Financial Thoughts, July 2016

Here is a comment exchange between the author (“J. Money”) of the Budgets are Sexy blog and I, July 8–11, 2016, concerning vehicle purchase decisions and investing. I have been following J. Money’s blog for a few months now—I would definitely recommend reading it and similar blogs if you are interested in changing your financial perspective. My comments also elucidate some of my viewpoints on Toastmasters, financial concerns for college students, market timing, risk, and insurance.

Comment by Richard Thripp, 2016-07-08:

The brief Brexit crash was actually a good buying opportunity, though it is easy to say in hindsight. I think when adding money from a bank account via Vanguard, the transaction doesn’t post until the next business day, meaning the price you see now is not the price VTSAX will be at when your “buy” order actually posts.

I would agree given the much lower value your Lexus minivan shows for private sales that you paid too much. However, many others make far worse decisions—I have young friends who literally have 15%+ car loans due to not understanding how credit works (meaning, they didn’t have their first credit card or student loan until AFTER the car loan and got their loan at a used car dealership).

With such high liquid net worth, why do you choose to pay 3.45% interest plus credit inquiries when you could just buy the car outright? Why do you have an $1859 warranty, which is clearly a money-maker for the warranty guarantor, when you could easily use your savings as your warranty? I suppose you are benefiting in the 10% “mix of credit types” portion of your credit score by having a car loan, but this seems no more worthwhile to me than keeping a credit card you don’t use that has an annual fee, just to avoid the hit to your average age of accounts from closing it (which doesn’t even occur until 10 years later, as far as I know).

Even most rewards checking accounts do not offer a 3.45% return. Most outlooks for the stock market are tepid compared to returns in recent years. A 3.45% return with no risk to the principal is pretty good.

I’ve been reading your blog for a while. You are definitely still a half-millionaire since your net worth estimates are very conservative. You aren’t including the value of most of your possessions, and you have barely any debts. Very smart.


Response from blog author, J. Money, 2016-07-09:

Thanks man 🙂 Yeah, actually just got an offer for the blog and my other project which raises the worth substantially more, but I never count on any of that until it’s actually a reality so that’s why I don’t include that stuff (I turned down the offer, btw).

As for liquidating some assets to pay for the car, it’s too slippery of a slope for me – I never like touching investments cuz it would tempt me too much to make it OK to do for other stuff down the road. And I honestly don’t mind taking on some debt and paying for the convenience of it since I know I can pay it off at any time and manage it responsibly. Plus, my investments will make much more than 3.45% anyways over the years 🙂 And actually gonna spend some time and try and get it refinanced lower too as soon as the chaos winds down….

thx for stopping by btw – just checked out your site, your background is pretty impressive! especially in the speaking stuff – always admire that about people as I hate it. Keep hustling 🙂


Response by Richard Thripp, 2016-07-11:

Thanks for replying and checking out my site, J. Money! Toastmasters has been great… when I started 2 years ago I was super nervous but after being a club president and giving two dozen speeches I have improved greatly. It’s not really “public” speaking per se since you only have an audience of 10–20 people you already know, typically, so it’s a good segueway into more anxiety-provoking environments.

As for my education, financially I find it a very interesting topic. I still live with parents and have all my degrees (AA, BS, MA, starting PhD next month) from public community colleges / universities. This is so much cheaper than going to private institutions or moving away (though not as exciting). It must be awful to come out of undergrad with $100K+ debt which is quite common with pricey private institutions. Alarmingly, what is becoming more common is that people incur debt without ever finishing their degree! Might be a good blog post topic.

I can definitely understand the “slippery slope” dilemma, and I too think the VTSAX index fund will continue to yield more than 3.45% annually. Heck, it yielded much more than this over the past 10 years, even considering the 2008 crash.

I am glad you turned down the offer for your blog—I am sure it wouldn’t be as good. So many blogs turn bad when revenue generation becomes the #1 priority.

Best Regards,
Richard T.

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