1 year ago 🥁 for day 312, 2020 with 393 words.

Value Used Up!

Exercise: 2.5 mile walk around a lake.
Keyboard: just a little 5 note melody

Some capital purchases go up in value (such as residential housing), some stay the same (such as commercial property) and most go down in value (anything you buy from computers to cars).

When you sell something and have made a gain, you have to pay tax on the gain. Likewise if you make a loss, you can get a tax credit for that loss. This generally only applies to assets that appreciate over time (residential houses, stocks, van Gogh paintings) and not to items that depreciate, like computers and cars.

Some go down in value in a relatively linear fashion over a short period of time, eg: computers - three to five years - and some over a longer period of time, eg: factory buildings - 27.5 years according to the IRS.

Almost everything goes down in value almost instantly it is no longer new, but only by a small amount (5-10%) and some go down a lot and those would be cars. You can lose a good 30% of the value by driving it off the dealership lot.

Now, if buy a new car for $25K, which instantly becomes worth $17K. If you have a bad accident - possibly through no fault of your own, the insurance company may only give you $17K when you have a $25K loan that is due. This is why dealers in the USA try to sell you Gap insurance to cover that eventuality. Obviously you get New for Old Insurance if you can afford it.

Just over two years ago I treated myself to a brand new Tesla Model 3. I had never had a new car and after decades of working hard I decided I definitely deserved one, and this was going to be it. Especially as I figured I would drive it for 10 years and after that we would have self-driving cars.

Today I checked the value of my car. After paying two years of loan payments. My car is worth over $10K more than the outstanding loan payments.

At two years old my car is worth more than 78% of purchase value.

Apparently that isn't how it is meant to work with cars.

With ICE cars it probably does. Another good reason to buy electric.

User Photo

By Yorick Phoenix 🥁

Chief WriteTogether Bug Finder & character stringer. Generally, to create computer code, but sometimes actual words and paragraphs. Listens to lots of music, takes lots of photos, & invests in stocks for the long haul.

Get Yorick Phoenix's newsletter

Almost there! Check your inbox and click the link to confirm.

Subscribe to Yorick Phoenix's latest writing to get it right in your inbox.