Personal Finance Advice

People blow themselves up all the time with new cars! Stick with the Samurai 1/10th rule for car buying and all will be good.

For those who don’t know, the rule we propose is spending no more than 1/10th your annual gross income for your car. That’s right, if you only make $80,000 a year, spend no more than $8,000 on a car!

Multi-millionaires do this, why shouldn’t you?

Financial Samurai

Yeah, now you’re talking! Cars are expenses, transportation, and utility only. Anything else (eg. personal statements, rewards, investments) is just the result of well-placed advertising! In the words of Cosmo Kramer, do yourself a solid and spend no more than 10% of your yeary salary for a car and no more than 15% for a truck or suv!

“…when I do not need to spend thousands of dollars, why should I?”

Doesn’t that say it all?

Our general approach to cars is to keep them as long as we can. The reasons why we would by a new/newer car are: 1) mechanical troubles that exceed the car’s value or 2) that the vehicle simply does not meet our needs anymore.

Examples: We bought a used mini-van when our granddaughter was born because 2 adults and a car seat did not easily fit in either of our small pickups (nor was it safe to have her in the front seat). We traded that van in on a new one when we started to suspect some costly transmission problems.

We generally don’t like to buy brand new, but when we bought our van at the end of 2005, the deals on new vans were actually better than any 1- or 2-year old vans we could find.

It seems silly to me that your has her own new SUV and still insists you get a new one just becus of a few dings, scratches and stains inside it.

Outside of a new house or a college education, a new vehicle is probably the most expensive thing you’ll buy.

Another reason to avoid a new purchase is because you don’t know what the next 10 years will bring. Will you or her lose a job, experience an illness or have some other sort of financial setback? If you did, you’d probably regret being stuck with the high monthly payments that come with a new car purchase.

But David, I think it’s IMPORTANT for the economy you guys buy another car you don’t need!

We all need to do our share in boosting profits to keep this bull market alive and kicking!

Use it up, wear it out, make it do, or do without.

My wife and I drive ’98 CRV and ’01 Civic. Both have seen better times, asthetically. Hers has fading paint, mine is just starting to leak and creak. But they run great, get good mileage, and ABOVE ALL keeping them going is MUCH less expensive than buying a new car!

Unless you have the extra $ sitting around, don’t do it! And if you do, don’t trade in your car, because of the teenager thing.

A professional interior detailing might spruce up the car.

David – I’m with you AND your wife here. I drive a 10 year old VW myself and never wanted to get another car again, for all of your reasons that you set forth. Plus, thank you VW for not changing the look of the Passat so my car doesn’t appear as old as it is.

However, I’m with your wife on wanting my husband to get a new car. His is an 8 year old over-sized, gas-guzzling mess, with a window that doesn’t shut, and filth that I can’t even describe. Now I could probably keep my car several more years, but he prefers driving my car because (1) gas mileage; and (2) it’s clean (even with the dog/kids riding in the back). Unfortunately, now that he uses it all the time, it’s taking a beating in miles + he’s now messing my car up (although the good husband that he is, he did by me new floor mats – the old ones worked for 8 years with just me driving, he ruined them in 12 months of marriage).

The other problem is that I won’t and shouldn’t drive his car. First, simply riding in a gas-guzzling over-sized SUV is against every principal of mine, let alone being seen behind the wheel of one. Second, it’s like driving a schoolbus. One should have a special license to drive large SUV’s. I did it once in an emergency and it was the most terrifying 5 mile drive of my life which included navigating through a bike race + backing up down a 1/4 mile windy drive through a narrow gate … So, we’ll have to split my vote on this one!

I see your wife’s point to a certain extent if your SUV looks ready for the scrap heap. How often do you wash it? Does it have rust spots? Without seeing it, I don’t know whether I am on your side or hers.

I’m right there with you , I too own an older, paid-off SUV. It’s useful, costs me almost nothing in maintenance, and NO PAYMENTS!

Get a clay bar kit and some cleaner wax from mcguires and it’ll look fine. Have the interior professionally shampooed/cleaned. You could even have the clay bar / buff done professionally.

Few hundred and it’ll look new. Have the engine compartment cleaned too!

