Struggling financially and getting frustrated?

[Lightcycle]

Stole this from Reddit, seems fitting

View attachment 44352

"That $44,445 car will cost you $111,761 after fees and finance charges."
"Yeah... I don't know what that means. It doesn't even sound like you're speaking English. Just tell me where to sign, so I can drive that pretty, shiny thing back home."

Two months later:

"WHY AM I SO POOOOOOR?!?!?"

 

[ChrisCBR]

My feeling is if a wave 2 comes, there will be lots of folks hurting. The bail out money won't be there this time. Meanwhile at my work we are selling cars like hot cakes-probably most of them financed. I dunno, ppl see the world differently than i do i'm guessing.

Maybe they feel invincible, as if the government is going to bail them out with CERB in perpetuity.

Savers and financially responsible people have been burned the past decade or two. People who took risk and poured money into the stock or real estate market have been rewarded.
With interest rates that are going to stay lower for basically forever, savers are going to continue to be punished, especially when inflation starts rising.

 

[ChrisCBR]

"That $44,445 car will cost you $111,761 after fees and finance charges."
"Yeah... I don't know what that means. It doesn't even sound like you're speaking English. Just tell me where to sign, so I can drive that pretty, shiny thing back home."

Two months later:

"WHY AM I SO POOOOOOR?!?!?"

lol his handle is ironic "wealth builder"

 

[nobbie48]

These threads seems to pop up now and then, so I was curious and ran some rough numbers for you.

Again rough numbers, I didn't include the seedoo at all, but leaving things as is and guessing this is what I came up with. Now I would say it's is just barely possible. But again I don't know how much that tool fetish is costing them, but they are not far off from being broke each month. Rate from Ratehub (pickering area), 5% down, not great.

$60,000 after taxes = $45,501

$3792 monthly

-- Basic living Expenses p/m --
$1200 Rent
$65 Mobile
$60 internet
$300 groceries

$1625 total


-- Vehicle Expenses --
New truck $25,000 - $5000 down payment
$20,000 over 48 months 0% = $417

Insurance $1700 / 12 = $141

Gas yearly $2500 / 12 = $208

$766 Total

-- Disposable income ---
$1401

-- House --
$450,000 / 0.05% = 22500 / 1401 = 16 months

Mortgage 444,600 @25y rate 1.89% = $1859 payment

$1859 is higher then disposable but since we are not paying rent (+1200).

$2601 - $1859 = $742 left

If he get's his expenses in order, and disciplines his spending habits it might be possible for them to purchase a home. A side hustle would be helpful. But as you can see there is very little left for any kinda of savings or life enjoyment.

If my numbers are out of wack please just correct them.

The truck price might be low. They get optioned up pretty fast.

Rent a room at half the $1200. Put the $7200 a year to paying off debts. Hopefully in three years some savings will show.

Discipline is the key word. It can be done but the person has to be able to focus on the long term goal of owning a house, if that is what he really wants.

The first year will be psychologically brutal. It may mean a new set of friends. Instead of the "What restaurant?" crowd it will be the "What are you cooking?" crowd.

The second and third year will be hard to but once the loans are paid off and some positives are seen in the bank account there will be some light at the end of the tunnel.

The biggest problem is that in this carpe diem world three years is agony.

 

[justride]

don't lend him any money or sign anything. he is not going to pay you back and leave you on the hook!

 

[nobbie48]

My feeling is if a wave 2 comes, there will be lots of folks hurting. The bail out money won't be there this time. Meanwhile at my work we are selling cars like hot cakes-probably most of them financed. I dunno, ppl see the world differently than i do i'm guessing.

A buddy is due for a new pickup and not seeing the deals he thought would be on the table, lots of other stuff selling as well.

Possibility 1) People with savings are ticking off items on their bucket list.

Possibility 2) People with limited credit are going for broke. Why declare bankruptcy for $30K when you can do it for $80K?

 

[nobbie48]

"Federal Truth In Lending" something or other on there above that box.

It's a great idea and I think a lot of credit cards even have that on their monthly mailings now, but people just F'ing ignore it because they want what they want. Who cares if that $50K pickup truck costs me $100K when it's a $2500 piece of rust in 10 years before I even finish paying for it - gotta have it.

This should be in big huge letters on the windshield of every single vehicle someone wants to finance. Toys, as well. It's too late putting it on the receipt once people have already signed on the dotted line, or are about to and have a huge boner about to get their keys to that new ride.

If there's a loan on the truck they will be paying for full coverage insurance to the end. The collision could be more than the value of the vehicle.

Years ago I was considering a lease deal through Ford but met a really decent sales rep. He pointed out that the two year deal looked great in the beginning based on monthly payments but a lot of people used their trade in as the up front money. In two years the lease is up and they have no trade in for the next go-around.

