On 8/16/2017 9:24 PM, Tim McNamara wrote:
On Tue, 15 Aug 2017 20:33:38 -0400, Radey Shouman
wrote:
Tim McNamara writes:

[ ... ]

The car I just bought listed at about 1/3 of the price I paid for my
house in 1993. My house has appreciated (according to my property
tax statement, which rivals Tolkien in the fantasy genre) to be worth
three times what I paid for it; my car won't appreciate. I could buy
about 6 of my very most expensive bike- which was a silly amount of
money to spend- for the cost of my car.

What's the average bike sold to consumers cost- about $500 or so
(I've been out of the normal new bike market for decades, so I really
don't know)? Versus the average car costing about $25,000?
Economics are not really the carrot one might hope for. People do
not make choices in an economically coherent fashion.

Many people in the US literally don't care what their car costs, they
only care about the monthly payment. An increasing number of cars are
never paid off. This is, of course, insane, but that's how it is.

A small increase in the cost of fuel, insurance, parking, or tolls is
much more likely to lead to a change in behavior than a large increase
in the cost of a new car.

Huh. That's an interesting notion. I had not thought about it, because
I don't do this myself, but many people only plan to own a car 2-4
years. Then they trade it in or sell it, getting a replacement vehicle.
With that kind of approach, paying off the loan is moot. For that
matter, leasing rather than buying is a viable option.

I kept my first car 7 years (and it was totalled or I would have kept it
longer), my second and third cars 13 years each (and the third car was
11 years old when I bought it). My fourth car was bought 2 years used
and was a VW diesel, sold back to VW but I had been intending to keep
that at least 10 years. Now I have a new replacement and expect to have
that at least 10 years. That should get me to 68 at which point who
knows what the car market is going to look like. I am hoping for a
fully viable electric with five minute charging and a 400 mile range. I
could get away with an electric car with a 65 mile range now for all my
commuting needs, or a Chevy Volt. I thought real hard about that
option.

Or maybe I'll just ride my bike then.

And not only does that approach apply to cars but also to houses (people
often buy without the intent of making it their lifelong home, unlike my
parents' generation or me) and to credit cards. Readily available debt
changes the math a lot. Many/most business cannot survive without debt;
farmers cannot survive without debt; perhaps half of Americans have
credit card debt they will never pay off and will die owing tens of
thousands of dollars. That's one of the three big looming economy
killers: mass defaults in the housing loan market (again), credit card
market and student loan market.

Two followups:

1) Our habits match. The car I sold last year was 26 years old. I'd
owned it for 18 years. We've had this house for over 35 years. I'm what
the credit card companies call a "freeloader." My favorite bike is 31
years old. And so on.

2) About debt: The Wendell Barry novel _Jayber Crow_ was mainly a sort
of platonic love story, set in a rural area experiencing changing times.
It touched in part on the conflict between traditional vs. modern ideas
regarding debt for farmers. There were also some plot aspects regarding
government interference in a tiny private business, the effects of the
above on relationships within a community, etc. I thought it was a
beautiful book.

--
- Frank Krygowski