Corollas2019-23ToyotasTech

Search Corolland!

By c2105026, December 12, 2007

See every reply in these pages:



Hello all, I am after some financial advice.....

Recently at work I won a biggish promotion that starts early next year. With my raise I was going to finally buy a house (in about august '08), so that extra salary has been spent in theory.

However, I am aware that my '05 is coming up to 3 yrs old and coming out of warranty, and there are plenty of new compacts on the market that are worth a look. As an example the 10th gen corolla, now available in OZ, is an excellent drive and has made huge leaps in quality, dynamics, fuel efficiency and safety. In addition the next-gen Mitsubishi Lancer and mazda2 have also been recently released.

I paid my '05 off early; this fortnightly payment was then diverted to a managed investment fund heavily biased towards australian and global shares. It is doing alright considering the turbulence of the financial markets. However, I have been considering over the last few days of cashing out this fund (has a few grand in it), trading in the '05 and using the fortnightly contribution to finance the rest of a possible new car purchase - would be enough for maybe a new mid-range corolla. ahh, heaven to drive...

The pros of a new car purchase is I can have a latest model whatever with up to the minute safety, fuel efficiency and dynamics and just something new, a change. I went to kick some tyres the other day, came away in love with a few different models. However, I am aware that in keeping my current '05 I have less exposure to debt (I feel good about owning the '05 outright), accumulating wealth in the managed fund, and an out of warranty car I am free to fix/tinker with that I have a history with.

I will say athat either options I can easily afford in an overall sense, won't induce and further fiscal strains for me. I will also add that the '05 is mechanically and cosmetically great, apart from a number of rattles, and has 51000km on it. and BTW main gripes about the '05 is the poor dynamics and a lack of ABS.

What should I do?

C,

You'll most likely get many opinions on this but my advice would be to keep the '05, keep the money invested, or use the money to pay down the principle on your new mortgage a bit if you feel that is advantageous to you. I've never had a car payment since married in 1982. This thought process has allowed me to pay off my mortgage at age 53 and realize the purchase of a new home at age 54, send 2 kids through college, allow my wife to stay home with the kids during their formative years and buy tools as I need them (easily justified by me when I do all the work on the cars, house and yard default_biggrin). I still have some left for savings and a night out with my wife every week. I don't make a ton of money either.

I assume part of the reason you got a Corolla in the first place was because of the reliability and reputation for a long lifespan. Cars for every day transportation are a poor investment regardless of which one you buy. I always let someone else depreciate them for me default_biggrin

Jay in MA

Hello all, I am after some financial advice.....

Recently at work I won a biggish promotion that starts early next year. With my raise I was going to finally buy a house (in about august '08), so that extra salary has been spent in theory.

However, I am aware that my '05 is coming up to 3 yrs old and coming out of warranty, and there are plenty of new compacts on the market that are worth a look. As an example the 10th gen corolla, now available in OZ, is an excellent drive and has made huge leaps in quality, dynamics, fuel efficiency and safety. In addition the next-gen Mitsubishi Lancer and mazda2 have also been recently released.

I paid my '05 off early; this fortnightly payment was then diverted to a managed investment fund heavily biased towards australian and global shares. It is doing alright considering the turbulence of the financial markets. However, I have been considering over the last few days of cashing out this fund (has a few grand in it), trading in the '05 and using the fortnightly contribution to finance the rest of a possible new car purchase - would be enough for maybe a new mid-range corolla. ahh, heaven to drive...

The pros of a new car purchase is I can have a latest model whatever with up to the minute safety, fuel efficiency and dynamics and just something new, a change. I went to kick some tyres the other day, came away in love with a few different models. However, I am aware that in keeping my current '05 I have less exposure to debt (I feel good about owning the '05 outright), accumulating wealth in the managed fund, and an out of warranty car I am free to fix/tinker with that I have a history with.

I will say athat either options I can easily afford in an overall sense, won't induce and further fiscal strains for me. I will also add that the '05 is mechanically and cosmetically great, apart from a number of rattles, and has 51000km on it. and BTW main gripes about the '05 is the poor dynamics and a lack of ABS.

