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Why is everyone struggling2??(Cars)

April 19, 2018

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Last post we talked about making emotional decisions concerning housing. Unfortunately, people make those same decisions when it comes to their cars. Well, maybe not so much an emotional decision with cars as it is a “I have to be cool” decision.

Everyone seems so concerned about everyone else is thinking. I tend to not worry about how cool things look. I have been told that I drive a girl car. Do I think that I am a soccer mom driving that car. And several other things that I dont care to mention. The first one came from my sister. She thinks that a Honda CR-V is a girls car. I told her, I guess I am a girl then. Can you tell, dont care what people say. I love my Honda because it works for what I do.

I rehab houses. Sometimes I have to get items from Home Depot. I need an SUV. My wife happened to have one. We ended up switching cars. Problem solved with no purchasing other cars or extra expense involved. How convenient and simple was that? The car also happens to get about 30miles to the gallon, WOW. 4cylinders from Japan are outstanding. Ask anyone who has owned a Nissan Sentra or Altima, Honda Accord or Civic, Toyota Camry or Corolla or a Mitsubishi Galant.

I had a Galant a few cars ago. When I sold the car I had over 250k miles on that car. I got really good at changing the brakes which I had to do a few times. I remember changing maybe a couple of batteries also. Thats it. The car ran pretty darn good for a bunch of years. I put anywhere from 20k to 40k miles on my cars every year. Towards the end, I ended up putting a quart of oil in the engine about every few weeks. That was when I knew it was time to put this baby to rest. It still had some life in it so I sold it for $500 to one of my wife’s employees.

A car is a tool that gets you to work, to the grocery store, or wherever you want to go. Do you NEED a fancy $40,000.00 tool or will a used $12,000 one work just as well. Purchasing a new car is not something that I am against. I just think that most people dont need to buy new. Also, maybe you dont need something that gets 15 mpg. You can get everything that you need from one that has a few miles on it and for WAY less money.

The 40k car costs over $700 per month for 5 years at 3% these days. The 12k car costs just under $300 per month for 4 years at 6%. Used cars cost a little more interest. There is over $400 difference and then $700 difference for the last year that there will not even be a payment.

Most people will read this and say, “What is wrong with this guy, everyone pays $600 or $700 for a car payment” WRONG. Some folks say well, I can afford it so I am going to do it. Thats ok. I just like to be in a position where if I dont want to work for a few days, I dont. If I want to spend the day with my wife, I do. Can you handle the freedom? This flexibility is possible because we dont have crazy big bills like big car payemnts. I can honestly tell you that life gets easier, you enjoy life more when there are not all these big bills causing life issues.

Mr Money Mustache will tell you that you should not even have a car loan at all. You should buy the car cash and skip all the financing to begin with. I am not so bold, and I would be lying to you if I said that is what we do. We get car loans. The payments though are so that they stay very affordable. I can tell you that I have never purchased a car for more than $20,000. Some of my friends reading this will be amazed and think that I am crazy. I have never needed a 20k+ car. I have found that what I need is usually 10k to 15k.

My wife is a different story. She wanted a Mercedes. She said she deserved it, works hard and she should have one. Well, she has a little of my qualities in that she waited until she found a great deal on one. Two years old, less than 10k miles on it and under market price, $30k+. OUCH is what I said. She keeps her own finances so she did what she wanted.

Shortly after the purchase, our bulldog Xena, bit a hole in the soft supple leather back seat. She was pissed!!! I broke a little light when I hit her car with something, I dont even remember anymore. What I do remember is that when she traded it in about 2 years later she got about half of what she paid for it. She lost about 17k after 2 years. PLUS she made payments for the 2 years. Talk about a big loss. I dont think we will be purchasing any luxury cars anytime soon. We can afford one, we have the credit to buy one, we have the monthly income to pay the payments, but WHY???

I can see losing most of the value of a 15k car after 5 or 6 years because you get full use of the car. The value is certainly there when you keep the car for 5+ years and drive it for several more with NO payment. It is at that time (with no payment) that you can put that money that would have gone to a payment to real estate investing or a stock market fund.

When you find times and situations where you can put money into RE funds or stock funds, that is when you start to see your net worth grow. Nothing grows when you purchase over priced cars except your frustration at making the car payment every month. This ends up leading to you yelling at your spouse for leaving the cap off the toothpaste. Which makes him/her cry and you end up having a huge fight. All of this could have been avoided by buying a car that was well within your budget that met all of your needs.

I hope all these little stories about my crazy life help you in your journey to become a great landlord, stock market guru or whatever it is that you want to be. The value of seeing others do things is very valuable. You can see what they did right, wrong or otherwise. As a parent I try to tell my kids who are in their 20s what I have done right and wrong.  They kinda think I am crazy sometimes, but I dont think that they get it. I am trying to tell them to learn from their stupid father. Dad did this wrong, maybe dont do this like he did. Dad did this right, you might want to try this if it works for you too. I hope the kids read this someday and learn maybe a few things from crazy old Dad.

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