True, but they are not receiving more stimulus checks and taxes are not going to be drastically lowered, so what happens in 2022? No more stimi checks, inflation, increased costs of living, and flat wages do not help the working classes for the next 18 months.
3 Likes
I agree with most of what youâre saying here, but I donât think wages have remained flat.
Labor market is tighter than ever, and I kid you not my local BofA branch is paying $25 p/h for a teller job. Wages definitely are spiking upwards.
Your point still remains for the countless left behind by the pandemic. Many that have seen their industries wiped out and are unable to find jobs, unemployment has ran out and costs are spiking. Nonetheless situation is quite bad for millions of people for sure.
1 Like
Genuine question: for most jobs, does that compensate entirely for the inflation thatâs occurred? And were those jobs underpaying (possibly by a lot) to begin w/?
If most are taking for full term to pay it off, that disturbs me⌠A lot.
From what I have seen, the raises have been in the 25-30% ball park.
Quoted inflation is something like 6.5%, meaning most are better off even with inflation factored.
No doubt those jobs were underpaying by a lot to begin with, and looks like the market finally caught up.
I guess the better question is, knowing what we know about Econ 101, at some point this all washes out and $25 becomes the new $10
If most are taking for full term to pay it off, that disturbs me⌠A lot.
With how low interest rates are for many new vehicle loans why not take the full 6 years and pay it off. Annualized stock returns tend to be higher than the APRs Iâm being quoted.
1 Like
Three major flaws in this logic:
-
Having a warranty isnât even close to being free, because you have to keep replacing perfectly good cars in order to continuously have a warranty. Instead of repairs youâre pissing even more away by acquiring car after car at the steepest point on the depreciation curve, plus there are significant transaction costs every time you replace a vehicle;
-
The car payment on an auto loan is based on how much car you buy / how much you borrow, just like a lease payment. Our last car loan payment was around $250;
-
Car loan payments end when you pay off the car. The above-referenced vehicle is still in our garage 5 years after the loan was paid off, and 7years after we purchased it when it was already 7 years old.
4 Likes
There are some better paying jobs and many large companies are offering better pay, but inflation is still outpacing average pay. Red line is average earnings growth adjusted for inflation.
https://www.washingtonpost.com/business/2021/11/10/inflation-wages-workers-october/
4 Likes
Yep, this is the gist of inflation. Prices are going up, wages are going up, but wages can never catch up with prices.
Seems you may have missed the point in OPâs post and my reply (agreement) with him and @TypeSH reply suggesting used car financing alternatives now that middle class American may not afford to lease new. If you cant lease a 450 per month car (because the lease price went up upwards of 50 percent), financing a used car for a 5 year term will likely increase your payment as is, and you will be liable for repairs (big or small) that used cars come along with. Not sue what your 3 bullet points have to do with this as your first one is moot point as this is, after all, a leasing focused site, youâll likely not win arguments that leasing doesnât make sense. Thank you for clarifying to us idiots how a car loan works. Iâm not sure what your individual experience with a used car was supposed to prove. Your one small data set is pointless in the big picture. Itâs like that guy that always argues against leasing and talks about how he drove his Civid Dx 300k miles.
Not sure how many people âin the middle classâ are using the math and their money that way.
1 Like
I think it would help if OP classified by what they define middle class as. Most sources claim middle class is $50,000 to $150,000 for household income and varies by region too. Obviously a huge difference in buying power between someone making $50k a year vs. $150k. I would imagine most people making over the $100k mark have actual stock investments (I think it is the top 10% of earners own 90% of the market) and over $60k are investing in a 401k or IRA.
1 Like
The premise that middle class people are priced out of reliable transportation (âpriced out of the auto leasing / buying marketâ) is false.
The premise that you save money by continuously replacing vehicles so you have a warranty is commonly going to be false.
I love my lease, but Iâm not lying to myself by pretending it was smart because Iâm saving money on repairs. Itâs the dumbest financial decision Iâve made in three years, and Iâd do it all over again.
10 Likes
I wouldnât say leasing is a dumb financial decision. Depends on what your priorities are/what industry you work in/etc. Some people value having a newer vehicle, latest safety features, newer tech, etc. Also, if you decided that you want a newer vehicle, letâs say 4-6 years old, then maybe leasing makes more sense since youâll more than likely have a car payment since youâll be buying a new car every 4-8 years.
2 Likes
What is so troubling/confounding about the current round of inflation is that its much more complex than just changing unilateral monetary policy or fiscal policy. China, UK and Eurozone are all dealing with the same thing.
Ultimately it probably doesnât really end until most of the related problems, think global shipping crisis, chip shortage, manufacturing/power issues in China are resolved.
2 Likes
I employ a nanny,
I am selling her my SUV lease turn it at cost⌠prob cost me a few K for not selling at market rate and the hassle of buying it up front. Vs a off the lot sub compact car with full warranty.
I honestly thought the newer sub compact car would be better financially, but she cant get over the extra 8-9k up front despite 3 yrs of warranty⌠Nothing is âpriced outâ just expectations need to be adjusted for the next year or so. Most in this situation, deal with the problem at hand, not planning years in advance.
Disagree. Leasing is definitely more costly for most people. Buying a lower mileage used vehicle (honda, toyota, etc) and driving it for the next 10-15 years is absolutely more affordable. You also need to consider higher costs of registration / insurance fees on brand new vehicles as well. Personally, Iâve chosen to spend anywhere between 250-500 on car payments perpetually when I could have just driven my $16K Hyundai Elantra that I owned outright with my super cheap insurance rates.
2 Likes
Letâs not conflate two different things.
Acquiring a new vehicle every 3 years rather than holding a vehicle for 10-15 years is often much more expensive.
Leasing vs purchasing is just a means for doing that. Leasing sometimes is and sometimes isnât a less expensive way of doing it along with mitigating other risks.
3 Likes
Mine was. With taxes and fees upfront Iâm ~$30k in with $850*7 to go, and the odometer just rolled over 9,000 miles on Saturday. So $3.33 a mile.
At the time I could have bought a 2-year-old CPO of the same model in the $40,000s.
⌠or a higher-mileage / non-CPO for about the same as the cost of my entire lease.
Or we could have just kept the 2010 Prius that wasnât costing us anything. It was barely even depreciating any more.
Well if we are comparing purchasing a new car every 3 years to leasing then yea obviously leasing makes more sense in a lot of cases. I guess I should have read his post more carefully but most people with self control (not me) who can hold on to a car would benefit from purchasing rather than leasing.
Itâs not just his post; this is something that often comes up in the discussion of âis leasing better than buyingâ. Someone inevitably will make the argument of âwell, you buy the car and hold it for 15 years and itâs so much cheaperâ. The problem there is youâre now comparing totally difference financial tools AND totally different products. Itâs not particularly reasonable to compare costs between a new product and 10 year old product, unless your only metric is total cost outlay.
Now, with that said, there was a great write up that someone did here comparing the cost of leasing a bmw vs holding his cpo bmw for 8 years. The total costs ended up coming out pretty even between them, even with the cpo bmw being very outdated.
4 Likes