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Originally posted by The Propagandist:
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Originally posted by LE89:
I seem to be into examples today so I will go one more. This isn't mine but the numbers are using today's numbers.
Average new car purchase: $2,400 downpayment, $24,864 financed, payments of $479 for 72 months.
Say you bought a new car every 6 years and maintained that payment from 16 years old to 66 years old for 50 years. You went thru about 8 cars and spent over $287,000 dollars.
Let's say your twin brother didn't buy a car but instead deposited $479 a month into some account making 11% per year. At 66 years old, that account has over $15.8 million. Divided by the 8 new cars your brother gave up driving, that's almost $2 million per car.
Now all of that is without tax considerations, and nobody is going to give up driving, but it could possibly change the way some of us think. You could buy several new cars along the way, more than 8, and still have a huge chunk of money.
This was not a revenue problem, the money was there every month for both brothers for fifty years. Now the spending or lack of resulted in two very different outcomes.
Reality could have been somewhere in the middle for both, but both chose opposite ends of the spectrum. One brother enjoyed his $2 Million cost per car and never missed a beat, the other never drove and had $15.8 Million to prove it.
Seems with some planning and restraint, both could have been filthy rich, had plenty to drive, and been equally happy along the way, at least as far as cars and bank accounts go.
Yes, you can retire a millionaire if you cram your family into a cheap, one bedroom apartment like a bunch of Mexicans. Yes, you could drive a cheap, worn-out car that cost more in repairs to keep it running than it cost to buy it. Yes, you could wear your clothes until they turned into rags and ride the bus until we stop all that socialist nonsense and you have to walk.
Yes, you could live on sardines, crackers, peanut butter, and bologna, go to an early grave from sheer deprivation and leave millions of dollars for your descendents to blow through because they don't know how to handle money. In fact, they always thought you never had any.
On the other hand, it might be Wall Street that blows your money. They convinced you not to give it to the government to blow, so they figured it was up to them.
OK, that was the fairy tale for the day. Now back to reality.
Okay, my scenario had nothing to do with a one bedroom apartment, clothes, the bus, food, or deprivation, it was merely looking at one example of spending on a car. You could maintain all the items you mentioned at the same level you are used to.
So here is "reality" on the car example. I bought a used Honda for $3,900, been driving it for 30 months and spent $450 in repairs during that time.
During that same time period average Joe NEW car buyer spent $14,370 in car payments and $0 in repairs I will assume.
I spent $10,020 less to drive for 30 months than average Joe NEW car buyer. If we both continue at this same rate for 50 years, I have over $2,000,000 in the bank and still accomplished everything Joe did. Drove to work, had the same house, clothes, food, didn't ride the bus ever, and deprived myself of nothing except a new car in my driveway every 6 years (and the $479 car payment). Of course my taxes, tags, and insurance were far less as well but I will leave those out of the argument.
Now if I had "deprived" myself for the first four years or so and drove that hand me down my parents gave me, yet made the car payments into a coffee can under my bed, I would still be able to buy the same car average JOE buys. Difference is I buy one every 52 months, Joe buys it every 72 months. We both have exactly the same. Now if I only match him and buy every 72 months, I have the same with money to boot.
Now I realize I am boring you with this endless example, but my point is living to max allowed today is guaranteed self destruction, whether it is personal finances or Government finances.
There has to be some restraint and accountability, not just spend, credit, charge it lifestyle. There has to be some common ground somewhere in the middle. A reasonable amount of "deprivation" may be in order on some things.
I am all for fixing tax loopholes, I am all for fair tax rates, I am all for calling out Politicians that lie, D/R/T. I am all for creating simplicity in the tax code. I am all for making GE pay more taxes than I do. Raising tax rates will NOT bring back companies that left the US for other tax havens, it will just cause more to leave. I guess we could put armed guards at the US borders and airports and refuse to let taxpayers leave. Maybe we can use those same guards to refuse entry to the tax suckers entering the country.
In other words my stance is, fix the existing problems first and then if income is still a problem we will fix that next.