I wanted to clarify, this is where I have the entire principal amount $75762 in a MM and then I pay out of a separate fund (my regular work paychecks) the actual car payment, so the MM account will never be depleted of the principal and accrue interest compounded. Normally, someone would have a lump sum of X dollars and then pay down the loan from that amount which would deplete the amount available to accrue interest. In this case, it is where the entire loan amount is put into a MM acct and earning 4.65 APY (which could go lower over 60 months) but the actual car payment is paid out of a completely separate account of recurring funds (paychecks).
That is important as the opposite would definitely not be worth it as over time the balance would go lower and lower and subsequent interest as well. I may just get a 10 day payoff and pay the whole thing off before paying any interest but wanted some Bogelhead advice first before I did that.
In this case there is a unique financial position in that I have reached my individual FIRE number and consider myself financially independent but in order to get to this point I had to do some major sacrifices and have not made a major purchase in many years as I funneled all my extra money into ETFs (VTI/VXUS) in order to get to this point and this is a major decision to purchase a luxury vehicle which is from a financial standpoint a significantly depreciating asset but I wanted to look at creative ways to mitigate that fact.
Obviously, if I could not afford it I would absolutely never, ever have purchased a 75K luxo vehicle that would be absurd and would not have even 5 years ago, but I reached that special number that allows me to withdrawal 4% and not touch the principal in theory but still am going to work and the annual income is in the 100K plus range so I rationalized I can buy what I want within reason at this point.
So the question is really limited to the transaction rather than bigger picture. I need to provide that context as if I were reading the post I would think this person is nuts for buying an expensive vehicle when they should be buying something used with a Toyota or Honda name and putting the rest into a low cost ETF to build wealth but I've been doing that for the past 27 years living 20% below my means so I feel its time to spend on things that I feel will benefit me and this vehicle happens to be one of them.
That is important as the opposite would definitely not be worth it as over time the balance would go lower and lower and subsequent interest as well. I may just get a 10 day payoff and pay the whole thing off before paying any interest but wanted some Bogelhead advice first before I did that.
In this case there is a unique financial position in that I have reached my individual FIRE number and consider myself financially independent but in order to get to this point I had to do some major sacrifices and have not made a major purchase in many years as I funneled all my extra money into ETFs (VTI/VXUS) in order to get to this point and this is a major decision to purchase a luxury vehicle which is from a financial standpoint a significantly depreciating asset but I wanted to look at creative ways to mitigate that fact.
Obviously, if I could not afford it I would absolutely never, ever have purchased a 75K luxo vehicle that would be absurd and would not have even 5 years ago, but I reached that special number that allows me to withdrawal 4% and not touch the principal in theory but still am going to work and the annual income is in the 100K plus range so I rationalized I can buy what I want within reason at this point.
So the question is really limited to the transaction rather than bigger picture. I need to provide that context as if I were reading the post I would think this person is nuts for buying an expensive vehicle when they should be buying something used with a Toyota or Honda name and putting the rest into a low cost ETF to build wealth but I've been doing that for the past 27 years living 20% below my means so I feel its time to spend on things that I feel will benefit me and this vehicle happens to be one of them.
Statistics: Posted by InvestorPsychologist — Wed Feb 19, 2025 9:10 pm