Photo by Resedabear

Wow, a month off, a new site, a new perspective on a lot of things. Man, it feels good to be writing again.  That said, I solved one of my biggest issues that I needed to solve over the summer, getting a new car.  When I say new, this was not a “new to me” car, this thing had 4 miles on it when I drove it off the lot.

Some of you that have been reading for a while will remember my post, “Dude, I Totaled My Car” and know that I really needed a friggin vehicle in a bad way.  I really wish I was able to live like some of the commenters of Matt’s post at FCN, and sustain myself without a car.  However, that wasn’t feasible for me.  So here is how this all went down and how I ended up with a 2010 car a week after it came out, surely a personal finance sin if ever there was one.

The Advice Along The Way (good advice I didn’t listen to)

I talked to several bloggers, several friends, and even a friend’s father that is a certified financial planner.  Without exception, everyone suggested that I get a used vehicle.   Now, some people were more receptive to the idea of a new car (Mapgirl being one of them), but for the most part, it was “find a used car.”

I listened to the personal finance hour’s episode on buying a car, I read Ramit’s post about why he bought a new vehicle, I even took some tips from The Millionaire Next Door.

A week prior to purchasing my NEW vehicle I spoke with Baker from Man vs. Debt.  When I started telling him about my plans to purchase a new vehicle he plainly said (and I paraphrase, because it was gchat and wouldn’t make total sense out of context), “It sounds like you WANT a new car.  There are good late model cars out there, it just takes hard work to find them.”  I agree with Baker, I did “want” a new car, but primarily because it was the process of this search that was slowly killing me.

The Process (it sucked)

The process of buying a car should be kind of fun, after all, it’s a big purchase, its something that a lot of people associate as an item that “defines” you.  I don’t really buy into that, but whatever.  I am here to say, the process sucks.  I mean, it really sucks.  Especially if you are looking for a used car.

Maybe its just me, I don’t trust used car salesmen, and a clean carfax report wasn’t going to make me feel any better.  Ebay, well that just took too long and I want to at least see the car before buying it.  Carmax, well that is actually a good option, but all of their vehicles were quite expensive for what you were getting.  I decided at the beginning of the process that if I was going to finance anything, I may as well just get a new damn car.

I tried craigslist.  I really tried craigslist a lot.  I called a ton of people, I saw a bunch of cars.  I trusted no one, and didn’t like a lot of the vehicles I tried out for the money they were asking.  Why would I spend all of the insurance money I received for my Jetta ($4200) on a car that was much inferior to that car?

Finally, I went down to a dealership and practically bought a 2002 Civic.  Something didn’t feel right about the car, but the money was acceptable, and I was a dude that was at the end of his rope.  They pulled a fast one on me and threw away the warranty on the car as I was about to sign the papers.  I walked out.

“Brian, you aren’t going to be happy or comfortable in a late model used car with over 100K miles on it.  Get yourself a new f***ing car.”

A friend who I trust said, “Brian, you aren’t going to be happy or comfortable in a late model used car with over 100K miles on it.  Get yourself a new f***ing car.”  He was right.  I knew which cars were in my price range, and what I would be satisfied with.  Knowing it was towards the end of the year, I wanted to see if I could find what I wanted (2009 Hyundai Sonata) as a used car.

Sure enough there was one around the corner from me.  If I went that route I could have saved a few thousand dollars, however it already had almost 30,000 miles on it from the past year.  I was still close to buying it.  Then I called to find out about all the warranty’s (which is one of the reasons I was going Hyundai) and found out that the 10 year/100,000 mile warranty was void for second owners.  Also, the vehicle was already halfway to voiding out the 5 year/60,000 mile bumper to bumper warranty.  I said screw it, and was off to find a new 2009 car.

Because of cash for clunkers, I wasn’t able to find the exact model I wanted, in the color I wanted (pearly white is a shitty color for a car, if you want a Sonata in pearly white, call any dealership, that’s all they have left).  J. Money from Budgets are Sexy stated advised that if I was going to buy a new car and go into debt to do it, I may as well get all the bells and whistle I want and not compromise.  I followed his advice, found myself a 2010 in the model I wanted, color I wanted, extras I wanted and then started haggling.  The next day, I bought the car.

Why I Went New (and why what was best for me broke the personal finance mold)

I really took to heart what Ramit said in his post a few years back.  I am paying for value.  Also, since this process sucked something big, I didn’t want to have to do it again two years from now if my tranny on my used car blew up.  For the following reasons I went new.

• Dollar for dollar this car is much more likely to last me 10+ years of driving.

• A new car is cheaper to maintain, especially under warranty.

• Time was of the essence.  2.5 months without a car and relying on my friends all summer made me expedite this process.  If I had six months to search for the “perfect used car”, maybe I would have purchased used.

• This is a big enough car that I can feel safe growing into it if my family were ever to expand beyond myself (ie, I won’t need to replace it because its not big enough for transporting kids).

• That smell really is something magical.