My car cost more than my BS and MS degrees combined. I bought it new in 2001 and plan on keeping it at least till 2017 or I hit 200k miles (currently I’m at ~135k). I try my best not to live/eat out of my car. Once a year, I usually pay anywhere from $50-150 to get my car cleaned and detailed (glazed, waxed and shampooed). I agree with the above comment that “cars are expenses, transportation, and utility only.”

LOL You and your wife do know that there are places where they will TOTALLY clean the interior and can use waxes and cleaners to bring the finish back to life for a couple of hundred dollars, right? Why does she think those used cars look so good? LOL

I agree with you. I buy my cars to last and tend to use them until they’re on their last legs, one way or another. When I got the vehicle before this one, my mechanic heaved a sigh of relief. He as afraid that, with the way the undercarriage was rusting, I’d put a foot through the floorboards one day!

I’m in total agreement with you!

We’ve got a similar, but very different situation, maybe your advice would be helfpul. DH has a wicked old Lexus (hand-me-down from the early days before his lawyer Dad realized that his type of law doesn’t pay well enough for such things). Its got way too many issues, some of which make it too unsafe to drive, some actually make it illegal to drive here. I’m the wife saying, PLEASE get a used car and remove the wicked old lexus. Of course, the problems with the lexus go way beyond some mere physical unsightliness – no brakes, bad battery, oil leak into the engine, etc. I say you are fine with your car, let your wife have her pretty car, and ask her politely to let you keep your not-so-pretty car. As long as you’re in no danger of having the brakes fail, don’t emit a huge cloud of black smoke from the hood and tailpipe, and aren’t calling her up asking her to jump your car in a walmart parking lot every few days, I say you’re all good.

Not once did you do a cost-analysis on this question. Too much emotion went into your reasons, and frankly, most of your reasons are very lame. Why two SUV’s in the family? Do you really thing gas prices are going to trend down? Your pridicament smacks of “typtical American” and shows the behaviors that got many Americans in trouble financially during this terrible Great Recession. Questions of finance should be devoid of emotion and be made with a practical, dispassionate mind frame.

I would suggest you look into getting rid of all your SUV’s and replacing them with new or used small cars…this would be a far more responsible strategy in my mind.

Cars are considered as “Doodads” by Robert Kiyosaki.

It’s a liability and not an asset. You have to pay for the gasoline, repairs, maintenance, etc.

Plus its value devaluates over time.

Think about it.

In response to the last comment, you bring up some points to consider.

But consider this also: when my husband and I were thinking of trading in our then 2-1/2 year old minivan for a smaller, more fuel efficient car, we DID do a cost analysis, and despite the fuel savings we would have seen with the small car, it would have taken us more than 5 years just to break even!

We don’t know enough about David’s lifestyle, finances, etc., to know for sure that it would be more financially responsible for him to trade one or both of his SUVs for something new and smaller. I seriously doubt it would, though. From his previous posts, it sounds to me like his family really does need at least one large vehicle with the ability to haul both people and things.

I don’t think he says for sure, but I suspect his SUV is also paid in full.
I’ve read time and again that if your vehicle is in good mechanical condition and is paid off, then it always makes better sense to keep it for as long as you can.

Sordo ~ I have done a cost analysis and it would take a long time for me to break even. I drive my vehicle about 6,000 miles per year. My wife drives her’s about the same. Both cars are paid off and my wife gets free routine maintenance (which we pre-paid for $250 when we bought her SUV in 2003). We just do not drive enough to make the price of gas a consideration (other than when we are filling up at $50 per tank every few weeks).

Also, I am over 6’3″. I have never found a small vehicle that had suffient leg room to allow me to drive comfortably. Even in both of our SUVs I have to stoop to see through the windshield.

Lastly, my wife has researched crash safety and believes that SUVs are safer (as long as they are not at risk of rolling over) than cars.

This is why we bought a 2003 Honda CR-V with 22k on it last March. It ran beautifully and was in pristine condition. With that low mileage and reputation Honda is known for, we knew we would have it around for a very long time. We drive our vehicles until they can’t run anymore. Plus, the CR-V meets our needs regarding our lifestyle. We don’t travel long distance much but once a year, and we make sure to consolidate all our errands twice a week. This keeps our insurance cost low as well.

We were extremely lucky to have found this vehicle.

I have a 2000 Ford Explorer with 130k miles on which needs new tires and possibly a new transmission soon. I have debated on what to do and I still think it makes much more sense to put new tires on and get a rebuilt or new transmission as the engine could last for 250k+ miles.