What should I do?

Max

I concur, Jay in MA. c, keep that money invested or use it to pay down principal on your upcoming house.

Bikeman982

I agree with Jay - he is a very intelligent dude.

Keep the old car (cheaper to maintain than purchase a new one).

Invest any extra money.

Your car will depreciate as time goes on, but a newer car depreciates the moment you drive it off the lot.

Invest your money for your future (retirement - Golden years, etc.).

The choice is ultimately yours.

Bike, you might not think that if you met me default_biggrin

An interesting topic in the General Discussion area might be "Immediate Gratification" regarding how society has changed over the years. This is not relevant to your post C as you sound like a very responsible and thinking individual. I was thinking of it more as a snapshot of what I've seen during my adult years. I am just now in the process of selling a very nice but old "pre-Civil War" house. The realtor warned me that 1st time buyers now want all the toys...... jacuzzi, central air, theater room etc etc.

I don't know.....maybe it's just me. Maybe I have some deep seated issues. I just hate debt. I probably inherited it from my father who went through the depression with his family. He was the youngest and didn't remember as much as his older brothers and sisters who told me stories of how bad it was then.

Dad always told me if you don't have the cash, save until you do. Don't get me wrong. We don't want for much but I didn't feel that we could spend without planning for it much before 50 years of age. I guess that's how "living within your means" works.

Jay in MA

..............I agree with Jay - he is a very intelligent dude.

I don't mind a few toys, but I too don't like to be in debt unless it is absolutely necessary - like, I can't really save up for a house, so will need a mortgage. At the moment I have only about A$800 on my visa card (due to a work trip I am yet to be reimbursed for), and even though I know it will be paid off within the intrest free period, it still makes me uncomfortable. Like, I enjoy the fact I own my car 100%. Many don't. I would like a jacuzzi in my new house, but I know that I must be able to cover the mortgage repayments regardless.

as for immediate gratification, it is marketers job to persuade people to buy stuff they do not need or want. Example - A colleague at work has recently bought a new jeep compass - top of the line model, A$50k. Thing is, I know for a fact he does basically the same sort of driving I do, which meant that a $20-25k compact would have been fine. I am guessing, deep down, marketing and image requirements got to him. Within many men and women there is a basic darwinian instinct to be superior than others; marketers play on this. In fact, to a degree, all humans and probably animals feature this trait to varying extents. Difference is some overcome it and some don't. Those that overcome it (the A group) are ok to live in a moderate house, buy a later model used car every 7 or so years, and buy a new sofa maybe every 10-15yrs when the old one falls apart. Those that do (the B group) want live in a grand mansion, buy a new muscle car every 3 yrs, and buy a new living room suite on an annual basis. Assuming both groups are on the same salary, which do you think will be better off. An innate desire to be up with the jonses is fiscally very dangerous. If you have no desire for this, though, you are fiscally pretty safe, unless you make stupid, greedy investments. It is like with any destructive habit. If you have the basic internal monologues and programming that are supportive of the destructive habit, you will never overcome it and may even succumb to it.

I agree 100% C. Well stated.

I was explaining it to my wife one day like this.....

Once upon a time, back in the day (the 60's) when the women's movement came along, women got more opportunities presented to them. Don't get me wrong....they should have had equality all along.

They got educations much like they had for many years but now more good jobs were available to them...not just teaching, nursing and librarian jobs. Upon reaching a level of success in the business world, they were made to feel that they would be a lesser woman to be a stay at home Mom.

So now they get a good job and get married to someone with a good job and all of a sudden there is more disposable income in the family. The marketers recognize this and pounce on it. Technology spins off all kinds of new toys and people and marketers plant the seed that you have to have it.....have to have it now.

So, along comes junior......but Mom is working and the family now can't afford to get by on one income......they're in the system and find it hard to exit gracefully.

It's my opinion that the mothers importance to the family unit is the most important one in terms of the future generation's contribution to society. She is the natural nurturer to the kids. I just see too many kids that are left to their own devices after school until Mom and Dad get home and it has had a profound effect on today's society. That said, any family unit is stronger when there are two parents on the same page with respect to morals and principles.

