Follow-up to last Blog Post...BAD Investments

So what is the definition of a Depreciating Asset?

In my last blog post I mentioned them.

To define, let's first define 'Depreciation.'

1) Depreciation in accounting terms means, "allocating the cost of an asset over its estimated useful life."

2) Depreciation in tax terms means, "an annual tax deduction for wear and tear and loss of utility of property."

3) Depreciation in automobile terms means, "a decrease or loss in value due to age, wear and tear or market conditions."

Believe it or not, there are more definitions. Would you believe it also means, "an instance of disparaging or belittlement?"

OK, so what are we talking about?

For the conversation yesterday, let's focus on #3. 

Do you have a new or newer car?

In the last 5 years, I've had 6 new (to me) cars. The cheapest one, a new Dodge truck, cost just under $40,000. I owned if for 3 years. I just sold it for $21,000. I put 39,000 miles on it. Can you believe I spent, after tires, maintenance, insurance, etc. are considered, over 70 cents a MILE just to look cool and feel good?

I just bought back a 2004 Lincoln Navigator I originally bought new for $59,000. I sold it for about $28,000 after 2 years. I just paid $13,000 to buy it back. It has only 72,000 miles on it and is in great condition and runs very well with a 2 year warranty remaining.

In an estimate of fast math just now, I figured I have spent over $250,000 on worthless sheet metal with motors and brakes attached in the last 5 years. 

If I had that invested in 12% student loan notes which my dental assisting school sells, any idea how much I'd have made over a period of just 24 months? A lot.

The lesson here: DO NOT BUY NEW CARS. Stupid people with small brains and a personality disorder buy new cars. I can say that because I am a reformed New Car Buyer. If you're buying new cars, THINK before doing. THINK about your kids or grandkids or spouse or favorite non-profit...heck, even your retirement plan!

Instead, buy used. 2 year old or older. Let some other moron swallow the depreciation. 

You know, I even KNEW I was the moron at one point, but my ego didn't care. 

Financial literacy, as Robert Kiyosaki says, is the beginning of your wealth education. Get literate. Figure out what terms like DEPRECIATION mean and USE that to your advantage.

Next Blog Post: Depreciation and USING it to your practically UNFAIR advantage in... REAL ESTATE Investments!

Adios, Jerry