Is This Truck Purchase a Bad Idea?

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hokiefan4527
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Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

My husband is obsessed with trucks. He is constantly watching YouTube videos about them and looking up trucks for sale. He currently has a 2011 F250 Lariat with 160,000 miles on it. We have 7 rental properties so he uses the truck for those and we just started a home repair business so he will use it for that.

He recently ordered a new truck from Ford. (Almost) his dream truck. He would prefer a diesel and the platinum package but no way would I pay $100,000 for a truck. I think this one is $54,000. His current truck is paid for and he could probably get $25,000 in today's market. He paid $21,000 for it 2 years ago. Since this is his "dream" truck I would expect him to keep and drive it until it won't go anymore. 20+ years.

Financial Summary:

- Both 27 years old with 6 month old baby
- Combined salary income $140,000 annually
- Rental income (gross) $58,000 annually
- Mortgages (rental + personal) $35,000 annually
- I have a 2020 Rav4 with a payment of $400/mo.
- Not had the home repair business long enough to know what the income from that will be
- Cash: $50,000
-HSA: $22,000
-Taxable: $18,000
-Retirement: $215,000
- Real Estate: $792,000
- Total Debt Balance: $469,000
- Credit scores over 800

Summary, does this truck purchase seem like a bad idea given our financial position?
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RickBoglehead
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Re: Is This Truck Purchase a Bad Idea?

Post by RickBoglehead »

If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
smitcat
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Re: Is This Truck Purchase a Bad Idea?

Post by smitcat »

RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
+1 ... if placed under the business its really an easy decision for vehicles with 6,500#+ GVWR. Perhaps consult your tax accountant for a more detailed scenario with your numbers.
Topic Author
hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
sureshoe
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Re: Is This Truck Purchase a Bad Idea?

Post by sureshoe »

It sounds a little bit like you're trying to get us to give you permission to deny your husband a purchase.

You told us the payment on your Rav4, not the loan balance. I'm going to assume around $30k?
If you buy a $50k truck with $25k down, that feels like a better purchase than your Rav4 to be honest.

I feel like $60k+ of vehicle debt is a little high for your income level but not oppressive. The truck would hold value reasonable well. I would consult an accountant, but in most cases you're going to deduct mileage, not the depreciation/cost of the truck (although at that price point maybe it makes sense).

Anyhoo, it seems like you're saving and doing well. If this makes him happy, I would do it. However, I would have a conversation about the expectation of keeping the truck for at least 5-7 years. People say they'll keep a car until the wheels fall off, but in your post, it doesn't seem to be the case.
NHRATA01
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Re: Is This Truck Purchase a Bad Idea?

Post by NHRATA01 »

I actually think it's a pretty reasonable purchase right now. In this market used trucks are holding their value absurdly well, who knows how long that will last. And while you probably won't get as much as a discount from dealers new with inventories being tight, at least the MSRP's have not risen as much accordingly. As long as their is no dealer "markup" on the new one, going from a 10 y/o 160k mile truck to a brand new one for basically 30K isn't a bad deal, particularly since you'll have a warranty and the reliability of the older truck would potentially have an impact on the business. As well as the noted potential business deductions of which I have no experience with.

So no, not a bad idea but it is a good idea you avoided the $80K+ diesel when you're not towing 5th wheels once a week, just to keep up with the diesel Jones's and brag about capabilities you'll never use.
smitcat
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Re: Is This Truck Purchase a Bad Idea?

Post by smitcat »

hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am
RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
FWIW - our new pickups within a business have had a low 'real' cost after taxes and use over many years. Perhaps run this by your accountant for a quick math excercise.

"I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive."
Do what makes sense, do what makes you happy... don't do what has happened in the past for no other reason.
smitcat
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Re: Is This Truck Purchase a Bad Idea?

Post by smitcat »

sureshoe wrote: Thu Jun 17, 2021 9:29 am It sounds a little bit like you're trying to get us to give you permission to deny your husband a purchase.

You told us the payment on your Rav4, not the loan balance. I'm going to assume around $30k?
If you buy a $50k truck with $25k down, that feels like a better purchase than your Rav4 to be honest.

I feel like $60k+ of vehicle debt is a little high for your income level but not oppressive. The truck would hold value reasonable well. I would consult an accountant, but in most cases you're going to deduct mileage, not the depreciation/cost of the truck (although at that price point maybe it makes sense).

Anyhoo, it seems like you're saving and doing well. If this makes him happy, I would do it. However, I would have a conversation about the expectation of keeping the truck for at least 5-7 years. People say they'll keep a car until the wheels fall off, but in your post, it doesn't seem to be the case.
It depends upon the business and many other things but we bought new pickups within the business about every 4 years sonce 2008 and it worked out very well.
Tingting1013
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Re: Is This Truck Purchase a Bad Idea?

Post by Tingting1013 »

hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am
RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
The cost of a vehicle is not the price of the vehicle. When you pay $60k for a truck the money doesn’t just disappear, it turns into 4 wheels sitting in your driveway.

The real question is how much that truck will lose its value over the time that you own it.
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unclescrooge
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Re: Is This Truck Purchase a Bad Idea?

Post by unclescrooge »

hokiefan4527 wrote: Thu Jun 17, 2021 8:49 am... His current truck is paid for and he could probably get $25,000 in today's market. He paid $21,000 for it 2 years ago.
Sell the old truck ASAP.