• I know everything about the history of my vehicle.  This will be important if I ever have to resell it.  I know where its been, whats been done to it and I don’t have to worry about  previous owners.

• I was also able to get decent financing.  Had to put 0 money down (which may not be advisable based on your situation) which allowed me to max out my Roth IRA for the rest of the year (something I was going to do in the next few months anyway) and invest more money in a marketplace that is likely to rebound huge in the next year or two.  This also allowed me to keep extra cash on hand in case of unexpected emergencies in a bad economy (if I bought used or put a big down payment on the car, that money would just *poof* gone).

To the Naysayers (I want to hear from you guys)

This may not have been a great financial decision for me.  I went $19,000 deeper into debt on a new car.  However, I don’t think this was a bad decision.  It was just a decision that was neither good nor bad.  Before you hit me upside the head too hard, it should be known my financial goals are still intact.  I am still able to save close to $1000 a month.  I still maxed out my Roth IRA for 2009.  I am still able to contribute 20% of my salary to my 401(K).  As for depreciation, I didn’t buy a Benz, I bought a Sonata.  It will depreciate a few thousand the first year, and I am not reselling it anyway.

So what now?  I want you guys to bring it in the comment section.  Give me your thoughts and perspectives.

Dude, I Totaled My Car (Update 3):

I have been living the past 5 and a half weeks without a vehicle.  I have updated the status of my search for its replacement once, shortly after my initial post about my accident and my carless situation.  At this point I have foolishly put all my eggs into two vastly different baskets, and I am waiting until the end of August to see which one hatches the most chicks.

• Basket One: A friend of mine is selling her 99 Nissan Pathfinder.  It has 106,000 miles on it which is mostly highway miles.  She is the original owner and has driven it for every one of those miles.  The car is priced reasonably, however the initial cost of the vehicle is about the same figure the insurance company gave me for my total loss.  After registration, tags, etc.  I will have likely lost a little bit of money on the deal.  However, I feel I will be able to sleep at night driving a car that I know has been taken care of instead of some car that I bought randomly off of Craigslist (that piece of mind may be worth an extra thousand dollars to some; it could be priceless to others)  Furthermore, she has made me agree that if I buy her car, I have to pet it before driving it on road trips (what is that about?!?).  Deeper Analysis: Buying a car from a friend is risky, but it has some rewards.  I am not thrilled about the price tag, but at the price I am looking to spend I am not thrilled with a lot of the cars.  I may have to up the amount I am willing to pay for my next ride.  Also, the MPG on a Pathfinder is a concern, then again, with as often as I drive, is it worth stressing over an extra $100 a year in gas when I haven’t really slept the past month because I have been carless?  This is my best option and if it still presents itself in late August when I get back from vacation, I will write her a check.

• Basket Two: Go to a dealer in late August and say, “How much are you giving car’s away for today?”  Now really is the best time to buy a new car.  In a month from now, when 2010 models start to show up on lots, the timing will be even better.  The price I wanted to spend on a new car was $14,000.  It is a possibility (albeit not a fantastic one) that I can go into a car dealership and walk out with a brand new Honda Civic LX for $14,500 with 0% financing for 3-5 years.  If that is the case I can afford to put $7000, finance $7500 and have a car that I know will last me 15 years.  Deeper Analysis: This is my last resort, but if the numbers work in a way I think they could, I have no reason not to consider this option as it represents the difference between value and cost.

I Gave Myself a 10% Raise This Week:

I started to contributed to my 401(K) this pay period.  I have mentioned it before, but the reason I hadn’t been contributing prior was because I my employer didn’t match until you’ve been employed there for six months.  This is the first pay cycle that fell after that six months, hence today is my first payday where I have my 401(K) contributions withheld.  You may ask, how did I give myself a 10 percent raise? Well this is it:

Employer match ($0.50 on the dollar with no limit) x Personal contribution of 20% of salary = 10% raise from employer

That’s right, 20% of my salary is being dumped into my 401(K) a month.  All of those part time jobs are starting to seem worthwhile now, huh?  Should I mention that this is just one more reason I am going to be a millionaire some day?

My Six Month Disposable Headphones:

Hopefully I have found a new pair of headphones that will last me a while.  I purchased the Zagg Z-buds.  I was very close to purchasing them through their online store for $80 + S&H.  I even started to shop for a coupon code.  Then I quickly scanned e-bay and saw the same pair I wanted, with iPhone compatibility for $46.50 Buy It Now with free shipping. I was about to click the “Buy” button when I saw the “Make an Offer” tab on the eBay page.  I needed to get that order placed that day, but I said I may as well try.  Instead of typing in something ridiculous like $25 or something, I typed in the reasonable price of $40 (a $6.50 discount).  A half second later, my offer was accepted, making me feel like I should have offered a lot less, because they always could have said no and I could have paid the higher price, but, they also could have said yes and saved me more money.

