CARS - I've had a few!
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There are two topics I have never covered on my blog. TAXES and CARS.
Both are a minefield. I’ve managed to avoid even thinking about how to file a tax return though because I gave my paperwork to an accountant a few weeks back and in the fullness of time he will hopefully find me some money I never knew I was owed. If so, that will help with the second topic: Cars.
Read any PF blog, listen to any FI podcast and they will all tell you that buying a new car is a dumb idea, akin to getting some of your hard earned money out of the bank and putting a match to it. Mr Money Mustache would be horrified to read this blog and if it helps any, I also own a bicycle... I learn a lot by reading but I also learn a lot by doing and to my shame I have first hand experience in buying brand new cars, because I’ve done it five times.
There, my secret is out!
You all thought I was some seriously switched on chick who has this money thing down pat right? I am! But I’ve made a few mistakes too.
And to be honest, although we would without a doubt have been financially further ahead if we didn’t buy cars, I’m struggling to regret any of my purchases.
I think I may have inherited the “car gene” from my Dad who for as long as I can remember was constantly buying old cars and flicking them off. The shortest time he owned a vehicle was when he bought a powder blue, one careful lady owner, Ford Escort. On his drive home he stopped to chat to a mate who coincidentally was just about to hitch hike a ride to town to buy a car because his old bomb had just died. Dad made $100 in that deal, he probably owned it for a total of 30 minutes. Not bad. His urge to buy vehicles was curtailed at one point when I heard Mum screech “if you bring home ONE MORE VEHICLE it better be big enough to sleep in!” He DID bring home one more and she made him take it back to the owner and say “my wife won’t let me keep it”. True story.
I’ve owned a lot of cars, all of them old and needing work, but my Dad was great at helping me get them going. The first car I made money out of was a Lada Samara which I bought for $1,995.
I had it in my final year of University and I heard ALL the jokes:
Why does a Lada have twin exhausts? So you can use it as a wheelbarrow!
What do you call a convertible Lada? A mini skip!
Why does a Lada have heated rear windows? So you can warm your hands while you are pushing it!
How do you double the value of a Lada? Fill up the petrol tank!
I could go on…
Despite all the jokes, my Lada always started on the coldest Dunedin mornings and even though people tried, it never got stolen. I remember going out one morning and a pair of scissors was broken off in the lock. Scissors were knackered: Lock worked fine. That’s a WIN for the Lada. And the crowning glory of that most excellent car was that I hired it out to some travellers for a month for $1,000 AND then I sold it for $2,000. So, I made money on that car!
When I met Jonny he was driving a Mazda Famila which quickly turned into a twin turbo Subaru Legacy that was always giving him trouble. When it was going it went like the clappers, but the rest of the time it just gave him grief. So, I took it to a dealer and sold it for him. His car ownership then took a giant pivot. He bought a brand new… Holden Barina, colour blue. I guess he figured I was pretty impressed by HIM by that stage and a car would not change that so he didn’t have anything to prove anymore. And get this, his Mum bought the same car, but in green!
For the next ten plus years I had a company car so I got extremely used to the “new car smell”, never driving anything more than three years old (oh, that simply would NOT do!). Free car, free petrol, unlimited use AND no insurance to pay. We saved a lot of money. Each new job had a different car and each and every one of them looked great up our driveway, parked beside the Barina. It was when I gave up the job that came with a car that we needed to buy our own vehicle again.
Jonny is an excellent researcher when it comes to cars. He reads every brochure, watches every review, trawls every website until we settled on the car that fitted our purpose at that time. I was bought in at the end to talk turkey and negotiate the deal with the salesman because he does not like that part. We certainly considered second hand but then dismissed that notion just as quickly. We would OF COURSE be keeping this car for 20 years so best we bought something new, right?
Our problem became that our purpose for which we needed the vehicle kept changing, so we needed to keep changing the vehicle...