People don't do the math. A three year lease at $400 a month with $7200 down is the same as $600 a month.

 

[GreyGhost]

If there's a loan on the truck they will be paying for full coverage insurance to the end. The collision could be more than the value of the vehicle.

Years ago I was considering a lease deal through Ford but met a really decent sales rep. He pointed out that the two year deal looked great in the beginning based on monthly payments but a lot of people used their trade in as the up front money. In two years the lease is up and they have no trade in for the next go-around.

People don't do the math. A three year lease at $400 a month with $7200 down is the same as $600 a month.

It's much worse that 600 a month. You have lost opportunity cost on the 7200 and much more importantly if you crash in month one, your monthly payment was $7600. Insurance cheque goes to ford. Money down on a lease is a horrendous plan.

 

[nobbie48]

Maybe they feel invincible, as if the government is going to bail them out with CERB in perpetuity.

Savers and financially responsible people have been burned the past decade or two. People who took risk and poured money into the stock or real estate market have been rewarded.
With interest rates that are going to stay lower for basically forever, savers are going to continue to be punished, especially when inflation starts rising.

A few years back I was coming out of a convenience store with a cold drink and was just folding my wallet. I had a bunch of cash for some planned shopping.

A kid was selling school chocolate bars and I said no thanks. He had seen my wallet and replied "But sir, you've got money."

The banks and government all know when you've got money and they're just like that kid. They want a chunk of it and they're like a pack of hyenas snarling over a dead carcass. The government is the worst in that they can pass a law that says you have to give them your money. It's called tax.

Canadian Emergency Coronavirus Benefit, CERB will be followed by CERBERP Canadian Emergency Coronavirus Benefit Extraordinary Repayment Plan.

 

[nobbie48]

Unless people can punt their mortgage, 10 to 20K doesnt last long. I dont know if 10K could last any normal family 6 months.

A woman my wife worked with sold her townhouse a half dozen years ago and rented. After paying out the mortgage and fees they put $60K in their pocket so they would have some money in retirement.

Four years ago a friend bought a townhouse in Mississauga for just under $500K. The one next door just went for about $750K.

Do the math.

My friend just bought a pickup that would wipe out most of the woman's $60K.

 

[nobbie48]

Tough to have money set aside when housing costs are out of control

You mean saving $20K a year towards a house that is going up $50K a year?

On a flight back from Winnipeg a woman asked me how people afforded houses in Toronto. My answer "You mortgage your youth."

 

[mimico_polak]

I know plenty of people that have this mentality. Don't want to save any cash whatsoever, and are spending it faster then it's coming in .... why not? Easy and cheap money to be had and they're enjoying their life. More than once my wife and I got into arguments with her saying 'how come so and so go on 3 vacations per year and we don't???' and my response is typically "because they're 100k in debt + mortgage, and we're not"

Some examples:
- 3 trips out of country / year and they don't have enough to go buy food sometimes...but the trips must be. COVID stopped the last trip so now they need to do a mega trip to make up for it.
- house, rental property, car, 140k/year annual...never enough cash to take the kids out for some activities. $300 on shoes and clothes spent every 2 weeks though (if that)
- car paid off within 6 months of buying it by a buddy...great...not really, rolled it into the mortgage as the money was cheaper.

Honestly sometimes I feel like a sucker for not spending like a fool on toys/cars/vacations when I compare myself to some in our inner circle of friends.

 

[nobbie48]

I know plenty of people that have this mentality. Don't want to save any cash whatsoever, and are spending it faster then it's coming in .... why not? Easy and cheap money to be had and they're enjoying their life. More than once my wife and I got into arguments with her saying 'how come so and so go on 3 vacations per year and we don't???' and my response is typically "because they're 100k in debt + mortgage, and we're not"

Some examples:
- 3 trips out of country / year and they don't have enough to go buy food sometimes...but the trips must be. COVID stopped the last trip so now they need to do a mega trip to make up for it.
- house, rental property, car, 140k/year annual...never enough cash to take the kids out for some activities. $300 on shoes and clothes spent every 2 weeks though (if that)
- car paid off within 6 months of buying it by a buddy...great...not really, rolled it into the mortgage as the money was cheaper.

Honestly sometimes I feel like a sucker for not spending like a fool on toys/cars/vacations when I compare myself to some in our inner circle of friends.

Who sleeps better at night? Priceless.

 

[Mad Mike]

A woman my wife worked with sold her townhouse a half dozen years ago and rented. After paying out the mortgage and fees they put $60K in their pocket so they would have some money in retirement.

