The $2000-$4000 Car :) This made me wealthy so jump on board

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
lessismore22
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by lessismore22 »

New cars often remind of the hedonic treadmill. That exuberance wears off pretty quick.

'The hedonic treadmill, also known as hedonic adaptation, is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes.'
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Scott S
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Scott S »

Here's how I pretend to be a millionaire: The $4,000 Car That All the Millionaires Love 8-)
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deltaneutral83
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by deltaneutral83 »

MrBobcat wrote: Wed Apr 07, 2021 8:56 am I've preached for years the 2 controllable things people do that hurt their financial well being the most is spend too much on transportation and spend too much on housing.
I don't disagree, but you can generally mitigate a housing mistake if you spend too much. You're going to take a haircut but if you figure things out 24 months after you purchase you can try to reduce the damage with a few options, plus housing generally keeps up with inflation. First 40,000 miles on nearly all cars are brutal financially. Again none of this matters if you are spending <20% of HHI on a vehicle. But for the people who spend 40% of their income on automobiles for 30 years, I can't help but think that's an unwise series of choices. The way the industry sells the safety features of newer cars (and even on BH) to the point where they convince you you're driving your family/grandkids off a cliff if you don't buy new is entertaining.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by MishkaWorries »

watchnerd wrote: Wed Apr 07, 2021 10:21 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I once spent $1500 on a dinner with the only diner being myself.
Now you're just trolling me :twisted:
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bwalling
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bwalling »

MikeZ wrote: Wed Apr 07, 2021 9:33 am So I'm going to disagree with the OP. I tried buying a Civic for $4700 once and it was nothing but a pain.

I am squarely in the camp that the sweet spot is this:

A 3 year old car with 50-60k miles. Keep it for 7-10 more years.

Here are the downsides of driving a beater:

1) Transaction costs: At least in Florida, you're paying $~350 to register the used car plus sales tax. That means a every time you change cars your looking at a minimum of $500 in expenses.

2) Transaction time: It takes time to buy and sell a car. I rather do it less often.

3) Deferred maintenance: Think tires and breaks. It's one thing to spend $500 for new tires on a car you plan to drive 40k more miles. It's anther to do it and not know if you'll get the value out of it.

4) AC compressors that blow. Driving a car with no AC is a terrible existence. Paying $1k-$2k to fix it on a car that is not worth much more than that is worse.

5) Because of the low value of the car, there is a tendency to want to use 'shade tree mechanics' instead of real shops that charge more. In my experience, this has been nothing but a pain.

In 2006 I bought a 2004 Mazda 3 with 58k miles for ~$12.5. Sold it ten years latter for $3,300 with 132k after it was clear that it was starting to sound bad. I figure including repairs along the way I spent $120/mo to own that car. I don't see the point in trying to optimize beyond that. I tired the to buy a $4,700 Civic after that, but it turned into nothing but a regrets. I traded it in on a 3 year old Camry a year latter with 52k miles for $14k. I got $2k for the trade in.

That $4,700 Civic was the most expensive car I've ever owned.
Yep, this. Time has value. I don't care if it is a Honda or Toyota, above 150k miles, it's going to be more of a nuisance than I want. And, it's really quite hot in Florida, so the AC needs to work very well and reliably so. That gets harder and harder in this heat as cars age. That, and all the rubber hoses and plastic parts go to hell from the heat.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by KlangFool »

lessismore22 wrote: Wed Apr 07, 2021 10:39 am New cars often remind of the hedonic treadmill. That exuberance wears off pretty quick.

'The hedonic treadmill, also known as hedonic adaptation, is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes.'
I disagreed.

In my opinion, there are two types of people.

A) Spend first, save later

B) Save first, spend later

Only type (A) person has a problem with new cars, big expensive house, and so on. Type (B) does not have that problem because they saved first. They do not have the money to overspend.

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hnd
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by hnd »

i'm not sure if it will make me wealthy or not but I basically am a cheapskate when it comes to my vehicle, but buy my wife a much nicer vehicle (3-4 Yr old 50k miles drive unitl it has 160-180k)

I spent $2500 on a honda prelude in college that i outgrew, sold for 1000 and bought a $500 geo prism. at the same time bought a S10 pickup for $200. drove a combination of both of those for 6 years without having to put much into any of them. prism tranny blew up still sold it for $350. the s10 i sold for $500. so i came out ahead on those and bought an 01 silverado for $4000 and drove that for 7 years until it started popping in and out of limp mode.

bought a low mile 2012 f150 with under 100k miles for 11k. salvage title due to gettng rear ended. thing is loaded and has more bells and whistles than any other vehicle i've ever owned for myself (wife has owned nice odysseys).

i don't know if it will make me rich, but with a bunch of kids it def helps.
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bg5
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bg5 »

Great points by everyone and I am def not saying that if you buy a new car or expensive car you are dumb. There are plenty of reasons why buying a newer car might work for certain families.

I guess what I continue to try to point out is that many people on this forum can easily afford a newer vehicle. People on this forum for the most part are far ahead of the game and have good financial sense.

But I always hear people (even on this forum) say that they dont know how people got so much money. I think its fair to say that an easy place to look is in the driveway and if you are struggling to save for retirement your cars are probably a bug reason for this. Another poster mentioned people buying to much house which again makes total sense.

Several posters have explained why they prefer to buy newer and I agree with them. I also understand that these posters are good with money and have a solid retirement plan.

But to many Americans spend way to much money on vehicles when they cannot afford to. As I mentioned above my wife and I are living off of $100,000 a year and the one area we chose to sacrifice is on vehicles. By doing so it allows us to vacation 3-4 times a year all over the country, it allows us to save extra amounts of money for retirement and it will eventually allow us to retire with a couple million in retirement.

So we chose to sacrifice cars, others might sacrifice house or vacations. A poster summarized it best when it says you need to live below your means in many cases and those that do will be just fine in the future.

