Is This Truck Purchase a Bad Idea?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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Sandtrap
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Re: Is This Truck Purchase a Bad Idea?

Post by Sandtrap »

Here is an example and a consideration:

I have driven only trucks in my construction company and other businesses since around 1978. All were used. DW had the “family car”. Also used. Our businesses (incl R/E) prospered because of an attention to spending and maximizing saving, investing, and growth, as well as expansion while increasing quality, etc. Now retired, it had worked out well.
While this may not be everyone’s business and financial model, it is a good one.

In your case,,,,Starting a business and investing in R/E income property and building a personal investment portfolio (as focused on and discussed on this forum) sensibly requires keeping debt to an absolute minimum and then maximizing working capital (put your money to work) as well as maximizing net profit, savings, and portfolio investment of those savings.

Again, avoiding or minimizing loans, monthly payments, debts, and liabilities, is not only a core business concept but a vital portfolio investment precept.

IMHO, Behavioral spending and other financial habits is more important than the numbers in this case.

OP: how you and your business and personal financial planning and goals accommodates this is something you have to work out.

Actionably: focus on a large comprehensive business and financial long range strategy that also includes building a sound investment portfolio concurrently with your other income and asset growing ventures. You will see the “truck issue” in better context this way and know what to do and keep doing or not.

j🌺
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iamlucky13
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Re: Is This Truck Purchase a Bad Idea?

Post by iamlucky13 »

hokiefan4527 wrote: Thu Jun 17, 2021 9:55 am 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.
I would not assume you can't cancel the order. I'm sure there are some provisions for cancelling, although I don't know how close to delivery they extend, and if there are penalties. The dealer really should be able to answer that question if a agreement is arrived at to seriously reconsider the purchase.

The financial numbers shared don't give me concern, especially since it will serve a purpose related to generating income. I would not consider buying the pickup the best move financially versus getting more use out of the existing pickup and later buying another F-150 (unless an actual need for more capacity presents itself), but I also would not consider it a bad idea. It looks like a discretionary purchase within your means.

I do have some level of concern about the amount of work you both have taken on. If I understood right, you're working a regular job, plus managing the rentals. He's working a regular job, plus maintaining the rentals, plus doing home repairs. The two of you also have a kid to care for.

So I'm concerned about whether all this work is to pull in necessary income to meet expenses, or whether you both are planning to earn a lot of excess to build up savings fast or pay down the mortgages faster. If something came up (and with that many responsibilities, eventual exhaustion sounds like a very realistic something) and one or even multiple of those income streams had to stop, would you have difficulty covering all of your expenses?

With the truck already ordered and emotionally invested in, I'm not inclined to recommend a hard push to cancel the order unless you see significant risks to meeting your expenses if your income situation changes. But if there is a significant risk, then you will want to be able to articulate clearly and quantitatively to your husband the reasons for your concerns.
hokiefan4527 wrote: Thu Jun 17, 2021 11:02 amI 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".
Dave Ramsey's job is to discourage people from spending money they can't afford to spend. Although he presents his advice as universal wisdom (and some people are best off thinking of it that way), it's not universal. I've put a fair amount of effort into total cost of ownership estimates for a couple rounds of car purchases now, and over the long term there tends not to be a big difference in the overall costs.

I don't generally like financing, but interest rates are really good right now, so there can be strategic reasons to do so.
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Sandtrap
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Re: Is This Truck Purchase a Bad Idea?

Post by Sandtrap »

iamlucky13 wrote: Fri Jun 18, 2021 4:36 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:55 am 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.
I would not assume you can't cancel the order. I'm sure there are some provisions for cancelling, although I don't know how close to delivery they extend, and if there are penalties. The dealer really should be able to answer that question if a agreement is arrived at to seriously reconsider the purchase.

The financial numbers shared don't give me concern, especially since it will serve a purpose related to generating income. I would not consider buying the pickup the best move financially versus getting more use out of the existing pickup and later buying another F-150 (unless an actual need for more capacity presents itself), but I also would not consider it a bad idea. It looks like a discretionary purchase within your means.

I do have some level of concern about the amount of work you both have taken on. If I understood right, you're working a regular job, plus managing the rentals. He's working a regular job, plus maintaining the rentals, plus doing home repairs. The two of you also have a kid to care for.