I really like the new earbuds.  They sound great, look durable, even have a funky bud piece that looks like, well, I don’t know how to describe it, but look to the right and you will see a picture.  They are very comfortable and because of how they are designed to be worn, you don’t the occasional pull on the front of your earphone chord that will pluck your buds from your ears.  So far, I would recommend these to anyone, however, we will see in six months if I am back in the market for another pair. Time will tell the story on Zagg’s Z-buds.

So, its been almost two weeks since I totaled the vehicle.  I received the insurance settlement from the insurance company, and now its just putting that money to good use.  Good use…in terms of a car… sheesh!

I am still up in the air about what to do about a vehicle.  All I know is that I like the extra cash sitting in my bank account right now.  I have gone into dealerships, talked on the phone with sellers, e-mailed some, and talked to friends about vehicles.  I have the numbers that I am willing to spend in my head, so if they can’t get to those numbers, I politely say no thanks, and go on my merry way.

When looking at used vehicles, I am sort of picky (I don’t care what the car is, I just want to feel comfortable about it).   If the car looks taken care of, I am put at ease, but the individual sellers I have talked to haven’t given me the best of vibes.  I would almost rather deal with a car dealership, because at least they have a warranty on their vehicles, even if it’s a bad one.

I saw a couple cars on craigslist yesterday at a dealership that wasn’t too far away.  I actually started to get excited about one of the vehicles, it was in my price range, looked good, etc.  I went and did a quick check for the dealer’s rating at the local Better Business Bureau; they had a rating of an F.  Not buying a car there.

I have even toyed with the idea of going car-less.  This is DC after all, and even though I live in the burbs, I could probably make it work somehow.  The only trouble I find is getting to and from my hockey games (which are not metro accessible).  I would hate to have to rely on others for transportation for a leisure activity.

If I can make it through the next handful of weeks, I probably won’t need a car until late August because of a hectic travel schedule throughout that month.  That gives me a little comfort that I don’t need to rush my decision, but at the same time, I do feel a bit stranded.

Being forced to make a hasty purchase is never a good idea.  I see it happen to people all of the time at the apartment building I work at.  They come in needing an apartment that week.  The building looks to suit their needs, and they sign a lease.  A few months later they come and talk to me saying, “I wish we didn’t rush into this apartment.  The building is fine, but we should have gone with a larger apartment, or a different area of the city.”

I can surely use any tips anyone has on buying a 10+ year used vehicle, or stories of people that have bought certified pre-owned cars.  Any input will be helpful.  Hopefully the next time I update everyone, it will be about my new ride.

Have a happy and healthy fourth of July.  Crack a beer for me.

This past Saturday I had a wee-bit of a car accident that I was very fortunate to walk away from. My car on the other hand didn’t make it. My ‘99 Jetta lasted me almost 7 years and 80,000 miles. I cleaned it out yesterday and walked away from it. I was shocked at how easy it was to walk away from something that has been with me for so long, but without any utility and looking like a piece of modern art (I can’t stand modern art), I said “peace out” and started looking in my mailbox for the insurance check.

I have gone through every aspect and permutation of my life in the past few days. Even though my career is metro accessible, I still need a car. It’s not fun to HAVE to buy a car. I would rather be able to stick to my plan and use my “new car” sub account to buy a new vehicle 4-5 years from now. Well, life happens, doesn’t it?

Here is the full sitch, with the insurance payout, my primary savings, my new car savings and a bit of extra cash, I have about $7,000 cash I can put towards a vehicle. That is a good start and makes it so that I have several options. Speaking of options, this is what I am looking at.

• Buy a used POS for less than the insurance payout and hope it lasts for a year or maybe two.
• Buy a decent used car that hopefully has some legs to it. Maybe spend $5000-$8000 for something that will last 4 years.
• Buy a good used car, make a car payment and have something that will last me 10 years.
• Buy a new car, help stimulate the economy (Japan’s economy – probably going Honda), make car payments and drive the car until I am 40 (15 years).
• Go on the Price is Right, win a new car and invest the insurance money into my Roth IRA! (Thanks Dave for the ecouragment)

All of these options are good and bad, but I need to make the best out of a bad situation.  Now, I will say that I am not someone who LOVES their car. I enjoy my car, primarily for it’s utility.

So here I am, trying to make an economic decision that will drastically impact my life for the 10+ years. This will be my biggest purchase, outside of a house in the next 15 years, so I feel that it’s important not to screw it up. That’s right, if I get a new car, I am driving that car into the ground. Heck, if I get a used car, the same applies.

What’s a guy to do that doesn’t want to start making car payments, but realizes that this is maybe the best opportunity i will ever see to buy a new car? There are rebates, financing incentives, etc. all making this THE time to buy. Not to mention, it’s summer and isn’t their usually a huge 4th of July sale coming up for most dealers?

Yeah, you can tell I am leaning towards a new vehicle, but I am open to hearing anyone else’s thoughts. I may be in virgin territory here. How many PF bloggers start their blog preaching conscious spending, getting out of debt, and accumulating wealth and then two weeks later, goes out and finances a new car?

I have not made up my mind, but I don’t want to put good money after bad (because that is just dumb). Let me know your thoughts by leaving a comment.