There will be a day when I buy an expensive vehicle for my wife and I. But right now is not the time for us and I was just trying to help certain people out by showing them that they can ditch their expensive cars and buy something cheaper if they want to raise some extra cash for retirement.

AS MANY ON THIS BOARD KNOW....ITS WEIRD TO WAKE UP AND JUST BE BAFFLED AT HOW LARGE YOUR RETIREMENT ACCOUNT CREW BY JUST LIVING BELOW YOUR MEANS. WE CHOSE CARS AS OUR SACRIFICE AND IT HAS WORKED OUT EXTREMELY WELL.
MathWizard
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by MathWizard »

I did this for years.

For the first 26 years of driving, I never paid more than $3000 on a car, often much less.

I got burned on one that required lots of repairs, and decided to pay a little more and
spent around $8K on the next 4 over the next 15 years.

Then in late 2017, we bought a $25K car with 10K miles that my wife really likes, and in 2019
spent another $25K on a car with 20K miles that I really like. Mine has features like Adaptive
Cruise, Blind Spot Monitoring and Lane departure warning. We expect to keep these at least 10 years.

Hopefully by then, we can replace hers with one which has even more driver automation.
I'd really love a car that I could at least drive (ride) hands-off at least down the interstate
in nice weather, but ideally one where it would just chauffer me wherever I want. Maybe that
is 20 years off, but by then the kids might be discussing taking my car keys away.
bogledogle
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bogledogle »

If your car is being driven for 60,000 miles, please change the oil a few times :oops:
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ClevrChico
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by ClevrChico »

There are amazing cars on the market now, but they cost a chunk of money too. We'll continue to keep our daily beaters.

- Spouses car - Bought used in 2006 for $12k, still using it.
- My car - Bought new with Cash for Clunkers rebate in 2009. $12k (for a new car!) and still using it.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bmelikia »

MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm shocked that you're shocked
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
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Raraculus
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Raraculus »

I agree that having 'too much car' can impede one's financial independence plans. By the time I learned about FIRE and bogleheads, I already had bought a new car. :) Can't undo that one.

In my defense, I was driving a Toyota beater before the new car purchase. I just wanted a new car with the latest safety features and technology such as Adaptive Cruise Control, Blind-Spot Monitoring, rear-view camera, etc. Sometimes, you just need a car with newer technological and safety features.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

marti038 wrote: Wed Apr 07, 2021 10:17 am
Tingting1013 wrote: Wed Apr 07, 2021 9:10 am
alfaspider wrote: Wed Apr 07, 2021 9:04 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
And yet the OP still buys beater cars...

OP, I play the opposite game with my cars. Instead of buying beaters that need to be replaced every year, I buy brand new cars that can be flipped a year or two later for the same price that I bought it. Better financial outcome and quality of life.
I recall reading about this approach the Millionaire Next Door, but I have to admit I am skeptical. How do you find a brand new car for sale at a price it will still be worth in a year or two? Not trying to be argumentative, but genuinely curious. This seems like one of the best approaches if you can pull it off.

Our approach has been to buy a slightly used car (less than 30k miles) with cash and drive it until we get 200k or more miles on it.
buying a car every year for almost no money

I bought a new 2020 Honda Clarity for $31k OTD, $23.5k after the federal tax credit. 7,000 miles later I have an offer from AutoNation to buy it for $22.5k. Take out the $400 DMV fees (which I would have paid for any car) and this brand new car has only cost me $600 to drive.

Right now I’m looking at a new 2020 Nissan Leaf Plus (goes 215 miles on a single charge) for $32k OTD. After tax credit that will be $24.5k. It’s worth $26k right now to Carvana. In a year’s time it’ll probably be worth $23k. So (excluding DMV fees) $1000 to drive a brand new car for a year.
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Lee_WSP
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Lee_WSP »

Ron Ronnerson wrote: Wed Apr 07, 2021 10:28 am
burritoLover wrote: Wed Apr 07, 2021 10:13 am Sorry, I value my life over money. The difference in safety in a crash between a similar new and 10-15 year old vehicle is massive.
I am curious if a calculation has been done on this. Let’s say two people have the same income and let’s assume it’s the median salary in a typical MCOL area. One person replaces their car every few years in order to have relatively new safety features that can be found only in pricey new models. The other buys old, inexpensive cars. All else held equal, the one with the habit of buying newer cars may have to either live further away from the job located in the city center and/or retire at a later date and spend more years on those crazy roads as they have a later retirement date. Accounting for this, which car purchase provides more safety? I honestly don’t know.
Probably not, but it would be simple enough to do.

The calculation is odds of an accident per mile driven multiplied by expected cost of accident (probably doesn't take into account time off work and other things) compared to the opportunity cost of the delayed retirement or other costs you've outlined. However, it gets real fuzzy because you don't necessarily have to live outside the city or make any other drastic changes to purchase a relatively new car.

A brand new Kia Rio MSRP's for $16k, you can probably get a used one for 14 or less. Plus you could shift spending from another area like dining/entertainment rather than housing; or get a roommate.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by tibbitts »

bg5 wrote: Wed Apr 07, 2021 10:55 am AS MANY ON THIS BOARD KNOW....ITS WEIRD TO WAKE UP AND JUST BE BAFFLED AT HOW LARGE YOUR RETIREMENT ACCOUNT CREW BY JUST LIVING BELOW YOUR MEANS. WE CHOSE CARS AS OUR SACRIFICE AND IT HAS WORKED OUT EXTREMELY WELL.
If this was the early 1980's, you might be saying how weird it was to wake up and see how much your retirement account hadn't grown and how much more the new car costs now vs. years ago. Sometimes what works is unpredictable and depends on factors beyond your control.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by runninginvestor »

I bought my first car for $300; a '94 Buick Regal with 220k miles on it. Got rid of it after 5 years and 300K+ miles for $300. Only oil changes and new brakes for maintenance. Needed some new lines and timing belt, but was moving into a city so no need of a car anymore at the time so repairing wasn't worth my effort.