You're getting 50% more than it's worth.

Tell your husband he can keep the new truck but he owes you a favor, to be cashed in at a future date :mrgreen:
smitcat
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Re: Is This Truck Purchase a Bad Idea?

Post by smitcat »

NHRATA01 wrote: Thu Jun 17, 2021 9:32 am I actually think it's a pretty reasonable purchase right now. In this market used trucks are holding their value absurdly well, who knows how long that will last. And while you probably won't get as much as a discount from dealers new with inventories being tight, at least the MSRP's have not risen as much accordingly. As long as their is no dealer "markup" on the new one, going from a 10 y/o 160k mile truck to a brand new one for basically 30K isn't a bad deal, particularly since you'll have a warranty and the reliability of the older truck would potentially have an impact on the business. As well as the noted potential business deductions of which I have no experience with.

So no, not a bad idea but it is a good idea you avoided the $80K+ diesel when you're not towing 5th wheels once a week, just to keep up with the diesel Jones's and brag about capabilities you'll never use.
Interesting - we paid about $57K for our diesel about 2 years back and we do tow trailers that vary around 10,000#'s.
Topic Author
hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

sureshoe wrote: Thu Jun 17, 2021 9:29 am It sounds a little bit like you're trying to get us to give you permission to deny your husband a purchase.

You told us the payment on your Rav4, not the loan balance. I'm going to assume around $30k?
If you buy a $50k truck with $25k down, that feels like a better purchase than your Rav4 to be honest.

I feel like $60k+ of vehicle debt is a little high for your income level but not oppressive. The truck would hold value reasonable well. I would consult an accountant, but in most cases you're going to deduct mileage, not the depreciation/cost of the truck (although at that price point maybe it makes sense).

Anyhoo, it seems like you're saving and doing well. If this makes him happy, I would do it. However, I would have a conversation about the expectation of keeping the truck for at least 5-7 years. People say they'll keep a car until the wheels fall off, but in your post, it doesn't seem to be the case.
The loan balance on my car is $21,000 at 0% interest.
Initially he was supposed to keep the 2011 Truck until the wheels fell off but he got it in his head that he needed a long bed and 7.3 engine (whatever that means).
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Watty
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Re: Is This Truck Purchase a Bad Idea?

Post by Watty »

hokiefan4527 wrote: Thu Jun 17, 2021 8:49 am He currently has a 2011 F250 Lariat with 160,000 miles on it.
At that milage it the truck could last a lot longer but it is at the point where it will periodically need some repairs each year. With your personal vehicle it is usually not a big deal if it is in the shop a few days each year but when you are depending on it for your business having your truck in the shop will impact your business so it becomes a lot bigger deal.

I am not as familiar with trucks as I am with cars but I would assume that a new truck would have a lot of the new advanced safety features. A 2011 truck might not even have ESC since it was not required until 2012.

One question to consider is if you do not replace it now then how much longer will his current truck last? If he is putting a lot of miles on it each year then you might be doing good if it lasts another five years. At that point it would have very little resale value and the used car market should be back to normal.

If he can get $25K for his current truck now then replacing it now sounds like it makes a lot of sense if he does not have to pay a high premium for the new truck.

A bit over a month ago I did that with my car. I had a three years old car that I could sell for what I paid for it and I was able to find a larger new car that I could still get a good price on. Since then I have noticed that the inventory of the car model that I bought has gotten a lot tighter. If he is going to do this he might want to do it promptly since a month from now the new truck he wants may be in short supply.
tibbitts
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

hokiefan4527 wrote: Thu Jun 17, 2021 8:49 am Summary, does this truck purchase seem like a bad idea given our financial position?
It seems like a very reasonable idea. You did good to get a new $50k F250, but I hope he's tall enough to reach that window crank on the passenger side from the driver's seat. Seriously, avoiding the diesel was a good move - that would have been a potential expense time bomb and just annoying besides. The next purchase will be the lowering kit so you don't need a ladder to reach the cab - I don't know what these truck manufacturers are thinking with these high-rise trucks.

The main problem I see is 7 rental properties, if the rentals plus repair business isn't his only job. That would be crazy and way over-extending time-wise with a baby.

As long as you didn't get one of the teething-problem 7.3s (being new technology recently) they are supposed to be a good engine and almost eliminate the need for diesel except for full-time towing of truly massive loads. Gas should also increase the carrying capacity of the truck vs. diesel, although I haven't verified for that model.

Oh, about the long bed, if that means not fitting vs. fitting in a garage, I might not sold be on that. Maybe he'd need to build a bigger garage. But generally I'm not a fan of long beds except single-cabs, which for that price might have been what he got. The baby would have to ride in front, of course.
Last edited by tibbitts on Thu Jun 17, 2021 9:58 am, edited 2 times in total.
sureshoe
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Re: Is This Truck Purchase a Bad Idea?

Post by sureshoe »

hokiefan4527 wrote: Thu Jun 17, 2021 9:49 am
sureshoe wrote: Thu Jun 17, 2021 9:29 am It sounds a little bit like you're trying to get us to give you permission to deny your husband a purchase.

You told us the payment on your Rav4, not the loan balance. I'm going to assume around $30k?
If you buy a $50k truck with $25k down, that feels like a better purchase than your Rav4 to be honest.

I feel like $60k+ of vehicle debt is a little high for your income level but not oppressive. The truck would hold value reasonable well. I would consult an accountant, but in most cases you're going to deduct mileage, not the depreciation/cost of the truck (although at that price point maybe it makes sense).

