Conversation About Savings

[pb4uski]

A SIL is like that. When her old car needed brake pads and tires she traded it in and bought a new car. "The payments are only $15/month more, and that's cheaper than new tires." Talk about "Kentucky math". ....

A few years ago, I met a good friend for lunch. He had a new truck. He was all excited that he traded his old truck and got a new truck and the payments were the same as on the old truck. The way he was crowing it was like he thought he had taken them to the cleaners.

Then I asked him a question.... how many payments did you have left on your old truck? Then I asked another question... how many payments do you have on this new truck? You could literally see the gears turning in his brain as he figured out that he now had a lot more payments than he had before.

Lesson learned. He still has that same truck.

 

[Maenad]

Now I'm even more convinced that the veterinary field is off the rails.

How do you know it was the vet? You seem to be throwing out a lot of unfounded accusations. IME vets will lay out the options - ALL the options - and leave it to the owner to decide. And I've heard from tons of vets who think spending $$$ on pets is ridiculous, for just the reasons we've discussed.

Hell, my vet was hesitant to suggest Rx food for our cat with allergies - granted, the stuff is 3x what our normal food was, but $30/month rather than $10 isn't really a big lever on my budget.

 

[Chuckanut]

P.S. DW paid cash for hers and I put mine on my CC to get cash back, then paid it off.
.

A car dealer let you put the purchase price on your CC?? Was there a charge for that? In my area they don't want to eat the CC costs of that big of a sale.

 

[candrew]

A car dealer let you put the purchase price on your CC?? Was there a charge for that? In my area they don't want to eat the CC costs of that big of a sale.

No sh*t! 6 years ago I tried that same strategy by paying the bill for a new roof on the house using our travel rewards card ($8K). No dice.

 

[REWahoo]

In these parts dealers limit the amount you can put on a card to $3k or less.

 

[Souschef]

A car dealer let you put the purchase price on your CC?? Was there a charge for that? In my area they don't want to eat the CC costs of that big of a sale.

Full disclosure-It was Enterprise Rent a Car, and it was for a 2016 Hyundai Accent with 20 K miles on it. However, DW bought her new Mazda from the dealer and they would only let her put 10K of the total on her CC.

 

[Chuckanut]

Then I asked him a question.... how many payments did you have left on your old truck? Then I asked another question... how many payments do you have on this new truck? You could literally see the gears turning in his brain as he figured out that he now had a lot more payments than he had before.

Lesson learned. He still has that same truck.

My last car had a loan on it only because the interest rate was 0.9% which I figured was going to be less than the inflation rate.

As I entered my last year, I received repeated mailings from the car company telling me that I could replace my now 5 year old car with a brand new one of the same make and model, and lower my payments by about $50 a month. All I needed to do was take out a new 6 year loan.

Your friend is not alone. Nowhere are people like those on this site more desperately needed than in the land of American personal finance.

I now make my loan payments to myself.

 

[pb4uski]

Yeah... I received a similar call where they could put me in a new 2017 for the same payment as on my 2016. I told the sales person that I had 48 payments left and if they could put me into a 2017 for 48 payments of the same amount that he had a deal. He backpedaled quickly and said it would be 60 payments not 48... at which point I told him to lose my phone number and never call me again.

 

[Throwdownmyaceinthehole]

Haha, just today I bought some material to make curtains and put it on my credit card as I do on everything. The check out girl made a comment about how she had heard you could get great refunds and other benefits, but she didn't want to go into debt (good), but when I said just pay it off each month, her mouth dropped open and she looked at me like I was an alien that just dropped out of the sky.

 

[MRG]

Our last neighbors had a new vehicle every couple of years. Expensive, 4x4 pickups and Wranglers. He once bragged about how could they be so stupid to sell him a new vehicle for less $ in monthly payments.

 

[Scrapr]

Yeah... I received a similar call where they could put me in a new 2017 for the same payment as on my 2016. I told the sales person that I had 48 payments left and if they could put me into a 2017 for 48 payments of the same amount that he had a deal. He backpedaled quickly and said it would be 60 payments not 48... at which point I told him to lose my phone number and never call me again.

Mrs Scrapr got a call from the dealer telling her she could get into her new model Rav4 for the same payment as her current Rav4. She led them on and said great! I'll be right down. Dealer then asked what her payment was. She say zero. We paid cash. <back pedaling>

Technically we took out a loan then paid it off a month later. There was some sort of spiff going on

 

[pb4uski]

I'll have to remember that one when they call me on my truck that I had a loan for a couple months but has long been paid off.

 

[Meadbh]

For the first five years after buying my current vehicle I would get letters and phone calls from the dealer every 6 months or so, offering me a chance to trade in for a new vehicle and reduce my monthly car payments. Trouble was, my 0.9% loan had been fully paid off in 36 months. When I asked whether my car payment could be a negative number, the conversation went no further.

 

[DrRoy]

In Southern California, I'm surrounded by them. Many make great salaries. This is an example how they do it:

It's surprisingly easy to end up living paycheck to paycheck when you earn $500,000 a year - Business Insider

That was interesting. They are not trying very hard to be efficient with their $. I never learned of another person around me that had built the NW that I did at the same pay.

 

[Ready]

At my last company I oversaw the 401K program and our participation rate was only at 50% in spite of a generous company match. We tried to encourage higher participation but always heard the same response - we don't have anything left to put away after paying our bills. This was even true of people in their 40's-60's.