Car 1. Holden Barina - dark blue
Car 2. Mini Cooper - red with white stripes
Car 3. Subaru Impreza - red
Car 4. Mini Cooper S - white with black stripes
Car 5. Mitsubishi Ute - red
We knew the full meaning of the word DEPRECIATION, we just chose to ignore it.
“A new car loses the majority of its value when you drive it off the lot YADDA YADDA YADDA...”
Irrelevant to us because we were buying the latest technology, highest safety rating, amazing fuel economy, all new gadgets onboard…
FINALLY after all these cars we owned up to the fact that we were losing money because although we thought that each time we bought a vehicle THIS IS IT, we are owning it until it dies, of course it wasn’t. Apart from the first Mini which we upped our mortgage a little to afford, the rest of them were paid for by trading in one car and adding a little more cash, or doing a straight swap, so buying new made perfect sense because we could afford it right? Right? RIGHT?
I KNOW that YOU KNOW that I’m not fooling anyone by trying to justify all this. We were new car junkies.
And that leads me to...
Car 6. Mazda 2 - light blue
We bought this ‘almost’ second hand, so we finally learned our lesson. It had 9,000Km on it and had been the car yard demo model so it had already depreciated a large chunk. We still have this car and I love it still.
AND THEN WE STOPPED BUYING CARS. Like an alcoholic giving up the grog I can tell you that it has been seven years since we bought a vehicle. But we have just fallen off the wagon again.
We hit that conundrum again where our needs have changed and we needed a different vehicle. Or do we? Of course we don’t! It is a want, cunningly disguised as a need and we are pretty good at justifying our spending needs.
Our 2010 ute still had four wheels and, at a squeeze it fits five people inside, with all of their junk in the back. A ute is INCREDIBLY handy. I don’t know how many times we have said aloud “that woman needs a ute” when we have seen someone driving along with a bed strapped on the roof of their car or fence posts sticking out the windows.
But how long do you keep a car for before it starts costing even more money? Well, we finally owned one long enough so I could do the math. This vehicle I worked out had been costing us roughly $4250 per year for every year that we have owned it. Half of that is our own silly fault because of depreciation but also added to that is:
- Many new tyres
- New cover for the back of the ute
- New cam belt
- Huge servicing costs because it was under warranty and had to go to a specific mechanic and have genuine filters etc used (which I have since realised it didn’t have to)
- Road user miles because its a diesel, plus all of the diesel we have poured into it
- Higher registration costs
- Insurance excess claims due to the odd dent - caused by someone else I should note
And our needs ARE now different. Honest! I’m always driving long distances to see family at the moment and I want to do it in a more comfortable vehicle than a ute. And my Mazda is too small to take away on these trips because I’m always carting stuff around. Our yard work is all done now and I’m more likely to be ferrying kids around than a ton of gravel. Plus, every neighbour has a trailer and all of them have offered to lend it to us whenever we need it.
Now, I know quite a few mechanics and can testify that they drive some of the crappiest cars out there. Just like my Dad, all their cars tend to be old because they can be fixed - by them. Their cars might look rough but they drive real smooth and whereas my fear is that “oh my god I might break down and be stranded” they just don’t have those concerns. I’m fixated on the latest safety ratings to protect those inside and yeah/nah, that’s not even on their radar. I was worried that our ute was going to become even more expensive as it got older. I’m always driving on the open road and I want to be in a safe vehicle that handles well and even though I own a bike a 500km round trip takes time. There are so many pros and cons and not helping is the fact that the friends we showed images of the car we wanted to buy said UNHELPFUL things like “that’s a great car, you should just buy it”. And I’m sure they are also thinking, just make a freaking decision already you two, we are sick of hearing about it for the last year!
I visited my Dad who has the terrible disease alzheimers. He is very hard to communicate with now BUT when I said we are off to look at a car and asked him if he had any advice for us he said as clear as day “to mollycoddle them along”. That was Dad’s proven technique and it seemed to work. He thought car shopping was a excellent idea!
