SUBSIM Radio Room Forums - Woman admits fleecing shopping network of more than $412,000

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Quote:

Originally Posted by SUBMAN1

An example of just how bad credit is, simply take a car payment. The average US car payment is $400 a month. Do you know that if you paid yourself $400 a month for 40 years straight into a decent mutual fund that this would add up to $4.5 Million dollars at a normal return on investment of 12%? That car you have there must be a pretty nice car for $4.5 million! :D The car companies know this, but would rather not tell you because they want that 4.5 million in their pocket, not yours! Hope you like the car!

Lol, that would be a dandy car, if you paid $400 a month on it for 40 years, as you suggested :)

Quote:

Originally Posted by SUBMAN1

ow lets calculate the 5 year loan on your fairly nice $20K used car. You would pay $444.89 for 60 months - much much longer than paying cash for it, for a total out of pocket of $26,693.40. So not only are you paying $11,093.40 extra for the exact same car,

Maybe i'm not a math whiz like you said but even i know that 26,693.40 minus 20k is not 11 grand and change dude...

Quote:

Originally Posted by Neal Stevens

Quote:

Originally Posted by SUBMAN1

Lol, that would be a dandy car, if you paid $400 a month on it for 40 years, as you suggested :)

That's the point. If you paid yourself $400 a month for 40 years (assuming no interest, nothing), that would equal $192,000 car. If you however invested it in a mutual fund - the exact same $192,000 out of your pocket would then be worth $4.5 Million, and you could buy yourself over 23 times over of the exact same CAR!!!! This is for the same $192K out of pocket total expenses.

-S

Quote:

Originally Posted by August

Quote:

Originally Posted by SUBMAN1

Maybe i'm not a math whiz like you said but even i know that 26,693.40 minus 20k is not 11 grand and change dude...

No - you missed it. You pay yourself at $400 a month into your mutual fund, and you will get the $20K in 3.25 years, and then buy the said car later on cash instead of driving it off the lot today. You will have paid out of pocket into that fund a total of $15,600 and have a return on investment of $4,400.

The math here comes down to what you are paying out of your wallet to get the car.

Take the 5 year loan, you have paid out of your wallet $26,694.40 to the bank, with $6,694.40 in interest, and $20,000 for the car.

If you invested the money first, and paid later, you would have paid out of your wallet, $15,600 (for a $400 a month payment to yourself) and made $4,400 in interest.

Out of wallet expenses are tallied like this:

5 year loan - $26,694.40
- investment - $15,600
--------------------------------
This is a difference of $11,094.40 that physically left your bill fold to pay for the exact same car.

Does this make sense yet?

-S