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      10-17-2007, 12:02 PM   #1
Steve325xi
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What makes the most sense?

I will probably buy a 135i through ED in the summer of 2009. I have a 2001 325xi now that has been payed off for two years.

I have been putting aside $600 a month since then and have about $10,000 saved/invested so far. By the time I'm ready to buy I will have at least $25,000 saved and my car should be worth around $7,000.

I plan to keep my next car for 8-10 years. I put on too many miles to lease.

Should I:

a.) Pay cash for a 135i

b.) Put a big down payment on a 135i and pay it off in three years

c.) Put a small down payment on a 135i and pay it off in five years

d.) Keep my 325xi as my daily driver and lease a 135i as my fun car

e.) Buy a 335i coupe
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      10-17-2007, 12:58 PM   #2
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I would do option-a
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      10-17-2007, 01:58 PM   #3
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W@W that really depends.......assuming you dont have a Roth IRA, option B, and use $4,000 to open a Vanguard Target Retirement 2045 Fund(excellent fund of index funds, well diversified, and automatically adjusts asset allocation as you get older)...if you have a good Beacon score, odds are that you could get sub 6% financing., which you can beat easily and conservatively with the wonderful fund I just recommended........then again, I know nothing about your financial situation.....sounds like you are young from your question though....

C I recommend too.....if you do not have an emergency fund that covers you for at least 3 months, I would put a small amount, or even nothing down......take all the money and invest in a Vanguard Prime Money Market Fund.....that fund allows you to write checks of at least $250....write a check each month from that fund for the car.....the interest earned will pay nearly for the interest paid....not only that, but paying the car off regularly will increase your FICO vs just paying cash

if you have a Roth and emergency fund, go for it and pay cash.....Never, I mean never, borrow on a 401K if you have one (except for a medical emergency)
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      10-17-2007, 02:02 PM   #4
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Option c.), provided you can 1) keep the $25K invested for 5 years at an annual ROI of 9%-10%, and 2) obtain a loan for ~6% - 7%.
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      10-17-2007, 02:14 PM   #5
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lease it!
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      10-17-2007, 02:17 PM   #6
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Personally, I'd go with option f) and buy in the summer of '08.

Buying a year earlier would get a bit more on the trade in and you wouldn't have to worry about driving your current car another year out of warranty. 7+ years is when some big $$$ issues can creap up (suspention, transmission, water pump, timing belt, sensors... etc) Why wait?
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      10-17-2007, 02:21 PM   #7
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Quote:
Originally Posted by TESLAASTRO View Post
W@W that really depends.......assuming you dont have a Roth IRA, option B, and use $4,000 to open a Vanguard Target Retirement 2045 Fund(excellent fund of index funds, well diversified, and automatically adjusts asset allocation as you get older)...if you have a good Beacon score, odds are that you could get sub 6% financing., which you can beat easily and conservatively with the wonderful fund I just recommended........then again, I know nothing about your financial situation.....sounds like you are young from your question though....

C I recommend too.....if you do not have an emergency fund that covers you for at least 3 months, I would put a small amount, or even nothing down......take all the money and invest in a Vanguard Prime Money Market Fund.....that fund allows you to write checks of at least $250....write a check each month from that fund for the car.....the interest earned will pay nearly for the interest paid....not only that, but paying the car off regularly will increase your FICO vs just paying cash

if you have a Roth and emergency fund, go for it and pay cash.....Never, I mean never, borrow on a 401K if you have one (except for a medical emergency)

Yup. This is what I'd do as well.
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      10-17-2007, 02:48 PM   #8
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Quote:
Originally Posted by zirrah View Post
Yup. This is what I'd do as well.

Thanks...never had one lesson...
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      10-17-2007, 02:52 PM   #9
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Quote:
Originally Posted by TESLAASTRO View Post
Thanks...never had one lesson...
Common sense then? :iono:
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      10-17-2007, 02:53 PM   #10
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Good suggestion

Quote:
Originally Posted by TESLAASTRO View Post
W@W that really depends.......assuming you dont have a Roth IRA, option B, and use $4,000 to open a Vanguard Target Retirement 2045 Fund(excellent fund of index funds, well diversified, and automatically adjusts asset allocation as you get older)...if you have a good Beacon score, odds are that you could get sub 6% financing., which you can beat easily and conservatively with the wonderful fund I just recommended........then again, I know nothing about your financial situation.....sounds like you are young from your question though....

C I recommend too.....if you do not have an emergency fund that covers you for at least 3 months, I would put a small amount, or even nothing down......take all the money and invest in a Vanguard Prime Money Market Fund.....that fund allows you to write checks of at least $250....write a check each month from that fund for the car.....the interest earned will pay nearly for the interest paid....not only that, but paying the car off regularly will increase your FICO vs just paying cash

if you have a Roth and emergency fund, go for it and pay cash.....Never, I mean never, borrow on a 401K if you have one (except for a medical emergency)
I can't do a Roth IRA, I make too much money. I have money in my 401(k) and other investments but I'm not touching that obviously. I have a Vanguard account, but not the Prime Money Market Fund you mentioned. I will look into it, though. Thanks.
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      10-17-2007, 03:05 PM   #11
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Pay cash....I underestimated your financial situation.....
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      10-17-2007, 04:32 PM   #12
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Eh, I'd put as big a down payment as possible, or pay cash if that's within reality. If you know you're going to keep the car a long time, you probably just want the payment to go away as soon as possible.
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      10-17-2007, 04:35 PM   #13
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Pay cash. Debt sucks and markets are uncertain. Garage queens suck, too. All cars should be used as daily drivers.
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      10-17-2007, 04:59 PM   #14
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Quote:
Originally Posted by 1ster View Post
Pay cash. Debt sucks
Bad debt sucks.....putting all your money down on a BMW, getting fired from a job,not having a tidy emergency fund, and losing your property to foreclosure sucks more.....

Credit card debt is for suckers.....

Our friend the original poster doesnt seem to have these dilemmas though....
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      10-17-2007, 05:16 PM   #15
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Quote:
Originally Posted by TESLAASTRO View Post
Bad debt sucks.....putting all your money down on a BMW, getting fired from a job,not having a tidy emergency fund, and losing your property to foreclosure sucks more.....
Yes. Yes it does.
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      10-18-2007, 07:44 AM   #16
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If you can afford it pay cash. It still sucks to drop sticker price on a depreciating asset like a car, but if you plan on keeping it a long time I'd do it for sure.
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      10-18-2007, 07:59 AM   #17
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As long as the OP can pay cash and still has 3-6 months of expenses in the bank I vote option A.

For those that don't know the Roth income limit is 110k per year.
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      10-18-2007, 12:22 PM   #18
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Those of us encumbered by a ball and chain (married), the AGI cutoff for Roth is 160k for 2007.....
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      10-18-2007, 02:40 PM   #19
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Quote:
Originally Posted by TESLAASTRO View Post
Those of us encumbered by a ball and chain (married), the AGI cutoff for Roth is 160k for 2007.....
Yeah, that's the boat I'm in. I may end up buying a 335i or coupe but the 1er is really starting to grow on me. :headbang:
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