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If I had a wife she would probably kill me! (But I don't)

#11
(12-01-2018, 03:29 AM)SilverAg47 Wrote: The fact that you asked this question in the first place tells me that you are generally conscious about your finance and budget, rather than being a typical over-spender who get into trouble with buying a mustang today, a luxury watch next week, a boat next month, and so on. So my overall take is, if this is something you want for whatever reason (e.g., you dreamt of owning one for long, it will lift your spirit, it will help your enjoyment, no more deep sighs when you see another mustang passing by, or any other reason), AND this is not going to be a financial disaster (the one-time payment plus the recurrent increase in insurance, gas, etc.), AND will not affect anyone else negatively (e.g., one suddenly turns from a responsible driver to a reckless one), then one should simply go for it. What is the worst that can happen if it turns out to be a bad decision? Will it be anything more than losing a few grands? Can such worst-cases happen even otherwise that you do not have any control on? Would you be okay to take the loss given that you at least owned something that you wanted to own, even for a short time? From the information you provided, it did not feel that way - but you are in a better place to evaluate this.
 
I strongly believe that people should do things that make them happy and not sacrifice them for incremental improvement of financial security. So it probably will come down to the question of whether to pay upfront vs taking a loan, buy or lease, etc., NOT whether to own it at this time. If I had passion for cars, I'd rather own it now rather than when I'm 90.
 
I bought the most expensive home stereo system right after getting my first pay. At that time, it costed a few months pay. My (late) dad was very upset with me because he thought this was an "irresponsible decision". He was not in a position to evaluate how much the crisp sound of the classic rocks meant to me - Shine on you Crazy Diamond, Paul McCartney's bass-line on Something, etc. - and what difference a good sound system made. I paid off the system within the first year. Glad that I made the decision at my young age - I've developed a hereditary hearing problems in recent years (nothing to do with hearing music) - so it'd have been an unfulfilled dream forever had I waited long.

1. Do you want to own the car or not? If yes, decide to get the car.  The the question is how do you pay for it? Cash, Lease, Loan?
 
2. My preference - since the time I could afford to do so - was to just buy a car rather than finance it. Often the financing is another profit center for the dealer. In addition, the insurance that is required if it is financed may be greater that the insurance that you really need.  I do have car insurance, but I maximize the deductibles, etc.  I have no intention of using the insurance if I can at all help it.  If I do use it, I believe the insurance company (or the next insurance company) will make it all back and more in higher future premiums.  (Same thing for home insurance; I have a large deductible and will only use it if the home is essentially destroyed).
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#12
If (hypothetical) wives killed husbands just for thoughts, then I bet there wouldn't be many husbands.

I do wonder, considering the title of the discussion, if the desire for the Mustang is really about the desire to attract a wife? If so, then maybe there are more direct things you can do with the money to get that wife...
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#13
In retirement you will probably only need one car so you should buy the car you most love to own. My dad bought a new Lexus when he was 86.   He got to enjoy it for nearly 3 years and then gifted it to his primary hospice care provider.  That person also provided for our mother when she pre-deceased dad.
 
After mom passed Dad died with about 5% of his maximum net worth in retirement.  He who dies with the least amount of money is the winner.  But some have wishes to provide for their posterity with some residual estate planning.
 
You will no longer have to pay the plus 6% in FICA tax in retirement but will have to likely pay tax on 85% of your SS income.  The earlier you collect the more likely you are to maximally reduce your total tax consequences on your ultimate total sum of benefits.  If you live past 82 then the amount of gross benefits you "lost" becomes a life insurance premium protecting you from dying before age 82.
 
Being single in retirement is not so much a blessing as your tax rate is considerably higher than for married couples.  If you do have near $5MM in retirement assets exclusive of the homes you live in, your tax rate may not matter that much to you.  but you can keep taxes down a bit by owning strong dividend themed investments that qualify for the 15% to 20% tax advantaged dividend treatment.
 
You can probably safely be able to afford to self insure yourself for end of life care.  But upon entering retirement you should have your estate planning well in place including durable powers of attorney that are up to date and allow your designated  attorney in fact to conduct your affairs in EITHER! the way that most benefits you and THE state OR best benefits your wishes to preserve as much as possible of YOUR estate for your heirs.  You do not reveal whether you are a lifetime bachelor or are just divorced. Many divorced couples have children they want to provide something for in their estate planning.
 
Not all retirements are permanent and some of us continue to work in other endeavors after a retirement or go back to work by way of networking or from some of the volunteer work we do resulting in our being hired on in some similar capacity.  In any case upon entering retirement we should all face up to the big fact of life that we are all going to at some point die/expire.  So the setting up of a trust or trusts and considering the end of life wealth transfer mechanisms should be taken care of and revisited each 5 to 10 years as the laws are continuously changing since most estates now escape inheritance taxes.  Tax free gifts can be made up to $14k annually but they NOT the interest and dividends they earn are subject  to 5 year look backs by medicaid if you have to enter a nursing home for end of life care.  So beginning gifting early instead of later can be a benefit in estate planning . Another disadvantage to being single is that you are subject to a $14K min Tax free gifting vs the married couple who can dole out up to $28K  tax free.
 