I hope not to offend anyone....just my opinion...not very eloquent but I think you'll get the point.

Jay in MA

I don't mind a few toys, but I too don't like to be in debt unless it is absolutely necessary - like, I can't really save up for a house, so will need a mortgage. At the moment I have only about A$800 on my visa card (due to a work trip I am yet to be reimbursed for), and even though I know it will be paid off within the intrest free period, it still makes me uncomfortable. Like, I enjoy the fact I own my car 100%. Many don't. I would like a jacuzzi in my new house, but I know that I must be able to cover the mortgage repayments regardless.

as for immediate gratification, it is marketers job to persuade people to buy stuff they do not need or want. Example - A colleague at work has recently bought a new jeep compass - top of the line model, A$50k. Thing is, I know for a fact he does basically the same sort of driving I do, which meant that a $20-25k compact would have been fine. I am guessing, deep down, marketing and image requirements got to him. Within many men and women there is a basic darwinian instinct to be superior than others; marketers play on this. In fact, to a degree, all humans and probably animals feature this trait to varying extents. Difference is some overcome it and some don't. Those that overcome it (the A group) are ok to live in a moderate house, buy a later model used car every 7 or so years, and buy a new sofa maybe every 10-15yrs when the old one falls apart. Those that do (the B group) want live in a grand mansion, buy a new muscle car every 3 yrs, and buy a new living room suite on an annual basis. Assuming both groups are on the same salary, which do you think will be better off. An innate desire to be up with the jonses is fiscally very dangerous. If you have no desire for this, though, you are fiscally pretty safe, unless you make stupid, greedy investments. It is like with any destructive habit. If you have the basic internal monologues and programming that are supportive of the destructive habit, you will never overcome it and may even succumb to it.

I agree, but only to a point. Whilst it would be great if mothers could stay at home, several things stand in he way on this. Firstly, in Australia at least, the average male simply cannot support a family AND pay off an inflated mortgage (we have bad housing affordability issues here). Secondly, due to the baby boomers retiring, there is a massive skills shortage. If more women stayed at home, that would furtrher the skills shortage, hampering the economy's ability to supply goods and services to the markets, which leads to higher inflation which leads to higher interest rates, placing more strain on the man of the house.

The important thing is for companies and employers to ensure flexible work practices so that parents spend adequate amounts of time with their children. Both my parents worked but they worked in the public sector which in NSW means 35-38hrs a week. I spent plenty of time with them. Had they both worked 70 hrs a week, things would have been a lot different.

Of course a lot of what I said was generalizing but my point was that the average male used to be able to support his family. It was a very different lifestyle where "things" weren't as important. It's complicated for sure but society is not going in the right direction as it stands today.

.......... Firstly, in Australia at least, the average male simply cannot support a family AND pay off an inflated mortgage (we have bad housing affordability issues here). Secondly, due to the baby boomers retiring, there is a massive skills shortage. If more women stayed at home, that would furtrher the skills shortage, hampering the economy's ability to supply goods and services to the markets, which leads to higher inflation which leads to higher interest rates, placing more strain on the man of the house.

Bikeman982

There is an old phrase - "Live within your means", which means don't purchase more than you can afford.

Don't go into debt, don't buy things you can't afford.

Budget your income and save some for an emergency.

Drive a 7th generation Corolla, instead of making payments on a new one. (Just me personally - doesn't apply to all you newer car owners).

Don't give in to all the sales hype and buy every new toy that comes along.

Don't worry- be happy!

Have looked at my finances, run some spreadsheets on forecasted income/expenses for next 5 years, have concluded that if I wait until 2011-2013 I could buy a decent mid-range small car for pure cash....may not even have to trade my '05. In '09 I am sceduled to recieve a lumpsum payment from a wealthy relative which shall be put into my mortgage. I shall be able to redraw on a portion of this, which I was then going to pay back into the mortgage. So its like borrowing money from myself intrest-free. So will keep my '05 for a further 3-5 yrs at this stage.

