This guest post from Joel Berry is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want submit your own reader story? Here’s how.
I’m writing this post as a follow up to my first post about why I drove a 13-year-old car. In that article, I set some goals for myself and came up with a plan to help me achieve those goals. Today I’m going to share where I succeeded — and where I failed.
My original goals were to:
- Drive my 1995 Geo Prizm for four more years in order to save a large down payment for a newer car.
- Put away $300 a month into a savings account for the down payment.
- Spend $1000 or less per year in maintenance for the Geo.
- Have $10,400 for a down payment on a new-to-me car.
How did I do? Let’s find out.
Goal #1: Keep My Car Another Four Years
At the time I wrote my last post, I’d already driven the Geo for 13 years. I had a choice to make:
- Take out a loan for the value of a new car minus any money I could get by selling the Geo
- Or, keep the car for a while longer while saving up more money to put down on the new car.
I came up with a plan to try to keep the Geo as long as it remained a reliable and safe car. I wanted to resist the temptation to purchase a new car and jump back into payments before I had to. All of my friends had purchased new cars and I was feeling a little pressure to keep up with them. I knew this was financially a bad move. I did not want to “keep up with the Joneses.” I wanted to buck the norm and not give into consumerism. I knew the longer I kept the car and remained payment free the better off I would be when I did purchase a new car.
So, did I keep the car for four more years? No, I kept the car for three instead of four years. Why?
My needs changed in the three years since I set that goal. My family grew and no longer fit in the car. When I originally set this goal, my children were smaller. They grew older, taller, and it was now uncomfortable for them to sit in the small back seat. When the car no longer met my needs, I knew it was time to change my plan. My needs changed and my goals needed to change with them.
Goal #2: Pay Less Than $1000 a Year on Maintenance
There was not a year of the three that I spent even close to the $1,000 I budgeted for maintenance.
This number was a worst-case-scenario number. If I was going over that number, I would have called it quits and gave up on the Geo. I averaged $400 a year on maintenance.
I consistently hear people say they need to get rid of their car because it is going to nickel-and-dime them to death. They get a new car out of fear, not because they truly have a need. The fear is the car would need a repair that would cost so much that it is better to sell it now and get a new car. I chose to ignore that fear and let the numbers dictate if I should keep the car or not.
Looking at the math, $400 a year and no payment works out to $33.34 a month that came out of my pocket to drive this car. I was okay with that. Other people might have chosen to sell the car. If I were to purchase another newer car, I feel the maintenance would be about the same. It might even be more because I would want to take better care of a newer car I was going to try to keep for a decade or so. I knew this car was going to be out of my life soon, so I had less to lose by not checking into every little squeak I heard.
People rarely take into account that the new car they buy might have problems as well. I have read many posts on the car forums about someone purchasing a brand new car and having nothing but trouble with it. Even though the repairs are covered under warranty, there’s a huge feeling of anger that they paid for a new car and it isn’t reliable. Most people end up selling the new car and take a huge loss just to be free of the troubled car.
Goal #3: Put $300 a Month into a Savings Account for a Newer Car
I set up a sub-account at ING Direct and had the money automatically withdrawn every month. I paid myself first to make sure the money was there before any other money was taken out to pay bills. This was easy to do; it only took a few clicks. The money being gone right away made it easier to meet this goal every month. When the money is not there to spend it made it easier for me to put off purchases until next week’s paycheck.
Goal #4: Save $10,400 for a Down Payment on Another Car
I missed this goal for two reasons. The first reason I brought on myself and the second was an unexpected life event.
The first reason I missed my goal was I sold the Geo one year early and missed out on that twelve months of savings. That’s $3600 that I gave up. Even though I was under budget with the maintenance costs, it wasn’t enough to offset the loss of those twelve months.
The second reason I didn’t meet this goal is we had a tough choice to make. One of my family members had a series of health problems that were getting worse and they lived very far away. We felt the need to take a trip to visit this person. The trip was something I needed to do; not going wasn’t an option.
We looked into all the alternatives. Credit card debt? I didn’t want to be paying for the trip on a card charging us 13% interest. 401(k) loan? I wasn’t willing to pull money out of my 401(k), pay the loan fee, and miss out on the potential returns the stock market could give us. ING account? The ING account was the only choice that made sense. After all, the ING account was only paying 0.8% interest at the time. But it would put me behind saving for a new car. That was a difficult thing for me to do.
We pulled the money out and went on the trip. We enjoyed spending time with family, saw things we would never have seen if we hadn’t taken the trip, and built lifelong memories. This is a choice I don’t regret at all. Money isn’t everything in life. I cherish my family and felt this was the right thing to do.
The Bottom Line
Three years ago, I set some goals for myself. I did my best to make a plan to help me meet those goals. As time went by my needs changed (needed a bigger car) and unexpected expenses came up (trip to see family). I feel good about how I did. I set some goals and stuck to them as much as made sense.
Over the 16 years I owned the Geo, twelve of those years were payment-free. My original payments were $250 a month. That extra $250 a month I that I didn’t have to spend on a car payment added up to $36,000 over the 12 years. If I subtract the overall maintenance I spent on this car over the full 16 years ($3400), it still leaves me with $32000. This number represents the amount of money I would have spent if I continued to have a car payment. I know many people who always have a car payment. I consider this a huge amount of money. This is the reason I chose to drive the car for so long.
In the end, I found a used car I wanted, put an ad on craigslist, and sold the Geo. After 16 years with this car, our family had outgrown it and was ready for another. Will I keep the new car for as long as I did the last one? That’s a question I can’t answer at this time. That depends on if this new car is as good as the last.
Life throws you curves; you have to bend with those curves. You have to take everything day by day and month by month. Your financial future is not set in stone. It is more like clay. Every decision you make and every curve life throws at you molds that clay. You need to re-evaluate your needs, wants, and limits every so often to make sure that clay is looking the way you want it to.