Four years ago a friend bought a townhouse in Mississauga for just under $500K. The one next door just went for about $750K.

Do the math.

My friend just bought a pickup that would wipe out most of the woman's $60K.

You mean saving $20K a year towards a house that is going up $50K a year?

On a flight back from Winnipeg a woman asked me how people afforded houses in Toronto. My answer "You mortgage your youth."

And that $50K truck goes down $10K each year.

 

[POWERMAN]

Who sleeps better at night? Priceless.

So true, my friend!

Earlier this year I was over at Islington Chrysler as I've been wanting to buy a proper muscle car (its on my bucket list)..they had a few Challengers sitting on the lot and were willing to go down to low 50s (MSRP around 65k+)..but I still walked away to think over it as I hate making impulsive decisions..

Granted, while I was still fortunate to remain employed during this time, I shudder to think about the state of my mental health had I gone ahead with this decision only to have the lockdown follow shortly after.
All this coupled with my oncall rotations at work and having my previous tenants leave the country threatened me with having to touch my savings if I could not find new tenants on time.
Thankfully everything worked out and I came out unscathed.

Decided to keep my current Charger (factory ordered it when I was 25) and planned out all the maintenance activities to keep it in top shape until 2025 at the very least.

Until then..I'll wait to see what the next iteration of the Challenger and Mustang are..

 

[mimico_polak]

@POWERMAN ive got a similar internal struggle. Went to check out some cars. Found the one I wanted, price was meh, shape was good, some minor issues I could deal with.
But my stupid brain was ‘wait...what if you lose your job? You don’t need that car now...a civic is the answer’ and I’m still on the fence. Mind you my purchase is sub 20k. Ugh. Wish I was a bit reckless with my cash.

 

[regder]

"That $44,445 car will cost you $111,761 after fees and finance charges."
"Yeah... I don't know what that means. It doesn't even sound like you're speaking English. Just tell me where to sign, so I can drive that pretty, shiny thing back home."

Two months later:

"WHY AM I SO POOOOOOR?!?!?"

People like this have zero concept of the actual cost of things, they look at monthly payments. If the monthly payment fits into their "budget", they're good to go. Unfortunately this is true for the large majority of our population.

I'm sure most of us have had conversations along these lines, "Just got a great deal on a new car", cool how much did you pay? "Only $***/month"

 

[sburns]

$300 per month is too low on groceries imo, at least for a man. Thats $10 a day, $3.33 per meal. Sure it can be done if your eating a lot of processed garbage.
What about clothes, shoes shavers, soap and all the little things every month that add up etc etc
What new truck are you buying that is $25K? Try $50K
$48 a week for gas for a truck? Maybe if you only drive 300km a week.
You forgot the CMHC scam mortgage "insurance", tack on another $20K to his mortgage.
Add in $500 a month for property tax, $300 a month for maintenance. Then heat, hydro, property insurance etc
What about vehicle maintenance? Another $500-$750 a year for a newish vehicle/truck.
No bank is going to give him a $450K mortgage with little down unless he is making well over $100K

You saw the part where I said rough numbers??

I just guessed and yes some of the numbers are more favourable then accurate.
An F150 starts around 28k retail, there are always discounts/deals on trucks. If they can't scrap enough together for house a 50k truck is outta the question.
Like I said if you want to correct the numbers and put up another ballpark figure, be my guest.

 

[GreyGhost]

People like this have zero concept of the actual cost of things, they look at monthly payments. If the monthly payment fits into their "budget", they're good to go. Unfortunately this is true for the large majority of our population.

I'm sure most of us have had conversations along these lines, "Just got a great deal on a new car", cool how much did you pay? "Only $***/month"

I'm the opposite. I could care less how much something costs per month. Show me the line that shows how much I am signing up for. If the bottom number is reasonable, the monthly numbers will work themselves out. When getting my last car, I was also planning a home purchase so the question was show me the interest rates by term so I can keep the ridiculous low rate and low monthly payment so it wont limit home purchase (although bank threshold and my threshold are not even close. The bank wants to give loans that would give me a stroke)

 

[Lightcycle]

I try not to be too judgmental about stuff like that, but sometimes can't help myself.

Financial acumen is like anything that involves impulse control and prioritization.

It's exactly like diet and exercise, things that I do very poorly on.

I like eating junk and not working out. I know if I ate well, I wouldn't be so doughy in the middle. I know if I exercised more, I wouldn't be so out of breath walking up stairs. But sitting on a motorcycle is more important to me. So is over-indulging on sour cream'n onion Pringles.

I'm sure people who over-indulge on spending know they are screwing their future selves, when the bills start coming in. It's just not a priority for them. Owning cool sh*t is more important.