Anyhoo, it seems like you're saving and doing well. If this makes him happy, I would do it. However, I would have a conversation about the expectation of keeping the truck for at least 5-7 years. People say they'll keep a car until the wheels fall off, but in your post, it doesn't seem to be the case.
The loan balance on my car is $21,000 at 0% interest.
Initially he was supposed to keep the 2011 Truck until the wheels fell off but he got it in his head that he needed a long bed and 7.3 engine (whatever that means).
And this is where I'm picking on you and the hubby some (with love). People SAY they're going to "keep it until the wheels fall off", and not a lot of people keep to that. Even if he bought the $100k dream truck... there's always a new dream :) :)

My stepdad wanted a camper, then bought a truck. Eventually found a "great deal" on a "dream camper". Then he needed a better truck. Now, his neighbor is selling their camper... and it's "too good of a deal to walk away from".
Topic Author
hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

Watty wrote: Thu Jun 17, 2021 9:52 am
hokiefan4527 wrote: Thu Jun 17, 2021 8:49 am He currently has a 2011 F250 Lariat with 160,000 miles on it.
At that milage it the truck could last a lot longer but it is at the point where it will periodically need some repairs each year. With your personal vehicle it is usually not a big deal if it is in the shop a few days each year but when you are depending on it for your business having your truck in the shop will impact your business so it becomes a lot bigger deal.

I am not as familiar with trucks as I am with cars but I would assume that a new truck would have a lot of the new advanced safety features. A 2011 truck might not even have ESC since it was not required until 2012.

One question to consider is if you do not replace it now then how much longer will his current truck last? If he is putting a lot of miles on it each year then you might be doing good if it lasts another five years. At that point it would have very little resale value and the used car market should be back to normal.

If he can get $25K for his current truck now then replacing it now sounds like it makes a lot of sense if he does not have to pay a high premium for the new truck.

A bit over a month ago I did that with my car. I had a three years old car that I could sell for what I paid for it and I was able to find a larger new car that I could still get a good price on. Since then I have noticed that the inventory of the car model that I bought has gotten a lot tighter. If he is going to do this he might want to do it promptly since a month from now the new truck he wants may be in short supply.
He already ordered it from Ford so I think he is locked in at the price. It's just a matter of them making the truck which I think they are pretty backed up at the moment.
Topic Author
hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

tibbitts wrote: Thu Jun 17, 2021 9:54 am
hokiefan4527 wrote: Thu Jun 17, 2021 8:49 am Summary, does this truck purchase seem like a bad idea given our financial position?
It seems like a very reasonable idea. You did good to get a new $50k F250, but I hope he's tall enough to reach that window crank on the passenger side from the driver's seat. Seriously, avoiding the diesel was a good move - that would have been a potential expense time bomb and just annoying besides. The next purchase will be the lowering kit so you don't need a ladder to reach the cab - I don't know what these truck manufacturers are thinking with these high-rise trucks.

The main problem I see is 7 rental properties, if the rentals plus repair business isn't his only job. That would be crazy and way over-extending time-wise with a baby.

As long as you didn't get one of the teething-problem 7.3s (being new technology recently) they are supposed to be a good engine and almost eliminate the need for diesel except for full-time towing of truly massive loads. Gas should also increase the carrying capacity of the truck vs. diesel, although I haven't verified for that model.
Not sure if I had a typo, but it is F350. He is tall - 6feet and he ordered the running boards to go with it. He does also have a full time job in addition to these other things. The rentals don't really require much of his time anymore because we put a lot of upfront work upon purchasing so they are pretty updated. I do all of the tenant communications, finding renters, etc. The only thing he will be towing is a dump trailer. I don't know how much it weighs.
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hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

sureshoe wrote: Thu Jun 17, 2021 9:55 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:49 am
sureshoe wrote: Thu Jun 17, 2021 9:29 am It sounds a little bit like you're trying to get us to give you permission to deny your husband a purchase.

You told us the payment on your Rav4, not the loan balance. I'm going to assume around $30k?
If you buy a $50k truck with $25k down, that feels like a better purchase than your Rav4 to be honest.

I feel like $60k+ of vehicle debt is a little high for your income level but not oppressive. The truck would hold value reasonable well. I would consult an accountant, but in most cases you're going to deduct mileage, not the depreciation/cost of the truck (although at that price point maybe it makes sense).

Anyhoo, it seems like you're saving and doing well. If this makes him happy, I would do it. However, I would have a conversation about the expectation of keeping the truck for at least 5-7 years. People say they'll keep a car until the wheels fall off, but in your post, it doesn't seem to be the case.
The loan balance on my car is $21,000 at 0% interest.
Initially he was supposed to keep the 2011 Truck until the wheels fell off but he got it in his head that he needed a long bed and 7.3 engine (whatever that means).
And this is where I'm picking on you and the hubby some (with love). People SAY they're going to "keep it until the wheels fall off", and not a lot of people keep to that. Even if he bought the $100k dream truck... there's always a new dream :) :)