So, we discussed every angle and every implication and the ‘dance of the new car purchase’ began. Jonny read and watched every review of every car produced in the last two years. For a guy who does not like to read, reading about cars is his exception. Off the top of his head he can compare various cars and their fuel ratings, safety ratings, various gadgets, rego costs, performance statistics etc etc. Yawn! We have narrowed down our search to a 2015 Skoda with 11,500KM on the clock. I should point out that Skoda was in the not too distant past the butt of more jokes than my Lada ever was:
Owner asks mechanic “Can I get a windscreen wiper for my Skoda”? Mechanic answers “That sounds like a fair swap”.
We then made our first mistake, we phoned the salesman Jason.
This guy then began to earn his money because he was persistent in answering every objection we had and THEN “following up” right when we thought we would just keep the ute. Having been in sales myself, I’m quietly impressed...
Objection 1. We want more for our ute than you are offering…
Answer - We will give you what you are asking. Bugger.
Objection 2. We can’t get through to see the car until the weekend (we are two and a quarter hours away)
Answer - I will drive to see you today. Bugger.
Objection 3. We will have to spend money putting a towbar on it
Answer - We will put a towbar on it. Bugger.
I’m throwing every road block out there that I can find because while I would love a new vehicle I don’t want to spend the money!
I’m a Happy Saver and an Unhappy Spender.
Going ahead means I can kiss goodbye to my Hairy Audacious Goal of meeting my savings target of $15,000 by Christmas. Or it means I have to think a lot harder about HOW to still meet that goal. I am already a third of the way there too so it is going to hurt to give it up. Not just my pride, I’m talking about our bank balance too. So, we were kind of running out of excuses by now but we could always have just said NO I guess?
And what about the money, where is that coming from?
I would NEVER take out a car loan and my theory is if we can’t own it, we don’t buy it. So to free up some cash we recently sold another vehicle, a 1972 Land Rover in need of restoration. This was my Dad’s last Landy and we thought we would be the people to restore it, but strangely a year and a half of looking at it from my kitchen window did not move the restoration along one nut OR bolt. It has however left a lasting reminder that we owned it by way of a big oil stain on the driveway.
So, after MORE DELIBERATION THAN ANY REASONABLE CAR BUYER WOULD NORMALLY DO we handed over our beaut ute and $14,000 cash.
Car 7. Skoda - red
The cash was from a savings account and from selling the Landy. Handily the yard let us put $5,000 on credit card so we get to keep money in our account longer and gain a few airpoints. That money represents six months of income in retirement. Its money that was already working for us by earning interest and paying us so we don’t have to work so much. A conversation with friends a while back plays on my mind. They are financially sorted but recently bought a brand new car for the very first time, after driving old cars forever. He still shakes his head every time his new car is mentioned followed by a comment along the lines of “the new car is great to drive, but I can’t believe I spent all that money”. I hear ya Andrew!
It has been a couple of weeks now since we shuffled around the cars in the driveway. Land Rover and ute are gone and the Mazda and Skoda are parked out there instead. When it comes to parting with cash you will have worked out from reading this we are not impulsive people. I thought through every implication of spending the money and Jonny thought through every implication of choosing the correct car.
We spent more than this on our trip to America last year with nothing but amazing memories to show for it and this time we dropped the cash and the result is sitting outside. I think we are over our period of changing a car every two years and buying this one with KM’s on the clock means it has already depreciated a chunk. Will it hold its value? Nope. But, to us, it is still important that we have a late model, reliable and safe car. The fact that this one also looks pretty fine and goes like like the clappers is the cherry on top.
And as for Jason the salesman? He earned his commission. He needs to do a bit of work on the client “welcome to your car gift” of some Beetroot and Balsamic relish though. WTF? That actually stands for Woulda Thought Fuel vouchers would have been more useful…
Jokes aside, thanks Dunedin Skoda!