So the articles don't surprise me, and the conversations like the OPs don't surprise me. Members on this forum are clearly the outliers.

 

[whatnot]

I also see our co. 401k information. Less than half take advantage of the full match. I have had a couple of staff meetings and had our 401k rep to come and talk to them.
Explain how it will save taxes now, how it can grow and be there when they retire.
One guy in particular makes mid 50k, saves $75 a pay period. But every Monday, he tells us of the dinners out, the concerts, the weekends away, etc. He is paid mid 50's and thinks he can work forever. Oh well.

 

[Sojourner]

A few years ago, I met a good friend for lunch. He had a new truck. He was all excited that he traded his old truck and got a new truck and the payments were the same as on the old truck. The way he was crowing it was like he thought he had taken them to the cleaners.

Then I asked him a question.... how many payments did you have left on your old truck? Then I asked another question... how many payments do you have on this new truck? You could literally see the gears turning in his brain as he figured out that he now had a lot more payments than he had before.

I think this example gets at the heart of a problem that many, many people seem to have. They only look at current spending and not at the longer term big picture. To them, getting rid of an older vehicle that is costing $X/month and replacing it with a new one costing $X/month is financially equivalent, because their monthly spending isn't changing. They don't think about the total cost of this transaction over their lifetime. It's astonishing how rare the ability to think and plan over the long term really is. You see it not only with money, but also with lifestyle and health. All that matters is today, so people keep spending like crazy, right up to the limit, and they keep gobbling up junky fast foods and snacks, keep sitting on the couch watching 6 hours of TV every night, and keep smoking deadly cigarettes by the truckload. Long term consequences are ignored and rarely fully understood. But even if they are understood to some degree, the "live for today and let someone else fix it and take care of me later" mentality is alive and very, very widespread.

 

[Sunset]

In Southern California, I'm surrounded by them. Many make great salaries. This is an example how they do it:

It's surprisingly easy to end up living paycheck to paycheck when you earn $500,000 a year - Business Insider

Somewhat interesting article, yet the author did fail to point out how padded some of the spending was, and that they were really saving for the future:

$36,000 into 401K
Some portion of the $60,000 mortgage is buying equity in home. ( will be 1/2
$7,000 left over.
============
Could consider it over long term that it is a savings of 36+30+7 = $73,000 /yr. (plus any employer portion of 401K)

 

[Pilot2013]

I also see our co. 401k information. Less than half take advantage of the full match.

Our company has a novel, if not somewhat progressive approach to this. The company contribution is not a match, it's a contribution whether our employees contribute themselves or not. Granted, it's only 3% as the "contribution", but everyone gets it.

On top of that, if EPS are over certain amounts, there is additional profit sharing contribution. At $2/share EPS, and additional 3.5% for everyone is put in, again, whether they contribute themselves or not. This max contribution has occurred for the last 6 years.

 

[kgtest]

In Southern California, I'm surrounded by them. Many make great salaries. This is an example how they do it:

It's surprisingly easy to end up living paycheck to paycheck when you earn $500,000 a year - Business Insider

I like the $10k/yr "something always comes Up" line item. Like how many years, year after year, would your budget need to cushion a 10k "something came up" expense?

And the charity is a below the the line deduction, they miscalculated the tax bill with that mistake.

 

[kgtest]

We live in a +55 mobile home park. In August we bought 2 new cars. Fortunately everyone we know is MYOB, and never heard a thing a bout them.
P.S. DW paid cash for hers and I put mine on my CC to get cash back, then paid it off.
DW said this was the first car in her life she did not have payments on.

You can buy a car with a cash back credit card? Say it aint so ?? Freedom, Citi?

 

[RobbieB]

I can still remember my Pops telling me about saving;

"Son you can make a million a year but if you spend a million a year you ain't gonna have crap, so salt some away"

I guess the "spend it all" (and more) set never got this informative lesson or maybe didn't listen?

 

[ExFlyBoy5]

I can still remember my Pops telling me about saving;

"Son you can make a million a year but if you spend a million a year you ain't gonna have crap, so salt some away"

I guess the "spend it all" (and more) set never got this informative lesson or maybe didn't listen?

Reminds me of a friend's DW who LOVES going out and "finding a great deal". She will crow on and on about "I saved X amount of $ when I bought this!" and I recently made a comment to her saying that you aren't SAVING when you are SPENDING. Oddly enough, she doesn't seem to like hanging around me too much anymore.

 

[Souschef]

Reminds me of a friend's DW who LOVES going out and "finding a great deal". She will crow on and on about "I saved X amount of $ when I bought this!" and I recently made a comment to her saying that you aren't SAVING when you are SPENDING. Oddly enough, she doesn't seem to like hanging around me too much anymore.

Now that I am retired, I do most of the grocery shopping. It is one thing to "save" money on apparel,etc, but when I hit the deals at the market, I can save 20% to 50% on stuff we eat
My DW reminds me that when she was a newlywed, she had a "clicker" to add up her purchases. She had a limited budget, and never made it to the end of the store.

 

[palomalou]

When we bought our last house (before the retirement condo we have now) we met with the lender for a small morgage. She asked us the usual questins and told us we could qualify for “anything” . We howled! No wonder people have no savings if they believe the morgage broker/salesman etc.