Author Topic: Mustachian Car Juggling  (Read 6346 times)

jpo

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Mustachian Car Juggling
« on: May 14, 2012, 03:25:51 PM »
Inspired by Guitarguy's thread...

I have a car with 150k miles on it. I also have some ~$9k for a newer car.

I do not think the current car will die within the next year, BUT in a year or three I will be driving on "borrowed time," and the car will be about to die.

It seems to me like the time after your only working car dies is the worst possible time to become a car shopper, as you need to buy something quickly. On this premise, have any of you Mustachians purchased a new(er) car before getting rid of the old one, and letting the new one sit undriven until the old one croaks? This way you could take your time shopping for a good deal on a used vehicle and you're not really losing anything (except registration fees) by letting the old one sit, assuming you're not planning on reselling it later. I would presume this is more Mustachian than buying the new(er) car and selling the old one before it dies.
« Last Edit: October 19, 2012, 02:23:54 PM by jpo »

AlexK

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #1 on: May 14, 2012, 03:37:25 PM »
Actually the trick is to sell the old car just before it dies, not after.  Ever try to sell a dead car?

gooki

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #2 on: May 14, 2012, 03:39:44 PM »
I'd recommend selling the old one before it dies. The general resale value of a working car is 10x that of a non working vehicle.

Also vehicles depreciate with age, so no point buying 2 years before you need to, when you could simply buy 2 years later at a more depreciated price.

For me it was a case of how quick can I get a positive ROI on my new vehicle purchase based on fuel savings alone. I purchased a new vehicle at $4,500 sold my old vehicle for $2,000. Which left a balance of $2500. My annual fuel savings were $1,000 per year so a 2.5 year ROI seemed very acceptable.

jpo

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #3 on: May 14, 2012, 03:51:19 PM »
Also vehicles depreciate with age, so no point buying 2 years before you need to, when you could simply buy 2 years later at a more depreciated price.
Right, but if you never sell it, does that really matter?

I'm talking about driving it until the transmission blows/wheels fall off/etc and costs more than the value of the car to replace, and then you sell/donate it to a junkyard for parts.

Plus, you don't know (or at least I don't) exactly how many miles the car has left in it, another 10k or another 50k...

gooki

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #4 on: May 14, 2012, 07:27:11 PM »
In that quote I was talking about buying the new car.

Say you buy a 2004 used car today for $9000

In three years time, it's likely you could find one for $6000

So what's the point buying it now and not using it for a premium of $1000 per year in depreciation + any annual vehicle licencing costs?

However I do agree about not putting yourself in a situation of having to buy a car. Weather that means buying before your current vehicle dies and the sell the current one, or structuring your life that you could live without a car for a month. All give you better bargaining power when it comes to buying.
« Last Edit: May 14, 2012, 09:26:27 PM by gooki »

James

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #5 on: May 14, 2012, 07:37:25 PM »
Any time I'm thinking I'm driving on borrowed time I would get a new vehicle and sell the old one.  A vehicle is a tool to me, not a gamble, I have no desire to drive a car until it actually dies.  Not that there is anything wrong with that, if you have the flexibility and can deal with an aging car at the end of its life then go for it, but that's not where I'd choose to save the money.


I'll probably drive vehicles from the 70-100k to 150-180k stretch.  That's about 80,000 per vehicle I own, which should run about 8 years with current driving habits, but hopefully much longer once we can move to town or move to a bigger city.  I'm fine with spending $1000 per year on the actual vehicle, so if I buy at $10k and sell at $2k in 8 years I'd consider that within my goal.

johnnylighthouse

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #6 on: May 14, 2012, 08:39:28 PM »
But James, what if you get three more years on it (11 total) and no return when it dies?  you have saved 1k right? I say drive them till they drop.

gooki

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #7 on: May 14, 2012, 09:29:05 PM »
Except now you need a working car and don't have the time to wait for the best buy and end up spending $2k more on a car because you need it now. Giving a net loss of $1000.

Yes this is all hypothetical and no answer is particularly right.

James

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #8 on: May 15, 2012, 09:16:51 AM »
But James, what if you get three more years on it (11 total) and no return when it dies?  you have saved 1k right? I say drive them till they drop.

Exactly.  As I said in my post I don't think there is anything wrong with that logic, it's just not where I choose to save money.

jpo

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #9 on: October 19, 2012, 02:16:41 PM »
Sorry to bump from so long ago, but I'm still wondering about this; I am still sick of dropping money into that damn car.

