Due to my crappy week I wrote about a few weeks ago, I had to replace my not so trusty Honda CRV.
Previously on Dad is Cheap…
In a previous post I mentioned what I would do when I purchased a new car:
“When the day comes that Handy needs to be replaced, I’ll most likely get a slightly used car from a site like Auto Trader or Craigslist and pay cash for it.”
One horrible incident slightly changed that perspective.
While I did look at Auto Trader and Craigslist for a bit, we ended up purchasing a certified used Camry that only had about 6,000 miles from a Toyota dealership. After what happened, I didn’t have the energy or time to fully research getting a used car from a private party like I originally wanted.
I was also about to start my new job, so I didn’t want the extra stress of coordinating meet ups with strangers to find that perfect used car. We just wanted something that worked and had a warranty so we could take it back if something got messed up. While we saved about $5-$6k vs. buying brand new, we spent a lot more than we originally intended.
Even though I backpedaled on some of my intentions when buying a new (used) car, there was absolutely one thing we stuck to:
We Paid in Cash*
Since I’ve bought the car I’ve been asked how much we put down, what our monthly payment is, and what’s the interest.
The answers? 100% down. $0/month. No interest whatsoever.
This apparently doesn’t happen that often in dealerships (or in general). The finance manager seemed pretty confused that I wasn’t financing the vehicle. He then probed a little bit into my finances in which I told him that yes we are debt free, had some money in investments, and would still have some money left over in our savings after buying the car. He seemed pretty impressed and responded “Wow, I hope to be debt free one day too!” He then proceeded to tell how I would be a lot better off financing and investing the difference in Google or Apple stock.
As he was giving me this advice, I wondered, “How much Google stock does this guy actually own?”
And more importantly, would I really want to listen to a finance guy who just told me he’d like to be in MY shoes eventually?
Who Needs a Car Payment?
I still don’t. Before my CRV died I would tell people that I planned to never have a car payment again. People looked at me like I was crazy.
We’re conditioned to think that car payments are a normal way of life. They don’t have to be. Financing a car hides the real cost of the vehicle as we’re trained to focus on affording the monthly payment rather than the total cost. Things like 0% APR and low monthly payments are just ways that dealerships get people to buy more expensive cars. Thank you marketing!
Car payments suck. Paying interest sucks. While Mr. Finance Manager guy at Toyota might be right when he said that I would be better off investing my money than paying in full, it’s not worth the risk. Even if we had less in savings, we would have purchased something cheaper and older rather than financing a vehicle.
Being in car debt for five or six years would take money away from more important things like retirement, investing, or Addie’s college fund. As someone who was recently unemployed, I know firsthand how quickly things can change in your financial situation. Having a $400+ payment looming over our heads for the next few years would be pretty crippling if something changes in our lives.
Our main goal was to find a car that we could truly afford, pay it off, and be done with it. While we took a huge chunk out of our emergency fund to pay for the car, it wasn’t completely depleted. With my new job and the fact that getting laid off has shown us that we can live way below our means, we’ll replenish our emergency fund soon enough 🙂
Still Not a Car Person
When we bought the car, I didn’t make a big fuss or post on Facebook a pic of our new ride in front of the dealership.
Would it even be cool to do that considering my car isn’t brand new? (Hey friends! Check out my preowned ride! It was a former loaner vehicle!)
I didn’t post anything on Facebook because I’m not THAT happy that we bought this car. (On social media I’m the annoying “look how cute my kid is” guy, not the “look at my new iPhone/TV/yacht” guy). This will always be a reminder that we dropped a lot of damn money on an expense that we weren’t anticipating. A few of our savings goals such as paying off our house and maxing our retirement have temporarily been paused while we rebuild our emergency fund.
As I’ve said before, I’m not a car person. Admittedly, it is kind of cool to have a newer vehicle that has a fancy backup camera and Bluetooth. But that coolness factor of having that shiny new toy faded real quick. The only thing I care about was that my daughter has something safer to ride in. I was more than happy to take my wife’s Hyundai and having the Camry become her daily driver. I sure as hell didn’t want to be the one to give that car its first ding!
Now let’s hope THIS CAR lasts 300,000 miles.
*PS – Vic paid $3000 on his Chase Sapphire card to score the sweet sign up bonus equivalent to about $625 in travel. He loves him some credit cards. If he could have he would have put the whole purchase on his card to reap even more credit card rewards. Sadly, $3000 was the max that Toyota would let him pay on credit.