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 Post subject: Poor Car decision: Need to Eat the costs?
PostPosted: Fri Sep 28, 2012 9:46 pm 

Joined: Sat Feb 25, 2012 9:59 pm
Posts: 9
Last December I convinced my wife of a poor financial decision (obvious now) and bought a used BMW for about $30K ($400 monthly pmt). I have always been a huge car fanatic and I really enjoy this vehicle still every time I drive it.

Anyways, I just wrote a check for the first semester of nursing school for my wife and our first child is almost 5 months old now (we didn't know about nursing school at purchase time). I have admitted to my mistake and am trying to convince myself to dump my new ride and pick up a moderate sedan in the 5-7$K range to help pay for nannies and nursing school. I actually got a decent deal on the BMW and it's not under water. I'm having a really hard time accepting the imposing $$ losses of selling this thing back to the dealer and finding a different vehicle. I really do not have the time or energy to make a private sale happen in my opinion.

I know I've read recommendations on this forum for people to get rid of their car and buy something more affordable, but it's really hard for me to swallow the transaction csots involved on top of my mistake. I can go into greater details of our finances, but ultimately we're not hurting because of this car. I just have a feeling that I haven't put my money where my mouth is with our current focus on our financesand increased expenses with school and nannies. Basically my wife an I make a concious effort to be frugal (she is better than I) and this car is really the only blatantly unfrugal thing we have at this point.

Not to have a pity party (okay maybe?) I have been working harder then ever before and this car is really my only frill/hobby/crutch at this point. It will be under warranty for 60k additional miles or 3 years from now.

I would really appreciate any advice or encouragement. I'm almost ready to just drive to the dealer and get it over with ASAP and walk away with my head down and consider it an expensive early mistake.

- Karl


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Fri Sep 28, 2012 11:07 pm 

Joined: Sat Jun 16, 2012 2:11 am
Posts: 193
I don´t know about you financial situation, but you say you can manage the $400/month car loan. A BMW has some other high costs; insurance, gas, servicing and so on. As stated, a $30.000 BMW is not frugal, on the other hand I have heard worse as far as splaching for luxury goods.

In the end, more important than keeping the car or not is whether you learned anything from your experience (frugality/financial prudence), and would act different next time around (you don´t really afford a BMW if you can´t pay it cash).


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sat Sep 29, 2012 6:04 am 
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Joined: Mon Jun 23, 2008 6:54 am
Posts: 636
You say that the car isn't hurting you financially, and you repeatedly say that this is your one and only pleasure, so what's the problem? Let's say you could sell it for $25k, and then buy another car for $5k; what would you do with the leftover $20k or $400/month? Would it go toward something more important to you than a BMW?

I personally have no interest in paying $20-25k to drive a BMW over a cheaper used car (I'd prefer travel or buying our dream home a little sooner) but if you really want your BMW more than anything else, keep it.

Tim


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sat Sep 29, 2012 8:04 am 

Joined: Sat Feb 25, 2012 9:59 pm
Posts: 9
Northern,
I definately did learn something, to listen to my wife when it comes to justifying big purchases :o

I'm probably not being completely honest with myself when I say it's not hurting us. We're not in the hole for the car, but until my wife is out of nursing school, we're not able to save very much if any cash on a monthly basis. We are still well on track for retirement goals and still able to save aggressively on that front.

Tim: The $400 a month would be saved for the remaining cost of my wife's nursing school, unless she get's a scholarship that she recently applied for. Basically the car loan and nursing school are about $20K each. Oddly, the student loan interest rate will be triple our used car loan rate.


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sat Sep 29, 2012 9:00 am 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5209
kagraham wrote:
Basically the car loan and nursing school are about $20K each. Oddly, the student loan interest rate will be triple our used car loan rate.


There's your answer. You CANNOT afford the car. Sell it, buy a beater, and pay for nursing school so you don't have student loans at the end. Ten years from now the nursing degree will be worth a lot more than the car.

And listening to your wife is priceless!


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sat Sep 29, 2012 4:59 pm 

Joined: Sat Jun 16, 2012 2:11 am
Posts: 193
DoingHomework wrote:
There's your answer. You CANNOT afford the car. Sell it, buy a beater, and pay for nursing school....

I agree.


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sat Sep 29, 2012 8:02 pm 

Joined: Fri Jun 03, 2011 8:26 am
Posts: 66
kagraham wrote:
Northern,
I definately did learn something, to listen to my wife when it comes to justifying big purchases :o


Keep the car, don't give your wife the smug satisfaction of telling you "I told you so..."

Just kidding.

I'm sure she'll be very appreciative of the sacrifice and your willingness to invest in her future...


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sun Sep 30, 2012 2:50 am 

Joined: Sat Jun 16, 2012 2:11 am
Posts: 193
Saving up for a BMW is easyer with a wife who works as a nurse, and don´t study for one. If a nice car is really, really important to you and your wife loves you, she will end up letting you buy another in the future.


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sun Sep 30, 2012 8:03 am 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1560
Northern light wrote:
Saving up for a BMW is easier with a wife who works as a nurse, and don´t study for one. If a nice car is really, really important to you and your wife loves you, she will end up letting you buy another in the future.

She's working hard to increase her earning potential and he's supporting that, which is great. Maybe a good thing to do when she's done and working as a nurse would be to go back to school and increase his own earning potential. That way, getting a BMW wouldn't be a matter of permission; it would simply be a nice perk for having a sizable increase in overall household income.


