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Old 05-30-2016, 08:16 PM   #1
WaitingToRetire
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Brand new truck or 5yr old truck?

This is long. Sorry.

Which would you do, if you had the financial choice/option?

A. Buy a new or slightly used truck about 6 months before you start fulltiming. Pay cash at time of purchase.

-OR-

B. Buy a brand new truck about 4 or 5 years before you plan to fulltime. Finance it like normal, aiming to have it paid off when you start fulltiming. Drive it sparingly in those 4 or 5 years, aiming to have a minimal-mileage vehicle when you start fulltiming.


Here’s the situation.

- The wife and I are both 45. We plan on fulltiming the day the last kid graduates college in 10 years; so we’ll be 55 yo. I’m aware of 401k penalties and such.

- I am retired military, pulling in ~$3000/month take-home on the military retirement; so $36k/yr. While I don’t expect this to keep up penny-for-penny with inflation, I think it’s a fair approximation for planning purposes. When we do start fulltiming, this will be our primary source of day-to-day, year-to-year income.

- I’m putting $14k/yr into my 403b, and expect my contributions to go up 1% per year up to the max. I just started last year, so the balance is only $14k presently. So let’s say without crunching the numbers, in 10 years this will hopefully be $150k (and I really hope that’s on the low side pending investment growth). This would be our $$ to draw from when we can do so without penalty.

- We’re putting $17k/yr (part of mil retirement $$) into a fund specifically for our fulltime dream. So even if I put that under a mattress, that should be ~$170k; hopefully with pending investment growth it will be much more. This is the $$ we will use to buy a new camper and truck with about 6 months before we start. When fulltiming, any leftover from the camper and truck purchase would be a supplemental source of income for any monthly splurges or occasional emergency beyond what our primary budget (mil retirement) allows for. Don’t plan on being excessive, but if we want to eat out, we’ll eat out.

The wife has a 401k as well, but she makes less than 1/3rd what I make, so I’m just planning with my numbers, and hers will be “supplemental”.

So, back to the original question. Would you finance a truck 5 years out, or pay cash right before you start fulltiming? The finance option would not change any of the above numbers, as I would buy the truck when a current vehicle is paid off. I personally like the 5yr/finance option, but am worried about a 5-year-old diesel meeting our needs down the road. Any worries there?

Thanks
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Old 05-31-2016, 04:09 AM   #2
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One thing to consider is that all of your "retirement and 401-403 investments are being made with tax deferred income, so when you get ready to start full timing and withdraw those funds, they will be subject to income tax. Depending on your income level and available deductions, you will likely find that withdrawing $100K will give you only $75-80K of "available spending power".

We found that much of the "tax-deferred investment" was made when we had significantly more "deductible income". Now that we're "just the two of us" without all the "business and family related deductions", much of the investment growth is actually consumed by taxes leaving us with actual dollars that equal the "spending power of previous cash" minus the inflation. That means the "dollar earned in 1970 will buy much less in 2016." Don't get me wrong, it's still much better than not saving for retirement, but get some good advice on how to make the most of what you'll have then without spending a significant part of it in "government costs"....

I'd urge you to talk to a good retirement planner and get their suggestions on the best strategy to avoid inflation and future taxation, leaving you with the most available cash when you start your venture.
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Old 05-31-2016, 07:24 AM   #3
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I think you end up with the same thing at retirement: both trucks would be 'slightly used'. A couple of differences:

- If you buy now you get exactly what you want. No searching or compromising on a used truck.
- You know exactly how it was used, since you're the one that used it
- On the other side of the equation, by buying new you're eating the depreciation and by financing, you're paying interest (unless you find a 0% interest loan). There are some incredible deals out there on slightly used trucks where someone else has eaten the depreciation. You can just about always get a lot more truck for less money if you take your time searching, do your homework, and be patient.
- Leaving your money where it is (investments/savings) where it will keep earning interest or growth means you are actually making money by delaying the purchase until somewhere down the road.

Every time I've bought a truck (and I've owned quite a few of them), I've gone through the exercise of looking at new versus used. And every time I've ended up going with the used version - less cost, more truck, and I've never regretted the decision.