Max

Bravo, c! I'd do the same.

Bikeman982

Good choice and sounds like you have a fair assessment of your finances.

I concur.

Good choice and sounds like you have a fair assessment of your finances.

Bikeman982

Too many people want to live it up for today and don't think enough about their future.

There is such a thing as delayed gratification and planning for the later life.

very true; some persons i have come across in my travels have lived reasonably basically and put a lot into investments and come out on top....like there was this real estate agent in his early 30s who my parents came across who got about in dog-eared 10 y.o. mazda 626 but had investment properties dotted about Newcastle. Not even some of the wealthiest people get about in the latest model - apparently bill gates has a porsche 911, but it IS a '98 model. And warren buffet has a couple of used ford f-series.

In addition, if you aren't after the latest thing you can get some real enjoyment for the deposit on a new corolla - for the same price as a 20% down payment on a corolla (here about A$4,000) one could get a nice 6th gen corolla that could be ripe for a tidy-up. Or, a vintage VW beetle or Mini or even an early 80s BMW. For the price of a new, cutting edge yaris one could get a mint '94 BMW 325i, which has far more street cred, and would have better resale down the track...

Max

I understand Buffet also still lives in the house he paid off decades ago. Now that's discipline!

Glad to see you're keeping the Rolla. An 05' is FAR from old. Even if you're worried about out of warranty repair costs, its been proven that keeping a car for its lifespan is still far more economical. CNN money did a study which showed keeping a car for its roughly 15 year lifespan cost almost 1/2 as much as trading in for a new car every 5 years, nevermind 3 years.

well, yes that is true, keeping the '05 rather than trading in on a new corolla would, over the next 5 yrs, save me $16k or so, taking into account resales of the two vehicles and the intrest I can earn on on what could have been payments. I do not think an 8y.o. car with 130,000km on it would need that much work - maybe new shocks, brakes, bushes, underbonnet belts/hoses, new windshield, cv boots - this may be a couple of grand for parts at most. And if i do the work myself (as was intending) it gives me something to do after hours (am actually a little bored in this area at the moment)

Probably the WORST thing you can ever do with perfectly good money is to buy a car with it -- even if it is a Corolla! I'd drive the '05 for as long as possible. If it's paid for, then get what you paid for and put lots of pavement under it over the next few years. Any money you invest in your house will be much better spent than if you buy another new car. I have an '03 Corolla with 52,000+ miles, and have no plans to replace it. I paid cash for it when it was new, BTW. That's the only way to buy a car.

Bikeman982

May I suggest the 7th generation Corolla and the extra money used for investments??

So, sounds like you will be on the forum for a few more years.

That's aways good!

A car loan is not "good" debt. The only thing considered "good debt" is a house mortage. Like Larry says, buying a new car is not smart, if you want to save money.

I already have 200k miles on my 10yr old 4runner and its running strong.

Just got new shocks. feels awsome.

In the next couple months, need to change all the belts and water pump. while i am at it, replace tranny fluid & filter. $200 in parts and @ $200 in labour (i am going to have a buddy take care of it - i dont have 8+hrs to spend on my car anymore - to me, spending time with my daughter is worth more than $25/hr.).

oops, getting back to the point.

your toyota should last you many more years without any problems!

2bits

tdk.

And quality time spent with your children is the most important investment any parent can make.

......... to me, spending time with my daughter is worth more than $25/hr.

Bikeman982

When they get old enough, you can combine the two.

Work on a car with your kid!!

default_biggrin I always wanted my girls to get interested or at at least a little bit interested in the maintenance of a car.

Now that they have Camrys of their own they're more involved. I do harp on them about knowing where the fluids are, maintenance schedules, having a diary of all maintenance done (their next mechanic will love that), checking under the hood now and then and looking at the tires and observing under the front of the car as they approach from that direction.

Jay in MA

And quality time spent with your children is the most important investment any parent can make.

......... to me, spending time with my daughter is worth more than $25/hr.

Topic List: Go to Everything Else