Ever since then I've been skeptical when used car buying, but I still do it just not that risky. I feel like I struck gold my first time and am not going to repeat the success. (Kind of like stock picking ;) )

I really hate registration and titling, so I tip my hat to people that are willing to cycle vehicles like you. Especially now with my state not doing those services in person. I try to generally hold onto my vehicle for as long as possible.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by JackoC »

alfaspider wrote: Wed Apr 07, 2021 9:04 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
Obviously whole discussion assumes a $700 car payment is significant. For most people it would be, but far from everyone. And I agree once you start talking about $500 golf rounds you're tending toward the people for whom it's not. Also like any such statement it's equating things which are very different to many people. You'd have to pay *me* to play golf :happy though I'm not 'shocked' other people drop major money on it. Whereas, I'd view being unable to ever afford $200 dinners (for two?) as an unfortunate situation. I would recommend a younger person in that situation to spend more of (everyone's) limited total of mental effort figuring out how to make more money. But if someone is locked into an income situations where $200 meals are out of reach for good they have to live with it. However it's ridiculous IMO to be 'shocked' somebody else would spend that much time to time.

Like you I ditched beaters when I had kids. Not right away but no regrets and if had it to do over I would have sooner. If there's an accident with loss of life or long term health of a loved one, all it will take to torture you the rest of your life is any doubt if your effort to save money on cars contributed to it, it won't take proof positive. Fortunately there wasn't. This is an element of difference between cars and some other things, even beside the fact some people get enjoyment from cars other than 'getting from A to B'. But again all depending on situation this is either an academic argument (exact difference in safety of older/newer cars) or else some people really cannot afford new cars and also have a reasonable prospect of comfortable retirement, but other people can. You can't generalize that difference away.
Last edited by JackoC on Wed Apr 07, 2021 11:38 am, edited 1 time in total.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Cycle »

I agree a car can be purchased for ~$4000 that gets the job done, I did this for ~10 years driving a dodge stratus, then Honda Accord. That and renting an extra bedroom were big levers in my 20s for wealth accumulation.

One thing otherwise rational people forget is that you can get in a car wreck through no fault of your own and this is a very real cost people typically don't account for.

In my fifteen year working career I personally was in a pileup on the freeway when another driver without a license spun out at high speed into me. One of my coworkers was killed on the way to work. I have seen many fatal crashes on my commute into work, hundreds of crashes requiring ambulance. Two weeks ago our intern was in a crash on the way to work that put him in the hospital bc he hit his head. These costs can be quantified, but people like to assume bad things will never happen to them https://www.mrmoneymustache.com/2011/10 ... commuting/

The last five years I haven't had a car. I chose to live across the street from daycare, so I walk my kids there. We don't need a car in our neighborhood bc we live in a downtown. I chose to live a block from an express bus stop that takes me to my megacorp 18 miles away.

My total transportation costs are ~$700 a year bc I can purchase my bus fare pre-tax. This is much cheaper and infinitely more enjoyable way to get to work than the 🤡 🚗 option.

That being said I'm going to purchase a $5k bakfiet this year if the ebike tax credit bill comes thru, that's almost a car... Just less obnoxious and not horrible for the environment like EVs
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watchnerd
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by watchnerd »

Scott S wrote: Wed Apr 07, 2021 10:41 am Here's how I pretend to be a millionaire: The $4,000 Car That All the Millionaires Love 8-)
Our neighborhood has large plots 1-2 acre plots, lots of horses, some polo ponies, 50% dog ownership, 7 figure houses, and a lot of Subarus.

Although not as old as that one!

(we have a Subaru, too)
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by stoptothink »

Cycle wrote: Wed Apr 07, 2021 11:35 am I agree a car can be purchased for ~$4000 that gets the job done, I did this for ~10 years driving a dodge stratus, then Honda Accord. That and renting an extra bedroom were big levers in my 20s for wealth accumulation.

One thing otherwise rational people forget is that you can get in a car wreck through no fault of your own and this is a very real cost people typically don't account for.

In my fifteen year working career I personally was in a pileup on the freeway when another driver without a license spun out at high speed into me. One of my coworkers was killed on the way to work. I have seen many fatal crashes on my commute into work, hundreds of crashes requiring ambulance. Two weeks ago our intern was in a crash on the way to work that put him in the hospital bc he hit his head. These costs can be quantified, but people like to assume bad things will never happen to them https://www.mrmoneymustache.com/2011/10 ... commuting/

The last five years I haven't had a car. I chose to live across the street from daycare, so I walk my kids there. We don't need a car in our neighborhood bc we live in a downtown. I chose to live a block from an express bus stop that takes me to my megacorp 18 miles away.

My total transportation costs are ~$700 a year bc I can purchase my bus fare pre-tax. This is much cheaper and infinitely more enjoyable way to get to work than the 🤡 🚗 option.

That being said I'm going to purchase a $5k bakfiet this year if the ebike tax credit bill comes thru, that's almost a car... Just less obnoxious and not horrible for the environment like EVs
We as well have planned our life around driving as little as possible; bought a home that is walking distance to my office, ~3 miles from my wife's, etc. I walk or ride my bike almost everywhere, including to the grocery store and sometimes as a family to my kids' training and athletic competitions (gym is ~3 miles away). Wife and I share a single compact car, putting ~12k miles a year on it, with a very significant percentage of that being road trips/vacations. Completely agree, by far the most efficient way to decrease your chance of injury in a car accident is by simply driving less.

I've been planning on getting an e-bike for a while, just haven't pulled the trigger. If the ebike tax credit bill comes thru, I'll definitely get one.
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watchnerd
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by watchnerd »

Cycle wrote: Wed Apr 07, 2021 11:35 am

That being said I'm going to purchase a $5k bakfiet this year if the ebike tax credit bill comes thru, that's almost a car... Just less obnoxious and not horrible for the environment like EVs
I didn't know electric bakfiet existed.

