What hope do they have with a parent like that?

Hi All

I just thought I'd share a conversation I had on the weekend with you all. (Unfortunately considering the way I tell stories, it's likely to wind up an essay!)

A friend of mind 18yo girl fresh out of school and just started uni decided that as she had picked up a second job (in addition to her $60 a week current job) making coffee at a fast food outlet she could afford to buy her own car instead of using her mother's big petrol guzzling V6 (Which by the way she didn't have to pay for petrol on).

Myself and another lady were having a chat to her about how it would probably be a good idea for her to pick up a small car which is economical on fuel. She piped up with the fact that she test drove a suzuki swift the other day and it was great, to which the other lady and I asked whether it was brand new.....it is. We both chipped in our two cents stating that as she was so young and it was her first car she definitely didn't need to buy a brand new one and get a huge loan from the bank (She doesn't have much in the way of savings). She replied "But it's only $19,000. We suggested she buy something between the 6 & 10k mark as that would get her a reliable little car for the next 5 or so years, at which time she would probably have a full time job. We also pointed out that as she hasn't been driving for very long, she might get a few dings here and there and wouldn't want to ruin a brand new car. Anyway, she grudgingly admitted that we had a valid point but just two days later I overheard one of her friends mothers asking her when she got her car.

I interuppted saying - did you buy a car? She replied yes, she had bought the $20k brand new suzuki swift. I teasingly said "What for!!!! You're so young, you don't need a fancy car??? "

Her friends mother must have thought I was seriously trying to talk her out of it and took exception to that fact and demanded "Why not? What's wrong with that?" of me. I said, "She's only just 18! I just thought it would be a bit expensive, and that someone so young doesn't need a brand new car."

She was obviously now offended (even though I wasn't being argumentative at all) and said "Well my daughter bought her car brand new when she was that age, I think it's good for them to go out and buy a really nice car as soon as they get their license and a job..." (BTW this woman's daughter works at subway).

At that point, I changed the subject, as I realised that I definitely didn't want to get into a discussion about money with her! I was just gobsmacked that a parent would strongly encourage their own child to go out, secure a loan for the most expensive car the bank would let them buy, when they know full well that their child only has a part time job and would likely be paying huge repayments on the loan for atleast the next five years. Coupled with the fact that a brand new car might only be worth half that in two years time....and the reality is they probably wouldn't have even dinted the balance of the loan by then.

I remember a thread in the Property Investment - General section regarding young people expecting to have the mansion straight up and not being prepared to live in the 'burbs' in a smaller house to begin with.
Call me crazy, but I think it's even more insane to buy the MOST expensive car you can afford when you have no assets at all, and a car is a depreciating liability! Atleast with a house, if you can afford to hold it, you can hope that it INCREASES in value....

Rant over, I'll get off the soapbox now.

I am so with you on this post!!!!

I purchased my car whilst at Uni from money earnt working in pubs over uni holidays for $5,500 a Hyundai Excel 1988 at the age of 20 - I was so proud of it and my dad helped me pick it out.

Later, at the age of 25 I was tossing up buying a new car at the age of 25 or an Investment Property, I was embarrassed to be driving around in the car that I had when many others that i worked with had nice new cars.

Anyway, I decided on buying the Investment Property and the rest is...well history!

Of course by this time, in the later years a lot of the IBMer's I was working with were all driving up to work with the latest BMW's, Mercedes, Boxter's ($130k ) etc and there I was still driving that crap car . DuncanM on the forum has seen my car and we always have a few laughs about it when we catch up. That, and I am the butt of all the family jokes for not replacing that car!

The car was irreplacable, it ran on $50 of petrol a month and really required no maintenance. Anyway, just before xmas I ended up crashing up the back of a 4 wheel drive and the car was "a write-off". That car lasted me 10 years

So at the ripe old age of 30, I am pleased to report that I finally purchased a new car - a Hyundai Elantra FX for $19,000 - and don't I feel grand. Now I actually have a working stereo, and a glamorous car!

So for any somersoftians who are facing the same debate that I was new car or investment property, go for the investment properties as I know that for myself, although I was painfully embarressed at driving that old car around (it wasnt that bad but still), I have never regretted prioritising getting the IP's first and then a new car (which I am rapt about now btw)

1HO, I think you'd do better to find a broader group of friends.

