Do I deserve it? [A new car]

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
lightheir
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Re: Do I deserve it? [A new car]

Post by lightheir »

Agree with posts above in that you can purchase a new car, but it's probably not prudent to spend $35k unless you're a real car buff and will be spending a lot of time detailing and tinkering with it.

For <$20k, you can get some pretty awesome entry-level cars. Heck, I'm nearing the prime of my career earnings and I would happily drive any of those (like a Honda fit) for my car even if I could afford the $35k car.
inbox788
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Re: Do I deserve it? [A new car]

Post by inbox788 »

So what's the $35k car you're considering? It's probably not this one, but this one is on sale and you will likely do much better shopping around (and you can use this one as leverage when shopping for another car too):
2017 Hyundai Sonata Limited 2.0T
TRUECar Estimate*: $24,936 Estimated Savings: $10,249 (29.13%) off MSRP of $35,185

https://cars.usnews.com/cars-trucks/hyu ... ata/prices?

It's market timing, but some people are predicting we're past the peak for new car sales and it's all downhill from here. While it's a good time to buy now, its possible or likely that things will get even better for car buyers. It may be like 2009 or 2010 again (UK is having their own diesel cash for clunkers)

http://www.latimes.com/business/autos/l ... story.html

https://www.bloomberg.com/news/articles ... sales-slow

http://www.cnbc.com/2017/05/04/tax-chan ... sales.html

http://www.businessinsider.com/europe-b ... les-2017-5

http://michiganradio.org/post/auto-sale ... gh-plateau

As far as your living situation, if all is good, milk it for as long as you can. If you're never home anyway and always working or out playing and it's only a place to crash, you might not need a place of your own yet. But eventually it's nice and necessary to have private space.

What's the cost to keep your car running? What's your depreciation? KBB says it's worth less than $2000 and next to nothing on tradein. So if you can keep it running for 2 more years, it will cost you $1000/year. Even if you spend $1000 on repairs a year, that's $2000/year. And in 2 years, you'll have a 2 year older car to worry about. If you leased a car for $200/month, that's around $2500/year, so not much more. It might cost you $8000 over 3 years. And if you bought the car outright, the longer you keep the the lower the cost, so over 5-10 years, the average cost per year might be under $2000. If you need a major repair on your current car, it could run you $8000 in the next few years, so if you thought that were likely, you might as well get a new car. So do you feel lucky?

https://www.youtube.com/watch?v=8Xjr2hnOHiM

I'd find a good opportunity, maybe not immediately, but soon and switch out to a newer more reliable car on a planned basis instead of scrambling and paying more when something big goes.
pacodelostigres
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Joined: Mon Jul 28, 2014 8:14 am

Re: Do I deserve it?

Post by pacodelostigres »

researcher wrote:
pacodelostigres wrote:I lease a new vehicle with reasonable annual miles for 185/month with only 1st payment and taxes due at signing.
Can you please share the make, model, and trim level?
Also, how many miles do you get, and how long is the lease term?
pacodelostigres wrote:You aren't getting the nicest car out there for that monthly price, but the cheap car you get 9 years out is going to be a lot nicer than the 9 year old car that you buy today.
I don't necessarily agree with this.
I would argue that a new stripper Nissan Versa or Mitsubishi Mirage is NOT going to be nicer than 9 year old Accord, Maxima, Avalon, ect.
It's a 17 Chevy Trax with AWD on a 3 year lease. I think I picked 10k miles, but 12k only pushed the payment to 190. It has four wheel disc brakes, basic power everything except seats, and a nice tech package that includes CarPlay. It comes with free maintenance for the lease term. For the same price I could have gotten several similar models of cars but I have a toddler and the small SUV configuration makes the most sense until we're out of the car seat.

There's no way I would rather be driving a 2008 Accord over this. Absolutely not, 100%, no question. I have a warranty, free maintenance, modern safety, modern tech, and no concerns about reliability, tires, brakes, etc.