By the way, I just retired at Christmas and did exactly what you are asking about. After doing the analysis, I waited until a couple of months in advance, started searching, and found an awesome used truck that is almost new and will last us for a very long time (and paid cash for it).
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Old 05-31-2016, 11:05 AM   #4
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For the truck it's almost a wash. For me, if I was able to buy one new, exactly how I wanted it, and be able to keep the miles off it, that's what I would do because I always buy new. Due to depreciation, it is not the best way to do it financially, but it's how I like to do it; the only 2 used cars I bought years ago caused me problems at the most inopportune moments.

Some thoughts on your retirement; 1)get a good financial advisor now. Don't self invest with Fidelity, Merrill Lynch etc. Get a personal advisor to manage your money. 2) Ask him about the IRS rule of 72T. You can retire at 55 and not pay any penalty. It does have some requirements but they are simple. That's what we did and it worked out great.

Remember that retiring at 55 you are young. All those things you think you will pay off so that your income requirements are lower will all come back in some form or fashion. We paid everything off for retirement but found we were having so much fun running around and doing that I bought a new truck, a new SUV, a new RV and another house, so all that money that was set aside had a dent put in it that I never expected. We are lucky enough that we have the money and it doesn't affect us, BUT, if you had asked me the day I retired if that could happen I would have told you no way. You also have to realize that everything goes up in cost so $1 today won't be a $1 10-20 years from now.

You are smart to think about how you are going to play it out. It's one of the keys to a successful retirement along with paying off all debt, especially your home. In this case I guess it would be the RV?? Good luck on your choice and your retirement efforts. It IS as fun as they say
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Old 05-31-2016, 04:53 PM   #5
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Thanks for the tips, advice, and opinions. I'll look into the IRS Rule of 72.
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Old 05-31-2016, 05:40 PM   #6
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Thanks for the tips, advice, and opinions. I'll look into the IRS Rule of 72.

The rule of 72t is based on several numbers and certain calculations that include them. I had my CPA and my financial planner both do the calculations so that I didn't run afoul of the IRS for some reason.
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Old 06-02-2016, 04:47 AM   #7
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Most vehicles depreciate about $5k from MSRP the first year, after that the depreciation numbers are 1/3-1/2 of first year. If you buy at the right time, you can get a new truck for well under the first year depreciation numbers and get 0% financing. I can't tell you how many times I've seen used trucks priced higher than new. I bought my 2500 for $8k under MSRP and got $500 less than I paid for it when I traded it in 2 years later with 42k miles.

I work as a car salesman and can tell you that I will not buy used, they're not as good of a deal as most people think. Buy new, but buy smart.
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Old 06-02-2016, 09:06 AM   #8
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Originally Posted by bsmith0404 View Post
Most vehicles depreciate about $5k from MSRP the first year, after that the depreciation numbers are 1/3-1/2 of first year. If you buy at the right time, you can get a new truck for well under the first year depreciation numbers and get 0% financing. I can't tell you how many times I've seen used trucks priced higher than new. I bought my 2500 for $8k under MSRP and got $500 less than I paid for it when I traded it in 2 years later with 42k miles.

I work as a car salesman and can tell you that I will not buy used, they're not as good of a deal as most people think. Buy new, but buy smart.
I don't know. That hasn't been my experience, but I suppose its possible given the right circumstances. The variable for me is the capability and features of a new truck vs a used truck. If a used truck is priced right, is capable for the task and you can live without the "bells, whistles and bling" of a new truck, then you bought used in a smart manner with a considerably lesser price. At least that has been my experience. Sometimes progress in engineering isn't the kind of progress I can live with, nor care to pay for.
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Old 06-02-2016, 09:25 AM   #9
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It's also not my experience. A new truck capable of pulling my trailer safely is roughly $55-$60K new on massive discount. Sticker is over $70K.

I bought my 2001 Dodge 3500 DRW w/Cummins for 25% of new price and even after *I* blew the head gasket and rebuilt the motor top end, and deciding if it was in the shop I'd have them rebuild the steering with upgrades and other upgrades (studded the engine, upgraded injectors, new exhaust manifold, better air intake), I'm still not to half of the price of a new truck.

