There are some business models where it might be smart to take on more debt.

Our first house was part of a triplex [three houses on one parcel of land] Buying the Triplex got us a house and two rental houses. The rent income covered the mortgage, insurance and taxes.

As an uber driver, driving is risky. There will likely be 2 or 3 accidents each year. There is a good chance that one of those accidents will wreck the car. If he carries full comprehensive insurance, so when the car gets wrecked the insurance will buy a new car, then it might make sense.

Too often guys do this, take on lots of debt, then wreck the car, and still have the debt.

 

Taking on debt is sometimes a wise move... like buying a house; where the price paid doesn't change over the next 10-20 years and only interest is added to the amount borrowed. The general rule of thumb is that when you borrow/invest, the long term benefit should ADD to your wealth, not lower it.
1.) A house will increase in value over the long term (ups and downs expected).
2.) A new gun, furniture, car or television will decrease in value.
3.) Precious metals will stay roughly the same (ups and downs expected) because it's value goes up with inflation. For example 2 oz. of silver will buy a pair of shoes....$70.- today and $135 in 5 years.
4.) Stocks go up and down with the economy; generally up more than down over the long term: risk is a factor, so do your homework before investing.
5.) Bonds have a fixed rate of return for their life (5 year?). So, a good 7% rate today may not keep pace with inflation.

 

Those electric vehicles often depreciate shockingly fast, such as 1/3 in the first year.

I drive a paid-up 2014 Ford Focus that I bought new. Put some money down, paid off the rest in 4 years at a very leisurely pace. During the summer it still gets 40mpg on the highway at 70mph+, and I'm not kidding.

I mentally set aside $100 per month for potential repairs, but as I approach 100K miles, I really haven't had to do anything other than tires. I suppose I had to do brakes at one point but I don't remember, and when I take it in to get serviced, they're happy with the brake pads and rotors.

Would it be nice to have a nicer car? Sure. And more costly. My monthly payment is zero, my insurance is affordable, the costs to run it are low, and it actually handles very nicely and has more than enough power.

Can't imagine why I'd trade that for an electric. Now, at some point I may decide it's starting to become unreliable enough that I don't want to have a breakdown on a deserted country road in the middle of the winter, so I might get something else.

But not now. And likely not for a long time. Wondering if I can get it to 20 years...I've had it for 11 years.

 

Those electric vehicles often depreciate shockingly fast, such as 1/3 in the first year.

I drive a paid-up 2014 Ford Focus that I bought new. Put some money down, paid off the rest in 4 years at a very leisurely pace. During the summer it still gets 40mpg on the highway at 70mph+, and I'm not kidding.

I mentally set aside $100 per month for potential repairs, but as I approach 100K miles, I really haven't had to do anything other than tires. I suppose I had to do brakes at one point but I don't remember, and when I take it in to get serviced, they're happy with the brake pads and rotors.

Would it be nice to have a nicer car? Sure. And more costly. My monthly payment is zero, my insurance is affordable, the costs to run it are low, and it actually handles very nicely and has more than enough power.

Can't imagine why I'd trade that for an electric. Now, at some point I may decide it's starting to become unreliable enough that I don't want to have a breakdown on a deserted country road in the middle of the winter, so I might get something else.

But not now. And likely not for a long time. Wondering if I can get it to 20 years...I've had it for 11 years.

Affordable insurance? Where? How?

 

bought a toyota prius from the local junk yard for $1500, with the color matched fenders and front end parts to fix it up.. A young family needed a car so they bought it for what i had in it. They drove it all summer and put a bunch of miles on it and it still works altho it is a little low for driving in the snow.. for the price of three car payments they have a running working car...

I tend towards toyota and honda rigs. My little toyota pickup has over 300K and the "good" car a honda pilot has 185K and does nothing but run. Bought it used a couple years ago and had a manor tune up with cam belts done so I fully expect to put a lot more miles on it.

i initially insured the 2005 toyota prius and the insurance agent told me insuring new hybrids or electrics with his company is really expensive. Crash damage on a new one is total time.

 

The Prius’s are very popular in DC as cabs, the buy them at end of life of the first battery, do a gray market battery replacement, then run the crap out of them . Apparently a hybrid is even more attractive for a cab, and the small engines running at at least half power do well on the emissions test.

