The BMW UUC Digest Volume 3 : Issue 48 : "text" Format Messages in this Issue: Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: <E36> Stewart Water Pump Re: <E36> Stewart Water Pump Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue Re: BusinessWeek article on Z8 issue [OT] NOW: why all three finance scenarios are the same Re: BusinessWeek article on Z8 issue
---------------------------------------------------------------------- Date: Thu, 26 Jan 2006 17:39:18 -0500 From: "Gary Derian" <[EMAIL PROTECTED]> To: <[email protected]> Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> Buy a $400,000 house with a $300,000 mortgage and drive an E34. Gary Derian > Tom, consider the following scenarios, and tell me which one you'd be > comfortable with: > > A. You have $100,000 in your checking account. You use it to purchase a > $300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, > getting a car loan for the full amount. (Total debt: $250k) > > B. You have $100,000 in your checking account. You use $50k of it to > purchase a $300,000 house, getting a mortgage for $250,000. You then buy > a > $50k BMW, using the remaining $50k from your checking account. (Total > debt: > $250k) > > C. You have $100,000 in your checking account. You use it to purchase a > $300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, > taking out a home equity loan against your house, for the full amount. > (Total debt: $250k) > > Now, I completely agree with your philosophy - live well and below your > means! But that does not necessarily translate to mean that borrowing > against your home to buy a car = BAD. > > Oh, and I could pay my monthly mortgage with my credit card, I'd JUMP on > it, > because I pay all my credit card bills in full anyway, and this way, I'd > get > (a) 30 days of extra float at no charge, and (b) I'd accrue enough > "points" > to buy some nice tickets to Europe every year. :-) > > Vty, > > --Dennis > > > -----Original Message----- > From: [EMAIL PROTECTED] > [mailto:[EMAIL PROTECTED] On Behalf Of T WALROD > Sent: Thursday, January 26, 2006 4:55 PM > To: Richard Dorffer > Cc: bmw digest > Subject: Re: [UUC] BusinessWeek article on Z8 issue > > > Rich, > Honestly, my personal opinion is that smarter and new car or worse yet new > car loan, are not words that I would normally join together. Borrowing > against your home to fund a toy that you can wreck strikes me as > either being supremely confident in one's income, being willing to live in > the toy should income sources shrivel, or having a bucket of money > invested > in a higher yield account that is a sure thing (hah). But I'm pretty > conservative - never have bought a car on time payments and can't really > imagine what kind of net worth would make me feel good about buying a car > in > > the Z8 price range. > Strikes me that fewer and fewer people buy and own things - instead it's > more borrow and hold. Some apartment complexes are offering people the > chance to pay their rent with a charge card. I think that is sad and > wrong. > > If you can't afford something - don't buy it. > > I like both meanings in the phrase live well below your means. Seems to > me > that borrowing for a toy is living beyond your means. > Tom Walrod > > > ----- Original Message ----- > From: "Richard Dorffer" <[EMAIL PROTECTED]> > To: "T WALROD" <[EMAIL PROTECTED]>; "bmw digest" > <[email protected]> > Sent: Thursday, January 26, 2006 12:49 PM > Subject: Re: [UUC] BusinessWeek article on Z8 issue > > >> --- T WALROD <[EMAIL PROTECTED]> wrote: >> > >> > As Ali G would say: Respet. Anyone who mortgages an asset to fund >> > a depreciating liability is umm, special. >> >> Really? So someone is smarter to take a loan out for a new car (or >> lease) >> than someone who uses >> equity (mortgaging an asset) at a potentially lower rate and tax >> deductible? >> >> Regards, >> >> Rich >> > Search the ARCHIVES:http://www.mail-archive.com/[email protected] > > > __________________________________________________________________________ > In memory of Michel Potheau - friend, enthusiast, founder of the BMW CCA. > > UUC Motorwerks - BMW Performance Fine-tuning and home of the Ultimate > Short > Shifter - accept no substitutes! 