How do you charge them?

Can they use auto EV charging stations that exist in parking lots etc?
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ray.james
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by ray.james »

I play a slightly different game. 3 year old cars with 30-45k mileage for great price. I do not want to spend my free time on car issues. Also accessories like radio, functional heater/AC, working door windows, USB ports, less rattles etc., are important to me.

Having said that, as one climbs up the wealth curve, buying new car is a non factor. Exception might be buying high end luxury or changing new car every few years.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Old Guy »

I’m 78 years old. I’ve accumulated my wealth. Now I want to spend it.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bltn »

Lee_WSP wrote: Wed Apr 07, 2021 10:19 am I think OP's lesson boils down to two things.

1) you must live below your means to build wealth
2) cars are a big ticket item most people are unwilling but, unlike housing, are able to tackle

Clearly if the house hold is a 1% earner, a $700/mo car is well within their budget.
If a house hold is a 1% earner, car payments are a mistake.

I ve used several ways to economize on cars in my life, and my wife and I are car enthusiasts.

My parents floored me when they told me I could buy a car the summer before my senior year in high school. My family had moved out of town and my father couldn t drop me off at school and get to work on time. I bought a 10 year old Ford sedan with 104,000 miles on it, which for a 1958 Ford was two lifetimes of use. Original clutch! Cost me $200. Learned how to drive a stick shift in a parking lot one afternoon, and off I went. Drove for a year and had to sell it when I went off to college , for $175. Paid cash for that car and all of the other cars I ve bought since then.

I bought my daughter a 1994 Civic to drive in high school, 44,000 miles on it. When she went off to college, we gave it to my son for his high school and college years. My kids followed my wife s example and kept their car immaculate. We sold it in 2014 for blue book plus $1000 to the first person on a list of five people who all wanted that car for their kids. 64,000 miles and very well maintained.

We have economized with our car purchases by buying new cars, and keeping them 10 years on average. Currently I m driving a 2012 car I bought on 2011, and my wife is driving a 2008 car we got in 2007 (hers is immaculate, with 48,000 miles on it). A more frugal way to buy cars would have been to buy 2-3 year old cars and keep them 7-8 years. But, as I said, we like cars, and this has been one of our splurges.
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Watty
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Watty »

Scott S wrote: Wed Apr 07, 2021 10:17 am
burritoLover wrote: Wed Apr 07, 2021 10:13 amSorry, I value my life over money. The difference in safety in a crash between a similar new and 10-15 year old vehicle is massive.
Let's not get into a false sense of security about that. Today's car will be a "death trap" compared to a new car another 10-15 years from now. ;)
It is a bit morbid but once measure of of car safety is the driver death rate per million registered vehicles. Overall it has declined from 87 in 2002 to 36 in 2017 which is the latest year that data is available.

You can also look up the statistics for other years and specific models here.

https://www.iihs.org/ratings/driver-dea ... -and-model

The new advanced safety features started becoming more common in 2018 so it will be interesting to see how much those impact the statistics.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by helloeveryone »

bg5 wrote: Wed Apr 07, 2021 8:11 am Good Morning,

Everyone has their "thing" that they enjoy to spend money on so if cars are your "thing" then please don't be offended. I have no problem dropping $500 on a round of golf at Whistling Straits or spending $200 on a meal every now and then.

With that being said I am always shocked at the amount of money people throw into cars. The vast majority of people cannot afford the cars they drive and it really takes away at their ability to become financially independent. I totally understand that on this boglehead board that most people can easily afford the cars they drive.

My goal with this post is to make people realize that if you want to get rid of your $700 car payments its very easy to buy a car in the $2000-$4000 price range and have it last for many years....often times being able to resell it for almost what you bought it at.

I have found that both Honda and Toyota's are almost indestructable and will often times reach well over 300,000 miles if you keep up on standard oil changes. There are plenty of cheap Honda Accords and Toyota Camrys on FB Marketplace right now in the price range I described above. I have been doing this for years and have found that the vast majority of my wealth has come from not having car payments and taking that money and investing it. See my story below and please understand that these cars are not rust buckets...I live and work in a wealthy area and these cars fit in just fine and dont stick out like a sore thumb.

2010 I bought a 2000 honda accord with 180,000 miles on it for $2200 and I drove it for 3 years and put 60,000 miles on it. The car still worked great and I ended up selling it in 2013 for $1700.

2013 - I bought a 2002 Honda pilot with 200,000 miles on it for $2800 and drove it for 2 years and put 40,000 miles on it. In 2015 I sold it for $2200.

2015 - I bought a 2005 Honda Pilot for $3300 and it had 210,000 miles on it. I drove it for 3 years and put 60,000 miles on it and in 2018 I sold it for $2600.

2018 - I bought a 2007 Honda pilot for $2300 and it had 210,000 miles on it. I drove it for 15 months and the engine blew......I sold the car in 1 day after the engine blew for $1000 :) Unreal as the resale value of Hondas is nuts....basically had people fighting over the car with the blow engine and still got a stinking grand.

2020 - I bought a 2009 Honda Pilot for $4000 and it had 220,000 miles on it


Bottom line is I realized that my cars Im driving are costing me very little amounts of money and I am taking all the money that I would of put into car payments and just invest it. Cars drop in value like crazy but what I have found is that there is always a HUGE market for cars that are selling in the $2000-$4000 range. If I showed you pics of these cars you would say to yourself that these are nice cars....they are not rust buckets and they look and fit in just fine.

So if you are someone who is trying to free up some cash then I would start with cars....they lost a lot of value and there are plenty of deals out there for reliable cars at a cheap price. I buy all my cars off of private sellers on Facebook marketplace and I know very little about cars. I could not even change the oil if I needed to. Buy a Honda or Toyota and it will run and last a lifetime while still having a great resale value.