At some point, this board is just too conservative. My heat bill in winter is more than my car payment. My internet plus electric is about equal to my car payment. My discretionary cash for the month is more than my car payment. If you just look at it like a utility or monthly recurring cost of living, 185 bucks a month just can't be a bad decision for the average person with a modest professional job. You can lease without getting a BMW.
Better2bWise
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Location: Columbus, Ohio

Re: Do I deserve it? [A new car]

Post by Better2bWise »

You sound like a bright young man. Learn from an old wise man who helped build this country of wealth. I am just one cord of this strong fabric of America. Listen to Ben Franklin so you can see if over time anything is new.

"The Way to Wealth" Ben Franklin
https://liberalarts.utexas.edu/coretext ... Wealth.pdf

P.S. Buy a car that you can pay cash. Don't start with the culture of present luxury for future misery. "For age and want, save you may. No morning sun lasts a whole day." "Better to go to bed supper less than rise in debt". You only deserve what you can pay for with cash.
researcher
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Re: Do I deserve it?

Post by researcher »

pacodelostigres wrote:It's a 17 Chevy Trax with AWD on a 3 year lease. I think I picked 10k miles, but 12k only pushed the payment to 190. It has four wheel disc brakes, basic power everything except seats, and a nice tech package that includes CarPlay. It comes with free maintenance for the lease term.

At some point, this board is just too conservative. If you just look at it like a utility or monthly recurring cost of living, 185 bucks a month just can't be a bad decision for the average person with a modest professional job. You can lease without getting a BMW.
My position is NOT that leasing is necessarily a bad idea or costs too much money.
I just don't agree with your stated advantages of continually leasing a low end vehicle, versus buying & holding onto a better vehicle...
- Your Chevy Trax is the #10 rated vehicle in its class (out of 11) according to Car and Driver. This is the definition of "bottom of the barrel."
- You can only drive 10K miles/year. The average American drives 13,500 miles/year.
- Virtually every mainstream vehicle sold in the last decade can be had with "four wheel disc brakes" and "basic power everything."
- The free maintenance offers little value. With only 30K, that likely includes 3 oil changes/tire rotations. Maybe a $100 value.
There's no way I would rather be driving a 2008 Accord over this. Absolutely not, 100%, no question. I have a warranty, free maintenance, modern safety, modern tech, and no concerns about reliability, tires, brakes, etc.
This is where the key difference lies. From what you describe, you simply want an appliance that minimizes your concerns about reliability and eliminates your need to perform any simple routine maintenance. It sounds like you may be a bit of a "Nervous Nelly" with respect to vehicle reliability/maintenance. If that is the case, then leasing is absolutely the correct choice for you.

Notably, you never mention other factors such as ride, handling, drivetrain, NVH, space, comfort, build quality, materials, ect.
If these were issues you also cared about, your preference for leasing cheap cars would likely be quite different.

And out of curiosity, what safety features does your Chevy Trax have that a 2008 Accord doesn't?
anoop
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Re: Do I deserve it? [A new car]

Post by anoop »

Marjimmy wrote:Hello All, hope everyone had a nice 3 day weekend.

Little background about me. 25, single no kids, never bought a new car, (drive an 06 ford taurus 135k miles) recent graduate, no debt (living at home), 6 months emergency funds, and roughly 100k in vanguard.

Since graduating I landed a job which pays salaries in the mid 60's. Eventually I want to buy a new car and replace the taurus right now. But what stops me is thinking that if I buy a new car now for 35k, if I were to have invested that money instead 30 years down the road at 8% growth......I'm actually paying well over 100k for the car.

When do you justify new purchases for yourself? Do I deserve a new car for myself?
The first step to freedom is learning that you do not need anyone's approval for anything. If you come to a forum to ask whether you deserve something, then you need to work on your self esteem.

It might make sense to ask for advice on affordability, which is what it appears you are asking. This big missing piece is you don't mention how much car you want to buy. Based on your income, I would say mid 30's is the highest you should consider.
deltaneutral83
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Re: Do I deserve it? [A new car]

Post by deltaneutral83 »

Mostly everything has been covered in this topic theoretically and I agree with the masses of a depreciating asset. I'll go a step further and say the "step up in car" when deciding to get rid of the old one and get a newer one doesn't have to be $15k+. I guess your current car is probably worth $1-2k. You can step up to $6-8K if you're having issues with the Taurus. Pay cash.

