Strider

We have a 2007 Honda Civic that recently passed the 200,000 mile milestone.

I intend to drive the wheels off of it, but I replace the tires often, so the wheels may never fall off.

Therefore, I intend to drive it until my wheels fall off.

The best part about Syble? She’s paid for. And she has been for a while. She was a gift from dad-in-law, who bought her new for Smokin’ Hot Wife.

In 2007.

That was 10 years ago. Still goin’ strong, that Syble.

We also have Mithrandir, a 2000 Saleen Mustang.

Rarely is The White Rider driven, but a good back up. And best of all? Paid for, a gift from Pops when I graduated college.

There you have it. Two cars given to us that are paid off.

I tell you this for 2 reasons:

1. Gifts are ok. Don’t be embarrassed that you were given something that you really didn’t have to work for. That’s called a blessing. Just be grateful.

2. No car is cooler, better, faster, smarter, or prettier than one that has no payments.

Back when Syble was our main vehicle, we averaged about 18,000 miles per year. That equates to 108,000 miles in 6 years, which is a lengthy loan term for a car.

That’s not too bad, as long you are taking care of your car and intend for it to go at least another 108k.

But what if you drive 25,000 miles per year? 30,000 miles?

Then you’re paying your car off way too late. You’re too close to the end of that vehicle’s life, and you’re still paying for it.

Face it, many cars do not reach 200,000 miles.

So you need to do at least 1 of 3 things:

1. When you apply for a car loan, apply for a shorter term. That is, 4 or 5 years.

2. Pay significant money down on that loan.

3. Pay it off early.

We have a car payment. It’s a 2009 Chevy Tahoe. (Have you noticed a trend in the ages of our vehicles? Don’t buy new!)

We set some financial goals recently. One of them is to pay off the Tahoe before the end of 2019, but as it stands right now we can probably make it happen by mid 2018.

That’s what you call a win.

Now, there is a popular belief that you can afford to sit on the minimum payment for a car loan, that you will always have a car payment, and that the interest is not significant on a car loan.

While there is some truth to these beliefs, different circumstances drive different outcomes.

I heard about one lady who received a car loan at 19% interest due to her credit.

I wish she had come to me first. I would have told her not to buy a car.

But in her case, she cannot afford to not pay that thing off early.

And let’s not forget that ANY interest paid is a PENALTY!

Hang in there, guys. Pay those cars off early. Stick it to the man.

Oh… if you’re wondering about the Tahoe’s name…

“What his right name is I haven’t heard, but around here, he’s known as Strider.”

Do not conform.

I’m Just Here for You

Real quick, listen up.

I’m gonna tell you why you pay money down on a house.

In this case, the house costs $200,000, and the best interest rate you are able to find currently is 4%.

Option A: Pay down 10% ($20,000) for a 30 year mortgage on said $200,000 home.

Option B: Pay down 0% ($0) for a 30 year mortgage on same $200,000 home.

Trust my math from here on out. It will be accurate within a dollar, just depends on how you round.

If you go with option A, you will have a minimum monthly payment of $855, which equates to $307,800 over 30 years.

If you go with option B, you will have a minimum monthly payment of $950, which equates to $342,000 over 30 years.

Seems like a no brainer, yes?

Paying $20,000 up front saves you $34,200 over 30 years.

Worth it?

Worth it.

Now, a slight twist:

Option C: Pay down 10% ($20,000) for a 15 year mortgage on said $200,000 home. Same interest rate (which isn’t realistic, it would be better than 4%)

15 year mortgage!

Option C would result in a minimum monthly payment of $1291.

BUT!

Over 15 years you would pay $232,308.

Recap:

30 year mortgage with nothing down costs you an extra $142,000.

30 year mortgage with 10% down costs you an extra $107,800.

15 year mortgage with 10% down costs you an extra $32,308.

Of course, these numbers include principle and interest only; also included in a real mortgage (at least in Alabama) would be insurance and property tax.

You can get them all combined into one payment in a thing called ESCROW, which stands for

Extremely Stupid Crap Really Outlandish Wonder…

That’s the best I can do… short time frame… you understand…

Anyway, money down?

You be the judge.

Don’t conform.