My stepdad wanted a camper, then bought a truck. Eventually found a "great deal" on a "dream camper". Then he needed a better truck. Now, his neighbor is selling their camper... and it's "too good of a deal to walk away from".
We come from two polar opposite families when it comes to cars. His family trades in every two years. My family drives cars for 15-20 years. In my lifetime, my mother has had two vehicles. My aunt has had 2 vehicles since the 1980's.
tibbitts
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

hokiefan4527 wrote: Thu Jun 17, 2021 9:58 am Not sure if I had a typo, but it is F350. He is tall - 6feet and he ordered the running boards to go with it. He does also have a full time job in addition to these other things. The rentals don't really require much of his time anymore because we put a lot of upfront work upon purchasing so they are pretty updated. I do all of the tenant communications, finding renters, etc. The only thing he will be towing is a dump trailer. I don't know how much it weighs.
Even a better deal on an F350, I guess I missed that, although the difference between the F250 and F350 isn't much (either physically or in dollars.) The dump trailer weight depends on what's in it - but relatively few people tow very far with a loaded dump trailer, and that's a significant factor. The 7.3 does have huge towing capacity, probably more than any other gas pickup I'll guess.
EnjoyIt
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Re: Is This Truck Purchase a Bad Idea?

Post by EnjoyIt »

hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am
RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
If you want to use your money on vehicle purchases most efficiently, then you are looking at buying a 7-8 year old car where most of the depreciation already occurred and drive it till the wheels fall off. If you want some luxury in your life, can afford it, willing to pay for it, then by all means, buy a new car. My only caveat on purchasing luxury is that it should not be financed. If you must take out a loan for a luxury, then you can't afford it. This may be a little different if the car is a business vehicle and you want to be able to deduct it as an expense.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
Californiastate
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Re: Is This Truck Purchase a Bad Idea?

Post by Californiastate »

Don't fall into the trap that's defined as "dream anythng" or "soul mate."
The big 3 auto manufacturers have pulled the biggest con of generations. They've convinced truck customers that they need a 1000 lbs of torque and a trim package that rivals luxury automobiles. People are taking out mortgage size loans to pay for these frivolous expenditures.

I've often wondered where the frivolous bling money will be spent when robot vehicles are the norm.
tibbitts
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

EnjoyIt wrote: Thu Jun 17, 2021 10:08 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am
RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
If you want to use your money on vehicle purchases most efficiently, then you are looking at buying a 7-8 year old car where most of the depreciation already occurred and drive it till the wheels fall off. If you want some luxury in your life, can afford it, willing to pay for it, then by all means, buy a new car. My only caveat on purchasing luxury is that it should not be financed. If you must take out a loan for a luxury, then you can't afford it. This may be a little different if the car is a business vehicle and you want to be able to deduct it as an expense.
That's just not true in the current era, especially with trucks. Really it hasn't applied to trucks for a while. A $50k F350 is nowhere near a luxury vehicle - it's nearly as stripped a truck as you can get.

Also it's not like there are a lot of F350s that are 7-8yrs old and haven't experienced a hard life already.
Last edited by tibbitts on Thu Jun 17, 2021 10:38 am, edited 1 time in total.
NHRATA01
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Re: Is This Truck Purchase a Bad Idea?

Post by NHRATA01 »

smitcat wrote: Thu Jun 17, 2021 9:43 am
NHRATA01 wrote: Thu Jun 17, 2021 9:32 am I actually think it's a pretty reasonable purchase right now. In this market used trucks are holding their value absurdly well, who knows how long that will last. And while you probably won't get as much as a discount from dealers new with inventories being tight, at least the MSRP's have not risen as much accordingly. As long as their is no dealer "markup" on the new one, going from a 10 y/o 160k mile truck to a brand new one for basically 30K isn't a bad deal, particularly since you'll have a warranty and the reliability of the older truck would potentially have an impact on the business. As well as the noted potential business deductions of which I have no experience with.

So no, not a bad idea but it is a good idea you avoided the $80K+ diesel when you're not towing 5th wheels once a week, just to keep up with the diesel Jones's and brag about capabilities you'll never use.
Interesting - we paid about $57K for our diesel about 2 years back and we do tow trailers that vary around 10,000#'s.
Certainly nothing wrong with putting a diesel to good use and regular towing would be justification. But 90% of the diesel owners I know are only interested in owning a diesel so they can say they own a diesel and never tow a load beyond the max rating of a mid size pickup. Without getting into the whole roll coal issues.
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hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

NHRATA01 wrote: Thu Jun 17, 2021 10:38 am
smitcat wrote: Thu Jun 17, 2021 9:43 am
NHRATA01 wrote: Thu Jun 17, 2021 9:32 am I actually think it's a pretty reasonable purchase right now. In this market used trucks are holding their value absurdly well, who knows how long that will last. And while you probably won't get as much as a discount from dealers new with inventories being tight, at least the MSRP's have not risen as much accordingly. As long as their is no dealer "markup" on the new one, going from a 10 y/o 160k mile truck to a brand new one for basically 30K isn't a bad deal, particularly since you'll have a warranty and the reliability of the older truck would potentially have an impact on the business. As well as the noted potential business deductions of which I have no experience with.

So no, not a bad idea but it is a good idea you avoided the $80K+ diesel when you're not towing 5th wheels once a week, just to keep up with the diesel Jones's and brag about capabilities you'll never use.
Interesting - we paid about $57K for our diesel about 2 years back and we do tow trailers that vary around 10,000#'s.
Certainly nothing wrong with putting a diesel to good use and regular towing would be justification. But 90% of the diesel owners I know are only interested in owning a diesel so they can say they own a diesel and never tow a load beyond the max rating of a mid size pickup. Without getting into the whole roll coal issues.
I think he would barely tow with a diesel. The only reason he likes them is knowing he has power so he could tow something if he wanted and the tinkering you can do/modifications, the noise it makes, tuning, etc.
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Re: Is This Truck Purchase a Bad Idea?

