. I've seen a few people trading their Titans in for Altimas and am curious what the rest of us are going to do.

The trick is to not live beyond your means. That way you don't have to re-finance 3 cars into your mortgage and pay for them for the next 25 years just to make ends meet or have more cash available monthly.

[Pops]

Originally Posted by PRJ

The trick is to not live beyond your means. That way you don't have to re-finance 3 cars into your mortgage and pay for them for the next 25 years just to make ends meet or have more cash available monthly.

Sorry but a year without my hunting trips is a year that's too dreadful to think about.

[HudsonValleyTitan]

Originally Posted by Pops

Sorry but a year without my hunting trips is a year that's too dreadful to think about.

LOL....NOOOOOOOOOOO say it aint so! I hear ya.

[Justintoxicated]

Must be nice to be able to put so much into your 401k. 8% here and I can't afford to put in more. Then again my 401k has taken a 12% hit since december anyways. As for the math in the post on the previous page, figure buying a car that gets 3x the gas mileage as the titan, driving 20k a year and $5 a gallon (which is what it will cost this summer sincwe it's already at $4 a gallon) and you will notice that a nice used $5k car will pay itself off considerably fast. I would estimate a savings of about $400 or more a month in gas for me...

Also you have to look at your financing not just interest etc. Gas = $800 a month Truck = $450 a month so a car would be paying for itself in fuel savings anyways despite if I get a ****y interest rate on it or not.

[honeykeeper]

Originally Posted by TriKKy

I'm not judging here, but for the life of me I can't understand living 0.9 miles (and to some extent 2.5 miles) from work and taking a truck in. I would walk or bike. I'm relocating to Cincinnati and I am going to live 2 blocks from work happily.

Pops, the only thing I can see where people are having an issue with the plan is that you are going to be paying for an asset way way way after it is used up. It sounds bad, and I likely wouldn't do it, however, I wonder how many of these people have taken a vacation or bought 1-time things with a very short useful life and then used their credit cards to finance it.

As far as vehicles go, I just fail to see the economics of it all. I've maintained for a while that if fuel prices as they are today have gotten you into so much trouble that you have to ditch the truck, then it might not have been a prudent purchase to being with. However, I do understand people wanting to save money but what has yet to make sense to me is how buying a $15,000 vehicle will benefit people who are trying to save gas (the MSRP of the cheapest HHR is $17K). For one thing, it will take a while to save $15k in gas. For another thing, unless you buy the vehicle outright, you are paying interest on a loan and you wouldn't have to pay for gas. Lastly, if all you did was put the money in an account earning 3% interest per year you would be even better off.

In the first post colding got 30.75mpg, great. Let's say on a similar highway run (since it had to be highway as the HHR is rated at 21/30) the Titan will get 14mpg. That difference is 16.75mpg. Let's assume the average person drives 15,000 miles per year. So, you use an extra 15,000/16.75 = 895.5 gallons of fuel per year. Let's assume gas is $4/gallon. Then you are saving $3,582 per year as a maximum ($4/gal of gas, and all highway driving...once city comes into the picture it's less). If the HHR was purchased new, then it would take roughly 5 years for this transaction to payoff. Clearly, the benefits are greater the more your drive and the more expensive gas gets. This doesn't even take into account financing (if any) which can easily add another year or two to this calculation.

I'm not yelling at colding or calling him an idiot, I am just using his case as a general example and for him it might make sense, I don't know. But as a general observation I think people have been too quick to jump. Buying a used car has other pitfalls such as not lasting as long or needing repair work.

The cheapest car you will ever get is the one you already own. Buying a second one, to me, seems insane unless there are some very compelling reasons.

Makes sense to me!......I'm lucky I can use my girlfriends 93 Accord anytime I want and it gets 34 MPG @ 60-65 MPH.....I also tested a Ridgeline and it makes a lot of sense, can pull all the weight I need, is comfortable, true 4WD when needed, gets better MPG's and I LOVE the two way tailgate!.

[Pops]

Originally Posted by PRJ

The trick is to not live beyond your means. That way you don't have to re-finance 3 cars into your mortgage and pay for them for the next 25 years just to make ends meet or have more cash available monthly.

Here's what I'm doing in a nutshell with ballparked numbers, you guys have been just assuming that I've been living beyond my means.