Most of the replies I see here start at a $15k step up because of the perceived headache of buying a vehicle. I much rather buy a 4 year old Honda and drive it for years (4/5)-7 and "step up" every 3-4 years. I never have a new car but I never have an old one either. I have never had a car that wasn't 3 years old and have never been struck with the allure of a new car because in the back, middle, and front of my head is a siren that goes off, blinks intergalacticly, etc. regarding depreciation. I buy/sell private seller but that's another topic entirely.
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StevieG72
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Re: Do I deserve it? [A new car]

Post by StevieG72 »

Single?

You will likely stay that way driving that 06 Taurus and living with your parents!

Get your own place and buy a less expensive car.
Fools think their own way is right, but the wise listen to others.
pacodelostigres
Posts: 151
Joined: Mon Jul 28, 2014 8:14 am

Re: Do I deserve it?

Post by pacodelostigres »

researcher wrote:
pacodelostigres wrote:It's a 17 Chevy Trax with AWD on a 3 year lease. I think I picked 10k miles, but 12k only pushed the payment to 190. It has four wheel disc brakes, basic power everything except seats, and a nice tech package that includes CarPlay. It comes with free maintenance for the lease term.

At some point, this board is just too conservative. If you just look at it like a utility or monthly recurring cost of living, 185 bucks a month just can't be a bad decision for the average person with a modest professional job. You can lease without getting a BMW.
My position is NOT that leasing is necessarily a bad idea or costs too much money.
I just don't agree with your stated advantages of continually leasing a low end vehicle, versus buying & holding onto a better vehicle...
- Your Chevy Trax is the #10 rated vehicle in its class (out of 11) according to Car and Driver. This is the definition of "bottom of the barrel."
- You can only drive 10K miles/year. The average American drives 13,500 miles/year.
- Virtually every mainstream vehicle sold in the last decade can be had with "four wheel disc brakes" and "basic power everything."
- The free maintenance offers little value. With only 30K, that likely includes 3 oil changes/tire rotations. Maybe a $100 value.
There's no way I would rather be driving a 2008 Accord over this. Absolutely not, 100%, no question. I have a warranty, free maintenance, modern safety, modern tech, and no concerns about reliability, tires, brakes, etc.
This is where the key difference lies. From what you describe, you simply want an appliance that minimizes your concerns about reliability and eliminates your need to perform any simple routine maintenance. It sounds like you may be a bit of a "Nervous Nelly" with respect to vehicle reliability/maintenance. If that is the case, then leasing is absolutely the correct choice for you.

Notably, you never mention other factors such as ride, handling, drivetrain, NVH, space, comfort, build quality, materials, ect.
If these were issues you also cared about, your preference for leasing cheap cars would likely be quite different.

And out of curiosity, what safety features does your Chevy Trax have that a 2008 Accord doesn't?
I've read all the reviews and I think that the car enthusiast magazines put too much emphasis on things that aren't important. They differentiate based on things like how soft the plastics are, on surfaces most people literally never touch. Or rear set headroom, or a 10 hp difference, etc. If we're comparing an AMG to an M series, fine, but in basic cars who cares?

I could have gotten a lease that covers average mileage and still been under $200/mo. I only drive 9k, so I can only provide my own example for precise pricing.

The fact that virtually every mainstream car has these features is kind of my point, although going back 10 years I don't think that argument holds. If you're willing to have a new basic vehicle today, it's going to have everything that was an option a few years ago. The features my Trax has that a 2008 Accord doesn't is 9 years of extra life and 90,000 less miles, while having as standard everything that car had as an option 9 years ago, plus much more modern safety and tech. There's no argument to be made that safety standards haven't improved since 2008.

Free maintenance at $100 * 4 is a significant percentage of the cost difference that results from lease vs buy. A lot of the debate is on a grand total of maybe a couple thousand dollars over a decade.

