SubscribeFive Reasons Why You Cant Make Me Buy a New Car
I graduated in August 2006. I have a fairly stable job that pays me a relatively good salary. So, why do I still drive a 14 year old car with 155K miles on in, you ask? Let’s say a new car will cost me $20,000.
- At $2.80 a latte, the new car is equivalent to 7143 lattes! If you like the Latte Factor Philosophy, that’s 19.56 years of one latte every day!
- The average cost of lunch at our cafeteria is $6. Assuming 260 working days in a year, I would have to brown bag my lunch every single day for 12.8 years to pay for that car!
- The person who bought a brand new $20,000 car in August 2004, now has a “used” car which might fetch him $10,000 to $15,000 depending on which brand the car is (and whom he sells it to :) But the person who bought shares of Google at their IPO and held on to the stock now sits on stock worth $98,661! (GOOG historical stock chart)
- If I lose my job and have to go on federal minimum wage of $5.15/hour, and put away every penny I earned towards the car, I would have to work for 3883.5 hours just to pay down the principal. Note that I am not even considering the interest payments here (or the taxes on my earnings!)
- For crying out loud, a car is a mechanical contraption for transporting people from Point A to Point B. My 14 year old car with 155K miles on it, does that part just fine! So why would I buy a new car?
Well, those are just my reasons. If you have any more reasons why I shouldn’t buy a new car (or any that I should, for that matter), make sure to leave a comment below.
7 Comments:
I'm sorry, but 1, 2, and 4 don't seem like stand-alone reasons why you shouldn't buy a new car. Just because it translates to a lot of lattes, lunches, and minimum wage hours doesn't mean it's a bad investment. It's like saying that buying a house is a bad investment because it would be equal to lots of lunches.
I think the point is that you don't get additional functionality from spending extra money on a new car. If that's the case, you should look at how many lattes the maintenance of your used car is, and compare that to the total cost of ownership for the new car.
Hi Ian, Thanks for stopping by!
Good point... Fortunately though, my old car runs really great and has minimal maintenance requirements. I did these calculations one fine day to remind myself that I would be "penny wise, pound foolish", if I buy a new car now, when I dont really need it. The large number of lattes & lunches hits the spot, when I feel like giving in to "lifestyle inflation".
After reading the Millionaire Next Door I swore to never buy a new car again. As we shopped around for a car a few years ago we decided we wanted a Honda CRV, for a variety of reasons.
As I priced cars I discovered only the newer models had some of the safety features we wanted. Easy enough, I thought I'd buy a few year old used CRV. Turns out they hold their value very well so buying one with a few years on it was almost the same as buying new.
I went with a new one but went on the last day of the quarter when they looking to make sales and haggled the price down!
Ian,
I think the point of the post was to give readers some motivation NOT to buy the new car.
There's too much peer pressure in our culture to go ahead and splurge on the new pricey vehicle without really needing it, or worse yet, lease.
Anyway, you have a nice blog here, and if I can make just one small suggestion - I black text on dark blue background is really hard to read.
moneysmartlife: I don't think my trusty old car will last me forever :( I will try to time replacing it at the end of the quarter. Thanks for the tip!
Alexander: You're right about the peer pressure. I'm amazed at how easily people are surprised that its been a few months now since I started working, but havent bought a new car yet!
Also, will you please let me know what browser/OS you use? Its supposed to be black text on white background :(
I used to believe in this philosophy. My first used car which I got from my dad went fine but my second used car which I bought for 2000 dollars (it was 8 years old when I bought it) ended up eating up 2500 in major maintenance over 1.5 years and I sold it for 1000 dollars. Thats when I decided my next car has to be a new one. I am not a car person and I cannot be bothered to spend hours at mechanic shops. At the same time I dont want to waste money so I bought a Hyundai Elantra for 13500. Now this car has almost everything that a pricier Honda Accord has (in fact its roomier than an Accord) but is 5000 cheaper. I got this price by buying on 31st December evening when the dealers are desperate to get their yearly quota done. After 2 years if I go and check the value of this car on KBB it shows up as 12000 if I try to buy from a dealer and 10000+ if I am selling it to a private party. So for me this car hasnt really cost too much more and has given me the piece of mind to concentrate on grad school
The only smart thing about the author
is that he is a good money manager. Many people without understanding when they get a job start taking loans. Many people failed.
But all the reasons against new cars are lame.
People buy cars when they can afford or in need.
Did you try to calculate in sunflower seeds? It will be millions and millions of them lol...
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