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Old 09-30-2018, 05:02 AM   #31  
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Charles Givens is the man. I keep a copy of ďWealth without riskĒ in the bathroom for easy reading 😊. I recently bought a new copy at a used book store for $3. I gave this to my son to read. Biggest expenses in life : Taxes, home loan, auto loans, insurance. It behooves one to become an expert on these subjects. I drive a twenty year old car that I maintain myself. I think I have financed it at least four times. Why you ask? Cheap money to invest. My last five year car loan allowed me to borrow money at 1.49%. My house refinanced several times when interest rates were dropping (Givens interest rates chart explaining market shifts based on prime rates should be required reading in high school). This allowed me to pay off my house in fifteen years while maintaining approximately the same payment (think refinancing a thirty year mortgage to a twenty followed by a ten year mortgage at 2.5%). I do most of my own maintenance around the house, but I know my limits. Sometimes it makes more sense to hire it out and pickup an extra day of flying. I enjoy mowing and washing my car. I always always always fund my retirement first. Then we make the most of whats left. Its not that hard. It just requires some self discipline.
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Old 10-01-2018, 09:35 AM   #32  
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Hmmm..

Can you expand on the car refinance scenario a bit?

Thanks.

STK
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Old 10-03-2018, 10:24 AM   #33  
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Stimpy,

My family situation requires four cars. They were all paid off numerous times. I shop interest rates all the time : Penfed, AA credit union, Navy Federal. The last time I refinanced all four into a used car rate of 1.49% for five years. I max out their KBB value. Some banks allow you to borrow 115% of their value. I use this cheap money to invest in items that pay much more. This strategy won’t be as effective as interest rates rise, but I think you could still find five years loans at 2.25 today (I’m just ballparking it). To me, that is still cheap money.
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Old 10-03-2018, 10:15 PM   #34  
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I'll throw my $.02 in...

Haven't seen anyone mention Quicken. 20 years ago I started logging EVERY penny I spent into the software program. I had always kept a balanced checkbook, but that didn't explain where all the money went. Now I know, and it's helped me be aware of how to control spending. Found out I was spending more on bridge tolls than wine!

I buy new cars and keep them until they die. (No hidden problems like in used cars). Once I paid off the first loan, I kept making payments to myself in a separate account for the next car which I paid cash for, and same thing for the third. So I've had no car loan since 2002.

For a retirement plan, ALPA pays Schwab to do one for us for free. Very detailed product, and if you've paid yourself first over the years, will give you a warm fuzzy.

Gotta step...enjoy talking money with like minded pilots!
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Old 10-04-2018, 08:05 AM   #35  
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Originally Posted by SimMonkey View Post
Stimpy,

My family situation requires four cars. They were all paid off numerous times. I shop interest rates all the time : Penfed, AA credit union, Navy Federal. The last time I refinanced all four into a used car rate of 1.49% for five years. I max out their KBB value. Some banks allow you to borrow 115% of their value. I use this cheap money to invest in items that pay much more. This strategy won’t be as effective as interest rates rise, but I think you could still find five years loans at 2.25 today (I’m just ballparking it). To me, that is still cheap money.

I understood and had inferred the above process but have trouble making the numbers crunch (?)

Example:

> Used car worth maybe $8,000.

> Loan at 2.25 % over 5 years = $8900.00 owed

------------ -----------------------------------

> $8,000 invested returns of 10.0 % over 5 years = $4000.00

> $4000.00 - $900.00 = $3100.00/5 = $620.00


So, you clear about $620.00 / year.

Is this an accurate example of what you are doing?

Stimpson
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Old 10-06-2018, 06:44 AM   #36  
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I too use Quicken religiously, though not so much to control spending as to simply be aware of it (yes I should budget but itís just not my thing - my control mechanism is intrinsic based on my known state of the financial union gained from keeping track a couple of days a week).

Iím debt averse, so the car financing thing seems crazy to me. We have lotsa cars w/ two teen drivers so our expenses are high; but the newest is a 2007 with 164k. I do the vast majority of my own auto (and home) maintenance too, but itís gotten bad to a point of frustration when I have to pay someone else (I guess I have a problem....).