If you have questins please let me know.
The carmax associate who processed my car appraisal told me he did the same thing but he kept the purchases to <$1000. Worst case scenario if he could not sell it on CL or FB he could sell it to a salvage yard or even carmax for several hundred dollars even after driving it 1 year or more
tibbitts
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by tibbitts »

bltn wrote: Wed Apr 07, 2021 12:04 pm A more frugal way to buy cars would have been to buy 2-3 year old cars and keep them 7-8 years. But, as I said, we like cars, and this has been one of our splurges.
We have Bogleheads saying they've bought new cars and sold them for what they paid two years later, so the 2-3yr-old thing was perhaps a point-in-time phenomenon that doesn't necessarily apply now. I think today it's not going to matter very much which approach you take.
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Lee_WSP
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Lee_WSP »

bltn wrote: Wed Apr 07, 2021 12:04 pm
Lee_WSP wrote: Wed Apr 07, 2021 10:19 am I think OP's lesson boils down to two things.

1) you must live below your means to build wealth
2) cars are a big ticket item most people are unwilling but, unlike housing, are able to tackle

Clearly if the house hold is a 1% earner, a $700/mo car is well within their budget.
If a house hold is a 1% earner, car payments are a mistake.
Maybe, but when the household is earning $400,000 per year or 33.3k per month, $700 is a drop in the bucket, representing just 3% of the total after tax monthly budget. Which is my whole point; $700 a month for a car is nothing to such households.
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Devil's Advocate
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Devil's Advocate »

tibbitts wrote: Wed Apr 07, 2021 12:15 pm
bltn wrote: Wed Apr 07, 2021 12:04 pm A more frugal way to buy cars would have been to buy 2-3 year old cars and keep them 7-8 years. But, as I said, we like cars, and this has been one of our splurges.
We have Bogleheads saying they've bought new cars and sold them for what they paid two years later, so the 2-3yr-old thing was perhaps a point-in-time phenomenon that doesn't necessarily apply now. I think today it's not going to matter very much which approach you take.

Those that bought new and sold 2 years later for what they paid were subsidized EV. I don't think you can count on that indefinitely.

But I agree, if you make enough any approach you make won't matter much.
DA
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by tibbitts »

Devil's Advocate wrote: Wed Apr 07, 2021 12:22 pm
tibbitts wrote: Wed Apr 07, 2021 12:15 pm
bltn wrote: Wed Apr 07, 2021 12:04 pm A more frugal way to buy cars would have been to buy 2-3 year old cars and keep them 7-8 years. But, as I said, we like cars, and this has been one of our splurges.
We have Bogleheads saying they've bought new cars and sold them for what they paid two years later, so the 2-3yr-old thing was perhaps a point-in-time phenomenon that doesn't necessarily apply now. I think today it's not going to matter very much which approach you take.

Those that bought new and sold 2 years later for what they paid were subsidized EV. I don't think you can count on that indefinitely.

But I agree, if you make enough any approach you make won't matter much.
DA
No but the 1-2yr old cars with low miles selling for roughly 50-60% of new, which weren't that uncommon in the past, don't seem to be there either. That was my point: the benefits of buying strategies don't always persist.
Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

Devil's Advocate wrote: Wed Apr 07, 2021 12:22 pm
tibbitts wrote: Wed Apr 07, 2021 12:15 pm
bltn wrote: Wed Apr 07, 2021 12:04 pm A more frugal way to buy cars would have been to buy 2-3 year old cars and keep them 7-8 years. But, as I said, we like cars, and this has been one of our splurges.
We have Bogleheads saying they've bought new cars and sold them for what they paid two years later, so the 2-3yr-old thing was perhaps a point-in-time phenomenon that doesn't necessarily apply now. I think today it's not going to matter very much which approach you take.

Those that bought new and sold 2 years later for what they paid were subsidized EV. I don't think you can count on that indefinitely.
This is like saying you shouldn’t take advantage of a sale because it’s only available once a year. Also, I expect EV incentives to increase, not decrease, going forward.

And one last thing. It’s not just EVs. Any SUV or pickup truck purchased last year can probably be sold this year for at least as much as was paid for it.
ElJefeDelQueso
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by ElJefeDelQueso »

bg5 wrote: Wed Apr 07, 2021 8:11 am Good Morning,

Everyone has their "thing" that they enjoy to spend money on so if cars are your "thing" then please don't be offended. I have no problem dropping $500 on a round of golf at Whistling Straits or spending $200 on a meal every now and then.

With that being said I am always shocked at the amount of money people throw into cars. The vast majority of people cannot afford the cars they drive and it really takes away at their ability to become financially independent. I totally understand that on this boglehead board that most people can easily afford the cars they drive.

My goal with this post is to make people realize that if you want to get rid of your $700 car payments its very easy to buy a car in the $2000-$4000 price range and have it last for many years....often times being able to resell it for almost what you bought it at.

I have found that both Honda and Toyota's are almost indestructable and will often times reach well over 300,000 miles if you keep up on standard oil changes. There are plenty of cheap Honda Accords and Toyota Camrys on FB Marketplace right now in the price range I described above. I have been doing this for years and have found that the vast majority of my wealth has come from not having car payments and taking that money and investing it. See my story below and please understand that these cars are not rust buckets...I live and work in a wealthy area and these cars fit in just fine and dont stick out like a sore thumb.

2010 I bought a 2000 honda accord with 180,000 miles on it for $2200 and I drove it for 3 years and put 60,000 miles on it. The car still worked great and I ended up selling it in 2013 for $1700.

2013 - I bought a 2002 Honda pilot with 200,000 miles on it for $2800 and drove it for 2 years and put 40,000 miles on it. In 2015 I sold it for $2200.

