Well, the thing that I had been dreading finally happened about a week ago. As you know, I’ve been having multiple wars with my vehicle, and recently had wondered at what point does one stop repairing their old car, and begin to save for a new one, and have done stupid things in the vehicular arena that have cost me quite a bit. Finally, after the first cold snap (below freezing temps for about 8 straight days), my car gave up the ghost in a fantastic way. It didnt start a few mornings, So I got it running, took it down for an electrical systems check, and it passed. This gave me cause for hope, as I could potentially make it through the winter and get a new vehicle in the spring. That wasnt in the cards, and it’s officially dead as of right now. Im not sure exactly what the problem is, but I suspect the starter. So, I needed some help with making a decision on how to go about it, so I emailed a PF Blogger and friend, Matt Jabs, who runs Debt Free Adventure. I figured he would have some solid advice, and the readers would also offer some great tips for me. He put my situation to the readers, and they gave me some great responses. Im aware that they couldnt really know the situation as completely as I do, nor my motivations for looking for certain things that I’m looking for, and for not considering things that I’m currently not considering. As with anything, this is a decision that is right for me and me only, and my situation, decisions and actions should be approached with caution, and your personal situation should be considered when you make a decision of this magnitude.
Much of the advice I got suggested that I use the funds on hand to purchase a used car. This is something that I had thought extensively about, and am aware that my insurance will be cheaper, and that I can own something outright without going into debt. Im aware of all of these things, and elected not to follow this path for the following reasons:
- I did this last time I purchased a vehicle, and spent approximately the same amount. After about 1 month, I was replacing the clutch, at a cost of $100. Im not naive enough to think that I can buy a used car and have it be reliable, but the clutch, along with the fact that i’ve spent ~1,400 in the last 8 months on repairs alone (most of which have been done by me for just the cost of parts. Cost could easily be doubled if this was done by someone else. I didnt enjoy the lost time or the constant worry regarding the state of my vehicle, and think that if I spend about the same amount, I’d get myself back into a similar situation in a few months, while spending money that I could be using to save for a car on repairs to keep my current car running. Couple the repairs with a previous post on being a moron, and I have spent more on my vehicle in the last 10 months than anything else, including rent!
- I was tired of losing sleep when the weather got cold, or when I got into it wondering if the car was going to turn over. Over the 18 months that I had it, it left me broke down on the side of the road 3 times, doing things that were ill advised countless times, and was in and out of the shop a handful of times, and was immobilized while I was working on it for a day or longer a handful of times as well.
- I drive alot of miles (100 on normal days, 160 on days where I work at both of my jobs). I go down roads through the middle of nowhere, frequently with marginal or 0 cell phone service. There is not many people going down these roads, and the weather on these roads is often poor, at the absolute best. Getting stuck on one of these roads with a broken down car would not be a good situation, and I really dont want to find myself in it.
- I honestly dont believe I can get something reliable for the amount of money that I will be spending without the assistance of financing.
Many of you suggested cragislist, which I am thankful for, but Im assuming you live in areas that have a much denser population than where I do. Craigslist works because there are alot of people on it, all from the same geographic region (say san fransisco). The area where I live does not have any of those things. There is 1 craigslist page for the state of wyoming, and the state has less people than alot of places, and some areas are 8+ hours away, when weather is good. Due to these two things, used car listings are rather sparse. This makes competition more fierce for the products, and limits the amount of product. I believe that if I procure a vehicle in this situation, I would find myself in the same spot in a year or two. I’d have sunk alot of money into keeping it running, and not made any headway on saving for a new one.
My New Truck (just kidding)
I thought the financial samuri gave good advice reguarding the top limit one could spend (10% of yearly income), but due to my life status, that would not amount to much more than the amount I currently have saved. It’s a great metric, although I believe it does not account for one crucial thing: Disposable income. Someone making 90,000 per year may have 14,000 per year that is uncommitted, just as someone making 38,000 could have 14,000 uncommitted. By this metric, one could spend $9,000 on a new car, while the other one could only spend $3,800, even though they have the same amount of money per year to throw at the outstanding debt in hopes of eliminating it.
So, these facts, unfortunately, resigned me to a loan for a vehicle, basically no matter what I do. This left me with a few options, some I thought were more fruitful than others. I figured one potential problem with buying a used car with a bank loan was the following (and it was just about enough to scare me away from the process). I could buy a used vehicle, and due to the age of the vehicle, get a short term 1-2 years from the bank, with high minimum payments. It would not be out of the realm of possibility to have the vehicle break down, or worse, get in a car accident, and owe money on a vehicle that I would no longer be able to drive, because repairs would cost too much. As Kevin from Out of your rut would said “buying a beater for $1000-$1200 may improve his cash flow situation short term, but it probably won’t solve his longer term problem” which I view to be crucial.
I could do this and expect to come out fine in the short term, but that’s not really the way I like to live. I tend to think over a much longer term than most people. I usually find that when Im thinking about next week or next month, most people are thinking about yesterday and tomorrow. This blog is about taking time to think through your decisions and make the best one over the long term, not the near term.
Many of the comments also centered around my Credit Card Debt. I have about 4k, and I have been looking at eliminating it. I’ve made good progress so far, but as I looked back, much of the debt was attributed to vehicular problems that I have had in the past. A lot of readers on the Debt Free Adventure Blog commented that getting a reliable vehicle was one of the smartest things they ever did as far as debt reduction was concerned. I share their viewpoint. Getting a more reliable vehicle will allow me to work my second job more often, and increase my income in that way. I could make all my monthly bills on the salary from my first job, but as you readers know, I’m focused on paying down my debt and saving for my future. Increasing my workload now (while I have the energy and time) will pay dividends later on, and being able to do this in a predictable fashion will allow me to budget better, save more, and get ahead faster.
So, What did I decide to do? After carefully considering my needs, I went looking for a truck. As people who have shopped for a truck are well aware of, they hold their value remarkably well, and because of this, it made more sense for me to get a new truck. I kept an open mind and inquired about many used trucks in the area, but some were 3 years old, and more expensive than the one I ended up purchasing. So, now, unfortunately, I’ve got more debt, but I feel better about this because unlike my credit cards, (and lots of CDOs) it’s backed by an asset that I know the location of, can see, touch, and most importantly, use daily.
I was able to get a good deal and negotiate the depreciation out of the dealer, so I ended up paying about 4k less than the sticker price, which I’m happy about.
After much deliberation Im confident that this was the right decision for me, and I’d like to extend deep gratitude to all of you that have provided input from Matt’s Blog and comments on my previous posts. They helped me greatly and it took much thought (and much more number crunching) to come to a decision.
As an aside, after owning the vehicle for about a week, I’ve finally slept through the night without waking up in a fit of worry wondering if my old car was going to start in the morning. This had become a real problem as of late, and it caused me to wake up multiple times in one night. Being able to sleep through the night and not have to worry about a stupid vehicle and instead concentrate on what’s really important in life is, as they say on the commercials, Priceless.
No comments:
Post a Comment