 

We have a 33 year old Defender 110 with 220,000 miles on the clock (more or less the only original part on the whole vehicle), which is my little prepper fantasy. Runs on diesel, I can repair almost all the problems with an adjustable wrench and a Swiss army knife, and not electronics at all so EMP safe. I use that as my daily drive.
The current Mrs. SNC has a Discovery Sport plug-in hybrid because she wants at least one car in the household that is reliable (ha!), and which complies with the legal requirements in our country. In this case taking on a bit of debt to get a shiny car makes sense. The worst that can happen is that we run out of money and have to hand it back (low probability), in which case we still have one car to move round with.

 

I personally don't believe in going into debt for my hobbies, and owning a fancier car when a mundane one would suffice is absolutely a discretionary expense.

Then again, I'm also biased against new cars from years of shopping used. I personally like knowing whether a given model year of car is going to suck before I buy it, rather than paying extra for the privilege of finding out this year's "improvements" and "updates" actually made the whole thing worse.

Cars are easy to justify because most people need something reliable to drive, but plenty of people make similarly poor financial choices with gambling, intoxicants, excess travel, luxury clothing, etc.

 

I went the other way a couple weeks ago. My 1996 Ford F150 4x4 that I bought used in 1998 finally reached the end of its useful life. The frame rail split lengthwise from behind the steering box to the bed. It has been a rusty mess under there for years. There was simply nothing left to weld TO let alone patch in. Also if one split the rest are not far behind. I sold it for $1250 to a local guy who rebuilds that era Ford trucks and old full size Broncos. The transfer case, OD trans and 5.0 v8 are all worth a bunch according to him especially since the truck only had 87,000 actual miles on it. Also the rear was a positraction 3.55 along with the front differential. All worth money according to him.

I searched for 3 weeks online and local for a suitable used replacement ..... folks there is literally nothing out there F150 standard cab, 4x4, V8 and 8 ft bed. Need the 8 ft bed for my side work cannot deal with a shorter one. The ones I found were either pounded into the ground, had a zillion miles on them or were priced out of value ranges. I considered Chevy and GM and even Dodge there was just nothing that seemed worth the asking price.

I found a leftover 2024 Ford locally that someone had ordered 6 months ago and then refused it when it showed up. It had been sitting for 3 months. Plain Jane XL but had the 5.0, 4x4 and the 8ft bed. They sold it to me for $1200 under invoice and I qualified for 2 separate $1,000 rebates. Oh and they offered 0% financing for 36 months and threw in the spray in bed liner. Done.

Sometimes you just have to bite the bullet and do the deal ... I needed the truck we have a ton of trees to slab up, bad weather is here and I was wasting time hunting for something that is incredibly hard to find. The silver lining is that this will be the last truck I ever need as my years ahead are far less than my years behind. IF the old one lasted 26 years I imagine this one will out live me.

 

I went the other way a couple weeks ago. My 1996 Ford F150 4x4 that I bought used in 1998 finally reached the end of its useful life. The frame rail split lengthwise from behind the steering box to the bed. It has been a rusty mess under there for years. There was simply nothing left to weld TO let alone patch in. Also if one split the rest are not far behind. I sold it for $1250 to a local guy who rebuilds that era Ford trucks and old full size Broncos. The transfer case, OD trans and 5.0 v8 are all worth a bunch according to him especially since the truck only had 87,000 actual miles on it. Also the rear was a positraction 3.55 along with the front differential. All worth money according to him.

I searched for 3 weeks online and local for a suitable used replacement ..... folks there is literally nothing out there F150 standard cab, 4x4, V8 and 8 ft bed. Need the 8 ft bed for my side work cannot deal with a shorter one. The ones I found were either pounded into the ground, had a zillion miles on them or were priced out of value ranges. I considered Chevy and GM and even Dodge there was just nothing that seemed worth the asking price.

I found a leftover 2024 Ford locally that someone had ordered 6 months ago and then refused it when it showed up. It had been sitting for 3 months. Plain Jane XL but had the 5.0, 4x4 and the 8ft bed. They sold it to me for $1200 under invoice and I qualified for 2 separate $1,000 rebates. Oh and they offered 0% financing for 36 months and threw in the spray in bed liner. Done.

Sometimes you just have to bite the bullet and do the deal ... I needed the truck we have a ton of trees to slab up, bad weather is here and I was wasting time hunting for something that is incredibly hard to find. The silver lining is that this will be the last truck I ever need as my years ahead are far less than my years behind. IF the old one lasted 26 years I imagine this one will out live me.

Unfortunately, modern trucks are much more problem prone than they used to be. The 5.0 is definitely the engine to get for longevity. However, they come with the damn 10 speed transmissions that are VERY problem prone. I really hope you got a good one, just watch out for problems because they are endemic to the design.