So I'm concerned about whether all this work is to pull in necessary income to meet expenses, or whether you both are planning to earn a lot of excess to build up savings fast or pay down the mortgages faster. If something came up (and with that many responsibilities, eventual exhaustion sounds like a very realistic something) and one or even multiple of those income streams had to stop, would you have difficulty covering all of your expenses?

With the truck already ordered and emotionally invested in, I'm not inclined to recommend a hard push to cancel the order unless you see significant risks to meeting your expenses if your income situation changes. But if there is a significant risk, then you will want to be able to articulate clearly and quantitatively to your husband the reasons for your concerns.
hokiefan4527 wrote: Thu Jun 17, 2021 11:02 amI 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".
Dave Ramsey's job is to discourage people from spending money they can't afford to spend. Although he presents his advice as universal wisdom (and some people are best off thinking of it that way), it's not universal. I've put a fair amount of effort into total cost of ownership estimates for a couple rounds of car purchases now, and over the long term there tends not to be a big difference in the overall costs.

I don't generally like financing, but interest rates are really good right now, so there can be strategic reasons to do so.
+1
Well said!
Oustanding points.

Great reference to Dave Ramsey's concepts and "big picture" view needed here for OP: :D :D
j :D
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hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

tibbitts wrote: Thu Jun 17, 2021 5:45 pm
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.

I'm not sure on the percentage. It depends how well the construction business takes off. The rentals do not require much work anymore. They were a significant amount of work upon purchasing as some required extensive remodeling and we were there every day. Now, I only go there to show it to someone moving in or maybe we will be there a couple days getting it ready to be re-rented. Sometimes we can go months without having to do anything to them. In my opinion, he can do everything he is wanting to do in his current truck. I am on the side of anti new truck but sometimes I just have to let things go. I ran an extremely tight ship our first few years of marriage and it was not sustainable for his mental health. I would say it is still pretty tight because the people at his work make fun of him for how "in control" I am of our finances. Meaning, he does not have a secret account like they do. We share all accounts and credit cards so I get a notification every time a dollar is spent or taken out of an ATM.
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hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

iamlucky13 wrote: Fri Jun 18, 2021 4:36 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:55 am 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.
I would not assume you can't cancel the order. I'm sure there are some provisions for cancelling, although I don't know how close to delivery they extend, and if there are penalties. The dealer really should be able to answer that question if a agreement is arrived at to seriously reconsider the purchase.

The financial numbers shared don't give me concern, especially since it will serve a purpose related to generating income. I would not consider buying the pickup the best move financially versus getting more use out of the existing pickup and later buying another F-150 (unless an actual need for more capacity presents itself), but I also would not consider it a bad idea. It looks like a discretionary purchase within your means.

I do have some level of concern about the amount of work you both have taken on. If I understood right, you're working a regular job, plus managing the rentals. He's working a regular job, plus maintaining the rentals, plus doing home repairs. The two of you also have a kid to care for.

So I'm concerned about whether all this work is to pull in necessary income to meet expenses, or whether you both are planning to earn a lot of excess to build up savings fast or pay down the mortgages faster. If something came up (and with that many responsibilities, eventual exhaustion sounds like a very realistic something) and one or even multiple of those income streams had to stop, would you have difficulty covering all of your expenses?

With the truck already ordered and emotionally invested in, I'm not inclined to recommend a hard push to cancel the order unless you see significant risks to meeting your expenses if your income situation changes. But if there is a significant risk, then you will want to be able to articulate clearly and quantitatively to your husband the reasons for your concerns.
hokiefan4527 wrote: Thu Jun 17, 2021 11:02 amI 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".
Dave Ramsey's job is to discourage people from spending money they can't afford to spend. Although he presents his advice as universal wisdom (and some people are best off thinking of it that way), it's not universal. I've put a fair amount of effort into total cost of ownership estimates for a couple rounds of car purchases now, and over the long term there tends not to be a big difference in the overall costs.