My goal was originally to lower my payments but as I statrted looking into it, I can lower my intrest and raise my risidual and use the difference to payoff some bills. Right now, I'm paying about $2000/mo in House payments on a 6.25% 30yr mortgage that I signed on 5yrs ago so I have 25years left. The intrest rate I can get now is 5.75% so if I lower the intrest with keeping $2000/mo for 25yrs, that gives me about $34,000 after closing+taxes to pay a couple cars off with. Here was my rough draft thinking:

$2000/mo x 25yrs = $720,000

6.25% = $450,000-intrest $270,000-Principle

5.75% = $414,000-intrest $306,000-Principle

That's $36,000 difference. I think the Closing+Tax runs somewhere around $2k but I'm not up to speed on that part, but I'm pretty sure I'd still have over $30k difference when all said and done.

So basically, I'd keep my existing monthly bill but move some of the $$$ being paid into intrest over into usable funds. $30k over 30yrs only comes to about $100/mo savings on payments and since wifey did decide to quit working, I'd rather get out from under at least 2 - $400/mo car payments (totalling $800/mo for the next 3 years) than worry about saving $100/mo over 30yrs.

[TriKKy]

Originally Posted by Pops

Here's what I'm doing in a nutshell with ballparked numbers, you guys have been just assuming that I've been living beyond my means.

My goal was originally to lower my payments but as I statrted looking into it, I can lower my intrest and raise my risidual and use the difference to payoff some bills. Right now, I'm paying about $2000/mo in House payments on a 6.25% 30yr mortgage that I signed on 5yrs ago so I have 25years left. The intrest rate I can get now is 5.75% so if I lower the intrest with keeping $2000/mo for 25yrs, that gives me about $34,000 after closing+taxes to pay a couple cars off with. Here was my rough draft thinking:

$2000/mo x 25yrs = $720,000

6.25% = $450,000-intrest $270,000-Principle

5.75% = $414,000-intrest $306,000-Principle

That's $36,000 difference. I think the Closing+Tax runs somewhere around $2k but I'm not up to speed on that part, but I'm pretty sure I'd still have over $30k difference when all said and done.

So basically, I'd keep my existing monthly bill but move some of the $$$ being paid into intrest over into usable funds. $30k over 30yrs only comes to about $100/mo savings on payments and since wifey did decide to quit working, I'd rather get out from under at least 2 - $400/mo car payments (totalling $800/mo for the next 3 years) than worry about saving $100/mo over 30yrs.

Pops, not getting down on you or saying anything about your spending habits. The difference you need to pay attention to is the fact that even at a higher interest rate on a normal auto loan, let's say 10%, you are still likely going to pay less in interest over the life of the auto loan (unless it's really high) than you are going to pay in interest on the "auto-loan" part of your mortgage.

Here are some rough numbers:

Let's say you have a high interest payment on your car, which would make this a "best" case situation for wanting to move to a lower interest payment. Let's use 10% and you financed $20,000 for 5 years.

Your monthly payment would be $424.94 and you would end up paying $5,496.45 in interest over the life of the loan.

Now, let's say you roll that same $20,000 into your house payment at 5.75% for 25 years.

Your monthly payment on the car portion of your loan is $125.82
Your total payments will be $37,746.38 and you will pay $17,746.38 IN INTEREST on a $20,000 vehicle.

Put another way, this transaction would only really make sense if the interest rates you were paying on your car loans (over 5 years) is a whopping 28.5%.

Technically speaking, this isn't correct either, since there is a time value of money. So the difference between the car loan and rolling it into the house isn't quite as large as $17.7K minus $5.5K since future payments are worth less than current payments. However, you are still paying substantially more in "today's dollars" in interest if you roll them in (at least double the 10%/5year car loan's interest). What's more is that your $34,000 suffers the same fate. You are not saving $34,000 in real terms, only nominal terms. In other words, that $34,000 is saved over the entire life of the loan but the benefit of the monthly savings is substantially lower in the later part of the loan because that money will be worth "much less." For every dollar you save in year 25, it is only worth $0.48 in "today's dollars" assuming an inflation rate of 3%. In year 20, every dollar is $0.55. Year 15, $0.64. Even in year 10, it's only $0.744. Your $34,000 is roughly $113.33 per month which using inflation at 3% makes it worth $23,898.63 today.

The difference (read loss) only gets "worse" if you are paying a lower rate on your car loan, have a higher principal, or if the loan is for a shorter period. In my opinion, from what you have told us, the numbers just don't work for what you want to do. You are losing money by doing this, a lot of money.

[joeinstl]

I traded in my Titan last weekend for an Altima 2.5s. To be completely honest, the Titan was way more truck than I needed. I don't tow anything, just use the bed to haul stuff from time to time. I figured I better get rid of it while I still could. To my surprise the dealer gave me $16,000 for my truck (owed 14,800 on it) and a good deal on the Altima. So it was a no brainer for me.