My truck is the year that was the last of the steel bodies, first of the ecoboost engines. I've had one major engine repair (exhaust manifold issues due to a design flaw), and the 6 speed transmission had a wire harness that died around 100k (relatively minor fix). I am close to the point where I want to think about a newer truck, but I won't touch any more turbos or 10 speeds. I've evidently had much better luck than the average with the turbo from what my mechanic tells me.

 

I purchased a new F350 diesel truck this year, and did so with a loan. Earlier in the year, we traded in our travel trailer for a bigger one (paid in cash, since it's a toy). It was within the tow ratings of my F150, but after two trips, I realized I was on the ragged end of what it could tow. I had two choices. First choice was to buy a bigger truck, second choice was to trade in the travel trailer (for a big loss) for a smaller one again.

My F150 was ten years old, and closing in on 200,000 miles, and I was already planning to upgrade to a diesel 1 ton for my next truck anyhow (I do a lot of towing for my farm, plus travel trailer), and my kids aren't getting any smaller, so the choice between the two was easy. I found a two year old slightly used truck (~20k miles) that already took the new vehicle depreciation hit, but was practically brand new in condition. They were offering a very low interest promotion, so I financed it, though between trade-in and money on top, equity is >50% at the time of financing. I could have paid for it in cash, but that would be money earning more in the market than what I'm paying in interest.

Some would say it was stupid to finance the truck when I didn't have to, and they may be right. I always battle between paying off debts, or keeping money in the market earning more. On one hand, having no debt is great, on the other hand, taking on the debt actually helps to increase my rate of net worth accumulation.

 

I purchased a new F350 diesel truck this year, and did so with a loan. Earlier in the year, we traded in our travel trailer for a bigger one (paid in cash, since it's a toy). It was within the tow ratings of my F150, but after two trips, I realized I was on the ragged end of what it could tow. I had two choices. First choice was to buy a bigger truck, second choice was to trade in the travel trailer (for a big loss) for a smaller one again.

My F150 was ten years old, and closing in on 200,000 miles, and I was already planning to upgrade to a diesel 1 ton for my next truck anyhow (I do a lot of towing for my farm, plus travel trailer), and my kids aren't getting any smaller, so the choice between the two was easy. I found a two year old slightly used truck (~20k miles) that already took the new vehicle depreciation hit, but was practically brand new in condition. They were offering a very low interest promotion, so I financed it, though between trade-in and money on top, equity is >50% at the time of financing. I could have paid for it in cash, but that would be money earning more in the market than what I'm paying in interest.

Some would say it was stupid to finance the truck when I didn't have to, and they may be right. I always battle between paying off debts, or keeping money in the market earning more. On one hand, having no debt is great, on the other hand, taking on the debt actually helps to increase my rate of net worth accumulation.

I wasn't turning down 0% for 3 years not a chance.

 

This is a dead horse topic at SB. Won’t stop the beating though.

Debt for assets which can appreciate such as land or house, makes sense for some people.

Same with a vehicle purchase if managing the debt is within budget and if the vehicle is absolutely necessary I.e. for work, school, etc.

I was at the office this week and counted 3 Tesla Cybertrucks in the parking lot. They retail for about 100k and are no “C” level employees at my facility, only drones. Not my choice for a purchase but I don’t care how people spend or waste their money as long as they don’t live with me.

 

This is a dead horse topic at SB. Won’t stop the beating though.

Debt for assets which can appreciate such as land or house, makes sense for some people.

Same with a vehicle purchase if managing the debt is within budget and if the vehicle is absolutely necessary I.e. for work, school, etc.

I'll add to this people have different priorities. If you drive a lot, much to this board's displeasure for some reason, a Telsa pays for itself quickly. People also ignore than a 20k ICE car from 2019 is now 30k and a 45k tesla is now 35k.

Beaters come with their own set of problems. I'll be around 5k into my now approaching 15 year old "reliable" car after the latest round of problems. That's only one year of payments but total cost to own is not as big of a difference as people who drive beaters like to make it seem. Cars, all of them, are money pits. One way or another.

 

I have the space so i have more than one used vehicle for each purpose....much cheaper than one new cost even with insurance and the good towing policy I have.

 

not reasoning but rationalizing emotional decision making.

"As of January 2025, the average price of a new car in the United States is $48,978" (AI answer)

choke choke choke...

 

You can make comparrisons but everyone has different circumstance and mindsets through life experience , thus differing priorities . I live in a rural south coast range mountain valley in Canada . I drive a 2003 Yukon SUV that cost $3k . I don't invest in vehicles but that is me . I do have appreciating assets and I am debt free and retired .
Different strokes for different folks.