Truck came with a brand new set of Michelins on it, an upgraded turbo, a computer for horsepower modification, 4" exhaust stem to stern, a monster toolbox in the bed, a Reese hitch already installed, Line-X sprayed bed with wiring already done for a bed connection for the trailer, Jacobs exhaust brake, AirDog lift pump/filter/water trap, progressive brake controller, and I don't even remember what else. All mods done by a friend who had sold his fiver.

Truck has leather and A/C and I replaced the stock stereo at a local car stereo place for a few hundred bucks with a Kenwood/Garmin combo, so any "gadget envy" wouldn't be there.

About the only thing I wish it had that didn't come along until later years is a larger cab. No big deal for two adults and two big dogs, but we can't carry passengers. If we ever need to do that, we just have someone follow along in style in the Lincoln LT my wife drives. Quite a cush ride. Also bought used.

I can't make the numbers work on a new truck. I paid cash for this one and cash for all the repairs and it was mine with a clear title the day I handed the former owner his money. There's something big to be said for that, too. If life has a bump in the road, I don't need to mess with any bank to sell it.

Especially with the longevity of a Diesel engine and the invaluable information online about what is definitely going to fail on the older trucks, you can adequately prepare for, or even pre-work many known problems.

What problems are the new variable vane turbos on the new Dodges going to exhibit in five more years? Ten? Etc.
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Old 06-02-2016, 09:44 AM   #10
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I'll buy a new one... personal experience tell me that 7 out of 10 used trucks are sold because of someone getting rid of a problem...

I bought a new '15 F350 dually (listed below) for $38K out the door... you don't have to spend $60K-$70K to get a new truck...
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Old 06-02-2016, 09:52 AM   #11
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Originally Posted by Javi View Post
I'll buy a new one... personal experience tell me that 7 out of 10 used trucks are sold because of someone getting rid of a problem...

I bought a new '15 F350 dually (listed below) for $38K out the door... you don't have to spend $60K-$70K to get a new truck...
Depends on where you live. I have a Kalifornia friend who only buys his trucks in Texas. Saves a lot of money in the process and he gets versions banned in Kalifornia for whatever reasons that government determines is evil. He brings them in as used, so they're legal.

What you did works for you and you bought smart and capable.
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Old 06-02-2016, 10:40 AM   #12
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I have the worst luck in the world when buying anything used it seems to cause me more problems than not, could just be my luck. On the flip side it is possible to get a new diesel for under $50k if you don't need all the fluff. Mine for example is a 2016 F-350 XLT Crew longbed FX4 4x4 nicely equipped with locking rear axle, power windows, power rear window, CD, Sat radio, sync system with Bluetooth, Ford Linex bed spray, 6" chrome running boards, rear view camera. (no leather, no touch screen nav).and I paid $48k new. Now if you want it equipped like an Audi with seats that heat and blow cold air up your butt and DVD, touch screens, etc then yea you're going to have to pay up, no way around it.
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Old 06-02-2016, 12:33 PM   #13
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I buy a new Ford diesel every 2 years or less.
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Old 06-02-2016, 02:22 PM   #14
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I buy a new Ford diesel every 2 years or less.
Well, they are Fords. Can't be too careful...
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Old 06-02-2016, 02:27 PM   #15
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Originally Posted by BlueThunder34 View Post
I have the worst luck in the world when buying anything used it seems to cause me more problems than not, could just be my luck. On the flip side it is possible to get a new diesel for under $50k if you don't need all the fluff. Mine for example is a 2016 F-350 XLT Crew longbed FX4 4x4 nicely equipped with locking rear axle, power windows, power rear window, CD, Sat radio, sync system with Bluetooth, Ford Linex bed spray, 6" chrome running boards, rear view camera. (no leather, no touch screen nav).and I paid $48k new. Now if you want it equipped like an Audi with seats that heat and blow cold air up your butt and DVD, touch screens, etc then yea you're going to have to pay up, no way around it.
The few times I've bought new I've had more problems than the many times I've bought used. Maybe they're just grateful I chose the smart and interesting ones to take to the prom.
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Old 06-02-2016, 06:02 PM   #16
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Originally Posted by denverpilot View Post
It's also not my experience. A new truck capable of pulling my trailer safely is roughly $55-$60K new on massive discount. Sticker is over $70K.