Pros: Saving $85/month on payment, saving over $150/month on gas

Cons: No more big bad *** truck that gives me a great view over the tops of other vehicles. No more hauling stuff whenever I please

Overall I'm very happy with my decision because I don't see gas going anywhere but up.

[Pops]

Originally Posted by TriKKy

Pops, not getting down on you or saying anything about your spending habits. The difference you need to pay attention to is the fact that even at a higher interest rate on a normal auto loan, let's say 10%, you are still likely going to pay less in interest over the life of the auto loan (unless it's really high) than you are going to pay in interest on the "auto-loan" part of your mortgage. .....

Right, but that's partly assuming that I'll be carrying this mortgage to full term which I'm not. In 5 years, my house has appreciated $110k (just got the appraisal in this morning) and the neighborhood is only 60% developed. My plan here is to build a smaller house and sell this one after the kids are grown and moved out. By then, the neighborhood should be very close to completion and the appreciation should be enough to be able to build smaller on some small acerage further out with financing $50k or so at the most. With the current numbers, I could do it now and reduce the mortgage amount at least 50% but I want the kids to finish school first. There's no question that you're right about spending more for the auto intrest in the long run, but I just wanted to consolidate our current monthly spendings since it's obvious to me now that wifey wants to continue to stay at home. With appreciation combined with equity, my plan is to have about $450k-$500k to build a new place with when the kids are grown. The nice thing about living here is that alot of new homes run about $110-$120/sqft so a 2600sqft home costs less than $300k.

Y'all's replies definitely have me rethinking things but I'm still thinking this is what I'm going to do.

[TriKKy]

Originally Posted by Pops

Right, but that's partly assuming that I'll be carrying this mortgage to full term which I'm not. In 5 years, my house has appreciated $110k (just got the appraisal in this morning) and the neighborhood is only 60% developed. My plan here is to build a smaller house and sell this one after the kids are grown and moved out. By then, the neighborhood should be very close to completion and the appreciation should be enough to be able to build smaller on some small acerage further out with financing $50k or so at the most. With the current numbers, I could do it now and reduce the mortgage amount at least 50% but I want the kids to finish school first. There's no question that you're right about spending more for the auto intrest in the long run, but I just wanted to consolidate our current monthly spendings since it's obvious to me now that wifey wants to continue to stay at home. With appreciation combined with equity, my plan is to have about $450k-$500k to build a new place with when the kids are grown. The nice thing about living here is that alot of new homes run about $110-$120/sqft so a 2600sqft home costs less than $300k.

Y'all's replies definitely have me rethinking things but I'm still thinking this is what I'm going to do.

So you are basically planning to pay off the cars from the profits from selling the house while keeping a lower interest payment until you sell the house. This makes perfect sense as long as you really can sell it for what you think you can in the time frame you are thinking and you don't get comfortable in your house and decide to stay. If you stay too long or if things don't work out this would be a bad deal.

Keep this in mind (since I don't know how old your kids are).

Using the math above, the present value of your interest payments on the 5 year, 10% loan is roughly $5150. Interestingly enough, by the end of the 6th year of rolling the car into your mortgage, you will have made interest payments on that part of the loan of roughly $5870 in today's dollars. What you should take home from that is that if you are staying longer than 5 years it really will not pay for you to do it. The reason there isn't much difference between the two is that these types loans are pre-loaded with interest payments, it's only during the later part of the loans where you are paying off the principal.

Here's the running total for the interest payments in the house loan.

Year /Present Value of all interest payments
1 1107.15
2 2161.49
3 3163.98
4 4115.53
5 5017.01
6 5869.26
7 6673.05
8 7429.14
9 8138.22
10 8800.97
11 9418.01
12 9989.91
13 10517.25
14 11002.50
15 11440.25
16 11836.77
17 12190.55
18 12501.92
19 12771.25
20 12998.81
21 13184.87
22 13329.66
23 13433.36
24 13496.13
25 13518.09

If you are there more than 5 years under this scenario, it just doesn't make sense. Furthermore, if you have lower interest payments, higher principals, or shorter terms 5 years is an overstatement. The house appreciation should be irrelevant to your plan to some extent. The only reason the appreciation matters is that you essentially plan on paying off the car loans from the profits. Your house will appreciate the same amount regardless of if you roll in the loans or not and you will be paying off the entire principal remaining on the cars when you sell the house anyway (since you will pocket that much less). You really need to think of the benefit of doing this as getting a slightly lower interest rate for 5 years because as I said, anything more and you are losing money.

[helomech]

I really lucked out, I got a home loan for 29 years at 2.6% interest. It was the only good thing that came from hurricanne Rita, and Katrina. It really doesn't pay for me to pay off my loan early.