Post by We'll See »

If he is buying a new diesel platinum trim f250 or f350 it will list for and sell for well over $70,000 or $80,000. Not sure where your $54,000 number comes from.
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

hokiefan4527 wrote: Thu Jun 17, 2021 10:00 am We come from two polar opposite families when it comes to cars. His family trades in every two years. My family drives cars for 15-20 years. In my lifetime, my mother has had two vehicles. My aunt has had 2 vehicles since the 1980's.
Probably your mother never made long distance phone calls either because they cost so much per-minute, but sometimes paradigms change. Also Bogleheads are almost unique in that they never seem to experience the need for a different kind of vehicle at different stages of life - that Corolla ticks all the boxes for a lifetime. Most of the rest of us experience different priorities as we go through life, and change vehicles accordingly: we have times when we need people carrying capacity, or material carrying capacity, or towing ability, or high fuel economy.
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

We'll See wrote: Thu Jun 17, 2021 10:51 am If he is buying a new diesel platinum trim f250 or f350 it will list for and sell for well over $70,000 or $80,000. Not sure where your $54,000 number comes from.
He's apparently foregoing the Platinum - thus my comment about reaching that passenger-side hand-crank window.
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Re: Is This Truck Purchase a Bad Idea?

Post by Mike Scott »

Is this a personal disagreement or a financial concern?
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

We'll See wrote: Thu Jun 17, 2021 10:51 am If he is buying a new diesel platinum trim f250 or f350 it will list for and sell for well over $70,000 or $80,000. Not sure where your $54,000 number comes from.
I meant his dream truck is that. This is a gas xl truck he is buying.
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

Mike Scott wrote: Thu Jun 17, 2021 11:00 am Is this a personal disagreement or a financial concern?
probably a little bit of both. I have ingrained in my head Dave Ramsey's advice of "never buy a new vehicle unless you're a millionaire" and "never finance a vehicle".
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Re: Is This Truck Purchase a Bad Idea?

Post by Gardener »

One rule that I've always followed is the only thing ever financed is for a residence.

The rest should be paid for cash in my opinion and only after having an emergency fund.

I think that rule solves a lot of issues and makes the purchase of things a little more painful. It keeps me sleeping well at night not to carry debt.

Just an anecdote though.
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Re: Is This Truck Purchase a Bad Idea?

Post by vanbogle59 »

hokiefan4527 wrote: Thu Jun 17, 2021 11:02 am "never finance a vehicle".
Unless it's a RAV4? :D
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Re: Is This Truck Purchase a Bad Idea?

Post by rebellovw »

Sounds like he is a hard worker - and is using the truck for income.

Give the man his dream truck.

I vaguely remember shopping for an F250 even an F350 - but I dreaded having a diesel - so I had my sights set for the F250 with the godzilla V8 - I think that is the way to go for a gas truck - I recall not reading good things about the smaller 6.x gas motor - but I could be wrong.

Edit: And when you have a truck you almost certainly will tow something - so wanting to have more than enough power is not at all wrong.
Last edited by rebellovw on Thu Jun 17, 2021 12:22 pm, edited 1 time in total.
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Re: Is This Truck Purchase a Bad Idea?

Post by finite_difference »

What can you do with the new truck that you couldn’t do with the old one?

Seems strange to spend $54k for zero utility.
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Re: Is This Truck Purchase a Bad Idea?

Post by EnjoyIt »

tibbitts wrote: Thu Jun 17, 2021 10:35 am
EnjoyIt wrote: Thu Jun 17, 2021 10:08 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am
RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
If you want to use your money on vehicle purchases most efficiently, then you are looking at buying a 7-8 year old car where most of the depreciation already occurred and drive it till the wheels fall off. If you want some luxury in your life, can afford it, willing to pay for it, then by all means, buy a new car. My only caveat on purchasing luxury is that it should not be financed. If you must take out a loan for a luxury, then you can't afford it. This may be a little different if the car is a business vehicle and you want to be able to deduct it as an expense.
That's just not true in the current era, especially with trucks. Really it hasn't applied to trucks for a while. A $50k F350 is nowhere near a luxury vehicle - it's nearly as stripped a truck as you can get.

Also it's not like there are a lot of F350s that are 7-8yrs old and haven't experienced a hard life already.
An F350 compared to a smaller truck is indeed a luxury. I haven't seen any particular need for the hauling capability of an F350. Plenty of contractors and builder's do just fine in smaller vehicles. This is a want and not a need which the OP has already alluded to. OP has a perfectly functional truck that cost $21k which they bought for $25k. This is a luxury purchase for them. Don't place your expectations and views on what constitutes luxury onto someone else. Everyone's opinion and desires vary.
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Re: Is This Truck Purchase a Bad Idea?

Post by squirm »

I wouldn't have purchased it unless I could easily pay cash for it.
Watching YouTube videos doesn't help. Honestly, the novelty will wear off after a few months and the truck will just become another vehicle. Like most of the time, it's brought home and babied at first, then over time the infatuation wears off, but the payments keep coming, then the regret starts to creep in. Then sacrifices are made to keep up with the payments.

