A couple other points --
1. A two-seater "smart car" isn't 2/5 the price of a regular sedan that seats 5. So it's a bad value for the money.
My wife bought a PT Cruiser new when she got out of college. We used that vehicle up through our 3rd child. Let that sink in. Our young, growing family didn't need to deal with a car payment during those crucial years. We were able to use our money for other things -- like saving up to buy land, which is the best way to raise a family. All because my wife was so practical in her choice of vehicle. We still have that vehicle incidentally -- it's 20 years old now. We still use it. And when our oldest starts driving, that will be what he drives at first.
2. Nevertheless, you DO want to avoid paying interest at all costs. If you need the space, buy the space -- even with a mortgage. But if you're single for 1, 5, 10, or 20 years -- why not just save your money (in a form that allows preservation of wealth, countering the forces of constant dollar devaluation -- I'm talking about silver and gold) and take on the debt WHEN you need it? I think it's better to buy a tiny home and save up your money, than A) rent or B) pay unnecessary interest when you don't really need to. What are you going to do with a whole house, when you're single? You're paying hundreds, maybe over a thousand, in interest every month for that wasted, extra space. Why?
In other words, you're still building equity (wealth) if you sock the money away. Only without paying hundreds of dollars/month interest! By the time you NEED the house, you'll have such a down payment, that you'll not be paying much interest. You do realize that interest is calculated every month, based on your outstanding balance. If you owe $80,000 on a house, you'll pay twice as much interest per month compared to if you only owed $40,000.
Young people out there -- if you haven't done so, you need to look into this: During Year One of a 30-year mortgage, how much of a $1,000 house payment is taken off your actual loan, and how much goes to interest? The answer will open your eyes, believe me!
https://financialmentor.com/calculator/mortgage-payment-calculator-amortization-scheduleI typed in $120,000
6% interest
30 year term
0 taxes, 0 insurance, 0 PMI
$719.46 monthly payment
After 180 of the 360 payments, the outstanding balance is: $85,258.95
So only 29% of your loan is paid off, after making half of the payments!
Those 180 payments cost you $129,502.80 by the way. Yes, that's more than you borrowed. Just another $129,502.80 to go, and you'll be paid off!
See why you want to send in EXTRA PAYMENTS off the principal, as early and often as you can?
Forget savings accounts, the stock market, and vacations. You need to be super frugal in your early years, and get that interest under control.
Topic: Tiny homes for homeless (Read 1505 times)