I grew up in a working class area, but had a private school education a few suburbs away. (thanks to my dad putting education before everything else)
I used to note my ideas were different to those in my immediate area. I just wanted to be friendly and get on with people, but I eventually realized many of these people are comfortable with what they know, don't like having to think about things so deeply, and are very very sensitive to people who think they might know better.

Eventually I left this suburb and found there were a whole lot of others in the world who thought more like me. I made more friends quicker, and the friendships were much more constructive, informative and harmonious, without me having to watch so often whether I'd offend someone.

Funnily enough, 25 years later, I am back within spitting distance of where I grew up.....and still have to watch how I express my views when mixing with locals....

But the other point is just because this girl didnt take the well meaning advice from 1st Home Owner, doesnt mean that you dissassociate yourself from friends etc. I mean, people will pursue certain and different paths from other people.

There are a lot more forces at play than just this girls mother. Ie advertising, peer pressure, availability of consumer credit, upbringing and values within the family - all contributed towards her decision to buy a brand new car as soon as possible.

At the very least, this girl with the car will be taught a few lessons about fiscal management, how to save for a goal and/or pay off a loan (forced savings) even if we dont agree with the type of asset!!. She may wise up to investing at 25 like i did, she is only 18.

i don't think we should necessarily push our views onto other people, if we make a suggestion and people decide not to follow it - then that is really up to them.

i bought my first car, a ford laser hatchback, for $9,000. It was 8 years old and had 48000klm on the dial. I bought it when I was 18, and got rid of it only 2 and a bit years ago, and I only did that because I was pregnant. It lasted me 12 years, and it was a great little car, but it was quite embarrassing at the end of its life with all it's dings in it and the putt-putt sound it made.

I remember going to someone's house to negotiate for us to buy their property and consolidate it with a few others in the street and I had to park around the corner so they wouldn't see which car I was getting out of!!

JoannaK said:

I remember going to someone's house to negotiate for us to buy their property and consolidate it with a few others in the street and I had to park around the corner so they wouldn't see which car I was getting out of!!

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hehe, i can relate!

can you imagine how your negotiating position would be effected if we roll up to a potential house purchase in a mercedes!!

I wonder if that would make the agent either less likely to negotiate (cos you clearly have money if you have a mercedes) or more willing to negotiate because you are clearly so successful you will buy more?

amazing, the assumptions we make of people based on the car they drive.

Corsa said:

But the other point is just because this girl didnt take the well meaning advice from 1st Home Owner, doesnt mean that you dissassociate yourself from friends etc.

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Corsa, I wasn't implying she drop this woman as a friend cold and hard, only that she ensure she has a broader network that resonates moreso. Besides, it seems it is the other woman with the discordant mindset; and who is to say how much the limitations of some friends hold us back from realizing our full potential.

Personally, my work involves dealing with people who are quite ignorant or apathetic about health matters. Every couple of days I wonder why I bother with such people. There's enough information out there for free to live a healthy life. However, my heart wants me there for the time being, and when I get a client who has a light bulb moment and changes their lifestyle and philosophy for the better, then that makes up for a couple of weeks of feelings of being up against a tsunami of human ignorance.

No worries Bruce, I understand where you are coming from

thefirstbruce said:

Besides, it seems it is the other woman with the discordant mindset; and who is to say how much the limitations of some friends hold us back from realizing our full potential.

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Completely agree, in one form or another we are all subjected to the limitations of others to varying degrees and forces. this phenomena is similar to people who reach a hurdle in life and give up.

But even ignorant people have choices don't they? I mean we all don't know what we don't know. It is just how open we are to exploring options and finding out information as to how we grow and learn.

It sounds like you have a very rewarding job helping others who perhaps cannot help themselves which is very honourable.

Hi All

Thanks for your replies. You have all made valid points and I'm glad I'm not the only one who thinks that it's not completely weird to be driving a rusty tin around

I myself bought my first car when I was 17/18 for $10k, which was alot to me, but as I had zero knowledge about cars my family was very firm on making sure I had a reliable car (At that time I was travelling long distances every day, and usually around midnight). I have since sold that car (which by the way ran perfectly for 2 1/2 years and gave me no problems whatsoever) and have downgraded to a cheaper car because I have someone who can fix it for me now if anything goes wrong!!!

FYI - the 'friend' I am talking about is more of an accquaintance, I only see her about once every couple of months at training, and have a quick chat here and there, I have a great mix of friends, some of them totally ignorant about anything to do with money, and some of them as enthusiastic as I am about investing and wealth creation.