Also for medicaid planning your assets down to a certain level are subject to liquidation and loss for your cost of nursing home care.  But your income is not in most states affected.  So the more you have in ROTH accounts vs Reg IR/Rollover IRA accounts the better it is for us at the end.  Most states do not prohibit you from buying an annuity NOT NOW!,  but nearer the time of your impending demise if you are to be a nursing home patient.   So those types of annuities are usually based on some shorter life expectancy actuarial and pay out-large sums of income that you can give away up to the gift limits.  So investing a Roth into these has no tax consequence on the sum for the purchase, but reg IRA money gets hit for a tax at the high end of the tax brackets.  But even Reg IRA money can get some preservation into income vs just paying it all against it being an asset to the cost of nursing home care.  So Roth conversions and gifting that get by the 5 yr look backs can be good estate planning tools.  Just as you can gift the giftee can gift back to you.  Some families set up these gifts into accounts where the tax advantaged type of investments are used and the giftee pays out that income or some larger portion of it to the persons who made the gift.   In this way money is after the 5 yr look back safely transferred into your estate .  Of course there has to be a modicum of trust involved and the person getting the gift has to know they are subject to having to fork it back over if you pass in less than 5 years.  So each year a new account is to be set up for the giftee where no dividends or interest should be allowed to accumulate in such accounts that have not met the 5 yr look backs.  So the giftee could "pay back"  a 3% rate on the gifts and put any overage towards paying the tax and contributing to their own retirement funding either by surrogate funding of their 401-k or direct deposit into a Roth IRA if they meet the income restrictions.  For a few dollars more in attorney's fees you can get such gifts set up in trusts that exclude current or future spouses or other children who are not of your direct succession (In STIRPES) from getting any joint tenancy or future  benefit from your gifting . 
 
I have been semi retired for 12 years and fully retired for 10 years and I can tell you it has been quite rewarding to be retired.  But others find it stressful and without purpose.  So a slide into retirement with a little work at the end  in a semi retirement can be a good way to make the transition.   Married people generally live longer.  The one wife for life plan is also one of the most effective retirement strategies available.
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#14
Retirement planning is much simpler when you have no spouse or children to consider. Buy the Mustang if that's what you want. No need to ask the rest of us nimrods here!
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#15
[i]Never pay cash for big ticket items.[/i]
 
Like most absolute rules, this one is a false friend.
 
Cost it out like you would any purchase or investment:
 
If you pay cash for the car, the "cost" is the lost opportunity cost.  Paying cash takes that money out of your investment universe, so you've lost the money the investment could have earned, and the flexibility to use that money for a sudden opportunity (or other expense).  You can figure this minutely (investment gain after tax and don't forget any marginal rate creep on things like Medicare Part B or the like) or you can figure it roughly (what could you reasonably earn on that money if you invested it).  That number is your cost.  Your gain is the interest on the car loan (and perhaps any loan insurance) you would otherwise have had to pay.  Which number is greater?
 
In these days of low interest rates, it might well be that you could earn more than enough (after taxes) on your investment to cover the interest you'd pay on the car loan.  In such case, it would make sense to take out the car loan at X% interest and invest the money you would have paid for the car at (X + more than taxes)%.
 
In other circumstances it might make sense to pay cash and avoid the monthly expense which would be a "given" drain in good times or bad.
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#16
"but you can keep taxes down a bit by owning strong dividend themed investments that qualify for the 15% to 20% tax advantaged dividend treatment."

You can keep them down further by investing in a non-dividend-paying blue chip like Berkshire Hathaway that plows earnings back into the company instead of burdening shareholders with periodic taxable income payments. Let the stock price continue to appreciate, and if you need money sell off some of the shares (by lot - be tax-savvy) at long-term capital gains tax rates when *you* want the income instead of when a calendar requires the corporation to send it to you whether you want it or not.
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#17
My dad's stated plan was to spend his children's inheritance. He did! Not a bad plan. Let each generation see how far they can go was his idea. Now he did not contribute much when children were young either, something I would NOT recommend. However it worked for him. If we continue to feel responsible for our children when they are adult, it does not build their responsibility towards themselves and can cripple them financially for life. Fortunately my kids are doing better than I did. So you might want to modify your "kids" concern. The middle-class is currently in demise and it may well be that future generations will not have even what we enjoy. But it is their life in their time! Enjoy what you have earned and be generous, even with yourself!
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