908-874-9092 . > http://www.uucmotorwerks.com > > > Search the ARCHIVES:http://www.mail-archive.com/[email protected] > > > __________________________________________________________________________ > In memory of Michel Potheau - friend, enthusiast, founder of the BMW CCA. > > UUC Motorwerks - BMW Performance Fine-tuning and home of the Ultimate > Short Shifter - accept no substitutes! > 908-874-9092 . http://www.uucmotorwerks.com ------------------------------ Date: Thu, 26 Jan 2006 17:14:00 -0600 From: Jamie Howton <[EMAIL PROTECTED]> To: Gary Derian <[EMAIL PROTECTED]> Cc: [email protected] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> On 1/26/06, Gary Derian <[EMAIL PROTECTED]> wrote: > Buy a $400,000 house with a $300,000 mortgage and drive an E34. > Gary Derian Hey Gary, How did you get an E34 for free? Just being a smarta$$. -- Jamie Howton 2000 M5 1995 M3 Hampshire, IL ------------------------------ Date: Thu, 26 Jan 2006 16:00:56 -0800 From: [EMAIL PROTECTED] To: [email protected] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> If limited to just these three scenarios, I vote for #3. In the long run I won't have paid out as much on the 30year (or whatever) mortage (3X of pricipal), and I would prepay the mortgage and car payment whenever unforeseen funds came into the door. -Kevin ---------------------------------------------------------------- This e-mail communication is confidential and is intended only for the individual(s) or entity named above and others who have been specifically authorized to receive it. If you are not the intended recipient, please do not read, copy, use or disclose the contents of this communication to others. Please notify the sender that you have received this e-mail in error by replying to the e-mail. Please then delete the e-mail and any copies of it. Thank you. ---------------------------------------------------------------- ------------------------------ Date: Fri, 27 Jan 2006 03:20:34 +0000 From: "Evan A" <[EMAIL PROTECTED]> To: [email protected] Cc: [EMAIL PROTECTED] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> That's an easy one: if the house gets repo'd, you live in the car. ;^) Aren't you glad you ordered the fold-down rear seat? ---- original message ---- Ok, worst case: things go horribly wrong. Bank comes and takes your car or bank comes and takes your house. _________________________________________________________________ Express yourself instantly with MSN Messenger! Download today it's FREE! http://messenger.msn.click-url.com/go/onm00200471ave/direct/01/ ------------------------------ Date: Thu, 26 Jan 2006 15:29:32 -0800 From: "Paul M. Moriarty" <[EMAIL PROTECTED]> To: [email protected] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> Dennis Liu writes: > Tom, consider the following scenarios, and tell me which one you'd be > comfortable with: > > A. You have $100,000 in your checking account. You use it to purchase a > $300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, > getting a car loan for the full amount. (Total debt: $250k) > > B. You have $100,000 in your checking account. You use $50k of it to > purchase a $300,000 house, getting a mortgage for $250,000. You then buy a > $50k BMW, using the remaining $50k from your checking account. (Total debt: > $250k) > > C. You have $100,000 in your checking account. You use it to purchase a > $300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, > taking out a home equity loan against your house, for the full amount. > (Total debt: $250k) > If you default in A or B you lose your car. If you default in C, you lose your house. ------------------------------ Date: Thu, 26 Jan 2006 16:02:35 -0800 From: [EMAIL PROTECTED] Cc: [email protected] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> Another possible option: D. Lend me the $100,000. We keep living in the homes we live in and driving the BMWs we own. I service your BMW for you, we buy a house for 50k down, another 50k to fix it and share the mortgage as needed, rent it for cheap office space to a fledgeling dot com, until sold, then split the profits which here in Silicone Valley are not in question. From the profits, you buy your $50,000. depreciable BMW or anything else you want to do with it and I buy another house, still delightedly happy with my '97 //M3 without incurring further debt to keep owning. Btw, I suppose this would be a serious offer if