I'm not nervous about maintenance. I had an 88 Ram in college that saw me spending a lot of time sitting in the engine bay fixing things. But time is money and spending half a day a couple times a year at the shop is thousands of dollars of my time over a decade. I pay to avoid maintenance the same way I pay to have someone mow my lawn and come clean my house, except the cost of leasing is much less.

My last car had almost 400 hp and tons of options. I could go buy a high performance car if I wanted one. But I do look at it as a utility because I want to retire in a few years, and this is a board about personal finance so I think that's a reasonable stance. Especially for someone in their 20's living with their parents. A person in that scenario is probably much better off picking up a very manageable monthly payment than dropping 20-25% of their net worth into a depreciating fixed asset of unknown reliability.

I don't see a lot of argument for buying a car vs leasing. Two of the last half dozen cars I've had have been complete lemons and the value gained by being able to abandon a lemon at lease end is really understated.
researcher
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Re: Do I deserve it?

Post by researcher »

pacodelostigres wrote: The fact that virtually every mainstream car has these features is kind of my point, although going back 10 years I don't think that argument holds...
But time is money and spending half a day a couple times a year at the shop is thousands of dollars of my time over a decade. I pay to avoid maintenance the same way I pay to have someone mow my lawn and come clean my house, except the cost of leasing is much less.
My 1992 model vehicle, manufactured 25 years ago, came standard with these features!

I currently have a 2006 and 2007 model vehicles, both purchased new, and both nearing 150K miles.
Both of these vehicles have spent exactly ZERO time in the shop for repairs.
This is a board about personal finance so I think that's a reasonable stance. Especially for someone in their 20's living with their parents. A person in that scenario is probably much better off picking up a very manageable monthly payment than dropping 20-25% of their net worth into a depreciating fixed asset of unknown reliability.
Wouldn't it be even more reasonable to finance the purchase of a Civic/Corolla/ect for 3 years, then drive it for another 8-10 years?
You think it would be better from a personal finance perspective to spend $200+ every month, until you die, on a lease payment?
Two of the last half dozen cars I've had have been complete lemons and the value gained by being able to abandon a lemon at lease end is really understated.
2 out of 6 cars have been complete lemons! That ratio is far higher than any normal car buyer would typically experience.
Could it be due to the fact that you chase the lowest possible lease deals, and therefore end up with some of the worst vehicles available?

Personally, I would rather buy a Honda Accord (or similar) and drive it for 9 years than lease 3 Chevy Trax's during that time.
You would enjoy a better ride, handling, drivetrain, NVH, space, comfort, build quality, materials and reliability.
Xpe
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Re: Do I deserve it? [A new car]

Post by Xpe »

Hm... I think it'd be crazy to spend $35k on a new car (in any situation, but especially yours).

In 2014 I bought a new-ish mazda3 (2013 model) for 18k - traded in Prius for ~8k worth. It's been a GREAT car, hasn't required any work other than basic maintenance (oil changes etc), and I spent 1/3rd the $35k you're considering. There are lots of similarly reliable cars you can get in the same price range.

I would recommend going on autotrader and looking at cars in the 10-20k range, lower the better.
jharkin
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Re: Do I deserve it? [A new car]

Post by jharkin »

Xpe wrote:Hm... I think it'd be crazy to spend $35k on a new car (in any situation ...
Why do we always generalize so on this board?


I agree that for this young kid 35k is a stretch. But everyone's needs are different and a middle aged couple with 2-4 kids and strong finances might not be able to squeeze into a 10k sub compact and may actually NEED the space of a 30k midsize car or van. A retired couple with a 7 figure portfolio may want the enjoyment of an expensive sportscar and they can easily afford it so why not.