I bought my 2001 Dodge 3500 DRW w/Cummins for 25% of new price and even after *I* blew the head gasket and rebuilt the motor top end, and deciding if it was in the shop I'd have them rebuild the steering with upgrades and other upgrades (studded the engine, upgraded injectors, new exhaust manifold, better air intake), I'm still not to half of the price of a new truck.

Truck came with a brand new set of Michelins on it, an upgraded turbo, a computer for horsepower modification, 4" exhaust stem to stern, a monster toolbox in the bed, a Reese hitch already installed, Line-X sprayed bed with wiring already done for a bed connection for the trailer, Jacobs exhaust brake, AirDog lift pump/filter/water trap, progressive brake controller, and I don't even remember what else. All mods done by a friend who had sold his fiver.

Truck has leather and A/C and I replaced the stock stereo at a local car stereo place for a few hundred bucks with a Kenwood/Garmin combo, so any "gadget envy" wouldn't be there.

About the only thing I wish it had that didn't come along until later years is a larger cab. No big deal for two adults and two big dogs, but we can't carry passengers. If we ever need to do that, we just have someone follow along in style in the Lincoln LT my wife drives. Quite a cush ride. Also bought used.

I can't make the numbers work on a new truck. I paid cash for this one and cash for all the repairs and it was mine with a clear title the day I handed the former owner his money. There's something big to be said for that, too. If life has a bump in the road, I don't need to mess with any bank to sell it.

Especially with the longevity of a Diesel engine and the invaluable information online about what is definitely going to fail on the older trucks, you can adequately prepare for, or even pre-work many known problems.

What problems are the new variable vane turbos on the new Dodges going to exhibit in five more years? Ten? Etc.
I understand your thoughts, but the OP was asking about a slightly used truck or new truck just before he starts full timing or a new truck 4-5 years out. To me slightly used means 1-3 years old not 15 years old. The price difference on many slightly used diesels vs new isn't significant, especially if you buy the new truck at the right time. If you can catch a 0% financing deal, that makes the new truck even more appealing since you won't get that on used.
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Old 06-03-2016, 09:19 PM   #17
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I understand your thoughts, but the OP was asking about a slightly used truck or new truck just before he starts full timing or a new truck 4-5 years out. To me slightly used means 1-3 years old not 15 years old. The price difference on many slightly used diesels vs new isn't significant, especially if you buy the new truck at the right time. If you can catch a 0% financing deal, that makes the new truck even more appealing since you won't get that on used.

He specifically said a five year old truck.
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Old 06-04-2016, 07:27 AM   #18
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Originally Posted by denverpilot View Post
He specifically said a five year old truck.


"A. Buy a new or slightly used truck about 6 months before you start fulltiming. Pay cash at time of purchase.

-OR-

B. Buy a brand new truck about 4 or 5 years before you plan to fulltime. Finance it like normal, aiming to have it paid off when you start fulltiming. Drive it sparingly in those 4 or 5 years, aiming to have a minimal-mileage vehicle when you start fulltiming."
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Old 06-04-2016, 07:32 AM   #19
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Originally Posted by kfxgreenie View Post




"A.Buy a new or slightly used truck about 6 months before you start fulltiming. Pay cash at time of purchase.



-OR-



B.Buy a brand new truck about 4 or 5 years before you plan to fulltime. Finance it like normal, aiming to have it paid off when you start fulltiming. Drive it sparingly in those 4 or 5 years, aiming to have a minimal-mileage vehicle when you start fulltiming."


See thread title.
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Old 06-04-2016, 09:29 AM   #20
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See thread title.
I did, and if you read his post you would conclude, would you rather have a brand new truck meaning, buy it when you are ready to full time, or rather buy a truck now and use it for 5 years and have a "5 year old truck" at the time he will probably go full time as HE has used it for 5 years. Thread titles are often used to entice people to participate or look at the thread, the first post had the context into the specific situations.
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