Friday, April 20, 2012

How to have free cars for life!

Ever heard someone tell you "you'll always have a car payment"? My supervisor is the same way. He believes that it's not possible to live the American life without debt. How lost and confused some sheeple are...

While I'm not going to make a post on how to avoid all debt in life, I will post about a very easy way to pay cash for cars and never have a car payment again. The principles in what I'm about to show you can be easily transferred to nearly every other kind of recurring debt of this kind, so I guess you could say it's a sort of debt-free advice post.

So, you just can't wait to get a new car, right? Think the dealer made you a great deal? Okay, let's say you're like one-third of Americans that now have a 6-year car note of $26,000 at around 9.6% interest. That's about a $475 monthly payment. Now, buying a new car is never a good idea, because the second you drive your new car off the lot, it looses 25% off its value! So, not only are you in debt for $26,000 (which is really way more when you factor in interest), but you can't even turn around and sell your brand new car for what you paid for it 30 minutes ago! You're car is now worth $6500 less, and you haven't even put your first mile on it yet. And it gets worse. In four years, your wonderful car has lost about 70% of it's value and you still have 2 more years of car payments left! And it gets worse. After you've paid the car off, you've ended up spending $33,000 on your $26,000 car, which is probably only worth $6000+ six years later. Baaaaaaad sheeple. Not to mention, you're probably going to get car fever at the end of that six years, then go out and get another car loan and start this whole process over again. That is how sheeple live, and that is why they say you'll always have a car payment.

The problem is not just the math, it's the mentality. If you let yourself think that you're always going to be sending hundreds of dollars a month to a bank so you can drive a nice car, then the bank is only going to be too happy to help you live that dream. But, if you want to break off from the flock of brainwashed sheeple and start making your money work for you, here's an alternative:

Using our previous example, you wanted a car that came with a $475 monthly payment, right? Okay, well, let's lowball it and say that your current car is worth $1500. Let's say you keep driving your current car a while and pay yourself the $475 a month. After 10 months, you'll have $4750. Add that to the $1500 you can get for your current car, and you could buy a used car for $6250...and have NO MONTHLY PAYMENTS! So, to reiterate, you can upgrade your $1500 car to a $6250 car in 10 months, never having dealt with a bank! And it gets better! Let's say you keep paying yourself $475 a month after you buy the used car. In another ten months, you'll have another $4750 in your bank account. Since you bought a used car instead of a new one, the depreciation value over 10 months is probably negligible, so let say you can sell it for $6250. Add that to the $4750 you have in the bank, and you could buy an excellent, used $11,000 car in just 20 months!

So, by paying yourself instead of a bank, you upgraded your $1500 car to an $11,000 car in less than two years! And you were about to sign up for a 6-year contract at $ see where I'm going with this..?

And it gets better! Let's blow this only slightly out of proportion: Okay, so for 20 months, you've paid yourself and upgraded your car to a kinda nice one that you completely own. But let's say you keep paying the $475 to yourself in the form of a mutual fund specifically earmarked for car replacement for the remaining 52 months you would have been paying on the original car loan, and fast forward to the end of the six years...

...If you had gone through with the old plan, gotten a car loan, made payments of $475 to the bank every month, you will have just paid off your car, lost $27,000 over the past 6 years (if you include the interest you will have paid by now), and only have a $6000 car to show for it.

But if you had paid yourself instead, you'd have a paid-for $11,000 car which is probably still running, but getting a little old and you're wanting to upgrade. Want to know how much money you'd have in that mutual fund? Well, if the average stock market holds at its 12%, you'd have $32,000! So, you have a car that you own, and money in the bank, versus having a $6000 car and nothing in the bank. Which would you rather have?

At this point, if you go out and buy a used (or even new at this point) car for $12,000, you'd still have $20,000 sitting in the mutual bank earning 12% interest (did you catch that whole earning thing instead of paying?).

Now here's where things really start to go crazy.

If you never pay a single dollar more into your mutual fund, you'll still be able to buy $14,000-$18,000 cars IN CASH every five years! Woohoo! Free cars for life!