Am I the only one that decided to change the plans that I made in January of 2009? If you read J.D.’s note at the bottom of the original post he writes about his Ford Focus. He had a plan for that Focus, to drive it into the ground. Not long after that, J.D. bought a Mini-Cooper. His plans changed, and so did mine. I feel like I am in good company.
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Awesome!
Wonderful lessons on goal setting, being content and being flexible when necessary.
For those readers who’ve not done so yet, you owe it to yourself to watch this power-point entitled “Drive Free, Retire Rich”
http://www.daveramsey.com/article/drive-free/
It will change your view of car payments forever!
Nice story. Thanks for sharing.
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I appreciate Dave Ramsey’s efforts, but there are so many things wrong with that powerpoint it’s laughable.
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What you can’t make 12% in your mutual fund?
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That’s one of the issues, yes, given that the long-term stock market return is only 7%. Another is the $475/month figure, which seems awfully high compared to my google-fu. (Many of the articles I’ve just seen in a quick search are more like $375-400, which is still pretty high compared to my own experience, since I’ve never had a car loan over $280/month). A third is how these interim cars magically don’t depreciate at all and you can sell them for exactly what you paid for them previously.
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Why is it laughable?
Lower the 12% and Lower the monthly payment YOU think is so high. The principle still works.
Furthermore, used cars have never been higher value-wise than they have for the last few years. After a certain point, they don’t depreciate that much over the span of a few short years.
Why do some have to be so smug?!?
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Well, no, if you lower the 12% and the monthly payment the principle DOESN’T work. Because you need that 12% and nearly $500/month to be able to buy the “free” cars (from the investment growth/dividends) and retire rich. Ignoring the used car depreciation, if you use more reasonable assumptions you only end up with about $8000 of growth over 5-6 years (nothing to sneeze at, but not enough to buy a brand new car outright) and just under $1M in 40 years (again, nothing to sneeze at, but not enough to “retire rich” as promised).
Pointing out unreasonable assumptions isn’t smug, it’s just good sense.
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Banking what would be your “car payment” so you don’t have to take out a loan is a great idea. I’ve done it myself for years and have avoided a car payment my entire life. I’ve owned five cars since I started driving in 1986. [I drive my cars until they die.] In 2010, I met my goal of walking onto a car lot and buying a new model year car with cash- a Scion xB. It’s not a sexy car, I know, but telling the dealer I was paying cash was a sexy enough feeling for me.
But I think this slideshow presents an inflated idea of how much interest a mutual fund earns these days.
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I’ve had my XB for 6 years and a measly 102K miles so far-I intend for it to last for a long time to come. It’s been so cheap to keep, especially compared to the Jeep Wrangler I had before it, which was almost comically bad at requiring repairs. I still think it’s a great car!
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I LOVE that statement: “It’s not a sexy car…but telling the dealer I was paying cash was a sexy enough feeling for me.”
That’s awesome!
I’m on the same page, I’ve been putting away a $300/month “car payment” for years although I have no intention of replacing my car any time soon (which I bough – cash – 9 years ago).
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My wife’s last car was 22 years old when it quit.
She really got her money out of it as it required very little maintenance.
Thanks for updating us on your plan. As you know, plans often have to be adjusted for the changing world around us.
It’s awesome that you got so much out of your car.
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I can relate! I have a 19-year-old GMC van that has been payment-free for 13 years. I didn’t originally plan to be driving it this long! I had planned for @ 10 years, but it just kept going and going and going. The lack of a payment in this economy was a Good Thing.
At 250,000 miles, the biggest problems until recently have been a cracked radiator (which we replaced ourselves for @$100) and a fuel pump that died (which we also replaced ourselves for @ $100.) For most of the van’s life, the only yearly maintenance costs have been for oil changes, brake fluids, power steering fluids, spark plugs and wires, changing hoses and belts when they show signs of wear (or we can’t remember when they were changed!) and the like.
Recently, however, sensors have begun to go which is a giant pain in the you know where. When various sensors go, the vehicle stops. The computer stores codes from various parts (including multiple sensors) that the kaput sensor has affected which often do not include the problem sensor!
My van is currently sitting outside my husband’s workshop because he is refusing to try to figure out the latest sensor failure. He wants me to get a new vehicle. I want my old one FIXED. I’ve gone and looked at new vehicles, but they’re all too fancy in the interior for hauling feed, a large dog or three, lots of grandkids with their assorted snack foods and sometimes livestock. In addition, of course, it has to get me back and forth from work.
I LIKE my old van. I’ve removed the carpet and sprayed down the interior with truck bed liner (grin) which makes it easier to get all the hay and spilled corn out. Perhaps, though, it does need to be fixed then driven on a weekly basis only to the feed store or the beach rather than a 30-mile plus one way commute to work daily.
For my “new” vehicle, I’d really like to get a pre-computer era truck with handles for the windows, no electronics, and a manual transmission. Maybe an old S10.
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I know what you mean. I had my VW Vanagon for 17 years! I loved it! It had 7 seats and lots of room for people, gear, groceries, whatever. AND, I could make an entire U-turn on almost any street in my town without backing up for a 3 point turn. One day, it died, and that was a sad day for me. I hated to go shopping for a new car. I knew I’d never find another car I liked as much. I do like my current car, but it doesn’t turn on a dime like my VW did. I miss that.
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We’d been planning to keep my Hyundai Accent for 5 years, and then get a “grown-up” car with say, power locks. But it’s been going strong, must be 7 years now. It’s just a really good car and there’s no reason to replace it. And it gets great gas mileage (though not as good as a metro). As you note, a new car might have more maintenance problems and who wants to take that chance?
