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April 06, 2006
Dumping the Lease
Here I go again - Last week-end I contacted the dealership where I leased my Avalanche and the response from them was more like a lack of response. The buiness manager was a bit boisterous and mentioned that I would never get credit again. What he doesn't realize though is the excellent relationship I have with my bank.
My bank understands that I am finally growing up (I am 36 years old) and want to do smart things with my money. I have set a goal of retirement by the age of 40 and to do that I need to start seriously growing my savings. An $830/month lease on a truck does not work to the goal of super-early retirement. What I want to do as mentioned in previous posts is take the money that the truck is sucking from my bank account every month and start investing in real estate. At about $1400/month total cost of operation on my vehicle that would easily cover the payments on an investment property. Buy a house - Rent the upper portion for $900/month and the basement suite for $650/month makes for an income of $1550/month - Since I already spend $1400 every month with lease, fuel and insurance on the truck, it is very clear that I can afford to have the mortgage on my residence and have a mortgage on an investment property so what I am aiming to do is find a property where the payments will be about $1200
So it would look like this:
Rental property income: $1550/month
Mortgage payment: $1200/month
Property Taxes: Approximately $150/month
Maintenance/Insurance: Approximately $150/month
Total cost on property: $1500/month
Rental income - Total cost on property:
$1550 - $1500 = $50
A $50/month positive cash flow on a property that is building equity for me and I will repeat this every time.
So then I will be in a position of being free from the lease and operation costs of the truck. That money goes into floating a mortgage until I get renters at the point when I get renters in that money is once again freed for me to go buy another property.
If I had purchased a home in the area I currently live rather than the truck - The payments would have been on par yet had I bought a second home as an investment that home would have increased by close to $100000 since the time when I took the lease on the truck.
Anyhow, getting back to the lease dumping - I have received a call from the GM Optimum lot tonight (I went to see them last week-end) and they are considering taking the truck into their inventory and will need to know the buyout on the Avalance.
I will be calling GM tomorrow to get the exact buyout price of the Avalanche and will take things from there with the dealer after that. I will be purchasing a fuel efficient vehicle this time!
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