Interest rate slaughter

SauRoNZA said:
For sure. Like we already established we can't see into your life or your finances.

It's all relative.

On one hand hindsight being 20/20 I think back to what if I didn't buy that first bike and invested the money instead where would I be ten years on with that cash, not quite retiring but certainly sitting with a chunk of change.

At the same time if I didn't buy it I would have missed out on a great many experiences that ultimately made me the person I am today.

It was just a statement to make you think twice. If your conclusion was that it's still affordable to you and that you aren't overspending or buying emotionally then it did exactly what it was meant to do.

Most young people don't even have these conversations online and simply take the first deal thrown at them, so you've already won, over most people, in that regard.

If I was in your position though I wouldn't look at the 20% I spend on my children as per your example as more money to spend on a car. I would look at it as more money I have free over other people and invest it instead. But that's just me and I'm a Jew like that and we aren't all the same.

But do consider yourself at 40.

Important question though. Have you got medical aid? Have you got an RA or other investments in the region of 15% or more of your salary?

If the answer to both those questions is no, the you shouldn't be buying this car.
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Maybe when I'm older I will think along those lines; right now, no. Think of it this way: I'm spending the 20% on the smile on my face while driving on the N1, cruise on 100km/h, arm on armrest, sunroof open, blasting some tunes on the radio....:D:D

Yes I do have med aid. Depends on what you mean by investments. I'm currently learning photography and spending some money on that. I consider that to be an investment.
 
Well don't wait too long.

Biggest mistake I even made was starting up investments when I was younger. Fortunately my companies forced me into Pension Funds and such so I didn't have to play too much catch up.

Soon you'll find out 100km/h with the sunroof open is also pretty ***. ;)

I can't even go 80km/h without it pissing me off. Next time I'll have a panoramic roof instead of a sunroof rather.

Sunroof adds a nice sense of space to the car but I almost never open it. In fact I only ever tilt it when the car was standing in the sun for a long one and I need to get the air out.
 
Nangi said:
this 10%, 20%, 30% blanket statement cannot be applied without looking at the complete picture.
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Of course there's no such thing as a 10% (or whatever) rule. And of course people have different circumstances.

What I'm really getting at is developing some financial savvy and modulating your tech-lust accordingly. Start looking at nett assets and not just income, and see how your income is spread across the expense lines on your personal P&L and balance sheet. Sure it's nice to have the latest toys and a flashy new car. But loading up on debt to get them NOW eats away your future - after all, debt is really just a way of taking money from your own future, and paying someone else for the time machine.

I can say without fear of contradiction that many first-world South Africans live beyond their means and spend huge amounts of their income servicing debt. That keeps the moneylenders happy. But not the money-borrowers. Getting into the debt-treadmill can severely cramp your life and cause much misery - just look at the wan faces and bent frames of so many. It's particularly sad when young people in the 20s and 30s labour under such burdens. The wreckage money stress causes is immense - poisoned relationships, wrecked families, cramped lives.

It's a generalisation I know, but I've seen it a zillion times ... young person in a new job, filled with enthusiasm, keen to get going with life and get ahead. They run the numbers and quickly see they can make the monthly payments on that auto with the metallic duco. Three months later the new car is glistening in the sun (too junior to get undercover parking), the hottest cellphone beeps all day ... new sound system in the new flat with a new fridge and microwave. Life is great! I've arrived!

FF a few years. Higher salary leads to new car and stuff. Paying off stuff eats the same % of income. Even though they're earning a lot more, things are tighter than ever. In the performance/salary review I hear them expostulate on the inflation rate, and note the shiny watch, labelled clothing, latest cellphone, and catch the beams off the latest new car parked in the sun. You get my drift.

