New Or Used Car? Why I Don’t Plan To Buy Another Car Again
I’m in love with Moose, my 12 year old SUV. There, I said it! When you are in love with something, no matter how old, out of shape, slow, or dumb, you will love it unconditionally until the day it dies. Moose is like my overweight son, who eats too much, but still gets me to point B without any problems.
And lest you think that Moose is a big polluter, not so, as he passed our stringent Smog Test every year without fail. Besides, I bought him used, which means I’m more environmentally friendly than new car buyers who failed to destroy their old cars. I did not add to the car population!
In “Fighting My Car Buying Addiction,” I highlight three things everybody must do to quit splurging on things that lose value and destroy their personal finances. After all, the act of buying too much car has significantly damaged many people’s financial livelihoods. Always remember the 1/10th rule of car buying where you should consider spending no more than 1/10th your annual gross income on a car.
1) Name your car. Anthropomorphism is a powerful, powerful thing. As soon as you name your car, you give it a personality and a soul. With a personality and a soul, you can no longer just abuse it like a ragged doll. My truck’s name is Moose. I love Moose. He’s handsome, reliable, and very loyal. Given he’s part of the family now, I’ve decided to keep him for as long as it makes sense. At some point, I’ll realize I should sell or donate Moose since he is turning 12 years old. However, at this point, I’m happy to buy him new brakes, rotors, batteries and change his fluids.
2) Go to the dealer and intoxicate yourself. Moose’s private party retail value is about $3,600 from $8,500 five years ago. When you go to a dealer, you start appreciating what you have. Just the other day, I stopped by the Mercedes Benz dealer for fun on the way home from golf. I test drove a well-equipped $47,000 out the door 2012 C250 coupe. I loved the new car smell and the drive was exhilarating. This wasn’t even the highest end version as the C350 coupe had 100 more horsepower and cost $5,000 more. When it was time to negotiate, the salesman insulted Moose by giving him a trade in value of only $1,114! There was no way this C250 coupe was worth 45X more than my beloved Moose! I declined his pitch and left smiling.
If you aren’t convinced how silly it is buying a new car when a used car can do perfectly fine, take a look at this picture carefully. Analyze it and soak all the data in. Look at the monthly payments after a $4,000 down payment. Observe the Trade Allowance of $1,114 for Moose and the Net Sales Price of $46,497.98 after taxes. Ridiculous and insulting!
3) Visit a garage sale or throw your own. One of the most humbling experiences is de-cluttering and minimizing your things through a garage sale. That golf club you spent $120 on might only get $10 now. That purse you were dying to have for $350 now is worth only $20 bucks. The list goes on and on of things you spent way more than you should. Once you start going to garage sales or to Goodwill, you will find so many bargains that you will seldom ever spend full or sale price ever again!
The 6th grade was when I first laid eyes on her. She was a 1989 BMW 635i Coupe who did donuts in the school’s parking lot after class thanks to an obnoxious, rich kid driver in the 11th grade. The driver was the son of a royal family who lived in a royal house filled with a fleet of the most luxurious automobiles.
If you want to know what’s wrong with people’s personal finances, just observe those who are willing to borrow money in order to borrow more money! One example is using a credit card you can’t pay off in full each month, for a downpayment on a car. Since the limit for credit card use for buying at the car dealership is usually $3,000, and given most downpayments on vehicles range from $0 to $3,000 to buy or lease, using the credit card is a tantalizing proposition.
There might be a new way to wean car addicts off their car buying behavior. That way is to simply have them experience a day at the DMV. Recently, I had the pleasure to go to the DMV and re-register my car because I never got the tags in the mail. Apparently State documents cannot be forwarded to a new address. Hence, if you ever move residences or offices, make sure that you contact the DMV and other state departments immediately to notify your change of address!
The last five cars I’ve owned have all been purchased by cashier’s checks. I loathe going into debt on an asset that is guaranteed to depreciate. In fact, I dislike buying anything that is guaranteed to depreciate!
Who doesn’t love driving a brand new car? The new car smell alone is enough for me to want to buy a new one! Leasing a car is a good option if you want to preserve your cash. With interest rates so low, leasing has becoming a more popular thing to do.
