Why buying a car with cash makes cents

Buying a car can be one of the easiest things you will do. Why? Because dealerships LOVE walking you through the ultra easy process of obtaining a new car loan. They have their own financing departments and everything. It makes the process seamless and quick. Plus they can help you find a car that suits your payment preferences. Did I mention they have no problem buying your old car from you? So…. why should I buy a car with cash if they make it so easy for me? Not to mention, I don’t have $30,000 to drop on a new car.

Why paying cash makes sense

  1. Paying in cash helps you avoid paying interest
  2. Emotional and financial strain in the event of a job loss or inability to pay
  3. It’s a little easier when buying and selling privately
  4. Cool factor. Let’s be real: handing over a $28,000 check can make you feel like a king
  5. The “I worked for it” factor

Why paying cash for your car is a dumb idea

  1. If the interest rate is 5% but you choose to invest the money you would have dropped on a new car in stocks yielding 8-12%, well, which one is higher? If the money can work harder for you in hand than it can by purchasing outright, then you shouldn’t buy a car with cash.
  2. You opt to pay with cash that isn’t yours. Borrowing from family for a car can strain relationships. It is better to avoid this.

Cars are typically not a good investment. In fact, calling them an investment at all seems a little inappropriate. But there are times when it makes sense to buy a car with cash and times where it makes more sense to make the monthly payment.

Why I bought a house at age 22

Most 22 year olds are seeking the next bar or nearest entertainment venue. Some are going to college or having children. Others are relaxing in mom’s basement. So what made me decide to buy my first home at the young age of 22?

I’m a bit of an old soul in that I’ve mentally grown up a bit faster than others. In some cases (mainly dating), I was told I was right about accurate. But in every other aspect, not so much. It has always been important to me to pay my bills on time. A credit card has always been a way to build credit and serves no other purpose. It is not “extra money”. So that should give you a small taste of why I am the way I am. But financial responsibility isn’t the reason I bought a house.

I keep skirting around it because there is so much back story, but the main reason is: My past.

Americans believe that you should get a job, go to school, and later in life buy a home. Right after my 22nd birthday, I was a full time college student working 2 jobs and cash flowing college. My ex had just left the picture about 1-2 months prior. I had wanted to buy a year earlier, but that didn’t fit in with our “life plan” because I wanted roommates. Once the relationship ended, I purchased. Yep, two jobs and full time college, I bought a house in the midst of it. 2 weeks in the market and I found the perfect dilapidated home that I would spend a few years repairing while figuring out my life’s goals, dreams, and direction. But again, why did I buy a home at 22?? I keep skirting around it because there is so much back story, but the main reason is: My past. My parents (separated), both owned about 5 properties each. My father started later than my mother. He bought all 5 off of a $30,000/ year salary. The fact he did it as a single parent really resonated with me. As children though, we listen to, and observe, our parents and we vow to “never do x,y, or z because my parents showed me how awful it is”. And believe me, after installing soffit and fascia, painting numerous baseboards, and performing a host of other odds and ends after awful, disgusting tenants left some of their apartments, I vowed that was something I would NEVER do. I hated it. Granted, I wasn’t being paid so maybe that’s why it didn’t give me warm fuzzies. 🙂

So, yes, my past and my parents actions caused me to buy a house. I then rented bedrooms to various people and I cannot tell you how valuable it has been to both repair the home I live in and have different personalities living with me. I learned laws, I’ve learned how to manage tenants effectively and what some people will put up with and what they won’t. I’ve learned what low rents can bring into your home and how high rents cause you to get too many people trying to move in. I’ve also learned that I cannot do another renovation with my own hands. It’s far too taxing while I’m trying to grow in my 20’s as a professional. I will be buying another property. Instead of picking up the hammer myself though, I will be finding contractors and a property management company to help aid my next ventures. As I learn about real estate, I get excited. I find out new things and I build knowledge. I really enjoy it.

I also find it intriguing how my take on “Rich Dad, Poor Dad” was different than the way others understood it. And that is where I am at today. 🙂 I’m excited for the future and what opportunities it will bring. I hope they are exciting. I’m glad I bought a house at age 22 and that I had parents that lit the fire in my brain at a very young age.