FF ten years. Living with the third girlfriend to pool and save costs. Can't marry or start a family because they're not yet financially stable (so they tell themselves). To get a roof they still rent someone else's fixed asset. And still the same percentage of income goes in servicing debt. The bank loves them, of course, so they have a VIP account and a personal banker, and they really love the service from the bank, which is always willing to advance a little more from their future. But scratch a little and you find they're still awaiting the future they've so dreamed about, because five years ago they borrowed all the spare cash today would have given them. Somehow life doesn't quite deliver even though they have a good job, lots of stuff, and all that. The eyes don't shine as much. And so it rolls on.

So often the entry into the treadmill of wage slavery working for the banks starts with the first new car that you just can't resist. They know that, which is why they're so keen to lend you the money.

It can be very different.
 
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100% with your Arthur.

Bottom line is people only look at the monthly income and the installments subtracted from that.

They don't work out the interest and see what that car is really costing them.

Often they also completely disregard insurance and maintenance costs and then neglect the shiny car because they can't afford it.

End result the car is worth even less when they inevitably upgrade to the next shiny toy five years down because "this car is unreliable" or this car "costs too much".

Or my all time favourite. "I'm buying a new car to safe petrol". Because a whopping 1l/100km is in their mind a saving while they ignore the monthly installment they need to start paying all over again after just finishing up the previous car.
 
The older guys always go on about how they should have done things differently, how they wish they could go back. My young mind says regret nothing. You live once. Not saying screw your life up and get an S3 sedan in blue with a 60% balloon.... I might look back a few years from now and think: I should've invested. But should I really have? Would I be happier at 40 because of the ROIs than I am now with this car? All things considered? Maybe, maybe not. Who knows. 40 is 17 years away... I guess time will tell...

Or is it just a matter of financial security? Does financial security make you happy? Or do nice things make you happy?

On that note, can anyone really be called stupid for using the debt available to them? We are here talking about doing the "sensible" thing, but what is that really? Does it not make sense for me to buy an S3 sedan with a guaranteed future value of 60% and simply return it after 3 years? because that would make me extremely happy!

Common sense is not really common is it? My sense is not your sense, and vice versa.
 
Financial security makes you happy. Sure, you don't get the thrill you'd get from a nice car (but you could probably afford said nice car), but the value of sleeping peacefully not worrying about money is never appreciated until it goes out the window.
 
Sinbad said:
Financial security makes you happy. Sure, you don't get the thrill you'd get from a nice car (but you could probably afford said nice car), but the value of sleeping peacefully not worrying about money is never appreciated until it goes out the window.
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People who go for these 60% balloon deals sleep better because there is a BMW in the garage, not because they are debt free... That's my opinion of why people go for those deals...
 
Nangi said:
People who go for these 60% balloon deals sleep better because there is a BMW in the garage, not because they are debt free... That's my opinion of why people go for those deals...
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No, they don't. A BMW doesn't ease your worries. Sure it makes you look successful, but until you've wondered where the money for your next tank of fuel is going to come from, you have no appreciation for the value of financial security.
 
Sinbad said:
No, they don't. A BMW doesn't ease your worries. Sure it makes you look successful, but until you've wondered where the money for your next tank of fuel is going to come from, you have no appreciation for the value of financial security.
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Looking successful is what makes some people sleep better. Some have always wanted to own a BMW/Audi and will do it at all costs, can't judge them for it.

I hope you are not referring to losing my job or a demotion, because that is a different game... I hope to never put myself or my future family in a position where I have spent everything and can't even pour petrol, then I'll know that I've gone too far...
 
Nangi said:
The older guys always go on about how they should have done things differently, how they wish they could go back. My young mind says regret nothing. You live once. Not saying screw your life up and get an S3 sedan in blue with a 60% balloon.... I might look back a few years from now and think: I should've invested. But should I really have? Would I be happier at 40 because of the ROIs than I am now with this car? All things considered? Maybe, maybe not. Who knows. 40 is 17 years away... I guess time will tell...

Or is it just a matter of financial security? Does financial security make you happy? Or do nice things make you happy?

On that note, can anyone really be called stupid for using the debt available to them? We are here talking about doing the "sensible" thing, but what is that really? Does it not make sense for me to buy an S3 sedan with a guaranteed future value of 60% and simply return it after 3 years? because that would make me extremely happy!

