soundmotor

Great topic, I'll try to add constructively! The area I am working on now is cars. I've had both new & used. I drive a used car now, but I bought an expensive one so I have a new car payment so it is really in between the extremes of basic transportation and "I'm the first one to debauch it."

First & foremost if you have to have a car, get one used. You'll save 40-50% on the model you want if it is as least 3 years old. That also coincides where new cars come off lease. Unlike a rental car offered up for sale, lease turn backs are in exceptional shape & often carry warranty. Second, when buying used, do not buy from a dealer. Find an auto broker. That may take some searching & word of mouth. Ideally, you get a personal recommendation from someone who bought from one. That's how I got into my current car but had I analyzed it more thoroughly, I would have done it very differently. Read on.

Here are the numbers on my purchase: late model German w/ 48K on it, single lease turn back, and in absolutely mint condition w/ every option. Original sticker on the car was ~$45K. My loan was for $21K w/ nothing down. A substantial savings on an outstanding car. ~24 months of payments so far & another ~24 to go. I am getting tired of payments and want to go back to outright "ownership". I put that in quotes because the continual gas, insurance, & maintennance costs mean you own the equipment but pay constantly on the use of it.

Recently this has caused me more & more concern especially when you reflect on what you must earn to pay for the ride. I put roughly 30K miles per year on the car. As the car only gets 22MPG it workes out to ~$2800 yearly in fuel cost. On top of that is the insurance. Even w/ a great record and no tickets, it adds another $1000. Keeping the car up (oil changes, carwashes, repairs, etc.) can easily add another $1200 or more. Finally, the note for the money borrowed totals ~$5100 per year. That is roughly $10,000 per year in after tax money for 2 more years. That means I must earn ~$14K per year just to drive this particular vehicle. That is definitely not living frugally and is why any 1st year financial adviser will tell you that your car is one of your biggest expenses. So how does one remedy this?

Get out of it and return to more reasonable transportation! For me, it must get better than 28MPG & that shaves $850-1000. Can't do much about insurance, it is what it is. Next is maintenance & that probably won't change much either because of my yearly mileage. The only other area of savings is outright purchase rather than financing upon sale of the vehicle I have. Because it is a popular model, I may even sink the note fully and have enough equite to buy the next one. As I put so many miles on the car, I don't want to spend much so I've put a cap of $4200 on the purchase including title & registration fees. The first year savings will be neglible if I don't get enough out of the old car to pay for the "new" one but the following one they are cut in half. This is certainly in keeping with the way I was raised, to live within my means even though technically I am with the current vehicle.

Hope someone finds this information useful.

soundmotor