With you finance that you presented, if that was our case, there is no way I would have purchased it.
Last edited by squirm on Thu Jun 17, 2021 1:45 pm, edited 2 times in total.
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Re: Is This Truck Purchase a Bad Idea?

Post by sureshoe »

squirm wrote: Thu Jun 17, 2021 1:29 pm it's brought home and babied at first, then over time the infatuation wears off, but the payments keep coming, then the regret starts to creep in.
This should be burnt into the front of every car dealership.
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Re: Is This Truck Purchase a Bad Idea?

Post by squirm »

I forget to mention, the first sentence in your first post is a huge red flag, in my opinion.
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

squirm wrote: Thu Jun 17, 2021 1:48 pm I forget to mention, the first sentence in your first post is a huge red flag, in my opinion.
A red flag on if we should be together or not? lol
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Re: Is This Truck Purchase a Bad Idea?

Post by Point »

It sounds like you're ok on the cost side of the equation. I'd sit down and do a rolling three year forecast of income and expenses, and capital outlays. I'd reach an agreement about what we are doing moving forward, including any additional outlays for truck related things and make sure they're in the budget. Then stick to it.
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Re: Is This Truck Purchase a Bad Idea?

Post by Hayduke »

I can relate to your husband and the satisfaction that comes from having a capable vehicle that helps you get a job done. It also sounds like he would use in its intended manner instead of a glorified grocery getter.

Do you already have the dump trailer you mentioned he would be towing? Those can be pretty pricey compared to a car trailer so make sure you factor it into your budget. If you already have it, can it be used in situations where you currently anticipate needing a long bed?

I would propose a compromise where you wait a year or two to upgrade trucks and try to get by with the current truck + trailer. You'll know better about the use cases and rental incomes by then, plus maybe truck prices will come back down to earth. Maybe he'll find a van or cargo trailer are actually better tools for the jobs that come up.

Just a few years ago we got a new diesel 2500 for 20% off MSRP. It's hard for me to fathom what people are paying for new trucks these days.
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Re: Is This Truck Purchase a Bad Idea?

Post by bottlecap »

vanbogle59 wrote: Thu Jun 17, 2021 12:16 pm
hokiefan4527 wrote: Thu Jun 17, 2021 11:02 am "never finance a vehicle".
Unless it's a RAV4? :D
"Unless it's a 2020 RAV4." That's a contradiction I was hoping would be explained in the thread! No new cars and no financing - seems like those rules have already been broken at least once...

It doesn't sound like the purchase is necessary and getting your "dream car" at 27 seems a bit over-indulgent. But it's a good time to do it given the market, he will get use of the truck, and with a full time job, 7 rentals, and a side business, he's certainly made the case he's earned it. Maybe it will keep him from looking a trucks online for a few months....

JT
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Re: Is This Truck Purchase a Bad Idea?

Post by Enjoy11 »

Salty union construction worker checking in. I’ll try to behave and avoid the wrath of Ladygeek. So Here’s a different perspective:

Just let the poor guy have a nice new truck. And I think that if you go that route, you deserve a nicer, newer vehicle, too! Life’s too short. Let the guy get the truck that he wants. And get something nice for yourself, too.

Not intending to be rude at all. But I knew a guy last summer who was 62 and a heavy equipment operator at the job site we were working at. He was working 12’s every day, 6 days a week in the hot desert sun. He told me that he was working as much as he could because he wanted to retire in a year and spend time at home with his wife and grandchildren. He was working and saving like crazy. He died from a heart attack on the dirty floor of a work trailer about 2 weeks later.

Life is too short. Get the new truck and I wish the best for you both! RIP Coach (that was his nickname, and he was very kind to me).
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

EnjoyIt wrote: Thu Jun 17, 2021 12:41 pm
tibbitts wrote: Thu Jun 17, 2021 10:35 am
EnjoyIt wrote: Thu Jun 17, 2021 10:08 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am
RickBoglehead wrote: Thu Jun 17, 2021 8:58 am If truck cost is offset in 3 years by rental net income, why would this be an issue?

If business you started is viable, the non-personal use of the truck can be deducted as an expense. Make sure you understand required record keeping, or never use it for personal use.

Seems like a simple math exercise.
I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
If you want to use your money on vehicle purchases most efficiently, then you are looking at buying a 7-8 year old car where most of the depreciation already occurred and drive it till the wheels fall off. If you want some luxury in your life, can afford it, willing to pay for it, then by all means, buy a new car. My only caveat on purchasing luxury is that it should not be financed. If you must take out a loan for a luxury, then you can't afford it. This may be a little different if the car is a business vehicle and you want to be able to deduct it as an expense.
That's just not true in the current era, especially with trucks. Really it hasn't applied to trucks for a while. A $50k F350 is nowhere near a luxury vehicle - it's nearly as stripped a truck as you can get.

Also it's not like there are a lot of F350s that are 7-8yrs old and haven't experienced a hard life already.
An F350 compared to a smaller truck is indeed a luxury. I haven't seen any particular need for the hauling capability of an F350. Plenty of contractors and builder's do just fine in smaller vehicles. This is a want and not a need which the OP has already alluded to. OP has a perfectly functional truck that cost $21k which they bought for $25k. This is a luxury purchase for them. Don't place your expectations and views on what constitutes luxury onto someone else. Everyone's opinion and desires vary.
The OP doesn't really have a "smaller" truck, except maybe in bed length, since there's very little difference between a SRW F350 and and F250. I don't think this is about needing to upgrade the truck; I think it's about wanting a newer truck, possibly with the longer bed length to better accommodate a gooseneck dump trailer, since the OP mentioned a dump trailer. I'm also guessing SRW based partly on the price, although that could be wrong.