I’m surprised that the Geo Metro doesn’t fit your kids comfortably– I have fond memories of being stuffed with 4 other teenagers into my first boyfriend’s metro! (Though usually I got girlfriend rights on the front seat…)
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nice article.
i had a 94 toyota truck that i adored. it cost me a ton of money over the 12 years i had it.(change the oil, it really makes a difference-the previous owner didn’t!) i sold it knowing i would be taking a loss, but still got almost 4k for it.
i have an old beater truck that i paid cash for and a jeep. i live in a rural area and burn wood so they are both needed.
the next vehicle i have will be paid for in cash.
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My Honda Odysey is 11 years old…172,000 miles…minimum goal is 250,000 miles…my dream come true would be twice that!
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Life definitely doesn’t always go according to plans. Things pop up and it definitely isn’t predictable. I’m really happy for you that you kept the car so long. So many others would have gone and gotten a new car when their payments stopped. I think the fact that you got as far as you did will have you even further ahead when you have to make your next car purchase
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Good story. I have a car that I love that I plan to drive until it falls apart. I think your next goal should be to build up some “accessible” savings, that you could dip into when you want to take the kind of unexpected trip you describe in your article. It’s not an emergency fund as such, it’s just a cash cushion that allows me to make purchases that aren’t usually within my budget without raiding other accounts or assets. I don’t know how old you are or how much you earn, but I just got the impression that you don’t have as much spare cash as you should, assuming you earn a decent living.
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Thanks for the follow-up! Out of curiosity, what kind of car did you buy? Did you need a loan to purchase it, or was the amount you saved sufficient? Needing to take from your car account to take the trip made me wonder, do you have an emergency fund set up? Why did you choose the car fund instead of the E fund for the trip?
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I would love to know what kinds of vehicles last for such long periods of time with high mileage. Is it better to go without the nicer features like power windows/locks etc so that when they go bad there’s less headache fixing them? Do cars even exist with roll up windows anymore?
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The best vehicle that would last for a long time is a well maintained vehicle. Most modern cars are very reliable, especially compared to 30 years ago. I think most cars today can reach the 200k mile mark or more with proper maintenance. Many of the reliability issues people have is from poorly maintained vehicles.
I had a coworker that was complaining about the reliability of his car. He owned one of the better reliable cars but he was having problems with it so he took it into a mechanic. He was really upset when they told him he needed a new engine. I was floored when he told me the “maintenance” he did on his car. He owned it for a few years and never changed the oil! Probably over 30k miles. His reason was that the car was supposed to be reliable and he shouldn’t have to do anything to the car. Unfortunate there are many more people like him. That is why i’m always weary of buying used cars. They must have maintenance records or its a no go for me.
So you can check consumer reports or other websites for the vehicles with the least amount of problems but the most important factor in buying a used car and getting it to last is doing all the proper maintenance.
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I always wanted manual windows because I once read that power windows don’t function if your car becomes submerged, and therefore you can’t escape when the car is filling with water. Being completely paranoid, this seemed important….
However, when I bought a new car 2 years ago I found that manual windows are pretty much a thing of the past. Fortunately, I was still able to get a manual transmission!
Excellent article, by the way. So many PF articles fail to realize that time and circumstances can cause enormous changes in the things we find to be important.
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…I once read that power windows don’t function if your car becomes submerged, and therefore you can’t escape when the car is filling with water. Being completely paranoid, this seemed important….
You’re about 10,000 times more likely to fall asleep at the wheel or be hit by a drunk driver than for this to happen. How often are you even within crashing distance of water? I can tell you that the vast, vast majority of my own personal driving is not done close enough for water for this to even be a possibility. I’d have to swerve off the road and then keep crashing for three miles west towards the ocean, somehow not get stuck in the sand on the beach, keep crashing all the way to the water, and then end up in water deep enough that the car would fill to the point that I couldn’t breathe. It would be the most spectacular crash in all of history.
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Hey, paranoia doesn’t have to make sense! However, I did drive over the Mianus River Bridge in Connecticut about 6 months before it collapsed, sending cars into the river…does that count?
I also worry from time to time about the latent supervolcano underneath Yellowstone National Park. So sue me.
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Everyone should be carrying a little tool in their car that will break a window and cut a stuck seat belt. Look for them in auto supply stores, among other places. There are other situations where you can’t get the window down.
My objection to electric windows is the cost of replacing the regulator! I really minimize my use of my windows.
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Andrews, you watch too many disaster movies on SciFy.
I wouldn’t worry about the supercaldron. You probably won’t even know if it goes, because you’ll die really fast. That’s how I felt about the liquid natural gas storage tank near us in Queens.
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I live in “Bridgetown” (Portland) where I cross a bridge at least twice a day so I think about this too. I have power windows so I hope I can at least open the door if I’m still conscious after such a drop.
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You absolutely will NOT be able to open the car door underwater. The pressure of the water against the door will make it impossible. Your best bet is to lie down on your back and kick at a window with both feet as hard as you can. If you can weaken it, it will break inward and quickly fill the car with water. Wait for the car to fill (you won’t be able to swim out as the water is gushing in), take a deep breath, then swim out the window and up to safety.
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I was watching a news program years ago, probably titled “Get Out Alive” or something like that. They showed how to exit a car that was submerged and used something called a center punch. They placed the tool in the center of the glass, applied some pressure, and the glass shattered. It’s a small tool and I didn’t get one at the time because I had manual windows then, but my new car has electric. Thanks for reminding me…
I should probably learn how to swim as well.
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They tested this once on mythbusters– they submerged cars with both electric and manual window controls, and neither worked underwater because of the massive amount of external pressure the water placed on the car. Basically your options are to get one of those little hammers meant to break the glass, or wait til the car fills up with water and open the door.
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This!
http://www.amazon.com/gp/product/B000FCRS0I/ref=noref?ie=UTF8&s=automotive&psc=1
I’m also paranoid of bridges and afraid of being stuck in a car underwater.
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Yes the do exist, if a brand has them its usually on their cheapest model and lowest trim, like the hyundai accent with no upgrades.
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Very good post. First off, congrats on having a car 16 years and keeping 12 of those years payment-free. Well done!
