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In Reply to: Don't start your adult life with debt. posted by Larry in TN on November 27, 2000 at 08:03:11:
This is appealing...except that your plan would require him to drive cars that he does not really want (the 6k car, the 13k car, the 26k car). For the next 5 years, he'll be thinking "ahhh only X months later until I get this car...and after that, only X months later until I get this car."
I'd rather just buy the car now, and accelerate payments so that I have it paid off before then.
Here's a better plan...
Start saving the $600 per month that you would have used for car payments. In six months you have $3600 plus the other $3000 from waiting tables. Buy the best $6600 car you can find and keep saving the $600/mo.
Twelve months later you'll have $7200, plus a little interest, in the bank and a car worth about $6000 for trade. Move up to a $13k-$13.5k car (maybe a used BMW?) and keep saving the $600/mo.
Twenty-four months later you'll have about $15,000 in the bank and a car worth about $11k or $12k. Move up to a $26k or $27k (a used 2002 or 2003 3er?) and keep saving the $600/mo.
After another 24 months you'll have another $15k in the bank and a trade worth about $20k. After 5½ years you'll be able to buy a brand new 3er for cash instead of having just paid off a five-year old 2001 3er.
At this point you can reduce your $600/mo "car payment" to a value that will allow you to upgrade at whatever frequency you want or you can keep saving the $600/mo and keep moving up to nicer cars for cash.
I assume that you're 21 or 22? You could be driving a brand new paid-for BMW by age 27. From then on you'll be driving BMWs for less per month than most people pay to drive their Camry's and minivans.
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