There’s no question that law enforcement work is challenging. There are often unforeseeable risks associated with the profession and LEOs, as well as civilian personnel, sacrifice a great deal for our chosen profession and public safety.
We Deserve to be Rewarded!
The pay and benefits can be great. And as the saying goes,
Work Hard, Play Hard!
There’s also something to be said about rewarding yourself for hard work and calculated risk taking. This often equates to spending good money on a nice ride, a cool bike, off-road vehicle or watercraft, if not the RV, toy-hauler and 5th Wheel. Great, if you can afford it!
But can you? Can you afford the nice car and one, two or three toys? Maybe….
All too often even the savviest investor doesn’t consider the ACTUAL COST of a purchase. That sticker price on the rear passenger window … that’s the MSRP and you know with your negotiation skills you’re going to pay less than that! That’s still not the Actual Cost.
Actual Cost is what it takes to both purchase and finance the vehicle, as well as to register, pay the taxes, the depreciation, maintenance and repairs, gas and transportation and insurance. No matter what the vehicle or “toy,” there’s more to the cost than what’s on the sticker. Here’s an example just to illustrate (we’ve used Edmunds.com as our source).
|2014 Toyota Avalon||2014 Audi A4 2.0 Turbo||2014 Mercedes Benz E350|
|Vehicle cost||$ 32,340||$ 38,440||$ 58,200|
|+ taxes and fees||3,380||3,890||5,810|
|5-year Actual Cost||$ 48,440||$ 61,660||$ 80,470|
I almost hate to mention it, but there’s yet another cost associated with any vehicle or toy you are considering, and that’s the OPPORTUNITY COST.
Opportunity Cost is the value of those purchases, investments, retirement, etc., that you must forgo in order to make a particular purchase. For example, let’s say that the 2014 Audi A4 fits you well. The total five-year cost is approximately $62,000. That same amount of money invested at 4% per year would have resulted in a difference of $136,750 at the end of five years ($62k @ 4% / 5 yrs = $75k on the positive vs. $62k expensed).
Of course you can only realize the $137k difference if you don’t spent any of the $62,000 and invest it all. In LA, we all need a car. But imagine that the $62k was for a boat or a toy-hauler, you really could be looking at Total Costs over $100,000!
So next time you look at the sticker price and think to yourself,
“It’s only $740 per month”
Remember, you could really be looking at much closer to
$ 2,300 per month.
We’re NOT saying you shouldn’t enjoy life and that their isn’t a great deal of inherent fun and enjoyment that comes along with a boy’s (girl’s) toy. We ARE saying that you should make a well-informed decision and not kid yourself about what the TOTAL COST of owning any car, off-roader, Jet Ski, etc. A good practice before making any big purchase, is to update your BUDGET.
Remember, there’s NO toy that costs as much as a kid in university or an unexpected divorce.
For a host of different on-line financial calculators, check out Yahoo Finance.