I don't generally like financing, but interest rates are really good right now, so there can be strategic reasons to do so.
I have a goal of "retiring" before I am 40 and living on passive income. I don't really have any hobbies so if we aren't working we are just sitting around watching tv or something which i can't stand. We do not have these various revenues to pay for living expenses. I would consider our cost of living low. We never eat out, have low maintenance appearances, don't have satellite tv. I really don't feel like these various things take up much time but then again, we have not gone anywhere or done anything since january 2019. This is not something I plan to keep doing until we are in our 60's. I plan for a few hard years and then the ability to slow down and enjoy ourselves.
tibbitts
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

hokiefan4527 wrote: Fri Jun 18, 2021 9:56 am ... In my opinion, he can do everything he is wanting to do in his current truck. I am on the side of anti new truck but sometimes I just have to let things go.
You are going to buy a new truck at some point, although Bogleheads sometimes seem to be thinking that the old and new trucks will have equally long and reliable lives, and that any time is an equally opportune time to purchase a new vehicle. The market does seem distorted now with the value of used vehicles combined with interest rates, although to me the value of used trucks has always been inflated and it's seldom been worthwhile to buy used vs. new. As someone who bought a used pickup years ago, even then it was marginal to buy used vs. new. With a full time job, 7 rentals, a new construction business, and a baby, nobody is going to have time to deal with vehicle maintenance or problems, so I just don't see all the resistance to a new truck.
smitcat
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Re: Is This Truck Purchase a Bad Idea?

Post by smitcat »

hokiefan4527 wrote: Fri Jun 18, 2021 10:11 am
iamlucky13 wrote: Fri Jun 18, 2021 4:36 am
hokiefan4527 wrote: Thu Jun 17, 2021 9:55 am 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.
I would not assume you can't cancel the order. I'm sure there are some provisions for cancelling, although I don't know how close to delivery they extend, and if there are penalties. The dealer really should be able to answer that question if a agreement is arrived at to seriously reconsider the purchase.

The financial numbers shared don't give me concern, especially since it will serve a purpose related to generating income. I would not consider buying the pickup the best move financially versus getting more use out of the existing pickup and later buying another F-150 (unless an actual need for more capacity presents itself), but I also would not consider it a bad idea. It looks like a discretionary purchase within your means.

I do have some level of concern about the amount of work you both have taken on. If I understood right, you're working a regular job, plus managing the rentals. He's working a regular job, plus maintaining the rentals, plus doing home repairs. The two of you also have a kid to care for.

So I'm concerned about whether all this work is to pull in necessary income to meet expenses, or whether you both are planning to earn a lot of excess to build up savings fast or pay down the mortgages faster. If something came up (and with that many responsibilities, eventual exhaustion sounds like a very realistic something) and one or even multiple of those income streams had to stop, would you have difficulty covering all of your expenses?

With the truck already ordered and emotionally invested in, I'm not inclined to recommend a hard push to cancel the order unless you see significant risks to meeting your expenses if your income situation changes. But if there is a significant risk, then you will want to be able to articulate clearly and quantitatively to your husband the reasons for your concerns.
hokiefan4527 wrote: Thu Jun 17, 2021 11:02 amI 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".
Dave Ramsey's job is to discourage people from spending money they can't afford to spend. Although he presents his advice as universal wisdom (and some people are best off thinking of it that way), it's not universal. I've put a fair amount of effort into total cost of ownership estimates for a couple rounds of car purchases now, and over the long term there tends not to be a big difference in the overall costs.

I don't generally like financing, but interest rates are really good right now, so there can be strategic reasons to do so.
I have a goal of "retiring" before I am 40 and living on passive income. I don't really have any hobbies so if we aren't working we are just sitting around watching tv or something which i can't stand. We do not have these various revenues to pay for living expenses. I would consider our cost of living low. We never eat out, have low maintenance appearances, don't have satellite tv. I really don't feel like these various things take up much time but then again, we have not gone anywhere or done anything since january 2019. This is not something I plan to keep doing until we are in our 60's. I plan for a few hard years and then the ability to slow down and enjoy ourselves.
This does not descibe a very balanced life - perhaps a good solution for some but certainly not balanced.
tibbitts
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Re: Is This Truck Purchase a Bad Idea?