 

A few weeks back I took a Uber and the guy was driving a Tesla turns out its the most economical costs him about 15.00 a day to supercharge his Tesla the car he had previously cost about 50-70.00 a day in gas.

 

$15 to fill a Tesla for 300 miles or so sounds about right. An ICE might take 15 gal fillup for the same miles, for $50. So a Tesla might save you $35/day.

 

$15 to fill a Tesla for 300 miles or so sounds about right. An ICE might take 15 gal fillup for the same miles, for $50, a difference of $35/day.

Depends on the electricity price. If you've got solar it's free.

 

I’m not debating whether an EV vehicle is better or not cost effective than a gasser, it doesn’t matter what this guy financed… he should not have financed anything because he just created more work for himself to service this loan, the name of the game for me was NOT TO WORK and the only way I achieved that was living below my means

 

I don’t know the guy and I don’t like debt, I’m debt free, but it looks like his loan is just like any business loan, he takes a loan to be able to make more money quicker. I wouldn’t have done that, but it’s not the same as most other people buying cars they can’t afford.

 

The Tesla Model 3 is a mid size sedan, so you would have to compare a mid-size ICE sedan for price comparison. The cheapest stripped down mid-size sedan in the US right now according to Kelly blue book is the Subaru Legacy Base at $26,180. So a little under 10k difference between the two.

 

This discussion needs a congressional hearing complete with lobbyists..
About the same amount of usefull info would be presented with ever changing benchmarks and cost of funding.
This reminds me of clickbait....

 

What @ForestBeekeeper said does work in many instances, by creating a debt in place of offsetting income or some other rule the IRS has for taxing you. The success comes by riding the line, neither creating debit which saddles you, nor having that which is legally taxed.

As for cars, when I closed my business I took one of the shop trucks and that's my daily driver. 2019 GM 1500 pickup. I've often thought about getting a Jeep, but a) I don't want the debt, b) the cost is outrageous, and c) now that I'm 90% retired, I don't need something new out of vanity.

 

EVs are not green or even close. Their production requires far more pollution and petrochemicals than most could ever imagine from what they express to the public to make them look 'clean'. The only reason there are so many on the roads are due to government requirements and subsidies. Each one yu see on the road YOU helped finance as a taxpayer.

The manufacturers re loosing their butts on them and they have put production on hold and stopped building new factories to manufacture them. The public just doe not want them in any quantity.

 

Nobody mentioned anything about them being green, he bought the Tesla to save on gas as he drives many miles hauling food and people.

 

I think if I were buying a new vehicle specifically for OP's use case for Uber and delivery services etc. I would probably buy a Toyota Corolla Hybrid. Between the initial cost, fuel mileage and resale in 5 years it presents a powerful case for that use case.

 

My 2003 Dodge Caravan has 258,000 miles and is still going strong...

 

My 1996 Ford F150 had 87,000 and the frame literally split in half from rusting out. Mechanically it was fine and I maintained it well but the undercarriage was a disaster. it sat in a carport too most of the time. Wasn't left out in the weather to rot. Northeastern winters with the salt and brine all over the roads are a problem no matter how well you try to keep it flushed out and washed underneath.

Our maintenance shops keep new brake lines in stock for the service trucks ... and they are all less than 5 years old.

 

I drive my cars until they break- then I fix them and drive em some more. I refuse to spend big money on a car- it's just an expense and a utility and doesnt add anything of value to our lives. My best friend owns a tesla, he will never see a return on investment vs. An ICE vehicle for the cost/utility and it causes him to be more beholden to work/hamster wheel.

He just likes it. That's a good enough reason I suppose, all the other reasons are basically bull****- it's not cheaper or more efficient by any metric especially cost, and that includes the cheaper EVs aswell.

If you want to drive a "nice" vehicle it's going to cost you, and that cost is almost never going to be justifiable from a utility standpoint unless you specifically need a capability outside of just normal driving like towing, offroading, storage etc. A tesla really answers none of those extra utility functions. If you want a nice car, totally fine- but save us the mental gymnastics when it comes to the basics of getting from A to B- especially from a cost perspective.

I drive a 4 cylinder suv, it has good fuel economy/capacity and can do light offroading gets 30mpg. My wife's car is a focus hatchback and gets like 40mpg. Neither car cost us more than $14k bought both lightly used with less than 15k miles on em- did no financing to save on interest- both are cheap to insure and cheap to repair. car issue solved. I could have spent less and got something cheaper if I had wanted- I will likely do that next time and just buy something comparable that's easier to work on.