2015 - I bought a 2005 Honda Pilot for $3300 and it had 210,000 miles on it. I drove it for 3 years and put 60,000 miles on it and in 2018 I sold it for $2600.

2018 - I bought a 2007 Honda pilot for $2300 and it had 210,000 miles on it. I drove it for 15 months and the engine blew......I sold the car in 1 day after the engine blew for $1000 :) Unreal as the resale value of Hondas is nuts....basically had people fighting over the car with the blow engine and still got a stinking grand.

2020 - I bought a 2009 Honda Pilot for $4000 and it had 220,000 miles on it


Bottom line is I realized that my cars Im driving are costing me very little amounts of money and I am taking all the money that I would of put into car payments and just invest it. Cars drop in value like crazy but what I have found is that there is always a HUGE market for cars that are selling in the $2000-$4000 range. If I showed you pics of these cars you would say to yourself that these are nice cars....they are not rust buckets and they look and fit in just fine.

So if you are someone who is trying to free up some cash then I would start with cars....they lost a lot of value and there are plenty of deals out there for reliable cars at a cheap price. I buy all my cars off of private sellers on Facebook marketplace and I know very little about cars. I could not even change the oil if I needed to. Buy a Honda or Toyota and it will run and last a lifetime while still having a great resale value.

If you have questins please let me know.
You cannot have the latest safety features with an old car. Accident likelihood and survivability are not the same. It seems penny wise pound foolish if you can afford a newer car and in particular if you drive in an urban area.
Wellfleet
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Wellfleet »

I appreciate these anecdotes but I like Klangfool's advice more and more that I recall to save 1/3, spend 1/3, and assume 1/3 on taxes.

At the end of the year why does it matter if I save $10,000 on cars to spend the $10,000 on golf and dinners?

Take two retired people- one who likes driving luxury cars for ten years but doesn't like to travel, while the other likes to travel and is ok driving 10 year old Hondas. Is one method better than the other if they both spend $10,000 per year on these items?
alfaspider
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by alfaspider »

Lee_WSP wrote: Wed Apr 07, 2021 12:17 pm
bltn wrote: Wed Apr 07, 2021 12:04 pm
Lee_WSP wrote: Wed Apr 07, 2021 10:19 am I think OP's lesson boils down to two things.

1) you must live below your means to build wealth
2) cars are a big ticket item most people are unwilling but, unlike housing, are able to tackle

Clearly if the house hold is a 1% earner, a $700/mo car is well within their budget.
If a house hold is a 1% earner, car payments are a mistake.
Maybe, but when the household is earning $400,000 per year or 33.3k per month, $700 is a drop in the bucket, representing just 3% of the total after tax monthly budget. Which is my whole point; $700 a month for a car is nothing to such households.
My HHI is a bit over that, and I wouldn't consider $700/month a drop in the bucket. Our actual monthly cash takehome after taxes, retirement contributions, and other items that come directly out of the paycheck is more like $18k. But then subtract daycare fees, mortgage, property taxes, and other expenses and that leaves $8-9k to save in taxable per month. So an additional $700/mo expense is almost 10% of our monthly taxable savings contributions.

But I am one of those weird penny pinching bogglehead types :mrgreen:
Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

alfaspider wrote: Wed Apr 07, 2021 12:38 pm
Lee_WSP wrote: Wed Apr 07, 2021 12:17 pm
bltn wrote: Wed Apr 07, 2021 12:04 pm
Lee_WSP wrote: Wed Apr 07, 2021 10:19 am I think OP's lesson boils down to two things.

1) you must live below your means to build wealth
2) cars are a big ticket item most people are unwilling but, unlike housing, are able to tackle

Clearly if the house hold is a 1% earner, a $700/mo car is well within their budget.
If a house hold is a 1% earner, car payments are a mistake.
Maybe, but when the household is earning $400,000 per year or 33.3k per month, $700 is a drop in the bucket, representing just 3% of the total after tax monthly budget. Which is my whole point; $700 a month for a car is nothing to such households.
My HHI is a bit over that, and I wouldn't consider $700/month a drop in the bucket. Our actual monthly cash takehome after taxes, retirement contributions, and other items that come directly out of the paycheck is more like $18k. But then subtract daycare fees, mortgage, property taxes, and other expenses and that leaves $8-9k to save in taxable per month. So an additional $700/mo expense is almost 10% of our monthly taxable savings contributions.

But I am one of those weird penny pinching bogglehead types :mrgreen:
If “almost 10%” of your discretionary monthly savings isn’t considered a drop in the bucket, what is?
Olemiss540
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Olemiss540 »

I say buy whatever you want as long as you do it in CASH. If you can go through the delayed gratification to save and want to prioritize the new car smell in you happiness spectrum, be prepared to drop a bucket of cash on it.

Payments for depreciating assets are for suckers in my opinion. I don't care if the spread on interest rates earns you a few hundred dollars a year by financing.

The difference in paying for golf rounds and nice dinners versus 700 dollars in car payments is that one is a decision you are making every month for the next 72 into the future. The other is a splurge you are paying cash for to make you happy. Splurge on cars if you would rather, just do it when you can afford to.

Also don't ignore the insurance/tax/registration cost savings of driving older less expensive cars paid in cash.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by alfaspider »

Tingting1013 wrote: Wed Apr 07, 2021 12:40 pm
alfaspider wrote: Wed Apr 07, 2021 12:38 pm
Lee_WSP wrote: Wed Apr 07, 2021 12:17 pm
bltn wrote: Wed Apr 07, 2021 12:04 pm
Lee_WSP wrote: Wed Apr 07, 2021 10:19 am I think OP's lesson boils down to two things.

