Made a costly deal, but worth it !!

[RSKY]

Our oldest granddaughter turned 16 in June. She will get her license in October and is wanting a car badly. Her mom and dad are wanting her to have one too. It will save them running around carrying her everywhere. But with what she has saved and what they can afford it will not be too great of a vehicle. So GRANDDADDY steps in for several reasons. #1 reason is that her year older female cousin is on her third junker after being broke down on the road by the first two. Once for more than an hour until she got in touch with a family member who could get to her. She wouldn't call anybody at work and others were at doctor's appointments. Next time she will call me or my wife. Not blood kin but has been at our house many times. Very pretty seventeen year old girl broke down on the side of the road for an hour scares the he11 out of me. #2 reason is that the granddaughter will probably go to the local university and live at home which will mean a 50-mile round trip every day. I want her to have something reliable and economical. #3 reason is that I made a deal with her. Borrow money from Granddaddy, never get a tattoo or nose ring, and no interest will have to be paid. Plus every birthday and Christmas a thousand dollars will be forgiven from the debt. One tattoo or a face piercing and the full amount plus interest will be owed. Pretty shrewd of granddaddy isn't it!

At a school event last Saturday she whispered in my ear that she had about $500 babysitting money that needed investing. Not spent, invested. Her words, not mine. So in all this talking and planning I have made a breakthrough with this intelligent young lady. She is going to make her money work for her, not blow it on useless junk. Hopefully a life lesson learned.

So she and I have sat and looked at the vehicle tests online. We have compared vehicles online. We have discussed money matters, interest earned vs. interest paid, investing, and many other things about finance. And she has made a choice on a new vehicle. Mainly using the Edmunds.com website she compared the "Five year true cost of ownership" of many different vehicles. And she has chosen a Toyota Corolla Cross small SUV. Why that particular brand and model? It is relatively cheap, economical to operate, and the depreciation is about half of some other brands. Toyotas are the absolute kings of the used car market. They simply do not sit on used car lots very long. So if she keeps it for five to ten years she will get a good trade in when she replaces or sells it.

She wanted the base model with the only option being the white color. I changed that to get several options that I considered to be for safety. A higher level over the base added a back windshield wiper, keyless entry and starting, and a bigger screen on the backup camera. I added all wheel drive for traction (50-miles a day in all kinds of weather). And lastly the hybrid version. She really didn't want the hybrid but the tests show a 0-60mph time over 9.0 seconds for the non hybrid and under 7.0 for the hybrid model. That may not sound like much but it can be huge when merging into traffic.

So the vehicle is ordered. It will be at the dealer in November. She is ecstatic about it. I am paying for it and she and her parents will pay me their part. I am paying about three quarters of the total and she will make payments to me. And she is not to tell anybody that Granddaddy is helping her with the purchase. And she will never get a tattoo or nose piercing. We are all happy with our deal.

Then I remembered that I have four more grandkids !!

RSKY

 

[ponytug]

@RSKY Congratulations! I do not know who is luckier, you, or your granddaughter.

What does she want to learn at university?

All the best, Peter

 

[civilian]

She is very lucky to have you RSKY. I like the stipulations you added. I hope the "nose rings" includes all visible piercings. "Hidden", her problem. Glad she is looking to you about learning on handling money and investing early in life. Never received that from my parents but have since learned dad started investing prior to age 42. He is now 96. Jon

 

[steve tym]

It's so much better when you make a "deal" than to just hand over the money. I have the same "problem" with grandkids. If I buy one a car, do I have to buy all 5 a car? It looks like the first (in 2 years) will get my wife's Subaru, but then the rest will come of age pretty quickly behind her. Things to ponder in life. Congrats RSKY.

 

[Shawn T. W.]

Congratulations on helping her learn about finances!

If you haven't thought about it yet ... Who is buying the insurance? You? Parents? Her?

 

[BackRoad]

Way to start them out on the right path Mr. RSKY!!!

Reminds me...there's an old 1926, yet still published book..."The Richest Man In Babylon"...by George Clauson. It's listed on Amazon as a classic and #1 best seller on personal finance.