I get the want of a newer vehicle for warranty reasons, or to save of mechanical costs- for the most part though there is no ROI if you can do the work by yourself. If you can't- you gotta pay the dummy tax.

 

Although I'd love to be debt free, I'm ok with reasonable amounts of debt. It's in the budget.

A while back wife wanted her dream car, 100% an emotional purchase. I agreed to it without hesitation and we paid it off as soon as we could. Got cancer last year, promised my son I'd buy him a car when I was well enough. My truck for the oldest, that car for the youngest, just in case I wasn't around anymore. 10 year old Tacoma with only 90k miles, it's still being broken in.

Some emotion was in that decision, but it was more logical... I have enough life insurance that the family will be fine, but I wanted to make sure they both inherited reliable vehicles as they turned into adults. Have a few years before youngest is old enough, will pony up for my retirement truck at that point. (Assuming I can find one without a turbo.)

 

I was looking at used Honda Elements today. Allegedly a bulletproof engine and totally utilitarian. Thats almost "sexy time" for me.

 

ONE of the most absurd things being claimed, when I was young and just getting started out in life, was, never let your house build up too much equity. Even then, and still rather ignorant about all things financial, the advice felt wrong. WAY wrong.

I liked the idea of knowing, if I owned my house outright, I could run back to it when things went totally south.

Interestingly: (1) I gave that house to a friend, who couldn't qualify for squat; (2) The mortgage he had to pick up was $370.00/month; (3) He had a masters in things money and business management; and, years in, he lost the free house.

He was smarter than I. He swapped the equity for a loan and higher mortgage, to turn it into a profitable duplex, and to add a mother-in-law loft to the unjoined garage. He had a good, federal job, but the Cold War froze over, and he was let go. He lost the house because he couldn't afford the mortgage he put on it. He had to rent for just a bit less than his mortgage cost

Then there is my other friend, with a whole lot of nickels to rub together. He got stuck with the house he built for his wife, before the divorce. It was on a lot of dirt and had a lot of room. It was nice.

He took a loan out and used the money to pay off the debts on his commercial properties. As he pointed out, if thing went south, he'd rather lose a house he didn't much care for than his money making properties.

In the end, he sold the big house on the Nisqualy River and is living happily ever after.

 

Please consider correcting your post. Too many times, over many decades, I've heard the words "the value of gold went up / down today," as if it was the promissory notes we call Federal Reserve Notes [FRN's] that are stable, and not the precious metal itself.

In truth, when gold cost more, it is all about reduced value agreed to and regarding FRN's

Gold didn't change much, but our domestic enemies, a/k/politicians, damn sure, gutted the dollar even more in the last four years.

As so houses, their most valuable investment quality for most of us is, once paid off, and the greed of the aforementioned politicians aside, we have a place to run to in hard times. A place where we can build outbuildings, root cellars and so on. To keep it, all we have to do is protect it from county foreclosures for endless taxes.

That rental can always go up. For example, I paid $45.00/month for my first one bedroom apartment. The same place would cost at least $700.00 today.

Please consider correcting your post. Too many times, over many decades, I've heard the words "the value of gold went up / down today," as if it was the promissory notes we call Federal Reserve Notes [FRN's] that are stable, and not the precious metal itself.

In truth, when gold cost more, it is all about reduced value agreed to and regarding FRN's

Gold didn't change much, but our domestic enemies, a/k/politicians, damn sure, gutted the dollar even more in the last four years.

As so houses, their most valuable investment quality for most of us is, once paid off, and the greed of the aforementioned politicians aside, we have a place to run to in hard times. A place where we can build outbuildings, root cellars and so on. To keep it, all we have to do is protect it from county foreclosures for endless taxes.

That rental can always go up. For example, I paid $45.00/month for my first one bedroom apartment. The same place would cost at least $700.00 today.

Kindly look at point #3 of my post. Inflation erodes the value of fiat (or gold backed for that matter) currency. Inflation comes from too many dollars chasing the same amount of goods: think of stimulus checks, which add to the money supply, but don't create more goods, which causes higher prices.

The point is, a fixed amount of precious metal (gold for example) will buy something today. After all the economic tricks of the government, causing inflation... that same amount of gold will buy that same item at the inflated price. In other words gold has not really increased in value, although the price may go up: it has retained its value. Shoes today for 1/8 oz. of gold or higher priced shoes in the future for 1/8 oz. of gold.

Measuring things in dollars isn't a good picture of value. That is why you often hear "adjusted for inflation" or "in 1982 dollars" in charts or explanations...it's a way to understand what happened to the currency/dollar, namely that It has lost much of its value over time.