Buying used cars instead of new can add up to nearly $400k

Used cars are cheaper than new cars. New cars generally depreciate 1/3 of their value in the first year. For more on depreciation see this calculator. A 2-3 year old car is still in usually going to be in very good shape and with the quality of vehicles nowadays cars should easily last 5-10 years. To me it really makes sense to buy a slightly used car instead of a new car. You get a nearly new car for 2/3 the cost and it will run just fine. Leasing a car is an even worse option than buying new or used. Leasing cars generally only useful in lowering payments so you can afford a more expensive car. But with a lease you retain no value and simply paying high rent.

If you buy 2 year old used cars instead of buying new and then drive them for 5 years you will save a significant amount of money over time. If you bought used cars instead of new then you could save $391k over a 40 year period. I showed the break down here. I assumed a 10% investment return for sake of example. Note: This is just a rough estimate, I do not account for increased maintenance costs with used cars or higher insurance premiums on new cars.

Imagine how much more comfortable you would be in retirement if you had that extra $391k in retirement. Is a slightly newer car really worth it?

More on buying used cars:

• FreeMoneyFiance: Saving on a car purchase, buy used.
• Used Car Benefits
• The Benefits of buying used.
• For more detailed comparison of total costs of ownership try Edmunds True Cost to Own ratings
  

Basic Pros and Cons of investing in real estate

I'm a fan of real estate investment in general. However I recognize that it has a lot of down sides along with the benefits. In general the primary pros and cons of rental real estate investments as I see them are below.


PROS

Good potential return. Real estate gives you returns via property value appreciation, rental receipts and these can give a significant return % rate especially if you're leveraging a loan.

Relatively low volatility. Property values do not fall or rise excessively fast compared to some other investments.

Tax benefits. You are able to deduct depreciation and expenses from your rentals. This can eliminate a substantial amount of your tax burden.

Inflation protection. Rental receipts should increase over time along with inflation.

Simplicity. Buying a house and renting it out is a fairly straight forward investment vehicle and does not require advanced knowledge of the finances.

Steady demand. Its basically a recession proof investment. People will always need homes.


CONS

The work involved in being a landlord. No matter how you handle it there is work involved in managing an investment property. Whether you do the work yourself or if you hire a property manager, you have to expend some energy.

Not a short term investment. If you are going to invest in real estate then you really need to be in the investment for years. Real estate is definitely not a short term venture.

Extra liability. If anything goes wrong with the rental then you can be held liable.

Lack of diversification. With real estate your eggs are all in 1 or a few small baskets. If you have problems with these properties or the area they are in then the damage will impact your entire investment.

Poor liquidity. You can't sell a rental property with a click of a button. It might take months to have a property sell.

Lack of mobility. If you own a property then you can not easily pickup and move across the country and take the property with you. If you move you are either faced with managing a property long distance (not recommended) or selling the property prematurely.

Look for a 4 cylinder engine instead of a V6 to save $ long term

I currently drive a 2004 Toyota Camry that I bought used about a year ago. When I was buying the car last year I specifically looked for a 4 cylinder engine instead of the V6. The 4 cylinder engine is plenty. Since I've owned the car I've never lacked power. I purposefully looked for a 4 cylinder since I knew it got better MPG and would save me money in the long run.

Over the Memorial day weekend I took a 4 day trip to visit family. It was 800 miles round trip. The V6 model Camry is rated at 29MPG and the 4 cylinder is rated at 32 MPG. So for that 800 mile trip the V6 would take 27.5 gallons and my 4 cylinder uses just 25 gallons. Thats a 2.5 gallon gas savings for my weekend. Before we left we filled up for $3.94 a gallon. So that 2.5 gallon difference between the V6 and 4cylinder is a $9.85 savings for one weekend trip.

If you look at a longer term I can estimate how much I'll save. The government Fueleconomy.gov website has a fuel economy savings calculator. WE can use it to see the long term impact. If I keep the car for 5 years and drive about 10,000 miles a year with 75% city and 25% highway and assume gas costs $4 then the 4 cylinder will save me about $783 over 5 years.

The 4 cylinder engine has more than enough power and saves me gas money. So if you're looking to buy a car that has options for 4 cylinder or V6 engines then I'd strongly recommend looking for the 4 cylinder option instead.

Myth: We buy everything from China

This is the kind of thing my dad likes to rant about. He'll comment how "we buy everything from China nowadays". It can seem like its true if you go to the store and look at the "made in China" labels on what seems like everything. But its not really true at all.

Our 2007 annual trade information. In 2007 we imported $2.3 trillion in goods and services. We bought $321 billion from China which is only 13.8% of our imports. Hardly "everything" as my dad would declare. In fact we imported $354B from the European Union which is more than from China and we imported $523 from our neighbors in Mexico ($210b) and Canada ($313b) combined.

We do NOT buy everything from China.