John A. Weeks III wrote:
> In article <2rfKj.884$V14.762@[EMAIL PROTECTED]
>,
> Mark Bole <makbo@[EMAIL PROTECTED]
> wrote:
[...]
> Car loans are not a wealth building strategy. [...]
Agreed.
> Rather, you missed the point. [...]
> If they had bought a house instead, then they would have had something
> of value when they were done paying for it. Again, in my book, shelter
> is a requirement, cars are toys, so take care of the shelter first,
> then buy toys if you have leftover money.
For some, a car *is* the shelter of last resort.
> [...] If
> anything bad happens to them, they lose pretty much everything.
> And with our current economic situation, bad things are happening
> at ever increasing rates.
I agree with your message about living within one's means.
I don't agree that new cars are ready for the junk heap in five years,
or that taking money out of an IRA automatically costs 50%, especially
if used for a down payment on a first home.
A non-trivial number of people have a lot of debt and still manage to go
out and enjoy the sun****ne every few days... they haven't lost everything.
From a financial planning viewpoint, I argue that under the right
circumstances, it can be wise to take negative mortgage amortization,
reduce a 401k matching contribution, buy a used car on credit, and so
on. It really depends on individual circumstances and tolerance for risk.
-Mark Bole
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