I am 53 years old. Never in my life have I allowed myself to buy a car I truly love...until now. This is the story of how I allowed myself to make a huge purchase just for the joy of it. And it wasn't even a purchase I'd intended to make. Let me explain.

During the peak of the pandemic (early July 2020), I paid $35,990 for a used 2019 Mini Countryman SE All4. The Countryman — which I call a "Maxi Cooper" — isn't a bad car, but I regretted buying it almost immediately. I'd intended to replace my 2004 Mini Cooper with a newer version of the same model, but allowed myself to be talked into a compact SUV.

For two years, I drove the Maxi Cooper and tolerated it. It wasn't a bad car by any means, but it was a bad car for me. I'm not an SUV guy. I'm a small-car guy.

Last month, I took the Maxi Cooper for an oil change. While I was waiting, the dealer offered to buy it back from me. I wasn't expecting that.

As you probably know, the used-car market in the U.S. has been crazy for a couple of years. According to the U.S. Federal Reserve, prices on used vehicles are up 55% since July 2020. Prices for new vehicles have also increased during that time, but by only 18%.

Because I write about money, I'm aware that used-car prices are high, but I hadn't considered that I might sell the car I purchased only two years ago. I'm the sort of person who buys a car and keeps it for a decade or more. But when the Mini dealer told me they'd pay $33,000 for a car I'd bought 26 months earlier, I was intrigued.

I contacted one of my buddies, a former car salesman. "What am I missing here, Jeremy?" I asked. "This seems like a pretty good deal."

"It's not just a good deal," Jeremy said. "It's a miracle. It's as if you leased that car for $115 per month. You should take the offer. Now. Before they change their mind."

Before you read my story, you might want to read this similar story from Liz at Frugalwoods: Why we bought a NEW car. Here's a relevant excerpt:

"In normal economic times – or rather, in past economic times – used cars were remarkably cheaper than new cars, which made the depreciation on new cars astronomical. In other words, new cars would lose a tremendous amount of their value as soon as they were no longer new.

"Used cars, on the other hand, had a much more gradual depreciation curve, which meant you could buy a used car for a reasonable price and then, if needed, re-sell that used car at a reasonable loss. Currently, thanks to supply chain issues, a shortage of computer chips and inflation, used cars are no longer a deal."

My girlfriend recently bought a new car. After 23 years, she sold her 1997 Honda Accord to a guy who's more mechanically inclined than we are. Kim upgraded to a 2016 Toyota RAV4, and she loves it.

One of her primary considerations when searching for a new car was the cost to drive it. In her ideal world, she would have purchased a fully-electric vehicle but it just wasn't in her budget. The RAV4 hybrid was a compromise. According to fueleconomy.gov, it gets an estimated 32 miles per gallon. (And actual users report 34.7 miles per gallon.)

Kim's quest for a fuel-efficient car prompted me to revisit apps and online tools that help users track their driving and fuel habits. I've written about these in the past -- and, in fact, this is an updated article from 2008! -- but haven't looked into them recently.

Here's a quick look at some of my favorite driving cost calculators, tools, and apps.

Congratulations — you’re about to snag a new ride! We’re assuming that you’ve already done some research: You know how much you can afford to spend, which car you want to buy, and the true market value (what other people are paying) for that car in your area.

And now you’re ready to buy. Follow these steps to get a good deal and make the car-buying process at the dealership as painless as possible. To help make it easier, download our cheat sheet and take it with you.

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?

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.

Last week via email, reader David Hatch asked:

If you were going to buy a new car, what would you get do you think?

I wrote a short email reply...then decide this topic is worth a deeper dive (of only for my own personal edification).

You see, Kim and I have been talking about cars lately. Mine is fifteen years old and hers is over twenty. Although both are running fine, we realize that we'll have to replace one (or both) of them in the near future. When we do, what will we buy? What kind of new car is right for Kim? What kind of car is right for me?

Let's start by looking at the cars I've owned in the past.

Every Car I've Ever Owned

I am not a car guy. Even though I can appreciate nice cars, I don't have any desire to own them. I'm not sure why. Maybe it's because my parents never had nice cars when I was a kid. They had practical, serviceable vehicles that got the job done.

During my 33 years of driving, I've owned five cars.

In high school, I inherited my father's 1980 Datsun 310 GX. I drove that little red beast until it died during my senior year of college. I had a lot of fun with the Datsun, but I treated it poorly. The best part about this car was that I could perform a lot of the maintenance myself -- even though I don't have much mechanical knowledge. (Driven from March 1985 to March 1991 -- six years.)

After the Datsun died, Dad bought me a $1000 Ford Tempo as a college graduation present. It was a POS from the start. I drove it for less than six months before giving up on it. (Driven from March 1991 to September 1991 -- six months.)

When I landed my first job (which turned out to be the worst job I ever had), I also bought my first new car: a 1992 Geo Storm. Naturally, I bought it on credit...before I'd even received a paycheck. I loved that $12,000 car the entire time I owned it. (Driven from September 1991 to December 2000 -- 9.25 years.)

On 01 December 2000, a semi sideswiped my Geo Storm on the freeway during morning traffic. The car spun 360+ degrees before striking an overpass guardrail, deploying the airbag. The car was totalled; fortunately, I wasn't hurt.

After the accident, I purchased a brand-new 2001 Ford Focus from a friend who worked at a local dealership. I paid $15,000. I hated that car from Day One. It was awful. (I should have read the Consumer Reports reviews before buying; I would have steered clear!) I bought that vehicle with a loan too. (Driven from December 2000 to April 2009 -- 8.25 years.)

In 2009, after years of dreaming about it, I realized I could afford to buy a used Mini Cooper. By this point, I'd been writing GRS for three years, so I put my own advice into practice. I shopped around. I bought used. I paid $15,000 cash. I've owned that 2004 Mini Cooper for more than nine years now. In fact, as of this month, it's the car I've owned longest in my lifetime.

As you can tell, when I buy a car, I tend to drive it for a long time. I rarely (if ever) get the new car itch. I wish I could say this was because I'm rational about my car-buying decisions, but that's not it. I'm just not a car guy. (Computers, though? Well, I want to upgrade my computer every year. I am a computer guy.)

But David didn't ask about the cars I've owned in the past. He asked what car I'd buy new.

While I'm not a rabid anti-car crusader, there's no doubt I think the U.S. is too car-centric. I understand the historical reasons behind our vehicle dependence -- we're a young nation with sprawling cities spread far apart -- but I also believe that if you, as an individual, make an effort to live in a walkable (or bike-able) neighborhood, you can save tons of cash while enhancing your lifestyle.

How much can you save? Well, that's tough to quantify. There are a lot of variables that go into the calculation.

The folks at Transportation Evolved, however, have made an effort to crunch the numbers. They've created a cost of commuting calculator that takes into account a wide variety of factors -- then allows you to further explore how this cost affects your true hourly wage and the opportunity cost of lost investment income.

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?

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.)

What was your first reaction when you saw "salvage title" in the headline? Cringe and shudder? Outrage, that anybody could seriously suggest something so risky on a respectable site like this? In mixed company, no less? Step away from the ledge, slowly, exhale, and then hear me out.

I used to feel the same way … until my friend Peter showed me his "new" 4Runner. Peter is a super-frugalista, and he saw the surprise in my eyes. He laughed, "Hey, it's a salvage title -- I got it real cheap."

He bought his son one of those, seven years back, and that car has run problem-free all that time. So he thought, "Why not get one for myself?" Continue reading...