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Broke the 10% car buying rule

Started by inoffensiveusername1, July 25, 2021, 11:16:00 AM

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I broke the 10% rule for car buying, and realize that FS was right.

I make about 100k so according to the 10% income rule, I should have bought a ~10k car. I justified it mentally because including stock gains I made ~200k in 2020. This was of course dumb because 2020 was a great year for stocks (post-crash). I was saving up for a house and had cash on the sidelines in March which I piled into the market in April after the Fed announced their emergency measures. But not every year is a bull market.

I set sights on a Toyota Corolla. Stupidly I didn't settle for the basic L trim level and got an SE which pushed my costs up by several thousand. For some reason I wanted that extra 30 horsepower. I thought, what if I need that extra HP to maneuver on the highway? But, based on my driving needs I don't take the highway much anyways. I don't even need that HP to get through the city.

When I went to my credit union to pick up the check, they congratulated me and that boosted my ego. But in retrospect, of course they are happy, they're making money off of me. Always keep your ego in check. At least I got a decent rate, 1.79%.

With the virus situation, I tried to complete the purchase online, but the dealer's website glitched out and it wouldn't let me. So I had to go into the dealership to seal the deal. Then they tried to charge me more than the quote they gave me online so I had to haggle. Then they came back with a price lower than the online quote. Whatever.

So with a 3-year loan and no money down (and GAP insurance), my payments are about $660/month. I'm feeling the pain.

The silver lining is I got the car earlier this year, before car prices went crazy. I had gone on the car dealer subreddit and saw that car salesmen were literally crying because they couldn't sell any cars. I took that as a bottom signal. I predicted inflation would come from all the loose money policies. So there's that.

With the car bubble (which appears to be cooling off now), I could probably even have sold my car for more than I bought it for. Except I already scraped the car while parking it in the garage. I got quoted $1300 to fix the paint. At this point I'm just going to live with it.

I have to drive the car every two weeks just so the battery doesn't die. I don't have anywhere to go to, so lately I just loop around the neighborhood for 20 minutes. At least I'm getting practice driving.