I completely disagree that buying a 7-8yr old work truck will necessarily have a significant economic benefit to a business vs. buying a new truck. Every vehicle has a lifespan and a cost to maintain. So the new truck might end up costing more or less going forward than the existing truck; we can't predict. The new truck would undeniably have capabilities that a smaller new truck wouldn't have; whether the OP's business will benefit from that capability we can't say. The fact that some contractors, like the one working across the street from me now, make do with an early '00s LeSabre doesn't mean that their business might not be limited by their vehicle.

You say I should not place my expectations as to what constitutes "luxury" onto someone else, yet you state without qualification that the new F350 compared to a smaller truck "is indeed a luxury." I don't believe most people would consider a somewhat base-level F350 to be a "luxury" vehicle. It's probably something that might be characterized as a "discretionary" purchase, but not a "luxury."
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Re: Is This Truck Purchase a Bad Idea?

Post by EnjoyIt »

Enjoy11 wrote: Thu Jun 17, 2021 4:33 pm Salty union construction worker checking in. I’ll try to behave and avoid the wrath of Ladygeek. So Here’s a different perspective:

Just let the poor guy have a nice new truck. And I think that if you go that route, you deserve a nicer, newer vehicle, too! Life’s too short. Let the guy get the truck that he wants. And get something nice for yourself, too.

Not intending to be rude at all. But I knew a guy last summer who was 62 and a heavy equipment operator at the job site we were working at. He was working 12’s every day, 6 days a week in the hot desert sun. He told me that he was working as much as he could because he wanted to retire in a year and spend time at home with his wife and grandchildren. He was working and saving like crazy. He died from a heart attack on the dirty floor of a work trailer about 2 weeks later.

Life is too short. Get the new truck and I wish the best for you both! RIP Coach (that was his nickname, and he was very kind to me).
What kind of car did he drive?

Maybe the moral of that story is to save early and make sure that one can retire early not needing to break one's back working 12 hour shifts 6 days a week at 62 just so they can retire.
Last edited by EnjoyIt on Thu Jun 17, 2021 5:01 pm, edited 1 time in total.
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EnjoyIt
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Re: Is This Truck Purchase a Bad Idea?

Post by EnjoyIt »

tibbitts wrote: Thu Jun 17, 2021 4:51 pm
EnjoyIt wrote: Thu Jun 17, 2021 12:41 pm
tibbitts wrote: Thu Jun 17, 2021 10:35 am
EnjoyIt wrote: Thu Jun 17, 2021 10:08 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:15 am

I know we can "afford" it. The rentals net about $2,000 per month if there's no repairs that month. For some reason I feel like this is money we shouldn't touch and I've not used a penny of it for personal use since we started in 2017. I just grew up in a very anti-new car household and feel like I'm breaking some sort of law by purchasing a vehicle this expensive.
If you want to use your money on vehicle purchases most efficiently, then you are looking at buying a 7-8 year old car where most of the depreciation already occurred and drive it till the wheels fall off. If you want some luxury in your life, can afford it, willing to pay for it, then by all means, buy a new car. My only caveat on purchasing luxury is that it should not be financed. If you must take out a loan for a luxury, then you can't afford it. This may be a little different if the car is a business vehicle and you want to be able to deduct it as an expense.
That's just not true in the current era, especially with trucks. Really it hasn't applied to trucks for a while. A $50k F350 is nowhere near a luxury vehicle - it's nearly as stripped a truck as you can get.

Also it's not like there are a lot of F350s that are 7-8yrs old and haven't experienced a hard life already.
An F350 compared to a smaller truck is indeed a luxury. I haven't seen any particular need for the hauling capability of an F350. Plenty of contractors and builder's do just fine in smaller vehicles. This is a want and not a need which the OP has already alluded to. OP has a perfectly functional truck that cost $21k which they bought for $25k. This is a luxury purchase for them. Don't place your expectations and views on what constitutes luxury onto someone else. Everyone's opinion and desires vary.
The OP doesn't really have a "smaller" truck, except maybe in bed length, since there's very little difference between a SRW F350 and and F250. I don't think this is about needing to upgrade the truck; I think it's about wanting a newer truck, possibly with the longer bed length to better accommodate a gooseneck dump trailer, since the OP mentioned a dump trailer. I'm also guessing SRW based partly on the price, although that could be wrong.

I completely disagree that buying a 7-8yr old work truck will necessarily have a significant economic benefit to a business vs. buying a new truck. Every vehicle has a lifespan and a cost to maintain. So the new truck might end up costing more or less going forward than the existing truck; we can't predict. The new truck would undeniably have capabilities that a smaller new truck wouldn't have; whether the OP's business will benefit from that capability we can't say. The fact that some contractors, like the one working across the street from me now, make do with an early '00s LeSabre doesn't mean that their business might not be limited by their vehicle.