anyone's interested. Barry Paul M. Moriarty wrote: >Dennis Liu writes: > > >>Tom, consider the following scenarios, and tell me which one you'd be >>comfortable with: >> >>A. You have $100,000 in your checking account. You use it to purchase a >>$300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, >>getting a car loan for the full amount. (Total debt: $250k) >> >>B. You have $100,000 in your checking account. You use $50k of it to >>purchase a $300,000 house, getting a mortgage for $250,000. You then buy a >>$50k BMW, using the remaining $50k from your checking account. (Total debt: >>$250k) >> >>C. You have $100,000 in your checking account. You use it to purchase a >>$300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, >>taking out a home equity loan against your house, for the full amount. >>(Total debt: $250k) >> >f you default in A or B you lose your car. If you default in C, you lose >your house. > > > ------------------------------ Date: Thu, 26 Jan 2006 18:13:12 -0500 From: "john grills" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]>, <[email protected]> Subject: Re: <E36> Stewart Water Pump Message-ID: <[EMAIL PROTECTED]> Good one! And the question I'm dying to ask, why do we need a higher-flow water pump in our motors? -John Grills 98 M3/4 88 M3 87 iC -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of [EMAIL PROTECTED] Sent: Thursday, January 26, 2006 5:08 PM To: [email protected] Subject: Re: [UUC] <E36> Stewart Water Pump Rob, How was the pump input power measured? Can a dyno measure with that amount of precision? -Kevin ---------------------------------------------------------------- This e-mail communication is confidential and is intended only for the individual(s) or entity named above and others who have been specifically authorized to receive it. If you are not the intended recipient, please do not read, copy, use or disclose the contents of this communication to others. Please notify the sender that you have received this e-mail in error by replying to the e-mail. Please then delete the e-mail and any copies of it. Thank you. ---------------------------------------------------------------- Search the ARCHIVES:http://www.mail-archive.com/[email protected] __________________________________________________________________________ In memory of Michel Potheau - friend, enthusiast, founder of the BMW CCA. UUC Motorwerks - BMW Performance Fine-tuning and home of the Ultimate Short Shifter - accept no substitutes! 908-874-9092 . http://www.uucmotorwerks.com ------------------------------ Date: Thu, 26 Jan 2006 16:03:38 -0800 From: Mark Dadgar <[EMAIL PROTECTED]> To: [email protected] Subject: Re: <E36> Stewart Water Pump Message-ID: <[EMAIL PROTECTED]> On Jan 26, 2006, at 3:13 PM, john grills wrote: > Good one! And the question I'm dying to ask, why do we need a > higher-flow > water pump in our motors? Two things: 1) E36 M3s tend to run hot at the track, particularly on very hoy days. Put an oil temp gauge on your car if you're in doubt. 2) if you have a higher *efficiency* pump, which is what this one is, you can turn it slower to get the same water flow. And that's less engine power wasted on the water pump. - Mark ----- [EMAIL PROTECTED] Check out my JustRacing Home Page at: http://www.justracing.com/homepage/mdadgar ------------------------------ Date: Thu, 26 Jan 2006 16:20:16 -0600 From: Jamie Howton <[EMAIL PROTECTED]> To: T WALROD <[EMAIL PROTECTED]> Cc: Richard Dorffer <[EMAIL PROTECTED]>, bmw digest <[email protected]> Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> > I like both meanings in the phrase live well below your means. Seems to me > that borrowing for a toy is living beyond your means. Tom, Technically speaking, borrowing to buy ANYTHING is living beyond your means; that would also include a house for most of us. -- Jamie Howton 2000 M5 1995 M3 Hampshire, IL ------------------------------ Date: Thu, 26 Jan 2006 16:18:32 -0800 (PST) From: Tammer Farid <[EMAIL PROTECTED]> To: [email protected] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> Very few people can afford to pay cash for a house. Plus, with tax write-offs, our system (in the US at least) is set up to reward home ownership (or at least make borrowing for a home safe and relatively inexpensive, and in the large picture, cheaper