Amazon.com

The 30 second summation:
Long-term investing of 10% of everything you earn. Gladly offer a spiritual donation of your first 10% to help others...next pay yourself 10% (save and invest it)...and only then, proceed with living expenses from the 80% left over.

The most important variable is to start investing that 10% when YOUNG, but it's never too late to start.

The book was given to me about 45 years ago...and we have followed its advice (and then some!) ever since...it's been a life changer.

Only the Bible has had more positive impact than the RMB for us and our marriage.

It's a great little story, and saving 10% is an important lesson to learn by young ones just starting out...

Each of our grandchildren (and children) could benefit from a personal copy from a wise ol' Granddad...

 

[bdhsfz6]

Glad you were able to "connect" with your granddaughter! Not an easy thing to do these days.

You might also consider getting her a subscription to an auto club as added protection on her commute.

 

[RSKY]

@RSKY Congratulations! I do not know who is luckier, you, or your granddaughter.

What does she want to learn at university?

All the best, Peter

She hasn't made up her mind yet. Still a junior in high school so she has time. Her mom is a teacher, her dad a firefighter. And her aunt, my youngest, is a business woman who now works from home making more money than anybody else in the family. BUT the main influence will be her uncle who is the 'chief computer nerd' at a local chain of banks. His title is something like Senior Vice President of Information Services. At our Sunday lunches he has questioned her and made many suggestions and offered advice that has changed her ideas about what she wants to do several times. She is smart enough to figure it out. There is a possibility that she may do follow along internships with everything from an architect to a chiropractor.

RSKY

 

[RSKY]

Congratulations on helping her learn about finances!

If you haven't thought about it yet ... Who is buying the insurance? You? Parents? Her?

Parents will provide gas and insurance. Believe it or not her first choice of a vehicle was a Honda Civic. She quickly rejected it because their insurance agent said the insurance for the Honda Civic and Accord was higher due to those models being the most stolen car in the U.S. Also, "everybody has one!"

RSKY

 

[dodge man]

When I was her age I walked uphill in the snow……………. Nothing wrong at all with helping kids, grandkids etc. if you can afford it. She is lucky to have you guys.

 

[RSKY]

Way to start them out on the right path Mr. RSKY!!!

Reminds me...there's an old 1926, yet still published book..."The Richest Man In Babylon"...by George Clauson. It's listed on Amazon as a classic and #1 best seller on personal finance.

Amazon.com

The 30 second summation:
Long-term investing of 10% of everything you earn. Gladly offer a spiritual donation of your first 10% to help others...next pay yourself 10% (save and invest it)...and only then, proceed with living expenses from the 80% left over.

The most important variable is to start investing that 10% when YOUNG, but it's never too late to start.

The book was given to me about 45 years ago...and we have followed its advice (and then some!) ever since...it's been a life changer.

Only the Bible has had more positive impact than the RMB for us and our marriage.

It's a great little story, and saving 10% is an important lesson to learn by young ones just starting out...

Each of our grandchildren (and children) could benefit from a personal copy from a wise ol' Granddad...

The biggest influence on my daughters was a lady at a local bank when they were just teens. They had a little money to invest and I went to the bank and talked to a lady about what to invest it in. She said she had some good mutual funds but she wouldn't do anything with the money until I brought the girls in and let her explain what a mutual fund was. When I took the girls in the lady pulled out a laptop computer which was an expensive and rare thing at that time. Girls eyes bugged out as she went through a twenty minute powerpoint presentation on the stock market and investing. Thirty years later they both can quote some of what was in that presentation. A few weeks later the oldest argued with a teacher about some remarks he made about the stock market and how it works. Told him, "That's not what my broker says!". His reply to my fifteen year old was, "You have a stock broker??".

RSKY

 

[RSKY]

When I was her age I walked uphill in the snow……………. Nothing wrong at all with helping kids, grandkids etc. if you can afford it. She is lucky to have you guys.

This is passing along generational wealth that I inherited from my parents and my wife inherited from her parents. In 2022 we sold a house and two farms with the proceeds split between myself and two sisters. My wife sold a house and farm that was split between her and her sister. That money is invested and will be passed to our children when we are gone. Both my daughters understand that it is not to be splurged but saved, invested, and passed along to their kids. We are already working on the grands to do the same. I just hope they understand how much difference it can make to the next generation.