Second, I think those are wise words about flexibility. Our financial plans often mirror life in that things are rarely static. We need to be flexible and adapt to changing situations, some of which might actually be out of our direct control.
By living within one’s means and focusing on saving while we can, it’s more possible to successfully adapt to changes when they do happen. In other words, plan for the unexpected, as counterintuitive as that might seem.
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I hate it when people limit themselves to false choices. In the beginning of this article, you pretend you had two choices. I think the second choice (without debt) is great. The first choice would have been dumb and isn’t the only other option. You could have sold your car, put it with whatever tiny amount of savings you had at the moment,and gotten another old, used car even if it was just a slight improvement on the Geo. Moving up in car doesn’t require debt and it doesn’t require jumping up many, many levels in niceness.
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I can’t speak for the OP. But I know, for my part, that getting rid of an old car does mean looking for something significantly newer and better. It takes time to research and buy a car, and I find the process stressful and frustrating. I like to limit car buying to less than once a decade. I bought my then-year-old car in 2005, and I am hoping for many, many more years out of my sturdy car. When the car finally does go, I will be on the look-out for another gently used vehicle that I can drive for ages.
This post does remind me to go get my oil changed! It’s been far too long, time wise, tho I haven’t been commuting more than two miles each way since the last change.
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I do like this site but its nice to see articles from people that have kids and have to make these kind of decisions. Kids tend to sway your decision a lot.
I decided to buy a newer car because I wanted some safety features that are standard on most cars today. Airbags, stability control and ABS are important to me especially since my 4 year old is in my car a lot. If it was just me I wouldn’t car if it had all those features but something changes when you are responsible for another person’s well being.
I know I’ll probably get flamed for this but I don’t see it as a big deal if she had to finance a nicer car with better safety features. Especially now since car loans are very low. JMHO.
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Kids tend to sway your decision a lot. I decided to buy a newer car because I wanted some safety features that are standard on most cars today. Airbags, stability control and ABS are important to me especially since my 4 year old is in my car a lot.”
Heck, I did that and its just me (hides in shame for being selfish):). But I do drive a fair amount, especially on an interstate and constantly give people rides, including children at times.
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This article REALLY speaks to me, loudly. I had a 2000 Dodge Durango that I drove for 5 years until October 0f 2011. I paid $6,000, cash. It had 90,000 miles on it when I bought it and put 100,000 miles on it myself over those 5 years. In September of 2011,after about six months of fixing this and fixing that, we realized the engine would have to be replaced or rebuilt; then in October the transmission started slipping. The cost for repairs (even with my husband doing the work himself) would have easily been another $6,000. Considering that our kids were now 12 and 15, we decided we would sell the durango and downsize to a small SUV or a crossover that I would drive for the next 5 to 10 years. Meanwhile, I would drive my husband’s 1969 muscle car for about a year. This would give us time to save for a good down payment on another car or maybe even have enough to pay cash. This was our “plan”. God had another plan for us though. It’s now May of 2012 and I am 7 months pregnant. Surprise! Curveball #2: where we live tempuratures hit 100 degrees in early May: so much for driving the no-airconditioning muscle car for a year. Curveball #3: we now need room for 3 kids, football gear, robotics equipment for my job, and baby gear. So, our plan changed: I drove the muscle car until the brgining of May, we had $4,500 in the savings account which we used as a down payment on a 2003 Suburban that we got for $5,995. It’s in great condition and will serve me well for a few years until our teenager is off to college and I am back down to 2 kids to chauffeur around.
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Congratulations! May your labor be easy and your joy a thousand times what you expected.
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Wow, that was one expensive mistake! Good luck with everything, but thanks for the stark reminder about why it’s important not to let your guard down with respect to birth control and family planning. One night of careless activity can undo literally a lifetime of planning.
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Wait… She said surprise, not mistake! And it sounds like, despite not being part of their plan, all of their choices put them in a great place financially to welcome a new life into their family. No mention of the news of the baby really making anything much more expensive (although there are obviously costs associated with a new baby).
Congratulations, Maria!
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I am not frugal with cars. In January we traded in my wife’s 2004 Honda Civic for a 2012 Subaru Outback. I paid about $30k for that, and still owe $9000 of it. Once that’s paid for (should be later this year), I’m thinking of replacing my 2007 VW GTI with a new BMW 328. With four doors, it’s a bit more baby friendly than the GTI, but I’m not kidding anyone, I just want a BMW. I am 31 and have owned nine vehicles, not counting my wife’s cars (or the boat that I had). I like cars. I spend more than I really need to on them, but I drive a lot and find cars fun.
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Never apologize for wanting a beamer. Ever. I figure you get what you pay for. 10 years later, it’s more than paid for itself and still looks as new as the day I got it and runs that way too.
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I totally agree with “just wanting a beamer” since that was my first car and it will always have an important place in my heart…tear…BUT you don’t always get what you pay for. The rear wheel bearings went out unexpectedly on my 50K mile 3 series and if I hadn’t noticed something odd, it could have had disasterous concequences. As of now, I’m sticking with my trusty 4runner for as long as she’ll go.
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When I lived in NYC, we called them “Break My Windows.” Be careful where you take it!
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You don’t have to apologize for liking cars! As we’ve all stressed from one time or another, GRS isn’t so much about limiting EVERYTHING as much as it is about being a conscious spender. I don’t care about cars except that my city has horrible mass transit so I have to have VERY reliable transportation. BUT, I will spend money on high quality outdoor gear and high quality kitchen stuff.
As long as you can actually afford it (which is sounds like you sure can!) there is nothing wrong with liking, wanting, or buying expensive cars. I’m sure there are other areas where you don’t particularly care and your costs are accordingly lower.
