Pushrod Tube Seals -- getting it right

On 28 May 2004 02:47:26 GMT, snipped-for-privacy@aol.com (Veeduber) scribbled this interesting note:

You forgot one item here...in economics it is known as opportunity cost. What else could you have done with that money? It adds up to far more than the rent you paid to buy the car in the first place! Millions more in most cases. But like you say, don't tell folks, they won't believe you anyway!

Don't get me started about the American Public. In general they make, on an individual basis, the worst financial decisions they can possibly make. Credit? Use it up. What else is it good for? Salary? One paycheck at a time. Bump in the road? Bankruptcy.

I am a firm believer in car payments...that is one car, one payment-when you buy the thing. Then use the car up-with proper maintenance, of course.

It has finally gotten to the point where keeping the first car I ever bought, which is now almost thirty years old (it was about eight years old when I purchased it) is costing me more than I consider it to be worth. That means my driveway space is more valuable to me than the car is. I put over 150,000 miles on it. It was totaled twice, one of those times I was more than paid for the car so I consider everything since then to be free transportation!:~) It will be sold. How much? Only about $1,300 less than I paid for it (then you have to figure in inflation, etc. so I figure about $2,000, in today's dollars, less than the purchase price-then figure in the amount paid by an insurance company for the first time it was in an accident, which was $100 more than I paid for it, and I'm doing well at this point!:~)

In today's disposable society (pun very much intended!:~!) new is better. Keeping up with the neighbors is very much in style. Throwing away money and resources is the order of the day. Preparing for tomorrow? Who needs it? Rainy days never happen. If yesterday's bills can be paid with tomorrow's paycheck (or better yet with some other credit card!:~) then so much the better.

Like I said, don't get me started!:~)

-- John Willis (Remove the Primes before e-mailing me)

...Bob, you wouldn't happen to have any links supporting this by any chance would ya....its easy enough for me to understand...unfortunately I happened to make the mistake of mentioning this factoid to a non-thinking sheeplike consumer...who immediately asked for "links...proof"... so before I leave them to their own demisezs and determine never to waste my breath again, I figured I would see if I couldn't give em a direction to turn for enlighteement.

..Gareth

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No links. Sometime between 1968 and 1973 I read an article that spelled out the economics behind the numbers I've cited.

For years I thought the article was in the Consumer's Union magazine but I must be mistaken because I've never been able to find it there... or anywhere else I've looked :-) Perhaps it was something from JD Powers or a similar organization whose reports I was required to review.

But there are other sources that say the same thing although the figures are usually embedded and often skewed to support a particular agenda.

If you want modern-day links, Carbuyer.com cites a saving of $450,000 if you give up your car entirely and use other other forms of transportation.

The AAA breaks down their cost-per-mile figures to show where the money goes. I'm not sure if the data is available to the public but it is to members.

Or you can use your own check stubs :-)

As a point of historical interest even Henry Ford recognized that the concept of personal transportation based on motor vehicles was fundamentally flawed.

-Bob Hoover

On 03 Jun 2004 10:19:28 GMT, snipped-for-privacy@aol.com (Veeduber) scribbled this interesting note:

Bob,

You and I corresponded a while back regarding this very question and I too was unable to find any evidence of the article you mention...which doesn't mean it isn't out there, just that my searching was not very effective.

Or Gareth's questioner could actually be bothered to think and run the numbers personally.

I ran some preliminary numbers a while back and roughly, if a person buys a new car for $25,000 (the approximate current average price according to one car buying website), borrows that amount for four year at 9% interest, they end up paying close to $5,000 in interest over that time period.

If that individual carries car notes over ten full years that is just over $12,000 paid in interest. If you invest only the amount of interest you've just paid over that four year period on a weekly basis over the same time period at the same 9% interest for the same four years you end up with almost $6,000. Over ten years it is almost $20,000. Over two ten year cycles, that same amount invested at the same rate gives almost $70,000. Over an estimated car buying lifetime of fifty years that equals approximately $1.2 million.

I'm not including higher insurance or repair costs associated with new cars. That will obviously drive up the cost even more. Obviously if you run the calculation again, including the original amount paid for the new car minus what you would have paid for a more economical used car, etc. then the final number really gets to be rather large. All for the personal sacrifice of the equivalent of eight fast food lunches per week, if you only want to invest the interest that would have been paid for a new car loan at 9% for the individual's car buying lifetime, everything else being equal.

And most people just don't understand what it takes to be a millionaire, all the personal sacrifices you have to make to get there!:~(

I ran the numbers again, this time throwing in more variables. Taking a number of assumptions into account, I derive a number an average "consumer" could invest (price of a new car minus the estimated cost of a four year old car plus estimated new car insurance expenses, plus the interest NOT paid, etc.) and assume a 6% rate of return and in 30 years that adds up to almost $600,000, in fifty years, just over $2 million.

Of course not everyone will be able to achieve a 9% or even a 6% rate of return on their investments. But the point being made is simple math. Grab a calculator and work it out. The numbers don't lie. No "links...proof" necessary, except for a "non-thinking sheeplike consumer" who fails to understand the utter simplicity of the matter.

Here's a clue, if someone is concerned with building wealth, it ain't about how much money you make, its about what you do with that money. "Consumers" (and in our household that is very much a four letter word) only know how to keep their money spent, often before they even have it in hand, never realizing that money is like any other tool-used one way it will only provide for yesterday and possibly today. Used another way it will provide for more tomorrows than one person will ever see. Somewhere between these two extremes lies a nice, comfortable living.

-- John Willis (Remove the Primes before e-mailing me)

...thanks Bob and John.

..Gareth