Quote:
Originally Posted by Sliver
Just spit balling, but I have wondered if a lot of us families could go down to one three-year old Corolla, go tent camping for our summer vacations and live in a two-bedroom town house with the kids sharing a room and a bunkbed, and survive on one income and enjoy life more.
We do have pretty high standards of living here, but I don't know that we've found the perfect balance between material possessions and expectations for travel and the amount of work it requires to sustain all of our wants.
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Spit balling? I've run ballpark numbers before because I'm as weirdo. I've never seen anyone else run basic numbers like this before, but when I've point it out, it quickly makes sense.
Many people lose $50-100K in net worth a year (ie: Interest debt on upgrades, duplicate/unnecessary spending). Some of it is required to be lost to put a roof over your head etc., work, stay warm in this weather, mental health etc., but a surprising amount of it is unnecessary to be lost. Making that lifestyle more efficient and retaining even 10-20% of that yearly lost net worth could be huge for many households.
OT, won't clutter the thread. Calc below.
Spoiler!
The difference between a $30K vehicle (ie: new Corolla) vs a $50K premium vehicle is $20K. If you finance that over 3 years at let's say 5% on average (higher now), you're constantly giving away an extra $1K while also locking up the cashflow difference of $20K during that time span.
For many families, vehicles a somewhat continuous cycle for at least a decade or two with minor gaps that don't change the calculation too much. Meaning that each decade, you're losing net worth of around $3-5K on that difference alone BEFORE the depreciation of the extra $20K bump ups. That perhaps could be described as exchanging around $2-3K extra net worth a year to be in a fancier vehicle. That's $20-30K a decade in extra interest and probably $40K+ on a depreciating asset. This before the additional costs of operating and maintaining those vehicles. If you're struggling to increase your household net worth, something like this better be worth it.
This is also easily calculable for intergenerational families in a home. $2-3K ish in extra in rent per year comes out to $25-40K extra you're giving away a year for comfort. A decade later, that's $250-400K. It's not to say you'd immediately save it all and invest and then retire early or anything. I'm just saying again that's how much after tax net worth you are exchanging for comfort.
There's also buying a house too big and how much 3% over a decade (yes, it's higher now) on an extra $200K house comes out to. $6K a year in net worth gifted to the bank extra in simple, not compound interest. Again, not even factoring the cash flow lock up for paying down the principle. A decade later, that's $60K in net worth given away, plus the stresses of forced savings by paying down principle. Again, is the bump up worth it? If yes, fair. If no, re-evaluate.
Blah, blah, blah. Yes, I have not factored other facets that might be worth it. But most people who say that to me haven't even gotten to the basic step 1 in quantifying the loss of net worth as I have in the above and summarized below. That's not including other stuff.
But bump ups net worth trade:
- $20K for car, $2.5K extra per year interest
- Equal or double above for depreciating asset.
- Rent v intergenerational household $20-40K per year.
- Interest on $300-500K mortgage about same $20-40K.
- $200K bump up for house, $8-12K extra per year.
If someone trading away an extra $30-55K in net worth a year for a comfort or conspicuous consumption that they don't need, that might be why they can't get ahead and why maintaining it is so stressful. A decade later, that's $300-550K they could have perhaps maintained or let's be real, spent on other things that excite the person more or derive more happiness. $300-550K is also a basic retirement that will last several decades when paired up with CPP and OAS. Even retaining half of that net worth in a decade isn't something to scoff at and this goes on for several decades for many people.
If you love that car or love that community or love those upgrades, by all means. But if those things are meh to you and the rich have convinced us to live like them, that might be why they're getting richer and the poor are getting poorer. $30-55K extra in net worth lost on a $75-150K post tax household is a pretty big percentage.
Saving an extra $3K ($250 a month), $6K ($500 a month), $12K ($1K a month) or even $18K ($750 a month) for a household (not person) can go quite far after a few decades.
Quote:
Originally Posted by Hemi-Cuda
You sound so far out of touch you should go into politics. There are plenty of families already with only 1 car (or none), who can't take vacations, and are renting a 2 bedroom suite because they can't afford to buy a house. They don't need the extra challenge of trying to figure out who watches the kids when their school has an unexpected closure
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If you make $50K after tax and work 50 weeks. I believe that means a single day of work is worth $200.
That's hard to let go, especially since taking time off for the kids also increases the risk you lose your ability to earn that $200 per day.
Quote:
Originally Posted by PepsiFree
Add AWD or 4H to that setup and you’ll feel like a god.
I’m out there ripping (while safely approaching stops and maintaining and over-cautious following distance as I am still a good citizen).
But off the line? Let’s ####ing go.
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I'm doing that too. I'm ripping it like crazy and having a ton of fun in this weather. But when other vehicles are around, I drive a lot more cautiously like speed limit and following distance of 2-3+ vehicles. I also try not to drive directly side by side vehicles if possible to reduce risk of side swipes because the road lines aren't always easy to see and I don't know how others will react when they can't see them.
I see so many people follow too close and use braking distances that have no room for margin. Even if I trust myself, I don't trust others not to do things that might increase the chances of a situation.
I seem to recall you had studs, I bet they're extra great right now.