RSKY

 

[NorTracNY]

That's wonderful that you're teaching your offspring about money. All of my children have saved and invested thousands before they even reached working age in this state. They all understand that getting a good education is important, that their HS doesn't give that, but their work ethic will be the key to their success.

 

[JTKub]

You did a great thing. I'd love to be able to do something like this for my grandkids some day. So far I've helped three of my college aged kids with the purchase of used vehicles and I still have a 14yr/old at home.

My problem lately is the car insurance situation and living in the PR of NY. Covering 5 vehicles and 3 kids, two of which are 20 and 21yr/old males, my car insurance at one point went up to $12K per year. My wife and I both had deer hits a year prior that did $8K and $5K worth of damage. Nothing fancy in terms of vehicles. The newest one is the 2022 Nissan Frontier and 2 of them are liability only.

I've since "given" the Frontier to my 23yr/old daughter who lives in SC and shopped around a bit to get my cost down to ~$8K per year. The 20 and 21yr old males couldn't afford policies on their own, they're working and going to school at the moment.

 

[RSKY]

I am trying to teach the grands about my mistakes and how much they cost me. Hopefully they will listen and not make the same mistakes I did.

When my girls were in high school their older cousin gave them a book for Christmas written by one of the leading TV money people at the time. I believe it was Dave Ramsey or somebody like that. It made a big impression on the youngest. Especially when she found the fifty dollar bill lightly glued on the last page.

RDSKY

 

[sandman2234]

Very pretty seventeen year old girl broke down on the side of the road for an hour scares the he11 out of me.

They don't even have to be pretty to be at risk, and I am right there with you in that concern!

She wanted the base model with the only option being the white color. I changed that to get several options that I considered to be for safety. A higher level over the base added a back windshield wiper, keyless entry and starting, and a bigger screen on the backup camera. I added all wheel drive for traction (50-miles a day in all kinds of weather). And lastly the hybrid version. She really didn't want the hybrid but the tests show a 0-60mph time over 9.0 seconds for the non hybrid and under 7.0 for the hybrid model. That may not sound like much but it can be huge when merging into traffic.

And she will never get a tattoo or nose piercing.

Then I remembered that I have four more grandkids !!

RSKY

Wait!!! You mean someone in the younger generation actually knows the word "merge", much less what it takes to do it? Hopefully that extra acceleration won't be on the shoulder after the end of the acceleration ramp! I see that way too many times when people drive to the end of the ramp and then wonder why that dang truck didn't get out of their way!!
David from jax

 

[newbury]

Late to this thread.
BUT
RSKY - I applaud your loan terms.
When I needed $$ for my first house down payment back in 1978 my Grandfather & Father stepped in with terms:
Pay back, interest rates what bank deposit rates were. Apparently it was a family tradition.
So that was about 7%, when mortgage rates were about 10%. On a GS 5 salary (~$7K) that helped
I've since been fortunate enough to do the same for my children on approved projects (vehicles, house etc), and with interest rates so low for the last (?) 10 years at the CU being so low they seem to look to me as the lender of choice. I did start them all out on "small" loans to ensure they had the "I'll pay it back on time" attitude.
I've only had "difficulty" with my daughter and her husband. Her husband is adamant about not owing money and they end up paying it back years early.

 

[NorTracNY]

Late to this thread.
BUT
RSKY - I applaud your loan terms.
When I needed $$ for my first house down payment back in 1978 my Grandfather & Father stepped in with terms:
Pay back, interest rates what bank deposit rates were. Apparently it was a family tradition.
So that was about 7%, when mortgage rates were about 10%. On a GS 5 salary (~$7K) that helped
I've since been fortunate enough to do the same for my children on approved projects (vehicles, house etc), and with interest rates so low for the last (?) 10 years at the CU being so low they seem to look to me as the lender of choice. I did start them all out on "small" loans to ensure they had the "I'll pay it back on time" attitude.
I've only had "difficulty" with my daughter and her husband. Her husband is adamant about not owing money and they end up paying it back years early.

I sound like I could be the son-in-law. There was one time we accepted a loan from an in-law. They weren't happy when we paid it back many years early. They were hoping for the years of interest.