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Sun Sep 30, 2012 6:33 pm 

Joined: Sat Feb 25, 2012 9:59 pm
Posts: 9
VinTek wrote:
Northern light wrote:
Saving up for a BMW is easier with a wife who works as a nurse, and don´t study for one. If a nice car is really, really important to you and your wife loves you, she will end up letting you buy another in the future.

She's working hard to increase her earning potential and he's supporting that, which is great. Maybe a good thing to do when she's done and working as a nurse would be to go back to school and increase his own earning potential. That way, getting a BMW wouldn't be a matter of permission; it would simply be a nice perk for having a sizable increase in overall household income.


Thank you all for your advice and input. Thank you all for telling me what I needed to hear. VinTek, I like your reasoning. I don't want our marriage to be based on "permission" but support of one another's decisions and trust in eachothers sound judgement. I think I still have some remorse from the purchase because I did have to convince my wife it was reasonable at the time, (it was more reasonable at the time than it is now).
I hope sometime in the future to have an opportunity to pursue another degree, there are few degrees that can "guarantee" enough salary increase to forfeit two years (minimum) of my salary and benefits. Until nursing school is out of the way I certainly cannot entertain any part-time programs.

Now, do I drive it to the dealership and make this quick and easy to just get it done (suffer extra $$$ lost), or take the extra time and energy for a private sale? I'm really strapped for time on a daily basis and worry that this will get drug out if I go that route. I think I know the answer.

- Karl


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Mon Oct 01, 2012 12:18 pm 

Joined: Fri Sep 12, 2008 12:29 pm
Posts: 1558
Location: Seattle, WA
Why are you so busy? Do you see it letting up any time soon? Is there anything you can defer, delegate, hire out, or just not do? You'll lose a pretty big chunk of dough by selling it to a dealer, especially selling it directly rather than trading it in for another car. I have a friend who sold his car in a few hours on craigslist, by pricing it below market.


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Tue Oct 02, 2012 5:14 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1683
Location: Ottawa, Canada
I agree with stannius. What's your salary? Say you make around $70k/year. That means you make around $2k every 2 weeks, after taxes.

Let's say you take 2 entire weeks off work, unpaid. For two whole weeks, you make it your full-time job to sell your car. You drive it around to several dealers, you post ads on eBay, Kijiji, Craigslist, AutoTrader, EVERYWHERE. You get a few nibbles from buyers, you drive it to them to show it to them, you drive it to their mechanic for them so they can confirm it's in great shape. You do this 8 hours a day, 5 days a week, for 2 solid weeks.

I'd bet that if you did that, you'd sell the car. Not only that, but you'd sell it for AT LEAST $5,000 more than the dealership would have given you for it.

Now, if you had gone to your job instead, you'd have made $2,000. But by taking unpaid time off, you improved your situation by $5,000, for a net "win" of $3,000.

Isn't this a no-brainer?


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Tue Oct 02, 2012 8:15 am 

Joined: Fri Sep 12, 2008 12:29 pm
Posts: 1558
Location: Seattle, WA
kombat wrote:
You do this 8 hours a day, 5 days a week, for 2 solid weeks.

I'd bet that if you did that, you'd sell the car. Not only that, but you'd sell it for AT LEAST $5,000 more than the dealership would have given you for it.


And I'd bet this is subject to the Pareto Principle, a.k.a. the 80/20 rule - if you spent 20% of that time (16 hours) you could get $4000.


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Tue Oct 02, 2012 9:03 am 

Joined: Mon Jul 30, 2012 3:59 pm
Posts: 29
Selling to dealerships is great for those who can afford to the cost of the convenience. But it is very expensive - based on what you've written, sell the car yourself. Craigslist and Auto Trader are easy ways to do so. Auto Trader and Edmunds, I recall, also provie tips on how to handle the transaction, including a bill of sale template.

_________________
www.dontgopoor.com
SOLD: Don't Go Poor and Miserable Being Sold Happiness - teaching consumers how to buy


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 Post subject: Re: Poor Car decision: Need to Eat the costs?
PostPosted: Tue Oct 02, 2012 9:14 am 

Joined: Mon Jul 30, 2012 3:59 pm
Posts: 29
kagraham wrote:
Last December I convinced my wife of a poor financial decision (obvious now) and bought a used BMW for about $30K ($400 monthly pmt). I have always been a huge car fanatic and I really enjoy this vehicle still every time I drive it.


I don't want to put you on the spot, so please pass on this if it's uncomfortable, but would you mind adding a little more about what led you to buy the BMW and then what later led you to realize the mistake?

I'm going to guess that the initial decision was quite emotionally driven, likely caused by marketing that really touched you.

In hindsight, do you think the car purchase was a poor financial decision (i.e., the value or cost of the car was different than what you originally projected) or a poor buying decision that was created by marketing or advertising?

I have done a fair amount of research and it seems that what most consumers call poor financial decisions are really poor consumer / shopping / buying decisions that end up as a financial burden. As opposed to a financial investment (stocks, real estate, business ventures) where the research was sound but that that went bad anyway due to market gyrations contrary to the forecast.

_________________
www.dontgopoor.com
SOLD: Don't Go Poor and Miserable Being Sold Happiness - teaching consumers how to buy


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