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This was an inspiring post and it was gratifying to read the posts with similar stories! I bought my 2003 Subaru Forester used for cash in 2006. It now has only 106,000 miles on it and I hpoe to get it to 200,000 miles. I maintain it meticulously and probably spent a bit more on service than is necessary by doing oil changes between 3-5 thousand miles and other services as recommended by the manufacturer. It still saves me a ton of money though and I am quite happy NOT keeping up with the Jones.
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As the owner of a 2010 Subaru Forester I completely approve.
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200,000 should be a piece of cake. There have been headgasket issues, so make sure the dealer replaces the special coolant/antifreeze additive when flushing the coolant system. This additive seems to mitigate the headgasket problems.
I’m looking at Subaru for the first time in my life. I might move to the mountains, so it would be nice to have 4 feet on the ground for traction. Their AWD, while not an adverse condition panacea, is unmatched.
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Hubby and I both owned Subarus when we lived in snowy Massachusetts. I worked as a home hospice nurse and never missed a day of work because of weather. I highly recommend them for someone driving in snow frequently. We moved to Texas 10+ years ago and I expected to not need the AWD but we get torrential rains and it is definitely of value then too.
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God bless you, Barbara. Hospice nurses are amazing and wonderful angels!
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Depending on where you live & your circumstances, there’s another option – no car at all. I know this doesn’t work for most people, but my husband & I moved from Canada to Boston and then New York 7 years ago. Parking in Boston was outrageous – $330/month at my apartment building, $180/month down the street. Insurance would have been another $300/month because I had never been insured in the U.S, & no one would count my clean 20+ year driving record in Canada. My husband does not drive – he has never had a license and has no interest in cars. We got rid of the car, and moved a ten minute walk from work, near grocery stores and such. I bought a bundle buggy. When we needed to use a car, we rented a Zipcar. Since then, I have spent well under $1000/year for transportation, counting bus, subway, cabs, and car rentals. We bought a house since and I hope to get a car in the next 2 years, as I am now farther wway, and it is a pain hauling things for the house around without a car, but it sure has been cheaper without it.
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My “new” car is 19 years old, but I only purchased it in 2010- a 1993 Nissan 300zx Twin Turbo with 71,000 miles. Yes, it is a toy that goes to bed for the winter. I paid cash, plus a bit over $4,000 for maintenance/repairs since- it is a high performance sports car and needs pampering.
My daily driver is a 1993 Pathfinder that has 173,000 miles, purchased as a lease return in 1995 for cash. Over the last 2 years I have purchased tires, replaced an exhaust gasket, replaced valve cover gaskets and the main headlight switch. Oh, and changed fluids regularly. Maintenance costs of less than $400 per year, although I will have to replace the timing belt this year- probably about $1,200.
Still, figure it is good for another 10 years.
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Did I really just read an article that ends with “I saved very little for my down payment after all”? I’m not suggesting that the family trip was a bad decision, but not revealing how you purchased the new/used vehicle compared to your stated goal is telling. Instead, you illustrated how much you theoretically saved by driving this car, but not how much you actually saved for a down payment on your next. Did a paragraph get left out?
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Agreed! I don’t mind that the article is about how your plans change and the money you’ve saved for “A” may get used for “B”, but this was all about the buying of a car and there’s no information in the end about how you ended up financing the new car.
Did you get a bank loan, dealer loan, or borrow from a relative?? How much and for how long are you going to be paying off this new car? And what are you doing now to prepare for the next car??
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I am an avid reader of GRS from past few months and love being here.
I am trying to learn a lot about financial intelligence from reading books and blogs like this one and evaluate my spending habits based on what I learn. I have a substantial amount of emergency fund set aside, already saving for the house down payment and have started IRA for my wife and myself. Both of us are 28 and are done paying out students loans. So I rate myself 6.5/10 on the scale of being good about money (of course the credit goes to everyone out there who is helping people like us learn by writing good books and blogs)
But one thing that I still have trouble with is with my expenditure on the car I have driven so far. I still have times when I feel if my decision to get the car that I wanted was a right one considering the amount of money I make every month (approx. $2.4K)
My wife & I (no kids) drive a 5 year old used BMW SUV which we bought last year after selling both of our cars which were approximately 13 years old. I debated with myself if we really needed a car change? But both of our cars were getting old (but no issues) and with the same fear as most people have of the “car dying down one day” I decided to sell them off. Got decent price on each even and bought this BMW. My previous car was a 98 BMW and like one of the comments here says it’s worth driving a BMW I feel the same for the money I have put in it. Except those few times when I recheck and think if there was a need to change the cars in the first place.
But after looking at it in a different way, have come to a conclusion about my decision of buying the car. Here is my take on the whole how much to spend on the car issue. I believe that as long as you don’t lose much money on the car in between buy & sale you can still drive a good car without hurting your finances much.
Like in our previous cars I bought my BMW for $5.5K and sold it for $3K after 3 years with some good money on maintenance. On the contrary, we bought my wife’s car for $3k and sold it for $2.5K after 3 years & zero cost on repairs. (Just regular oil changes)
Also, I got a very good deal on this newer model BMW. It was way less than KBB value and I believe that it’ll still hold a good part of its value in the next 3 years or so when I plan to sell it. So all in all either way most of us lose money on the car but as long as you don’t lose much you can justify your love of driving the cars you really like. Tell me what ya’ll think?
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If you are actually only making $28k/year and you’re driving an X3, that seems foolhardy for a single person and irresponsible for someone responsible for a family (unless maybe you own a completely paid off house or something). I mean, I’m all for buying a BMW if you can afford it, but the cost of a X3 is more than your annual salary. I will likely buy the 328 I mentioned earlier within the next year or two, but I make like 5x what you do, and I will only buy cars when I can put down enough cash that I can always get out of debt in short notice if I needed to (if you put $10k down, it’s pretty much impossible for you to ever owe more on the car than you could sell it for), and I pay them off quickly (like, within a year). I also won’t take on a car payment without having a buffer of six months worth of payments set aside in case I have some emergency that makes it difficult to make payments.