Post by tibbitts »

smitcat wrote: Fri Jun 18, 2021 10:25 am
This does not descibe a very balanced life - perhaps a good solution for some but certainly not balanced.
That was why I questioned starting a new business in addition to the full-time job, 7 rentals, and the baby. But the desire to earn as much as possible as early as possible and get to FI at almost any cost seems to be a Boglehead-ish thing to do.
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hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

tibbitts wrote: Fri Jun 18, 2021 10:31 am
smitcat wrote: Fri Jun 18, 2021 10:25 am
This does not descibe a very balanced life - perhaps a good solution for some but certainly not balanced.
That was why I questioned starting a new business in addition to the full-time job, 7 rentals, and the baby. But the desire to earn as much as possible as early as possible and get to FI at almost any cost seems to be a Boglehead-ish thing to do.
I may have failed to mention that he currently hates his full time job. He recently said he would rather work at Wendys making minimum wage. Not sure how accurate that statement is. He doesn't hate the work, just hates the two guys he works with. Anyways, the long-term plan for all this extra work is so he can eventually quit his w2 job and work for himself.
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Re: Is This Truck Purchase a Bad Idea?

Post by CoastLawyer2030 »

hokiefan4527 wrote: Fri Jun 18, 2021 10:37 am
tibbitts wrote: Fri Jun 18, 2021 10:31 am
smitcat wrote: Fri Jun 18, 2021 10:25 am
This does not descibe a very balanced life - perhaps a good solution for some but certainly not balanced.
That was why I questioned starting a new business in addition to the full-time job, 7 rentals, and the baby. But the desire to earn as much as possible as early as possible and get to FI at almost any cost seems to be a Boglehead-ish thing to do.
I may have failed to mention that he currently hates his full time job. He recently said he would rather work at Wendys making minimum wage. Not sure how accurate that statement is. He doesn't hate the work, just hates the two guys he works with. Anyways, the long-term plan for all this extra work is so he can eventually quit his w2 job and work for himself.
I initially had a similar mindset to you -- sprint until late 30s/early 40s, completely FI, then live my life. My late 20s and early 30s were all about paying off debt and then saving.

Then I kind of realized that desire is just a contract you make with yourself to be unhappy until a later date. Not my quote but it is something I read that resonated with me.

I've since taken my foot off the gas. My wife is pregnant with our second and I could honestly care less that she works like 10-15 hours a week now. Sure, this is delaying our FI date, but who cares.

I have posts on here indicating that I am already thinking about leaving a nice, cushy government job. My original plan was 5-6 years here. Now? Who cares. I will save a nice nest egg and then leave, then figure the rest out.

Have you looked into "CoastFIRE" (a stupid name but whatever)? I find this to be a much more sustainable and happy way to get to where you want to go.
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hokiefan4527
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Re: Is This Truck Purchase a Bad Idea?

Post by hokiefan4527 »

CoastLawyer2030 wrote: Fri Jun 18, 2021 11:12 am
hokiefan4527 wrote: Fri Jun 18, 2021 10:37 am
tibbitts wrote: Fri Jun 18, 2021 10:31 am
smitcat wrote: Fri Jun 18, 2021 10:25 am
This does not descibe a very balanced life - perhaps a good solution for some but certainly not balanced.
That was why I questioned starting a new business in addition to the full-time job, 7 rentals, and the baby. But the desire to earn as much as possible as early as possible and get to FI at almost any cost seems to be a Boglehead-ish thing to do.
I may have failed to mention that he currently hates his full time job. He recently said he would rather work at Wendys making minimum wage. Not sure how accurate that statement is. He doesn't hate the work, just hates the two guys he works with. Anyways, the long-term plan for all this extra work is so he can eventually quit his w2 job and work for himself.
I initially had a similar mindset to you -- sprint until late 30s/early 40s, completely FI, then live my life. My late 20s and early 30s were all about paying off debt and then saving.

Then I kind of realized that desire is just a contract you make with yourself to be unhappy until a later date. Not my quote but it is something I read that resonated with me.

I've since taken my foot off the gas. My wife is pregnant with our second and I could honestly care less that she works like 10-15 hours a week now. Sure, this is delaying our FI date, but who cares.

I have posts on here indicating that I am already thinking about leaving a nice, cushy government job. My original plan was 5-6 years here. Now? Who cares. I will save a nice nest egg and then leave, then figure the rest out.

Have you looked into "CoastFIRE" (a stupid name but whatever)? I find this to be a much more sustainable and happy way to get to where you want to go.
Yes and I am also thinking of doing this. I started a Roth IRA when I was 18. My husband has been maxing out his 401k the last couple years. My plan is for him to keep doing this until he leaves this job because he gets a 40% match up to the max contribution so $7,800 match. When he does leave the job, I don't think we will have to worry with loading up on retirement any longer and will just need to make enough money to make it until we can access retirement funds.
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