You say I should not place my expectations as to what constitutes "luxury" onto someone else, yet you state without qualification that the new F350 compared to a smaller truck "is indeed a luxury." I don't believe most people would consider a somewhat base-level F350 to be a "luxury" vehicle. It's probably something that might be characterized as a "discretionary" purchase, but not a "luxury."
Luxury vs discretionary I guess can be argued all day long. I generally take discretionary expenses as luxuries as they are unnecessary expenditures that may make life better, more fun, more comfortable, etc. At the very least we agree that this is a discretionary purchase that probably adds little additional value unless there really is a need for larger towing capacity. With that in mind, I will rephrase my statement. Outside of a home, it is usually not a good idea to take out debt for discretionary expenses. Save up the cash and buy whatever makes one happy.
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

squirm wrote: Thu Jun 17, 2021 1:29 pm I wouldn't have purchased it unless I could easily pay cash for it.
Except for when there were special financing deals available, I always paid cash for vehicles. There have been times when financing made sense, such as when you could earn more even after-tax in high-yield savings than you paid in interest.

Also price does matter. Early in my career, I could have bought that era's version of the truck the OP is buying for less than half my annual salary. Toward the end of my career, it would have taken about three-quarters of my annual salary. That's a significant difference. And I believe this is a different case because it's apparently a business expense. So I wouldn't be too quick to apply the rules that I applied for my personal vehicle purchases to a business expense.
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Re: Is This Truck Purchase a Bad Idea?

Post by squirm »

tibbitts wrote: Thu Jun 17, 2021 5:23 pm
squirm wrote: Thu Jun 17, 2021 1:29 pm I wouldn't have purchased it unless I could easily pay cash for it.
Except for when there were special financing deals available, I always paid cash for vehicles. There have been times when financing made sense, such as when you could earn more even after-tax in high-yield savings than you paid in interest.

Also price does matter. Early in my career, I could have bought that era's version of the truck the OP is buying for less than half my annual salary. Toward the end of my career, it would have taken about three-quarters of my annual salary. That's a significant difference. And I believe this is a different case because it's apparently a business expense. So I wouldn't be too quick to apply the rules that I applied for my personal vehicle purchases to a business expense.
I've did the zero percent financing years ago for a car, but I'd still rather just pay cash now. I gather from the poster that personal use will be most of it. I have rental homes too, when their occupied, when does business use happen? Hardly ever. Let's must admit it, it's easy to come up with any justification if your salivating over a new car but that isn't Boglehead like at all.

It's my opinion that vehicles are more costly now due to longer term financing, so manufacturers will stick on more bells and whistles as most buyers just want to know what the monthly payments are.
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

squirm wrote: Thu Jun 17, 2021 5:38 pm
tibbitts wrote: Thu Jun 17, 2021 5:23 pm
squirm wrote: Thu Jun 17, 2021 1:29 pm I wouldn't have purchased it unless I could easily pay cash for it.
Except for when there were special financing deals available, I always paid cash for vehicles. There have been times when financing made sense, such as when you could earn more even after-tax in high-yield savings than you paid in interest.

Also price does matter. Early in my career, I could have bought that era's version of the truck the OP is buying for less than half my annual salary. Toward the end of my career, it would have taken about three-quarters of my annual salary. That's a significant difference. And I believe this is a different case because it's apparently a business expense. So I wouldn't be too quick to apply the rules that I applied for my personal vehicle purchases to a business expense.
I've did the zero percent financing years ago for a car, but I'd still rather just pay cash now. I gather from the poster that personal use will be most of it. I have rental homes too, when their occupied, when does business use happen? Hardly ever. Let's must admit it, it's easy to come up with any justification if your salivating over a new car but that isn't Boglehead like at all.

It's my opinion that vehicles are more costly now due to longer term financing, most buyers just want to know what the monthly payments are.
As with education, it's hard to know what part of the pricing has to do with changes in financing. I would rather pay cash for simplicity now, too, but circumstances can change. Probably we just financed to collect the interest, but I'm just saying that there can be other reasons, especially for a business. The OP is starting a new construction business in addition to the 7 rentals so I'm guessing a significant amount of business use; maybe the OP will clarify the percentage. To me starting a new business in addition to the other things the OP has going on seems like it might not be the best idea but not my call.
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Re: Is This Truck Purchase a Bad Idea?

Post by heyyou »

He needs a towing-capable truck with a long bed for 8 foot building materials to lay flat, or for 10 footers to only hang out 2 feet. Used trucks are now very valuable due to the building boom based on low interest mortgage loans, but as with most booms, that will change someday.

Note that you two have debt that is 3+ times your dual salaries' income, and he is starting a new business with unknown future prospects. Yes, there is plenty of work now, but will it pay well, and not every customer will fully pay. Just between the two of you, tie the truck's cost to the after-tax income of the new business, so his truck effectively gets paid off from his business revenue (thus your existing real estate continues to pay for its debt). That is to help him to see to not buy the next new toy that he wants, as soon as the new business has notable income. Many, many successful business people went broke once or twice, before they learned how to be successful.

Where I grew up, the farmers' wives needed steady jobs (often teaching school with the summers off during the peak harvesting period) to keep the family fed those years when the crops were not successful for a few years in a row.

If he keeps this new truck for a long time, it is a good investment. The big question is how soon he will want to get another one, or something else of similar large cost. Landscapers in the luxury neighborhoods here, need to look successful, but the smart one drives a shiny, quite old, easy to repair truck, and some of his retired customers like to tell him about their vehicles from that long gone era. Choose a paint color on the new truck so it is easy to keep it looking clean. That will save time in the future.
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