04-11-2022, 11:49 AM | #45 | |
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04-11-2022, 12:31 PM | #46 | |
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04-11-2022, 01:19 PM | #47 | |
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Seems like we may be on a different place and I don't mean to offend in any way. Tough to understand financial decisions through forums lol. I am 30 and have spend majority of my adult life working on a career and even got my wife in it. So both of us are well established with work. On another note our monthly expenses are probably around 20% of our income. That includes her 2021 Jetta lease As well. My brother has 3 kids so i have hand me downs as well as eager grandparents ready to baby sit lol. I am very grateful and fortunate. Most things in my life are well planned including children. My choices to this point were relatively smart which is why a decision to buy a 100k suv hurts the soul. Not because its difficult to afford but because it is unnecessary.
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2022 BMW X3M - 11.604 @117.96
Gone But not forgotten 2008 BMW 135 - 10.9 @ 131 2016 BMW X6 |
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04-11-2022, 01:47 PM | #48 | ||
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04-11-2022, 02:13 PM | #49 | |
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I actually own my APT out right. I got a deal about 7 years ago from a guy who was unfortunately terminally ill. 2bedroom. Personally living in nyc I enjoy the APT life. Its a great apt community with a park and all kinds of things so im kinda set for living. I also have my family home that I airbnb for my mom close to me as well. I was looking into getting multi family home a year ago but the properties that i saw were all shit. Another reason i decided to get a car instead. Just want to get something that puts a smile on my face every morning.
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04-11-2022, 02:26 PM | #50 | |
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My financing plan for the X3MC is $45k cash + $50k 401k loan. I'm looking at it as a 4 year bond that pays out at 4.5%/yr with zero default risk. Such a bond seems like a good investment in the current market where bonds are crashing. I'm nearly 100% invested in equities for that reason. My pre-tax 401k contributions are easily max'ed on my income, so this strategy allocates some of my after tax contributions as 401k loan interest. I have around $200k in cash. This is mostly proceeds from my house sale in 2016, when I moved in with my wife (now separated). Had I kept the house, I'd be sitting on $800k in equity. That hurts. My monthly cash flow can handle the 401k loan repayment, especially if I can down-size my current house rental at $3400/mo. About half of my take-home pay goes into rent. It was about the right size for two people, but too big for just me. Finding a house with a 2-car garage for less right now is an impossible task in my area. Honestly, I have no idea how people who make significantly less than I make can survive in the Bay Area. The cost of living is outrageous. An area where someone making $150k+ must live frugally. I'd love to buy another home, but prices are in a bubble right now. I'm waiting for the crash, having been waiting for that crash for 6 years. With mortgage interest rates doubling, and on there way to tripling, I don't see how the current pricing can be sustained. A 25-50% correction seems inevitable, depending on how hard a recession hits the economy over the next 2 years. Because I intend to buy another home when I sold in 2016, I hadn't invested the $200k. Obviously in hindsight, I wish I had. My wife came from the mid-west and she couldn't get past the California house prices. We never could agree on what to do, hence the separation. We have no children. I plan to invest the half of the remaining $70k in equities. I have my eye on SPYD ETF, SPDRŽ Portfolio S&P 500 High Dividend ETF. I'm bullish on equities simply because there's no where else to put your money. Haven't drank the Crypto cool-aide. I'm almost 40, been working since I was 14, saver and never a big spender. My wife and I spent a lot of our disposable income on travel, which was fun (no regrets), but I don't think I'll be doing as much while single. If I'm ever going to enjoy the fine things in life, I'd better start now. Expect the X3M to retain half of its value over 5 years. When you look at that way, the cost is around $10-12k per year, which I can afford. When I was in my early 20s, I lusted after a 3-series BMW (couldn't afford an M3). Now I can. I mountain bike, hike, and ski, so the X3M makes more sense for my lifestyle. Last edited by SearsTurnSix; 04-11-2022 at 02:35 PM.. |
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04-11-2022, 03:05 PM | #51 | |
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You have definitely put some thought into this. The 401K loan to buy a car is something I cannot recall anyone I know doing. I am not saying that it is wrong I simply haven't run across anyone who has done it that way. But if you are comfortable with that, by all means, go for it! It would be hypocritical of me to advise strongly against it because, well, I have 2 X4M's depreciating in my garage right now. Ha. |
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04-11-2022, 03:35 PM | #52 | |
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Essentially, you can use your 401k balance as a bank to take out a loan up to $50k. It must be repaid in 5 years and you must pay yourself interest. Currently the interest rate is 4.5%, it's something like PAR+1%. If you do not repay the loan on time, you must pay the IRS early withdraw penalties of 20% plus income tax. If you're going to do this, you better have the ability to cover the loan in full at a moments notice. No financial planner would advise you take out a loan against your 401k to purchase a car, nor would I unless your income and 401k balance is relatively large and well on track with your retirement investment goal. The interest I'll be paying myself is after-tax dollars that I would have been contributing toward my 401k anyway. Essentially, the only "opportunity cost" I am potentially missing out on is any positive returns that could be accrued from the loaned funds. However, the funds I am taking out as part of the loan is normally invested in bonds which I am betting will have a negative total return over the next several years. Taking out a car loan would actually be a more aggressive strategy, because it would allow one to invest the car loan funds in the stock market and make a return on them. There is a risk that those funds could lose value if the market crashes during the loan repayment. That makes it more risky. The same argument can be made for the 401k loaned funds and any equity investment made on cash on hand. However, these are investments I would have made even if I hadn't purchased a car. If the investments return 4-5% dividends over the loan period these returns would cover the interest I'm paying myself. Capital appreciation would be a cherry on top. I'll be happy with no net change in capital value. |
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