than paying rent for an abode). It isn't really living beyond your means to borrow for a home when there are ways to invest money at a higher return than your mortgage rate. In general, home debt is cheap money and is a "good" kind of debt to carry. Maintain your home and it will generally appreciate. Do whatever you want with your car, and it'll still lose value at some rate, with few exceptions. And most "exceptions" cost more than a decent home anyway! ;-) -tammer 3 cars, paid cash for each, 1 home, sure as hell didn't --- Jamie Howton <[EMAIL PROTECTED]> wrote: > > I like both meanings in the phrase live well below your > means. Seems to me > > that borrowing for a toy is living beyond your means. > > Tom, > > Technically speaking, borrowing to buy ANYTHING is living > beyond your > means; that would also include a house for most of us. > > -- > Jamie Howton > 2000 M5 > 1995 M3 > Hampshire, IL > > Search the > ARCHIVES:http://www.mail-archive.com/[email protected] > > > __________________________________________________________________________ > In memory of Michel Potheau - friend, enthusiast, founder > of the BMW CCA. > > UUC Motorwerks - BMW Performance Fine-tuning and home of > the Ultimate > Short Shifter - accept no substitutes! > 908-874-9092 . http://www.uucmotorwerks.com > __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com ------------------------------ Date: Thu, 26 Jan 2006 16:30:54 -0800 From: [EMAIL PROTECTED] Cc: bmw digest <[email protected]> Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> "...says the low spark of high heeled boys..." Barry //doesn't like sitting in traffic, does like listening to it Jamie Howton wrote: >>I like both meanings in the phrase live well below your means. Seems to me >> >> >that borrowing for a toy is living beyond your means.Tom, >Technically speaking, borrowing to buy ANYTHING is living beyond your >means; that would also include a house for most of us. >-- >Jamie Howton >2000 M5 >1995 M3 >Hampshire, IL > > ------------------------------ Date: Thu, 26 Jan 2006 18:34:07 -0500 From: Chris Eck <[EMAIL PROTECTED]> To: [email protected] Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> I highly suspect the Z8 was insured, so the loss in totalling it was likely extremely limited. A friend bought a Lotus Elise this spring ($46K out the door, paid cash) and totalled it five months later on the track. Insurance covered the loss, and compensated him in the amount of $42,500. So it essentially cost him $3500 to rent an Elise for 5 months, 5,000 miles and four track events. If our Z8 guy bought a second Z8, I'd guess how he finances his car purchases is simply not significant to him. Maybe he borrowed for the car against his house because his assets are tied up somewhere making him more than whatever his home equity interest rate is. However, regardless of all that, the guy still sounds like a tool. ;-) Chris Eck On 1/26/06, T WALROD <[EMAIL PROTECTED]> wrote: > Quite right. I oppose our degeneration into living on credit. I also > profit by it. But I have the feeling that I came into the ballroom with a > little something extra on my boot. Don't mean to stink up the joint. The > UUC, by it's credo, espouses spending for upgrades that do not meet any > rational criteria other than making one feel good. Sometimes I do that. I > applaud all of you who spend with vigor and purpose and feel good about it. > Still think it's a dumber move to mortgage your house to buy a $100,000+ car > that you then wreck than it is to wreck the car after buying it with > savings. > But my newest car is over ten years old. > Tom Walrod ------------------------------ Date: Fri, 27 Jan 2006 09:41:18 -0500 From: "Dennis Liu" <[EMAIL PROTECTED]> To: <[email protected]> Subject: [OT] NOW: why all three finance scenarios are the same Message-ID: <[EMAIL PROTECTED]> I wrote: > Tom, consider the following scenarios, and tell me which one you'd be > comfortable with: > > A. You have $100,000 in your checking account. You use it to > purchase a $300,000 house, getting a mortgage for $200,000. You then > buy a $50k BMW, getting a car loan for the full amount. (Total debt: > $250k) > > B. You have $100,000 in your checking account. You use $50k of it to > purchase a $300,000 house, getting a mortgage for $250,000. You then > buy a $50k