Financial information is the key to change.
Unfortunately, for most of us, basic financial information is not taught in schools. We live in a country that continues to pass out diplomas to people who lack healthy financial skills, creating a society not prepared to handle the financial ups and downs of everyday living. The road to financial freedom is paved with information; join me on my journey.
Lucille Tyler Baldwin
Author of "Sick and Tired of Being Broke"
Thursday, September 9, 2010
Is your Dream Car Creating Wealth?
The truck will have lost its magic years before the final payment is due. If he is like most consumers, the husband will trade the truck in for a newer model (his next dream vehicle). If like most consumers the husband only makes the minimum monthly payments on the truck, he will soon "owe" more on the loan than the truck is worth.
If the couple purchases a $500 savings bond each month instead, they would have invested $6,000 each year with a future value of $12,000. $12,000 times the "eight" years for the monthly truck payments would have given them a future value of $96,000! How much will his used truck be worth in eight years?
What's worse is that the truck will depreciate by at least 20% the moment he pulls off the car lot. Which means the value will go from $30,000 down to about $24,000 in minutes! Now he owes $48,000 for a truck that is now worth $24,000 and he has not made it home yet. Wasted wealth.