And it gets even better! Now that you're not making car payments anymore and the interest from your mutual fund is running on autopilot, let's see what you could do if you decided to start paying yourself $475 every month again. Of course, there's no hassle with the banks, no late payment fees, no repossession pressure that you'd have with a car loan, just money in your pocket.
If you did this, you'd have $100,000 in just 10 years! Wow!
In 20 years, you'd have about $470,000!
In 30 years, you'd have $1,600,000!
And in 40 years, that $475 car payment would be worth $5,588,385! That's a 40-year retirement plan with free cars!!!

I put this to you: If you can live with your car for just a little while longer and pay yourself first, you can really go somewhere. So make the choice today, break off from the herd of sheeple and change your economy. Recession-proof yourself by staying out of debt, being patient, and being the master of your money.

Modern Day Slaves

"The rich rules over the poor, And the borrower becomes the lender's slave." Proverbs 22:7

Sounds like a condemning Old Testament verse, right? That totally doesn't apply to today, does it? I mean, America did away with slavery in 1865, and they even had a war to solidify the decision! How can this not be a fallacy?

I believe the Bible to be completely infallible, inerrant, and God-breathed. If this is true, then slavery certainly still exists today, and it is absolutely rampant. I thought about writing this blog post about how credit card companies are run by amoral, lying scum, but realized I didn't have the time today (if you would like me to elaborate with several examples in a future post, please respond likewise in a comment).

"For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs." I Timothy 6:10

Some people think money is good. Some people think it's bad. Both assumptions are wrong. The Bible doesn't exactly call money either. Money is a tool. It is an instrument by which both good and bad things can be done. In that, money is like fire. Fire can be destructive, burning homes, forests, and killing people. But if used correctly, fire can create stronger materials (like steel), purify gold and precious metals, and heat a home, keeping people alive. Likewise, money can be used to buy someone food, pay for a home, buy a gift, or build a school or church. Alternatively, money can be used to bribe an official into voting opposite his conscience, or it can be spent to fuel a destructive gambling addiction, or it can be lent to someone with unmanageable interest, and then the borrower finds himself the slave of the lender.

Have you ever borrowed money from family? If you have, you probably know that this can be an extremely volatile situation. First off, the Bible strictly forbids lending money with usury (interest) to people who are your countrymen (Leviticus 25:35-38). Second, even if the family member doesn't specifically ask for interest, many times, they do expect to be repaid, and if you've ever been there, you know the relationship is never the same until restitution is made, and sometimes even after the recompense is made, there's a lingering awkwardness. 

Jesus warned against lending in Luke 6:35 - "...and lend, expecting nothing in return..."I believe that Christ's intention was to give to others freely according to their needs and your abundance. The early church was a model for this in Acts 4:32, 34-35 - "And the congregation of those who believed were of one heart and soul; and not one of them claimed that anything belonging to him was his own, but all things were common property to them... ...For there was not a needy person among them, for all who were owners of land or houses would sell them and bring the proceeds of the sales and lay them at the apostles’ feet, and they would be distributed to each as any had need."

So, if we know we are not to lend to others expecting return or interest, can we not conclude that we are not to allow ourselves to become slaves to lenders by accumulating debt? I believe we can assume this. Consider the following:

1. "You shall have no other gods before me..." Exodus 20:3-4"
2. "...the borrower becomes the lender's slave." Proverbs 22:7
3. "No one can serve two masters..." Matthew 6:24 & Luke 16:13

Therefore, if you borrow money knowing you'll owe it back, you are temping yourself toward idolatry and bondage to someone other than God! What a radical thought!

Too many Christians think that you can't live life without some kind of debt. I can't tell you how many times I've heard sheeple say "you'll always have a car payment." I'm sorry, but if you believe that, you're an idiot because no one can make you sign for a car. And you're also deceived because having a car payment has only been the norm for about 50 years. If you want a smart, reliable way to have a car and not have a car payment, check out my next blog post. I'm going to do a plug on how to drive free cars for life and retire on around $5.5 million;) 

In summary, I say this: if you're borrowing money, you're turning yourself into a slave to someone other than God, because He does not loan out His gifts. And remember not to loan out anything, especially with interest. This is not God's plan for His people, His church, or His servants.