My actual car buying plan looks like:
1) Save $10,000 plus six months of anticipated payments.
2) Purchase the car with $10k down, finance the remainder for 36 months.
3) Sell old car privately.
4) Put proceeds of old car sale immediately towards balance on new car.
5) pay triple on car every month.
6) when the balance on the loan drops below the six month payment buffer, use the buffer to lay off the car (you don’t need it as a buffer anymore).
It’s my compromise between paying cash and waiting an extra year or two to buy the car (if you pay cash, you need to save the value of your old car in advance, when if you finance, you can sell the old car for that money after you have e new car).
And yeah, I wouldn’t finance a car if I couldn’t afford to make triple the required payment. That’s my safety buffer.
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I guess I should have added a little more information here so that I don’t come out as a bad example for people around here who want to develop good spending habits.
First, your assumption of 28K/Year is a little off as you are probably considering the amount I wrote earlier before taxes but its after that makes me over 40K/Year. My wife makes same as me and we share the same car as we drive to the same bldg which is 10 mins from our house which in turn brings down our gas expenses to less than $60/month.
Second, we live in a very small town and so our rent is less than 25% of one of our salary which in turn leads to less spending on outside activities as their is not much to do around here. We make a lot of road trips and was one of the reason we wanted a car which we would love to drive.
Third, somewhere down the line my company will give me an office car when I go up a step above in hierarchy of the office structure. That ain’t going to be a BMW so now is my time to drive what I like driving.
BTW, I like your plan of how you plan to buy your next car. Mine was pretty much similar to yours and I have already executed it.
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Yeah, it sounds a lot more reasonable on a family income of $80k/year than $30k/year, especially if your housing costs are only about $700 a month.
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If you want a BMW, then go ahead and drive a BMW. It’s your money. But don’t pretend you’re frugal too. You only live once, and if you want to blow your money on an overpriced status symbol, that’s completely your choice. But to try and wrap it in statements about the car being a “good deal” or “holding its value” just makes you look silly. It’s a wasteful indulgence, like Starbucks or organic food. Be at peace with it and stop trying to play both sides.
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To me, being frugal is about saving on the things that don’t matter, while spending on the things that do. If you’re never going to actually enjoy your money, what’s the point?
If the car is the one thing in his life that he spends money on, then so be it.
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I was with you on the “wasteful indulgence” thing until you lumped in organic food alongside Starbucks and BMWs. I fail to see how eating poison-free food is a wasteful indulgence. I was always sympathetic to organic but not strict about it. Well, once we had our daughter everything changed – pesticide covered conventional produce and hormone / antibiotic filled milk became a non-option.
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@DB: Organic food is a “wasteful indulgence” because it reduces crop yields for entirely superficial reasons. Say a given acre of land can produce 2 tons of conventionally-grown soy. A GM crop might be able to produce 2.5 tons on that same acre. But an organic crop (due to loss to pests, weeds, intolerence to heat/drought/mold, etc.) might only produce 1 ton.
Now, the same number of people want/need that food. There are 7 billion people on this planet, whether we grow 1 ton or organic soy, or 2.5 tons of GM soy. Less supply, same demand equals higher prices.
That’s not a problem for you or I. We’re rich white Westerners. We’ll just complain a little and pay the extra. But that’s not an option for billions of people in Africa or Asia. So in order for you to not have to inconvenience yourself by washing your vegetables, and so you can sleep better after buying all the liberal “Frankenfood” propaganda, billions of people go hungry.
25,000 people starved to death today in Africa. That’s not hyperbole, that’s a fact. 25,000 real people, with names, dreams, and families. 25,000 more will die tomorrow, and the day after that, and the day after that.
How many people have GM foods killed? Not. One. Single. Person.
That’s why organic food is a wasteful indulgence.
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@ Kevin –
Terms like “liberal Frankenfood propaganda” don’t really contribute to a reasonable debate – so I’m not going to discuss that aspect of your comment. You’ve clearly made up your mind there.
I do want to point out though that in terms of global food supply, you’d do better to focus on high levels of meat consumption than you would high levels of organic food consumption, especially as a lot of organic food growers are very small operators and probably wouldn’t exist if they weren’t doing higher-priced, locally-oriented operations. In contrast, livestock take a lot of feeding in order to get a relatively small yield – that’s pretty well documented and a big reason some people become vegetarians.
Of course, all of this is relatively unrelated to starving people in Africa, because the problem isn’t a global food shortage – we have plenty of food globally – it’s that there are local food shortages. In other words, the food exists – it’s just not where the starving people are. Blaming consumers of organic food – or meat – doesn’t really DO anything for those people.
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We can’t say that GMO foods haven’t killed anyone. There’s no way to determine their effect on cancer patients, etc. Maybe it contributed to someone getting a disease that killed them.
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I am an avid reader of GRS from past few months and love being here.
I am trying to learn a lot about financial intelligence from reading books and blogs like this one and evaluate my spending habits based on what I learn. I have a substantial amount of emergency fund set aside, already saving for the house down payment and have started IRA for my wife and myself. Both of us are 28 and are done paying out students loans. So I rate myself 6.5/10 on the scale of being good about money (of course the credit goes to everyone out there who is helping people like us learn by writing good books and blogs)
But one thing that I still have trouble with is with my expenditure on the car I have driven so far. I still have times when I feel if my decision to get the car that I wanted was a right one considering the amount of money I make every month (approx. $2.4K)
My wife & I (no kids) drive a 5 year old used BMW SUV which we bought last year after selling both of our cars which were approximately 13 years old. I debated with myself if we really needed a car change? But both of our cars were getting old (but no issues) and with the same fear as most people have of the “car dying down one day” I decided to sell them off. Got decent price on each even and bought this BMW. My previous car was a 98 BMW and like one of the comments here says it’s worth driving a BMW I feel the same for the money I have put in it. Except those few times when I recheck and think if there was a need to change the cars in the first place.