Common sense is not really common is it? My sense is not your sense, and vice versa.
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I'll put it in perspective for you.

R2500 per month at 10% in 17 years is just shy of R1300000 (1.3 million).

Chances are you are paying double that for this car if not more than double.

So if you bought something that costs r2500 per month instead and infested the other R2500 you would have a decent car and a massive chunk or change to buy a house with in 17 years.

And no I thought exactly like this when I was 21, just wish I was more extreme about it.

This YOLO **** is going to **** up a whole lot of people and the rest of us are going to have to foot the bill in thirty to forty years.
 
Nangi said:
Looking successful is what makes some people sleep better. Some have always wanted to own a BMW/Audi and will do it at all costs, can't judge them for it.

I hope you are not referring to losing my job or a demotion, because that is a different game... I hope to never put myself or my future family in a position where I have spent everything and can't even pour petrol, then I'll know that I've gone too far...
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NONONO not referring to you personally at all. (But have been in that position, fortunately I had enough saved up to survive).
I refuse to believe that owning a BMW confers financial security. People who think like that haven't actually grown up yet IMHO
 
SauRoNZA said:
I'll put it in perspective for you.

R2500 per month at 10% in 17 years is just shy of R1300000 (1.3 million).

Chances are you are paying double that for this car if not more than double.

So if you bought something that costs r2500 per month instead and infested the other R2500 you would have a decent car and a massive chunk or change to buy a house with in 17 years.

And no I thought exactly like this when I was 21, just wish I was more extreme about it.

This YOLO **** is going to **** up a whole lot of people and the rest of us are going to have to foot the bill in thirty to forty years.
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Which investment would give me 10%? And what do you propose I drive for the next 17 years?
 
Nangi said:
Looking successful is what makes some people sleep better. Some have always wanted to own a BMW/Audi and will do it at all costs, can't judge them for it.

I hope you are not referring to losing my job or a demotion, because that is a different game... I hope to never put myself or my future family in a position where I have spent everything and can't even pour petrol, then I'll know that I've gone too far...
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You prepare for the worst.

Imagine you lose your job with that expensive car, it means you can either give it back and get blacklisted or you can maybe make one payment before you get blacklisted anyway.

Or if you had a car the that a smaller installment or was paid for you could possibly float yourself for a few months off your savings while looking for a job.

I know for a fact I wouldn't want the added stress of a fancy BMW if I lost my job.

But we've already clarified you are all YOLO so this conversation is futile.

Come back in ten years and tell us how you should have never bought that car.
 
Nangi said:
Which investment would give me 10%? And what do you propose I drive for the next 17 years?
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Drive that Clio for another five. It's at least a fully featured car unlike my Corsa Lite which has no creature comforts.

Many investments will average out above 10%. It was a conservative value. My RA has done between 16 and 18% the last three four years.
 
SauRoNZA said:
You prepare for the worst.

Imagine you lose your job with that expensive car, it means you can either give it back and get blacklisted or you can maybe make one payment before you get blacklisted anyway.

Or if you had a car the that a smaller installment or was paid for you could possibly float yourself for a few months off your savings while looking for a job.

I know for a fact I wouldn't want the added stress of a fancy BMW if I lost my job.

But we've already clarified you are all YOLO so this conversation is futile.

Come back in ten years and tell us how you should have never bought that car.
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I'm actually far from that, I just believe in the balance that I'm in right now.
 
To each their own.

Ultimately we all need to live and learn from our own experience and there's no one single answer.
 
If you save all your money and live like a total chump I find you just as stupid as someone that saves nothing and goes deep into debt. Enjoy your life, and spend responsibly. If he can afford it, let him have his gadgets.
 
I personally would have kept the Clio for a few more years (maybe even one if you really hate it??)... They aren't bad cars. Or I would have gone for a 2010 Polo or similar in that case... Essentially the same car but older and has mileage but best of all, the major depreciation has already happened! :)
 
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