TMI calculation question

[fasc76]

Perhaps I'm being a little dense about the momthly cost calculation, but I cannot figure out how Tim calculates his monthly costs in his examples. Like where the Aston Martin DB9 equates to a monthly cost of $2,003/mo. :confused:

At $179,000 cost - is he assuming a certain number of years to payoff the vehicle to reach the monthly figure? If so, where is that specified? Does the monthly amount include an interest calculation as well?

Thanks in advance.

fasc76

[final_id]

I think that this amount for the Aston Martin was simply what his lease or rental cost him, a figure worked out by the car dealer where he got the car, and not something based on calculations which Tim himself made. So, instead of buying the $179,000.oo car, he "outsourced" the purchase (this is often called leveraging) by renting or leasing it for a short time, never owning it, but having all the benefits of using it.

I think.

My first post here, by the way. :)

[fasc76]

Thanks Cliff.

My first post here as well :)

[Drewkerr]

Ok. This is where in the book he talks about Absolute versus Relative income.

Who makes more
the guy who works 60 hours a week and gets paid $100,000yr
or the guys who works 25 hours a week and gets paid $50,000 yr

The answer is the second guy. His average per hour pay is $40 and the first guys gets paid only $33 and hour.

Same thing applies to buying a house or a car. An Aston Martin cost maybe $129,000. Most people don't have $129,000 cash laying around. So through finance (purchase or lease) the monthly payments come out to the $2,000 a month.

What Tim left out here was what his rate was (the better your credit the better the finance rate) down payment if any, and if he traded in anything.

That is the whole idea where he has you break down everything you want to do and own into monthly costs. Then you calculate your TMI which puts you in the range to afford your Dreamline. Now another thing Tim left of was savings/retirement. Now if you always have a muse running you should always have income coming in, but having some sort of buffer for emergencies or down turns in a market would be good.

Absolute versus Relative

Hope this clarifies!

Drew