BMW, using the remaining $50k from your checking account. > (Total debt: > $250k) > > C. You have $100,000 in your checking account. You use it to > purchase a $300,000 house, getting a mortgage for $200,000. You then > buy a $50k BMW, taking out a home equity loan against your house, for > the full amount. (Total debt: $250k) > Paul replied: >If you default in A or B you lose your car. If you default in C, you lose your house. ============== No, not quite. Now, mind you, the whole point of the three examples I gave was to show how money is fungible - I should have posited AGAIN to ignore tax and interest rate effects (as I make explicitly clear in my previous response to Tom), as that affects the choice, as well as the duration of the loan (the length of the mortgage and the car loan are the same). And if you do ignore these externalities as not being relevant to the question, then these three choices are *exactly* the same. And that includes Paul's point, about defaulting and losing the house (the same point made by Tom and one or two others). You don't lose your house. Alternatively, you lose your house in ALL THREE scenarios. What you guys have to consider is the AMOUNT of the default. Your total debt in each scenario is the SAME, $250k. The question assumes that you have enough income to make payments on this $250k debt. If, hypothetically, you can't make ANY payments, then you lose BOTH the house and the car. Let's say then your available income decreases to the point that you can only support (x) $225k worth of debt, (y) $200k worth of debt, and (z) $175k worth of debt. Let's see what happens in each scenario: A. You have $100,000 in your checking account. You use it to purchase a $300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, getting a car loan for the full amount. (Total debt: $250k) (x) you have the car repossessed, sold to pay off the full loan, so you don't have a BMW and but you can pay down your mortgage to $175k; (y) you have the car repossessed, sold and no money refunded, so you don't have a BMW and still have a $200k mortgage; and (z) you have the car repossessed, sold, and no money refunded, and you still can't cover the $200k mortgage, so the house gets repossessed anyway. B. You have $100,000 in your checking account. You use $50k of it to purchase a $300,000 house, getting a mortgage for $250,000. You then buy a $50k BMW, using the remaining $50k from your checking account. (Total debt: $250k) (x) you sell the car for $50k, so you don't have a BMW but you can pay down your mortgage to $175k; (y) you sell the car for $50k, so you don't have a BMW and you can pay down your mortgage to $200k; and (z) you sell the car for $50k, so you don't have a BMW but you still can't cover the $200k mortgage, so the house gets repossessed anyway. C. You have $100,000 in your checking account. You use it to purchase a $300,000 house, getting a mortgage for $200,000. You then buy a $50k BMW, taking out a home equity loan against your house, for the full amount. (Total debt: $250k) (x) you sell the car for $50k, so you don't have a BMW but you can pay down your mortgage to $175k; (y) you sell the car for $50k, so you don't have a BMW and you can pay down your mortgage to $200k; and (z) you sell the car for $50k, so you don't have a BMW but you still can't cover the $200k mortgage, so the house gets repossessed anyway. As you can see, in each scenario, it's the same outcome. There is a FALSE choice here - however you want to structure the financing, you're still left with the same amount of debt (and equity), so the ONLY reasons you'd have to prefer one scenario over the other two is dependent on externalities, like interest rates, tax effects, loan durations etc. Vty, --Dennis ------------------------------ Date: Fri, 27 Jan 2006 09:48:49 -0500 From: Neil Maller <[EMAIL PROTECTED]> To: "[email protected]" <[email protected]> Subject: Re: BusinessWeek article on Z8 issue Message-ID: <[EMAIL PROTECTED]> on 1/26/06 6:19 PM, "Dennis Liu" <[EMAIL PROTECTED]> wrote: > money is fungible. And your BMW puts the fun in fungible! Neil Fort Wayne, IN 96 M3 - Bastard child 03 525iT - Sterling Grey Metallic 77 MGB - Original owner, need to sell 05 Mini - Cooper S with LSD! ------------------------------ End of [bmwuucdigest] digest(14 messages) **********
