Quote:
Originally Posted by onewhippedpuppy
I don't doubt your numbers, but all are based upon short term ownership. In the case of my wife's truck I expect we will own it 5+ years, unlike myself she isn't prone to frequently switching vehicles.
Mental masturbation and warm fuzzies - perhaps so. But here's what I know. I have the titles for all of my vehicles, and can do whatever I damn well please with them. If I lose my job I don't have car payments to worry about. And frankly, I don't like owing people money. It's an old-school mentality, but I tend to think of things in this light - if you don't have the cash for it, you can't afford it. My house is my only debt because it's simply not practical to save enough money to purchase a house, but if I had a financial windfall I would pay off my house before doing anything else. All I can do right now is finance significantly less than what it is worth in today's market. Conservative? Sure, but being conservative also never landed anyone in bankruptcy. Being overly leveraged, on the other hand......
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Look, nowhere did I say, nor would I say, that leasing is always the best solution. It depends on the situation, certainly.
But it's tremendously misunderstood and you constantly hear people talking about how bad it was for them without really knowing what the alternatives would have looked like. They simply don't understand the variables, as I said earlier.
The devil's advocacy to what you posted is that retaining cash may help someone weather a job loss or other economic hardship. Have all your cash stuck in a depreciating car or truck? I'd rather have $30K in the bank to draw from to make my bills, including a $400 lease payment. Because if you are forced to sell the truck to extract equity or regain liquidity, you're going to take it in the shorts. When SHTF and no one has jobs, inflation is rampant, and loans have double digit rates to counter inflation (if you can get approved), and gas goes to $6 a gallon......how much is that truck worth?? Leasing is the best hedge against a bad economy. They guarantee future value. You know the worst case scenario. If things go really south, you flip them the keys and THEY take it in the shorts. Then you have the liquidity to capitalize on the new opportunities.
Leveraging cheap money (without getting overextended) isn't always a bad thing. In fact, it could be the smart play. I thought you were doing the MBA thing?
Although I used the mortgage example, I'd retain a mortgage right now, not pay it off. My parents just financed one of their properties for 2.15% for 15 years fixed, no closing costs. Hedge against inflation, if nothing else. I'm not sure why you wouldn't.