For the past two years, one of my top financial goals has been to save for a Mini Cooper. Just like a child with a toy catalog, I've spent hours on the Mini website playing with colors and options packages, building my own dream vehicle. Whenever I'm tempted to buy small indulgences, I ask myself, "Would I rather have this or a Mini?"
Until the beginning of last week, however, I thought I still had a long way to go before I could afford even a used Mini Cooper. Turns out I was wrong.
Since the middle of last year, I've been saving like mad, attempting to accumulate enough money to buy a car. My progress has been outstanding:
Earlier this month, I shared a link to a comprehensive guide to certified pre-owned vehicle programs. In doing so, I mentioned that Kim and I both believe that you should drive a car until it dies. This prompted a great question from Tired Scientist in the comments. She wrote:
Exactly what is the definition of "until it dies"? My husband and I have gone around and around on this question ourselves. We both believe in driving a car "until it dies", but disagree slightly on the definition of this–because, unlike with the human body, almost all problems on a car are fixable given enough money.
When is a car considered "dead"? When the cost of repairs exceed the value of the car? When the average monthly cost of repairs exceeds the amount a car payment would be? Is my husband right, and the car is "dead" once it tries to make you dead?
I'm not sure there's any one right answer to this question. There are several ways to decide that a car is dead, and it's up to you to decide which definition applies to you. Let's look at a decision I made recently -- then talk about what other people think.
My Mini Cooper
In April 2009, after years of wanting one, I bought a used Mini Cooper. I paid $15,600 to purchase a 2004 Mini with 60,000 miles on it. I've had that vehicle for over eight years now, and I've put another 75,000 miles on it. In that time, I've spent less than $1000 on repairs -- until recently.
I love my Mini. I love how compact it is. I love its fuel economy. (It still gets over 30 miles per gallon even at this age!) I love how fun it is to drive. And I love how reliable the car has been despite not always being treated well. During our 15-month RV trip around the U.S., Kim and I towed the Mini behind the motorhome -- and we used it for the kinds of off-road adventures that Minis were never intended to have.
That said, my Mini has started to show its age. Parts that are expected to wear out have begun to wear out. Plus, problems have begun to appear.
Two weeks ago, for instance, the car died while climbing the 16% grade near our house. The clutch went up in a cloud of stinky, stinky smoke. When I had the car towed to our mechanic, he found evidence that the transmission was failing. "It'll cost about $1600 to fix the clutch," he said. "And I found a used transmission I could install for about $1900."
As much as I love my Mini, $3500 is a lot of money to put into repairs for an older car. In fact, that's nearly as much as the car is worth! (According to the Kelley Blue Book website, my 2004 Mini Cooper is worth roughly $3741 if I were to try to sell it to a private party. It's worth much less in dealer trade-in value.)
I had a decision to make: Do I scrap the Mini and buy a replacement? Or do I make the repairs and continue to drive an older car?
It's funny. Fifteen years ago, daily personal finance was a chore for me. I didn't understand how to go day to day making smart choices that were aligned with my values. I wasn't even sure what my values were!
Today, things are much easier. Sure, there are challenges. Sometimes I make poor choices. But mostly, what I spend aligns with what I want out of life. (With the caveat, of course, that who I am and what I want shifts over time.)
I'm glad I've developed good habits. Right now, it's keeping me from making a rash decision. For most of 2019, Kim and I have both been fighting the new-car itch. The old J.D. would have succumbed by now. This year's model still does dumb things like spending hours building custom cars on the Mini website, but so far I'm not scratching that new-car itch.
Instead, I've come up with a plan, a path to a car purchase. And Kim has come up with a plan of her own too.
My Plan for Purchasing a New Car
"Look at this," I told Kim a couple of weeks ago. I carried my laptop over to show her my latest Mini design: a super-powered orange convertible that makes no sense for our lives.
Kim shook her head. "You've got to stop going to the Mini website," she said. "And you especially have to stop using that build-your-own-car tool. That's dangerous." She's right.
Earlier this week, as Tally and I strolled through the hills and picked blackberries, I did some serious thinking about if/when I should get a new car. I think I've gained some clarity.
Sure, if I cashed out some of my investments, I could justify making this purchase today. But, as I learned last year, this sort of action carries a huge tax consequence. If I sold investments to buy the car, I'd effectively be paying a 15% premium to make the purchase. I'm not willing to do this.
Plus, it's hard for me to rationalize paying so much for a new car. It's crazy how expensive vehicles are these days. (Do I sound like an old man yet?)
Speaking of being an old man: The one thing that even allows me to consider a new new car is that I'm getting older. I'm fifty. It's highly probable that if I purchased a new vehicle, it'd be the last new-vehicle purchase of my life. (I tend to keep my cars a long time. I can see that at 67 or 70, I'd buy another used car because a new Mini would last me until then.)
While the dog sniffed the roadside for rabbits, I formulated an actual plan for buying a new car. I decided that there are three conditions that would lead me to make this purchase. From least likely to most likely, those conditions are:
- Interest rates on auto loans drop low enough for me to justify making payments. As I said, I don't want to cash out my investments to buy a car. My monthly income has reached a level where I could conceivably use part of it to pay for a car, but I don't want to pay a lot of interest if I do. Right now, the U.S. national average for a 60-month loan is 4.21%. That's too high. 0.0% would be low enough, obviously. But at what level would I be willing to take out a loan? I'm not sure. I think 2% may be too high, but 1% is okay.