1) you must live below your means to build wealth
2) cars are a big ticket item most people are unwilling but, unlike housing, are able to tackle

Clearly if the house hold is a 1% earner, a $700/mo car is well within their budget.
If a house hold is a 1% earner, car payments are a mistake.
Maybe, but when the household is earning $400,000 per year or 33.3k per month, $700 is a drop in the bucket, representing just 3% of the total after tax monthly budget. Which is my whole point; $700 a month for a car is nothing to such households.
My HHI is a bit over that, and I wouldn't consider $700/month a drop in the bucket. Our actual monthly cash takehome after taxes, retirement contributions, and other items that come directly out of the paycheck is more like $18k. But then subtract daycare fees, mortgage, property taxes, and other expenses and that leaves $8-9k to save in taxable per month. So an additional $700/mo expense is almost 10% of our monthly taxable savings contributions.

But I am one of those weird penny pinching bogglehead types :mrgreen:
If “almost 10%” of your discretionary monthly savings isn’t considered a drop in the bucket, what is?
My miserliness may be a bit pathological, but I pay close attention to any purchase over about $200, and any recurring expense in excess of about $50/month. A single item that's 10% of your discretionary savings may not be much, but make 5 of those and you've just cut your discretionary savings in half.

We do drive late model cars, but wouldn't spend an additional $700 month (or amortized cash purchase equivalent) to upgrade to luxury late model cars. Add in additional maintenance and other ownership costs, and that would cut around 25% from our discretionary savings, which could push back hitting FI by years.
cshell2
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

Olemiss540 wrote: Wed Apr 07, 2021 12:43 pm Also don't ignore the insurance/tax/registration cost savings of driving older less expensive cars paid in cash.
Honestly, this is what's hanging me up more than the plunking down the initial cash for a new vehicle. I got an insurance quote of 4X what I'm paying on my 2005 and my tabs would be going from $35/year to almost $400.
jcricket73
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by jcricket73 »

Lee_WSP wrote: Wed Apr 07, 2021 12:17 pm Maybe, but when the household is earning $400,000 per year or 33.3k per month, $700 is a drop in the bucket, representing just 3% of the total after tax monthly budget. Which is my whole point; $700 a month for a car is nothing to such households.
We resemble this remark, except we earn more than that, so it's more like 1% of our income. Right now I drive a nearly 20 year old reliable sedan that's still in decent shape (some dings/dents) because I drive it less than 10k miles a year. For my wife who ferries the kids more we lease a nice SUV for $500/month, and are on our 3rd new one in 9 years. Zero down, hand it in at the end of 3 years. Easy. Just have to worry about scratches/accidents, knock wood.

The new safety and convenience features have been worth it for my wife, and we like the zero maintenance of the lease. Pretty much anything that breaks is the manufacturers responsibility. We don't even drive enough to need to replace the tires in those 3 years.

When my car dies we'll probably lease a second car - but one that can be had for more like $200-250/month. Although I've debated buying a used car for $10k and then hopefully being able to keep it another 10+ years. Usually keeping a car that long, if it's reliable, is the better move financially - but not always. We've had cars before that seemed to suck money out of us as much as they sucked gas.

So you're right. It's still an expense, it's still optional, but it's also still a "drop in the bucket" - it's not by itself going to make or break our financial future. We could dwarf the impact of our not-so-frugal auto spending by selling our house in our VHCOL area and moving to a paid-off place 30-60 minutes away once the kids are out of school or we're closer to retirement.
Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

jcricket73 wrote: Wed Apr 07, 2021 12:56 pm Right now I drive a nearly 20 year old reliable sedan that's still in decent shape (some dings/dents) because I drive it less than 10k miles a year. For my wife who ferries the kids more we lease a nice SUV for $500/month, and are on our 3rd new one in 9 years. Zero down, hand it in at the end of 3 years. Easy. Just have to worry about scratches/accidents, knock wood.
Instead of handing it back this time, get buyout quotes from Carvana, et al.

You very likely have positive equity in the SUV (assuming you negotiated well upfront)
AB609
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by AB609 »

When I was starting out, I drove old beaters purchased with cash I had on hand. Now I buy new and drive them into the ground. Current car is 14 yrs old with 220K+ miles. We did purchase an additional new car last year. I wanted something reliable with the latest safety features. DS is a fairly new driver and things like blind spot monitoring, lane assist and automatic braking add an additional safety margin. Avoiding having someone injured in accident is worth a few bucks to me.
Olemiss540
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Olemiss540 »

cshell2 wrote: Wed Apr 07, 2021 12:54 pm
Olemiss540 wrote: Wed Apr 07, 2021 12:43 pm Also don't ignore the insurance/tax/registration cost savings of driving older less expensive cars paid in cash.
Honestly, this is what's hanging me up more than the plunking down the initial cash for a new vehicle. I got an insurance quote of 4X what I'm paying on my 2005 and my tabs would be going from $35/year to almost $400.
Yes. And some states charge incredible amounts for sales tax (8-9 percent) which makes it even more of a difficult decision to justify.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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serbeer
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by serbeer »

marti038 wrote: Wed Apr 07, 2021 10:17 am
Tingting1013 wrote: Wed Apr 07, 2021 9:10 am
alfaspider wrote: Wed Apr 07, 2021 9:04 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
And yet the OP still buys beater cars...

OP, I play the opposite game with my cars. Instead of buying beaters that need to be replaced every year, I buy brand new cars that can be flipped a year or two later for the same price that I bought it. Better financial outcome and quality of life.
I recall reading about this approach the Millionaire Next Door, but I have to admit I am skeptical. How do you find a brand new car for sale at a price it will still be worth in a year or two? Not trying to be argumentative, but genuinely curious. This seems like one of the best approaches if you can pull it off.

