What happens when your children show an interest in selling on Ebay.

October 14, 2015

PART TWO: Why car payments are costing you millions of dollars!

October 14, 2015

Dave Ramsey might be mad at me & Why car payments are costing you millions of dollars!

October 14, 2015
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making dollars sense10/14/15

PART ONE

Why might Dave Ramsey be mad at me?  We’re not yet done paying off all our debt and just incurred a bit more debt as we bought a new car on payments.  All no no’s when it comes to being smart with your money.

Our new 2015 Nissan Quest Minivan.  Some people buy sports cars when going through a mid-life crises..we get a family car!

Our new 2015 Nissan Quest Minivan. Some people buy sports cars when going through a mid-life crises..we get a family car!

We’re not done paying off all our debt, so why in the world would we buy a new car?  We’ve paid off $100,000 of debt in a little over 2.5 years so far.  We’re not done yet..we still have a loan with my parents. But we have older cars and my hubby’s truck has been breaking quite a bit lately…it’s a 2001 Dodge Ram.

Here's hubby fixing the damn truck.  We put $700 into it just in Sept. No matter how many times you fix a car, especially if you can do it yourself, it's less expensive than buying another one.

Here’s hubby fixing the damn truck. We put $700 into it just in Sept. No matter how many times you fix a car, especially if you can do it yourself, it’s less expensive than buying another one.

This will now be my 16 year old son’s.  Hubby still wants to do a few more things, but it works!

Our other car is a 2006 Ford Fusion.  We knew we’d be looking for a car and have been doing so since about May of this year.  And we’ve been looking for slightly older minivans.  Our sons are huge..the 16yo is now 6″7″ and my 13yo is 6’2″ already.  We need the leg room and also more seating (our in-laws live 3 houses down and we do lots of stuff with them..nice not to have to take 2 cars).

If you had asked me 6 months ago if I’d ever buy a new car, I would have said “NO WAY, are you crazy?  You lose like 25% of the value of the car just by driving it off the lot.”   Plus millionairs (I think this was from the book “The Millionaire Next Door”) usually drive cars about 1-2 years old..they let someone else take the depreciation hit.  And Dave Ramsey’s guideline for buying a new car is that you should have a net worth of $1 million dollars, and then you can take that kind of an depreciation loss.

So why in the world did we get this new car when we still have my parents loan to pay back?  Well, first, they basically told us we can pay them back (at no interest), whenever. They’ve actually been looking for a good deal on a minivan for us for about a year.  My son was going to need a car anyway and we really needed something with some more room.  So a minivan made most sense.

About every couple of weeks, I would be online searching for what’s available.  And as I was searching…here’s what I was coming up with.

used mini vans

I had no idea how expensive mini vans are. And look at all those miles!

used mini vans 2010

And these..5 years old and all those miles and still so expensive!

So I typically search for used minivans.  Well, I accidentally forgot to click on the used search and left it set to new.  I also had my $ limit set to $23,000.  So when I clicked search, I thought I was looking for used minivans.  And here’s what came up:

our nissan

$22,799 for a brand new minivan? WHAT??

Yep, that the car.  I did have to drive about an hour to get it.  And the price was actually $600 more (that above price was for recently college grads…grrr!).  So by chance I happened to find this minivan.  And that was with a 100 mile radius.

Now why was it so inexpensive compared to everything else on the market.  First of all, the sticker price on it was $27,900.  Which is still cheap as these go for about $40,000.  But this is the most basic model available.  And that’s perfectly okay with us.  This most basic model already has more features than our current cars.  Sure, it my not have DVDs in the back, or tinted windows (which we’ve already gotten done for $300), or a rear-view camera, or automatic seats, or side doors that close automatically.  Who cares.  It’s still a beautiful looking car and has everything we need. Plus the way we see it, the less features, the less things that can break.  And we saved about $20K.  However, I will be replacing the rims though..that will be another $400.  Then this car will look just like the $40K version.

If you have to buy something on payments, you really can’t afford it.  Plus you’re making another company rich..keep that money and let it work for you instead! Well, we should be done paying this sucker off by next October (within one year) and the interest cost will only be $715.  Actually will be less as we’ll be making huge prepayments on it so the monthly interest calculation will be smaller every month. We got a loan through our local Credit Union at only 2.75%.

And it actually hurts my stomach to know that I’ll be throwing $715 away..but I’m willing to pay that instead of having to wait a year to save up the money and pay cash.  Plus we found a great deal on a car that’s exactly what we wanted.  And all of you out there are my accountability to get this sucker paid off within a year.  Although I’m hoping it will be sooner, but we’ll see.

This post is already quite long so I will leave PART TWO for another day.  That’s where I’ll talk about how these car payments are costing you millions of dollars.  It’s really important and I hope you’ll read it and take it to heart!

Thanks so much for stopping by!

5 comments

  1. The oldest of our cars is a 2003, and I am starting to become concerned that we may need to replace it sooner rather than later. It is approaching 200,000 miles and I am afraid that it may have some repairs in its future that could be quite costly. And unfortunately neither myself nor my husband are at all handy with cars. Both cars we have purchased since we got married 13 years ago have been new, but we haven’t had a car payment in many years. My attitude about money has definitely changed over the years, and I can’t imagine going back to having a monthly car payment. We haven’t had any debt other than our mortgage since paying off the last of my student loans at the beginning of the year, and I love that feeling! But buying a used car makes me anxious in its own way. Ugh, hopefully a decision we can postpone awhile longer!

    1. Hey Kari, we’ve been postponing it for about 2 years. Luckily it was long enough where we could make a huge dent in our debt. And luckily hubby can fix cars..he’s been fixing them quite a bit. I guess it’s easier to buy used when you know you can fix a car without having to take it in..you never know what you’ll get with used. But you have to weigh that against the cost of a new car. We haven’t paid on cars in about 10 years..so this car is getting paid off fast. I don’t want any payments!!!! I’m keeping my fingers crossed that maybe we can get it paid off before 1 year is up.

  2. First, it looks like you really thought about this. We did a similar thing with our house and PMI. We knew we would have the cash in a year. We paid our house down like crazy and got rid of the PMI last month… Ended up paying ~1200 in PMI compared to the 7500 if we went by their schedule.

    Second, have you thought about selling the truck and getting a good beater car? My father-in-law did this and got an old Chevy Cavelier and had all 3 daughters drive it over the years. There were a few minor accidents through the years but he ended up selling it for a $100 profit at the end!

    1. Hey Chris. There’s no reason to get another car. Hubby fixed it and it’s awesome now. The engine on this beast is fabulous…it’s just that everything around it was breaking..LOL We put in about $750 (but it’s like $4k if we took it somewhere). He didn’t just fix what was wrong (bearings), but replaced a whole bunch of stuff that was wearing out. Brakes, u joints, ball bearings, etc.). The truck only has about 130K miles. It will last a good long time still…so no reason to get anything else.

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