But after looking at it in a different way, have come to a conclusion about my decision of buying the car. Here is my take on the whole how much to spend on the car issue. I believe that as long as you don’t lose much money on the car in between buy & sale you can still drive a good car without hurting your finances much.
Like in our previous cars I bought my BMW for $5.5K and sold it for $3K after 3 years with some good money on maintenance. On the contrary, we bought my wife’s car for $3k and sold it for $2.5K after 3 years & zero cost on repairs. (Just regular oil changes)
Also, I got a very good deal on this newer model BMW. It was way less than KBB value and I believe that it’ll still hold a good part of its value in the next 3 years or so when I plan to sell it. So all in all either way most of us lose money on the car but as long as you don’t lose much you can justify your love of driving the cars you really like. Tell me what ya’ll think?
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If only all cars were made as reliably as the Geo Prizm, a lot more of us would be driving around payment-free. I guess that doesn’t help the auto industry, though, to make such longlasting cars.
I also had a Geo Prizm. Best car ever!!!! I drove it to 300,000 miles and never paid for a single “repair” on it. Just the usual oil changes/tires. And it got crazy good gas mileage too.
I only gave it away because the body was starting to fall apart and my brother offered me his company off-lease Grand Prix for $4k. I figured I couldn’t pass off such a deal, so… but I missed the Geo terribly. The Grand Prix was a sweet car to drive, powerful, but it was nothing but problems. I was astonished that a car with not even 100k miles was breaking down…stupid stuff too.
The constant repairs were killing me, so after several years I opted to get a used Scion. It’s OK but not as reliable or fun to drive as the good old Geo. I really really really wish I had thought to search for a Geo Prizm, I could have gotten my old gold standard back for like $3k instead of spending $10k on a crappy tin-can Scion. It’s the first time I’ve had a car payment and it sucks.
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The Scion may turn out to be a better car than you think. I have a Scion XB that I bought new 6 years ago and which now has 140,000 miles on it. I have had absolutely zero problems with it. All I have done is routine maintenance and not even that as conscientiously as I should. I won’t disagree that it is kind of a tin can, but the XB can also haul a lot and is roomy for my teenage boy passengers. On the other hand, I have been researching a replacement car, just in case, and it looks like the other Scion models might not be quite as reliable.
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Alright well here’s a question for the populace: I bought a car 2.5 years ago, just off-lease, still paying for it. She got her first boo-boo a couple days ago.
A rock hit on the windshield, not the first time given I drive ~120 miles per day, 5 days per week. The crack showed up overnight, from the bottom of my windshield up about 6 inches. Then the next morning it had spread to 9 inches. Then this morning it’s up to 12.
My mom says this is totally not critical, and my aunt’s van has had a crack in the windshield since 1999. She’s still driving it. My instinct is to get this thing fixed before it shatters on me the next time I hit a pothole. Funds are short, but the last time I had a (rear) windshield shatter into my car, I was still finding glass 2 years later. I’d rather replace the windshield now than pay for the detailing to get the glass later on top of it. Plus the risk of injury to myself and my partner! No babies, or else this would be a non-choice of getting it replaced ASAP.
What would you do?
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Replace it… I see that as a safety issue.
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I too would replace it.
“No babies, or else this would be a non-choice of getting it replaced ASAP.”
Why should the decision be any different just because you don’t have kids?
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You may have to replace it–in many states a crack like this would mean an automatic inspection failure.
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My ins. co. covered a 1″ crack for free. Just scheduled their windshield people to come to my work & replace it. Didn’t cost me a dime. Call your ins. co.
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Exactly, you may have free windshield replacement as part of your insurance. If you don’t, I recommend getting it so the next time this happens you don’t have to worry about it.
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I had to sell my 2002 Hyundai Elantra for a 2003 model, after the head gasket blew away along with radiator and belts. This car is better brand than Hyundai, much more reliable. thinking of driving it for another 5 years at least.
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I want to know how much you got for the GEO?
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Evaluating your priorities is useful. I do this from week to week. Stability can turn into stagnation unless you keep your goals fresh. Don’t think I’d want to have a car for 16 years. I don’t get too attached to my posessions – they’re only with me for a season not a lifetime!
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We just tossed $300 into our 03 Mitusubishi so the fact that you can get $400 with annual service blows me away. We could dream to be so lucky.
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82 Buick still a daily driver. Drive em’ don’t hide em’.
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I think a lot of this depends on what state you live in and how handy you are. The labor rates in PA at all the shops including independent and dealers range between $80 and $100 an hour. Plus in PA you have to get annual inspections (emmissions and inspection), which are somewhat thorough at licensed auto mechanic shops, either at the dealer or independent, its a bit ridiculous, every other year would be fine. In DE next door its a joke, when you buy a new car you get 5 years, and then 2 years after that and even then you just show up at the DMV and step on your brakes and they check your emissions, 5 minutes and your done. If your not doing the work yourself, the cost of a used car adds up pretty quick, especially once you get to the 10 year mark, I’ve found things start to go, including electrical and at the rates your better off getting a newer used car. Also it depends on the brand of car you have, certainly some have better long term reliabiity than others.
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So… what did you buy, how much did you end up financing, and what’s your repayment plan? You can’t write a detailed article about waiting to buy a new car and then not give ANY information about what you bought!
Also, you stated you had a “new car fund” targeted savings account – did you have any other savings accounts you could have used to travel and see family? If not, I question whether you were really able to afford your car savings account – seems as if you should have been putting less in there and putting more in one or more other accounts.
We don’t have tons of money in any one of our targeted savings accounts (it’s a slow and steady thing), but we do have multiple accounts, at least two of which we’d dip into for unexpected expenses before dipping into our car fund.
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Wow — this post resonates. I’ve also been driving a 1996 Geo Prizm for over a decade, and I’ve been hoping it WILL break down. I want a new car, but the ridiculously good numbers from the Prizm make it hard to justify!
