Day 56: New Cars Don't Impress Your Future
by Edward Smith
30 Aug 2020
You're Going To Drive Yourself Insane
When I was growing up, I used to have car envy.
Every year my aunt and uncle would show up to our house from out of town. They always showed up to our house in a fancy rental car. The cars smelled nice, they looked good, and they performed well.
I was super impressed.
One day I would be like them. To me my aunt and uncle had made it. They were what refined adults looked like. That's what I would be one day. A made man driving a well made car.
Then I grew up.
You Are Not Defined By Your Car
As I got older, I learned some useful things about cars. Cars are always expensive, even if the car itself doesn't cost a lot at the beginning. If you don't have a garage, they sit out in the elements. They get damaged by flying debris. People hit them. They break down. You have to insure them. You have to replace them. They are not always required, and you never have to buy them new.
My First Car Was a New Car
My first car was a Geo Metro. My parents bought it new, and it lasted for over a decade. It worked great. I used it to travel to and from college. I picked up my future wife in it on our first date. I moved across country with it to live with her. The car served me well.
Unfortunately, after ten years of reliable service, the thing became unreliable and costly to fix. Being new had not prevented it. It eventually became old.
All new cars become used given time. You can't prevent it. It makes you wonder. Are new cars worth it? What are you paying for?
New Cars Can Be a Bad Financial Decision
At this point I had been reading books by Dave Ramsey. In his book the Total Money Makeover, Ramsey talks about only buying used cars. Ramsey's reasoning behind this approach is new cars are a bad financial investment, because they lose the majority of their value as soon as you drive a new car off the lot for the first time. That got my attention.
Ramsey also argued that new cars don't have all of their bugs worked out yet. If you buy a new car, you often find the dealer will send you recall letters afterwards. These recalls can be very serious and the car can be dangerous to drive if you don't have things fixed. They might not even look broken, but you don't want to take a chance. It could cost you your life. To think you paid for that.
With a used car, the bugs have already been worked out. People have often already run your car through the grinder and figured everything out. It was physically driven around and proved itself in battle. It has a history and a story that you can review. You don't get that with a new vehicle.
My Second Car Was a Used Car
I decided to make my second car a used car. I wanted to see if I could save some money and get a good value. I'm glad I did. It was a great decision.
I decided to go through a car rental agency. You could find cars in small mom and pop car lots at a cheaper price, but in my head, money wasn't everything. I wanted the peace of mind that went along with seeing a review and knowing how the customers felt about the place.
With the rental agency, I could tell that the car wasn't stolen, I didn't have to negotiate price, and I could tell if the car had any backstory. With the smaller places it wasn't always that obvious.
The first benefit of buying slightly used, was I was able to get a car that was only two years old, but it cost almost half the price of what a new car cost. That meant I could pay cash for the entire car, and I never had a car payment.
That has saved me thousands upon thousands of dollars. It also kept risk out of my life. The car still ran great, it smelled new, and it only had a few thousand miles on it. Everything was in perfect condition and most people couldn't even tell that the car wasn't brand new.
The second benefit of buying slightly used was insurance. Since the car wasn't new, I didn't have to pay as much for insurance like people buying new cars have to do. As a car ages, your insurance premium drops. It doesn't cost the insurance company as much to replace it.
If you can, I recommend keeping a good working car long term. I tend to keep mine for around ten years. Some schools of thought suggest you only keep a car for a couple of years, and then trade up to a bigger and brighter thing using the value of the current car to pay for part of the other car.
I'm not a big car buff, so it doesn't really matter if I have the biggest and best. In fact big and fancy can actually play against my peace of mind and feelings of safety. For me I want reliable and good, and older cars don't tend to attract thieves the way new cars do. That means I don't attract unwanted attention, and that makes me happier.
If you do decide to trade up to bigger and better, go ahead, just realize your insurance premium grows as your car grows. Don't become car poor, trying to live too big. It's not a necessity. Your life will be good without it.
Conclusion
When I moved to my new location, I was blessed by having a used car. In my current state, the government taxes you for owning a car. The reasoning behind it, is your car requires an infrastructure, and the infrastructure is expensive to keep running. Taxes are used to cover it.
The interesting thing about this tax though, is people pay more taxes if their car is new. If your car is used, the city gives you a break.
Ever since I switched from a new car to a reliable used car, I've been saving money. I've saved on the cover price. I've saved on insurance. I've saved on taxes, and I've saved on time. My used car drives as well if not better then my new car. I cannot tell the difference when I'm behind the wheel.
The car sounds and runs the same.
If you want to start out life on a good note, start out your car life going with a used automobile. The price for new is not worth it. Get yourself a dollar air freshener and get the new car for cheap. Don't pay for it.
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