Iíve also bought furniture and flooring on zero-percent-for-years deals and I always want/need and do get them paid-off early. Still paying on my one foolish foray into a 401k loan when I needed a cash position a couple of years ago. Thatís not really a debt but is driving me crazy too. Iím hesitant to pay it early as Iím feeling the market is due for a significant pullback so Iím DCA'ing it back in with monthly payments, but man do I want that off the books. The mortgage is about the only debt I can take; refi'd to a 20 yr a number of years ago so the interest portion of our payment is quite palatable.
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Old 10-08-2018, 03:21 PM   #37  
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Stimpy,

That's about it. Compound interest in your example would clear about $884 a year, for five years, for doing about 30 minutes of online applications. When interest rates were lower, Penfed actually had a Black Friday special of a 5 year refinance at .99%. I had four cars worth about $60,000 that were paid off. This isn't big money, but I like the spread. Like I said, it was painless through one of my credit unions. I like easy money. I wish I could scale this up a few million
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Old 10-09-2018, 01:57 PM   #38  
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Originally Posted by SimMonkey View Post
Stimpy,

My family situation requires four cars. They were all paid off numerous times. I shop interest rates all the time : Penfed, AA credit union, Navy Federal. The last time I refinanced all four into a used car rate of 1.49% for five years. I max out their KBB value. Some banks allow you to borrow 115% of their value. I use this cheap money to invest in items that pay much more. This strategy won’t be as effective as interest rates rise, but I think you could still find five years loans at 2.25 today (I’m just ballparking it). To me, that is still cheap money.
So you’re borrowing money on things that depreciate in value (cars) and using the borrowed money to engage in speculation on other financial products/items/instruments? I prefer paying cash for cars, having no debt, and using all my income for investments. There’s no such thing as easy money. Momma said there’s a place you can go if your need money....it’s calld WORK... Four pieces of advice to never take from pilots : financial, fitness, culinary, and relationship.

Lots of guys are self reportedly “killing it” with financial schemes but seem to have negative net worth. It’s just like getting ripped in the gym: stick to the basics and lift heavy and you’ll do great.

Last edited by Std Deviation; 10-09-2018 at 02:14 PM.
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Old 10-09-2018, 02:12 PM   #39  
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A properly diversified portfolio always makes money over the long term and almost always makes money over the medium term. This is why anything less than $2 million just isn't enough to retire on with a 5% withdrawl.
Iíll bring up an interesting philosophical debate on the withdrawal rate. Retaining the principle is only a factor because you donít know when youíll die. Unless you just decide when you reach age ďXĒ youíll ďcheck yourself out.Ē Then you can pull far in excess of the mythical withdrawal rate. So if you retired at 65 and say your X was 75 you could live like royalty on 2 million for the next 10 years. Thereís an article by a Harvard professor entitled , ďWhy I hope to die at 75.Ē Fascinating read. For the non religious without any heirs this philosophy is intriguing. No Iím not crazy. This whole financial paradigm is driven by the unknown X. You could drop dead at 85 with a couple million tucked away and what good is that The last check I write is going to the undertaker - and Iím hoping that bounces.

Iíll literally give my money to a cat charity - I donít like cats - before I let my deadbeat relatives inherit it.
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Old 10-10-2018, 06:04 PM   #40  
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So youíre borrowing money on things that depreciate in value (cars) and using the borrowed money to engage in speculation on other financial products/items/instruments? I prefer paying cash for cars, having no debt, and using all my income for investments. Thereís no such thing as easy money. Momma said thereís a place you can go if your need money....itís calld WORK... Four pieces of advice to never take from pilots : financial, fitness, culinary, and relationship.

Lots of guys are self reportedly ďkilling itĒ with financial schemes but seem to have negative net worth. Itís just like getting ripped in the gym: stick to the basics and lift heavy and youíll do great.
Let me correct you:

I am leveraging an asset to obtain financing (OPM) at an interest rate that could be the cheapest in the history of financing in order to obtain my long term goals. What does the fact that cars depreciate have anything to do with this? As far as my momma, she used to tell me to make my money do the work. So far I'm doing fine. I grew up in a family of accountants. I happen to graduate from one of the best Accounting schools in the nation and was a CFO at one time.

I wouldn't call this "killing it", but I do have a net worth in excess of seven figures.
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