Our approach has been to buy a slightly used car (less than 30k miles) with cash and drive it until we get 200k or more miles on it.
I am also VERY skeptical, too good to be true. A new car drops in value considerably the first day it is driven of dealer's parking lot, and the 1st year's depreciation is the steepest of all. Unless there is huge under-supply in used cars "year or two later", which clearly cannot be counted on, no matter how good of a deal you got on the new car, you will not get all your money back. My best guess is that Tingting1013's strategy is to get as good of a deal as possible on the new car and to lose as little as possible on the sale. Which involves money vs time tradeof since likely involves private sale, as trade-in always fetch less--but still not possible to recoup the full cost, especially if you factor in taxes and fees that come with every new car sale. Taxes can be partially recouped with trade-ins, but there limits in many states now what value can be offset, and would not happen at all with private sale either.
fwellimort
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by fwellimort »

I agree that the average American probably pays too much for an everyday vehicle.

That said, just do take into account the improved safety standards in the past decade when it comes to automobiles.

I would pay premium for the increased safety any day. For me, my health >> a few thousand dollars.
A lot of Bogleheaders here are already much wealthier than the average American.
Sometimes, paying a bit of premium can be worth it.
(and for those who can easily afford a new vehicle and want to, congrats)

I'm not stating one should always buy a new car. But just not be too extreme when it comes to cutting costs.
(the options aren't binary)
There's probably a good middle ground in this kind of purchase.
Last edited by fwellimort on Wed Apr 07, 2021 1:15 pm, edited 2 times in total.
Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

serbeer wrote: Wed Apr 07, 2021 1:09 pm
marti038 wrote: Wed Apr 07, 2021 10:17 am
Tingting1013 wrote: Wed Apr 07, 2021 9:10 am
alfaspider wrote: Wed Apr 07, 2021 9:04 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
And yet the OP still buys beater cars...

OP, I play the opposite game with my cars. Instead of buying beaters that need to be replaced every year, I buy brand new cars that can be flipped a year or two later for the same price that I bought it. Better financial outcome and quality of life.
I recall reading about this approach the Millionaire Next Door, but I have to admit I am skeptical. How do you find a brand new car for sale at a price it will still be worth in a year or two? Not trying to be argumentative, but genuinely curious. This seems like one of the best approaches if you can pull it off.

Our approach has been to buy a slightly used car (less than 30k miles) with cash and drive it until we get 200k or more miles on it.
I am also VERY skeptical, too good to be true. A new car drops in value considerably the first day it is driven of dealer's parking lot, and the 1st year's depreciation is the steepest of all. Unless there is huge under-supply in used cars "year or two later", which clearly cannot be counted on, no matter how good of a deal you got on the new car, you will not get all your money back. My best guess is that Tingting1013's strategy is to get as good of a deal as possible on the new car and to lose as little as possible on the sale. Which involves money vs time tradeof since likely involves private sale, as trade-in always fetch less--but still not possible to recoup the full cost, especially if you factor in taxes and fees that come with every new car sale. Taxes can be partially recouped with trade-ins, but there limits in many states now what value can be offset, and would not happen at all with private sale either.
You’re right, I do negotiate every last dollar out of the dealer for the new car. It’s a game that I enjoy. I once had a dealer email his entire sales team to ignore my emails since I was bargaining too hard (that’s how I know I got a good deal!).

I do not mess with private party sales. No need, with the rise of CarMax, Carvana, Vroom, Shift, AutoNation. They bid against each other.

It’s not too good to be true. If you don’t believe me just plug your late model car VIN into Carvana and see what you can get.
Last edited by Tingting1013 on Wed Apr 07, 2021 1:17 pm, edited 1 time in total.
H-Town
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by H-Town »

bg5 wrote: Wed Apr 07, 2021 8:11 am With that being said I am always shocked at the amount of money people throw into cars. The vast majority of people cannot afford the cars they drive and it really takes away at their ability to become financially independent. I totally understand that on this boglehead board that most people can easily afford the cars they drive.
- I don't have a car payment. It feels good that way.
- I keep my car for a very long time. Still on my 2nd car ever bought.
- Hence, it doesn't cost me much for cost of car purchase over the life of the car. I don't even need to buy car every 2-3 years if I want to buy $2000 - $4000 car.
- I want to like how my car drives. It's difficult to find a good engine, good handle, sporty, low gravity, can handle corner, etc. with $2000 - $4000 price range. If you know one, let me know.

So I buy car I want, maximize its utility & mileage, and keep it for a long time.

That helps me to put away a lot of savings early on. And that money keeps compounding like crazy. Not that I complain about it.
Time is the ultimate currency.
lazydavid
Posts: 5155
Joined: Wed Apr 06, 2016 1:37 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by lazydavid »

Tingting1013 wrote: Wed Apr 07, 2021 12:59 pm Instead of handing it back this time, get buyout quotes from Carvana, et al.

You very likely have positive equity in the SUV (assuming you negotiated well upfront)
This. I have a friend who has been leasing luxury cars for over 20 years. He's never once turned one in--he trades them because he comes out ahead. This should be even easier now with the insane valuations on used cars.
Goal33
Posts: 2004
Joined: Sun Apr 12, 2015 12:30 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Goal33 »

TBH I am surprised you're not doing better on resale... you're losing money on each car.

When I buy a used with as many miles as that, I've been able to break even on the resale.

You must do better!! :wink:
Broken Man 1999
Posts: 8626
Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, near Champa Bay !

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Broken Man 1999 »

fwellimort wrote: Wed Apr 07, 2021 1:10 pm I agree that the average American probably pays too much for an everyday vehicle.

That said, just do take into account the improved safety standards in the past decade when it comes to automobiles.

I would pay premium for the increased safety any day. For me, my health >> a few thousand dollars.
A lot of Bogleheaders here are already much wealthier than the average American.
Sometimes, paying a bit of premium can be worth it.
(and for those who can easily afford a new vehicle and want to, congrats)

I'm not stating one should always buy a new car. But just not be too extreme when it comes to cutting costs.
(the options aren't binary)
There's probably a good middle ground in this kind of purchase.
It seems there is a sub-set of BH's who drive cars all below average, a reverse Lake Wobegon effect!
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
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