Everyone is different. Lets not try to put everyone in the same box. Or I'll start saying that you all have to eat a diet of nothing but cup-o-noodles because nobody needs anything more to survive ;) ;)
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wander
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Re: Do I deserve it? [A new car]

Post by wander »

I would buy new reliable car and keep it forever if you can. I bought my car out of college and keep it for 20+ years. It saves me a lot of money over time and I plan to keep it until I retire.
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sunny_socal
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Re: Do I deserve it? [A new car]

Post by sunny_socal »

wander wrote:I would buy new reliable car and keep it forever if you can. I bought my car out of college and keep it for 20+ years. It saves me a lot of money over time and I plan to keep it until I retire.
So let me get this straight:
- You bought a new car right after college, it's now 20+ years old
- You plan to keep that same car until you retire (let's assume another 20 years)

I think you win the prize! :beer
LeeInTN
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Re: Do I deserve it? [A new car]

Post by LeeInTN »

I'm saying this as gently as I can muster: Please consider changing your outlook from using words such as "deserve" when it comes to conveniences and luxuries. Practice gratitude instead. Yes, you may need a more reliable/current vehicle - and that's a trade-off among other uses for money. But be grateful. "Deserve" implies entitlement, and entitlement is the opposite of gratitude.
stoptothink
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Re: Do I deserve it? [A new car]

Post by stoptothink »

LeeInTN wrote:I'm saying this as gently as I can muster: Please consider changing your outlook from using words such as "deserve" when it comes to conveniences and luxuries. Practice gratitude instead. Yes, you may need a more reliable/current vehicle - and that's a trade-off among other uses for money. But be grateful. "Deserve" implies entitlement, and entitlement is the opposite of gratitude.
+1. I have a little placard on a shelf in my office that says "Empower, don't entitle". This past weekend, while I took our kids on an extended bike ride, my wife took her mom to the salon and spent IMO an insane amount of money on their hair and nails (of course, my wife footed the entire bill). As I walked in the door, first thing she says is "before you see how much I spent, we both had a hard week and deserved it." Can't remember the last time I bit my tongue so hard.
Cycle
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Re: Do I deserve it? [A new car]

Post by Cycle »

Before you buy a car, rent an apartment, or buy a house, educate yourself on the true costs of where you live and how you get around. I recently stopped driving, opting to bike and bus to work and cost savings are substantial, from 3700 per year to 1k. If my car was worth more than 3.5k, like your 35k car, annual cost is 7500. I'd recommend reading walkable city.

If you are not living on your own and putting 17k per year in your 401k and 5k in your roth, you cannot afford a car. You will be a millionaire in your early thirties and comfortable retirement at 40 if u follow this advice, though I had a nice bull market to ride.
Never look back unless you are planning to go that way
Xpe
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Re: Do I deserve it? [A new car]

Post by Xpe »

jharkin wrote: Why do we always generalize so on this board?

I agree that for this young kid 35k is a stretch. But everyone's needs are different and a middle aged couple with 2-4 kids and strong finances might not be able to squeeze into a 10k sub compact and may actually NEED the space of a 30k midsize car or van. A retired couple with a 7 figure portfolio may want the enjoyment of an expensive sportscar and they can easily afford it so why not.

Everyone is different. Lets not try to put everyone in the same box. Or I'll start saying that you all have to eat a diet of nothing but cup-o-noodles because nobody needs anything more to survive ;) ;)
Hm... OP asked a subjective question, I gave my opinion. I also think it applies generally - just because you need the space of a midsize car or van doesn't mean you need to pay 30k for it.
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wander
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Re: Do I deserve it? [A new car]

Post by wander »

sunny_socal wrote:
wander wrote:I would buy new reliable car and keep it forever if you can. I bought my car out of college and keep it for 20+ years. It saves me a lot of money over time and I plan to keep it until I retire.
So let me get this straight:
- You bought a new car right after college, it's now 20+ years old
- You plan to keep that same car until you retire (let's assume another 20 years)

I think you win the prize! :beer
That's what I am going to do. Unless auto parts stores do not sell parts for old car anymore.
bloom2708
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Re: Do I deserve it? [A new car]

Post by bloom2708 »

OP, you know what you know now.

The experience of this place is trying to give you some idea of what you will look back on 20-30 years from now and say "wow I wish I knew or did that".

You can take all the information and then go buy a $35k car. The bank will borrow you the money. 72 months of payments is an option often.

Your future self that is thinking about retirement and buying back your time is the person that cares. None of us (really) care if you buy a car you can't afford or not. Gather information, study options, do what your heart and wallet tells you to do.

Good luck!
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
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