Some of my 'friends' think I'm crazy to be thinking about money when I am so young, they have told me their theory is to spend every cent they've got now and enjoy themselves until their career is up and running and they are making lots of money and can afford the big house and fancy car. THEN, they will start thinking about saving money for their future when they start to have families....believe me, it's difficult to keep off the soapbox when we get into those discussions!

But life is all about balance I think. And if you apply that to the group of friends you have, it's nice to have people from all walks of life, with different views and opinions...even if you don't always agree with them.

Well said Corsa and 1HO. And I'd add that yes it might all be about balance in relation to many things. But even moreso, I think it is about following your own star and heart wisdom. And sometimes our hearts prompt us to do things that don't seem balanced.

1st Home Owner said:

...they have told me their theory is to spend every cent they've got now and enjoy themselves until their career is up and running and they are making lots of money and can afford the big house and fancy car. THEN, they will start thinking about saving money for their future when they start to have families....

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Wow, they sound just like 95% of the population

Stewie said:

Wow, they sound just like 95% of the population

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Wait, hang on a second, what am I complaining about?????

We all need people like this so that we can be wealthy!!!!!!!

Hmm, you can be wealthy without being wealthy at the expense of others.

Whether 95% of the population think like this or not, there is more than enough wealth to go around.

What do you think?

Hi,

I remember my first car, a Datsun sunny which I bought for $1000 + a tradein on an old Commodore 128D computer system.

I only got rid of that car when my brother decided to drive it into a parked car (by accident).

Michael G

michaelg said:

Commodore 128D

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"GO 64" I recall that model well

I bought my first new car when I was around 23 yrs old. It was a basic model Suzuki Hatch with no extras. It cost me $5000. At the time I saw some land advertised for the same price. Boy do I wish I had bought the land.

1st Home Owner said:

Call me crazy, but I think it's even more insane to buy the MOST expensive car you can afford when you have no assets at all, and a car is a depreciating liability!

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1HO,

I agree with you but you have the "voice of experience".

I assume you are like me and have learnt more from your mistakes (... and I have made plenty) than from your successes. We feel your friend made a mistake; in time, she might agree with you and that will be a valuable lesson for her and one that she will never forget. I helped my 21 yr old daughter buy a car last year (between $5K and $6K); her boyfriend bought a $40K car on hire purchase prior to meeting her - both of them have seen/experienced the error of his ways and won't be doing that again.

Your friend's mistake is not life threating - she is 18 and has plenty of time to recover from it.

Smart people make a mistake once; fools repeat them!!!

My car was a hand-me-down. My grandad bought it from work (he worked at Ford) in 1970 brand new. About 10/12 years later, he gave it to my mum. She then passed it on to my uncle who had it for about 5/6 years. He then handed it back to me.

I drove it into the ground. Back then, I didn't care about cars, to me it was just a way to get from one pub to the next (just kidding!). No, it was purely for transport. It was a XW all original when I got it (I can hear the car geeks gasping). I had more offers to buy the car than I can count.

I had it (read: thrashed it) for about 3 years before it finally gave up the ghost. Ended up selling it to a guy who was doing up an original GT and wanted it for parts. It was only a few years ago that I began to appreciate exactly what it was I had thrown away. Ah well, regret is for people that live in the past.

So anyway, the car and I parted ways when I was 21 and I have been carless ever since and love it!

mark

Yeah, not the thing I would advise to do. Nor do myself.

BUT maybe she will pay off the loan and learn lots from it;

* She may see the interest she is paying and start doing some sums on it.

* She may learn the discipline of paying off a loan and get a charge from paying it out early and onto the next thing.

* It may give her confidence to get a home loan because she knows some of the terminology.

I know paying out my car loan early gave me a charge (2nd hand car, saved 1/2 borrowed rest and paid 5 yr loan in less than 3 yrs). It actaully was scarier than getting a home loan. Paying it out gave me confidence. I hope it gives this girl confidence too. She may learn the drill and know the way to go about the next big thing. Hope so!

It isn't a disaster just a learning experience.

My first car was a Ford Escort panel van. It was a heap of rubbish, broke down a fair bit and could have got me killed when the left hand strut failed (luckily I was doing a slow u-turn at the time).

I currently drive a six year old Sireon and the wife drives a RAV about the same age (leased this one through the business and have now bought it from ourselves).

Would suggest that a car upto five years would be the go, any older and you may be asking for trouble.

Regards

Andrew