I’ve been talking about selling this thing for years…
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It always comes back to personal priorities. I am currently driving a 1986 Jeep Cherokee that I paid $600 for. In the 18 months I have had it, I have spent another $500 in mostly routine maintenance (one wheel bearing and some exhaust work to go with the oil, plugs & such). Before that, I had a 1977 Ford truck that I paid $2600 for. I drove it for a decade and then sold it for $1800, still in great shape. My ex an I put over 60,000 miles on a Dodge Caravan that we traded a VCR for. The only non-routine maintenance it ever required was a radiator replacement about 6 months before we got rid of it. None of these vehicles were in the least stylish, but the money I/we didn’t spend on a newer/fancier ride bought the freedom to make a lot of other financial choices that would have otherwise been impossible on my/our modest incomes.
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This month my Nissan is 20 years old. This was my goal, but now I just want to see how long I can get out of it without major work.
I bought it new for $19000 cash when young. Resisted the urge to keep updating which was one of the best decisions I made. Nothing much wrong with it. The Odometer stopped working this year at 469,000 km. Other than the headlining becoming unglued one hot summer, it still gets me around no problem.
I loved cars, and came close to upgrading many times. The difference came with my mentality – realising cars burn money. I have saved a ton, don’t care where I park or worry much about it. Just keep it spotlessly clean
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I think it’s a really cool idea to drive an old car – I could easily afford a brand new car but I drive a really (18 year) old one anyway here is my old car I can’t say enough good things about it – I don’t really worry about it, no-one will steal it, it drives fine but is cheap on petrol, it fits my golf clubs & four bikes on the roof as well as my family (wife, 2 children) and the dog in the boot
It can be repaired mostly by myself with a screwdriver.
At the end of the day a car is a liability. You should be thinking not just about the cost of buying the car, or even petrol, but all of the hidden costs too – insurance, maintenance etc etc. Even if my car breaks repairs are really cheap.
I see a car as something that is designed to get me from A to B. Nothing more.
I hope your new cardoes last you as long as your previous one – if not longer. Drive it into the ground is great advice!
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Where is the wrap up to this story? What did you buy and for how much? What was your car worth when you got rid of it or did you donate it? This site’s readers need details not an inconclusive ending.
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My daily driver has been the same daily driver for a little over 17 years now. A 1995 Saturn. It’s still a little trooper & other than the occasional new unexplained noise, slow to start on cold mornings & ornery gear shifter (it’s a manual transmission) – it’s been a good little car to me. I hope to still be driving it for a few more years – like to make it to the 20 year mark.
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I am not sure how they did it on $400 a year. I just bought new tires yesterday and it was over $600 even with a rebate. My car is a 2004 Honda Element.
I love that I don’t have payments and I love my car.
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We just purchased our 4th Subaru Outback. We keep each car 14 years. We know that there are more cars of this model/brand on the road more than a decade than any other model in USA. And we also know this type of car is capable of reaching at least 300,000 -350,000 miles, if it is maintained. We figure touchuo body work every 5 years is cheaper than a new car, and keeps our cars bodies’s capable of lasting as lo g as it is mechanically capable.
Each time we replace o e of these cars, it is because we want an update on safety features. So now my husband has side airbags and backup camera features.
My Subaru was purchased comi g off a 2 years lease someone else had. The original car warranty of 50,000 miles goes to new owner if sold used, so I knew I had a coupe, years or so of warranty.
When we have replaced our two previous Subarus, we gave them away to workmen of modest income who had done great work for us for years. My previous car went to a young carpenter who was a foster parent, had his own you g children, and was supporting his elderly parents.
Last fall, my husband’s 14 year I’d previous Subaru went to the fellow who mowed our lawn for 10 years, who also is a school bus driver.
In each case, they p,an to try to drive the cars for 50,000 to 100,000 more miles. Indeed, the carpenter already has doe so.
Since cars of that age wouldn’t being us much money, we consider it worthwhile to give them away this way as “tips” and gifts to wonderful workers who live on modest incomes, and have been iChat superb helpers to us.
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I am retired and widowed and drive a 2008 Suzuki SX4 that just turned 50,000 miles (12,500 miles/yr). I bought the car new at 0% interest for 60 months for a monthly payment of $313.00. Other than routine oil changes and gas, the only money I’ve put in for maintentance has been for a new set of tires and front brakes – $1000. Figure $100 annually for oil changes, and my total maintenance over four years has been only $1400 ($350/yr). Planning to keep the car after the loan is paid up next Spring – giving me a “raise” of $313/month or nearly $3800/year. Subtracting $350 from the $3800 still leaves me with $3450/yr – so if I keep the car only an additional 3 years, for a total of 8 years, I would have logged 100,000 miles – still “young” considering that the car is driven in Florida – and would have accumulated $3450 times 3, or $10,350, in cash. And with the rising value of used cars these days, my Suzuki will still be worth something, even with 100,000 miles on it. Again, as I am retired, it makes perfect sense to “hold on” this long, if not longer!
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I too have had Subarus last 14+yrs.
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This article is so similar to my situation it’s scary. I drive a ’94 Accord, which makes it 18 years old right now. At the beginning of this year I started my first real job and am getting married in June. I decided it was time for a new car, but did not want to go out and buy one without a down payment. I have resigned myself to save up $10,000 (part of the reason it’s scary, we picked the same amount for our down payment goal) to buy a new (to me) car. Though I am going to try and be a little more aggressive with my savings, I am aiming for December of next year, giving myself essentially 2 years to save. I am also not going to take any money out of my day to day income and budget, the entirety of the down payment is going to come from freelance and side jobs that I am doing (I do web design and photography). Hopefully I can meet that December 2013 goal. If not, I guess I’ll wait a few more months. I can’t wait to get a new car, but until I can afford it, I’ll be ok with what I’ve got.
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