- My current Mini Cooper dies. My car has had a couple of major repairs since 2016, but mostly it runs fine. There's no rush to replace it. But if it were totaled in an accident (heaven forbid!) or if something else major were to go wrong, well then I'd consider moving on to a new car.
- I save enough to pay cash for all (or most) of a new vehicle. GRS is starting to make more money. Not a lot -- not like in the olden days -- but some. I plan to set this aside in a car fund. Meanwhile, whenever I get lump sums, I'll stick that money in the car fund too. (I'm negotiating a project that might give me roughly $15,000 — if it ever happens.)
If any one of these three comes to fruition, I'll do pull the trigger. I'll buy a new car. (Unless, of course, I manage to shake this new-car itch for good. But that's unlikely.) In the meantime, I'll make do with the two vehicles I already own: my 2004 Mini Cooper and my 1993 Toyota truck. I like them both and they run well. They're good enough, you know?
When I went to the street to get the mail on Saturday, the latest issue of The New Yorker was in the box. Walking up the sidewalk to the house, I idly began to remove the subscription cards. I stopped, though, when I came to a full-page cardstock advertisement. I read the front of the ad. I read the back.
At the kitchen table, I carefully removed the ad from the magazine, carried it upstairs, and sat down at my computer. I typed in the listed URL, and for the next two hours, I was at the mercy of the advertiser. What was this ad for? The 2007 MINI Cooper.
I've mentioned before that I hate my current vehicle — a 2000 Ford Focus. I bought it in a hurry after my 1992 Geo Storm was totaled by a wayward tractor-trailer rig. I've loathed the Focus since day one. Continue reading...
Yesterday, Kim and I joined my cousins for an afternoon trip to the Oregon Coast. Our aim was to harvest a bounty of clams. We came home with zero. We managed, however, to harvest a bounty of mussels. Plus, the dog had fun.
My cousin Duane carpooled with us to and from the beach. We rode in Kim's car: a 1997 Honda Accord that's showing signs of its age.
"It's a little warm in here," Duane said about ten minutes into our drive. "Would you mind turning down the heat?"
"Well, I can't turn down the air," Kim said. "It's stuck on high. But I can turn down the temperature." She laughed as she demonstrated that the knob for the air volume has broken off at the post. The vents now permanently blow at full force.
"This car is falling to pieces," I said. "Literally." As if to prove my point, a bit of molding fell from a roof handle. I picked it up and wedged it back into place.
"I like my car," Kim said. "I have an emotional attachment to it. But I've come to the realization that it's time to start searching for something else."
More and more, it looks like our vehicles have reached the end of the road.
Yesterday, Sierra wrote that she's bored. She's reached a point in her financial journey where nothing exciting seems to be happening. She's paid off the easy debts, and now it's a slog as she pays off her big debts (and then prepares to save for the future).
Ah, yes. I remember that feeling well. While I paid off my final debt — and again while I made the transition from debtor to saver — I sometimes found it difficult to maintain enthusiasm. Sierra's on the right track: She's decided to find ways to turn saving into a game. But today, I want to share some of the things I did when personal finance became a chore.
On Saturday, I wrote about my transition from spender to saver. I mentioned that I'd recently peeked at the latest camera equipment. "I spent twenty minutes on Amazon, drooling over the Nikon D300," I wrote. "I'm tempted — but not much. I'd rather save that $1,800 for the future."
Reader Kristi Wachter left an astute comment:
$1800? That's, what, 6% of a Mini Cooper? Continue reading...More about...Psychology
If it's March, it must be time to talk about cars. The annual auto issue of Consumer Reports landed in my mailbox this week, and I spent some time skimming the pages.
I'm not nearly as interested in car info as I used to be, but I know that many folks are in the market for a new car, and I think Consumer Reports is a great source for info. Plus, it's fun to review their findings to see what (if anything) has changed.
This year, the Consumer Reports website — even the part that's not behind a paywall — has plenty of useful info. There are video reviews of top cars again in 2012, although external embedding has been disabled (meaning I can't share a video with you here — you have to go to the CR website to see them yourself). You can access all of the free, public content from the site's April 2012 issue homepage. But let's review some of the major news.<
Over the past couple of weeks, more than a few GRS readers have complained about the site's tone. These folks are afraid that Get Rich Slowly is turning into a column that's only about frugality and self-denial, one that is neglecting the "rich" part of the blog's title. These concerns came to the fore in last week's article about remembering to appreciate what I already have.
In that discussion, ObjectiveGeek wrote:
I want the best possible life for myself and my family. Maybe that means a dream house, or maybe that means the freedom to travel any and everywhere, but maybe that means both. I'd be proud of my dream home if I had earned the means to own it. I don't think contentment is much of a virtue — it's more of a guise for mediocrity. Continue reading...More about...Frugality
Kim and I have been talking a lot about cars during the past few months.
She drives a 1996 Honda Accord with 226,000 miles on it. The car runs fine and has served her well, but she's begun to think about the possibility of upgrading.
I still drive my beloved 2004 Mini Cooper, but the little guy has had some issues lately. (Right now, it's in the shop because the clutch burned out. In the process of replacing that, the mechanic discovered that the transmission needed to be replaced -- thanks to towing the car behind our RV for 15 months.)