So on a new car...let’s be conservative, $30,000...9 percent fed tax adds $2700 to the price ( we pay 7 percent state sales tax, but we’d have to pay that anyway.) I don’t think that’s anything to discount.
On a new house, right now, no sales tax because state sales tax does not apply, but a new house runs around $200,000, add 9 percent sales tax that’s another 18,000 added to closing costs...yikes!
Okay, but in a given paycheck, conservatively speaking, I pay 20% effective income tax (after deductions) and now I’m going to pay 9%. If I earn $10,000/month I’m going to pay $900.00 in tax instead of $2000.00, giving me $1,100 back every single month. This doesn’t even take into account the additional $765.00 I save by not paying FICA and Medicaid.
Save up for a month and I pay for the additional tax on the car. Save up for a year and I buy the house.
I say “yes”. No, I say “heck, yes!!”