More specifics on my situation:
I drive a 2000 Mercury Sable with ~160k miles on it. It gets about 20 mpg. Over the last 2 years or so I have averaged $80/mo in repairs above and beyond normal oil changes. It also needs about $500 worth in functional repairs that I haven't had done to the car yet, plus a list of things that I am not going to fix (windows stuck up, etc). I think I could sell the Sable for about $1k. I drive ~900 miles per month. Also, as it doesn't fit the large car-loving canine and her crate, I'm not sure the sedan is the greatest fit for my desired lifestyle.

Right now there are two fairly mustachian cars I see online:
  • 2004 Toyota Prius, $10k sticker, 75k miles, 46mpg
  • 2010 Honda Fit, $11k sticker, 55k miles, 31mpg

Prius:
(900mi/20mpg - 900mi/46mpg)*$3.75/gal = $95/mo gas savings
$10000 upfront cost/($80 repairs + $95 gas savings)/12 months = 4.75 years until I break even, assuming no extra maintenance and constant gas prices

Fit:
(900mi/20mpg - 900mi/31mpg)*$3.75/gal = $60/mo gas savings
$11000 upfront cost/($80 repairs + $60 gas savings)/12 months = 6.5 years until I break even, assuming no extra maintenance and constant gas prices

I have enough cash reserves to pay for either car. I also haven't factored in any possibly increased insurance costs, and the probability that I will be driving less per month after moving within the next few years.

Am I being a major complainypants or is it time to switch?

AJ

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Re: Juggling Multiple Cars The Mustachian Way?
« Reply #10 on: October 19, 2012, 02:33:18 PM »
I have enough cash reserves to pay for either car. I also haven't factored in any possibly increased insurance costs, and the probability that I will be driving less per month after moving within the next few years.

I think you should price out the insurance before making a decision. Given the low value of your current vehicle, I assume you only carry liability? There's no real reason to fully insure a car worth only $1k. But if you buy one of these nicer cars, will you carry full coverage? If so, what does that do to your break-even points?

Also, 5-6 years is sort of pushing it to assume no repairs at all on a used car. It might be fine, but might not.

ErinG

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Re: Mustachian Car Juggling
« Reply #11 on: October 19, 2012, 04:48:22 PM »
I'm going to drive my car into the ground. I have 206K miles on it and it's worth squat. Maybe $1000 while running and $350 to the junk yard. I'm squeezing every mile out of it possible. If I run into some fantastic deal, I would consider buying the new (used) car and then selling mine. Otherwise, I hope it just catastrophically fails after racking up guinness book of record type miles and I junk it. If I had to spend 2 weeks searching for a replacement, that would be inconvenient but I have a car pool buddy + grocery store on my street + kids ride the bus so it would be doable.

My bigger fear is that my car will nickel and dime me to death on repairs before it "dies". It's always hard for me to know when to pull the plug. However, even a younger car could end up on life support, there's no guarantee that swapping my 99 for a 05 is going to get me a car that doesn't need work.

thurston howell iv

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Re: Mustachian Car Juggling
« Reply #12 on: October 23, 2012, 06:45:41 AM »
jpo: What $500 does the car need in maintenance?

While I am new here, I have been reading MMM's blog and he seems to be a pretty hands on type of guy... I wonder if maybe things such as basic car repairs (or repairs of any sort) should not be in a mustachian repertoire... (not bashing, just thinking outloud)

I once had this same issue. A car was a mysterious machine that could only be serviced by "mechanics". I was 17 and got ripped off (at least in my estimation) by a local shop that claimed to be doing me a favor. They charged a couple hours labor for something that could clearly be done in a few minutes. From then on, I vowed to try and learn and do it myself (mind you this was before the fancypants internet)!     

Since then, we have tackled or attempted to tackle any and all car related issues- eventually grew into all home issues as well (that's another story)... I estimate that I have saved thousands and thousands of dollars by DIY.

The point of this rant?  Well, I'll bet you that with some basic maintenance, general care and some savvy internet shopping, your car can be fixed easily, you'll learn a new skill or two and your car will last much longer.... I have 207k on my honda and 157k on my subaru. Not worried a bit.

If you post the issues with the car (you can pm if that's more comfortable) I can see if I can help. Trust me, it's not rocket surgery.

Paul der Krake

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Re: Mustachian Car Juggling
« Reply #13 on: October 23, 2012, 08:37:26 AM »
If you post the issues with the car (you can pm if that's more comfortable) I can see if I can help. Trust me, it's not rocket surgery.
I'm going to take you up on that offer, I have a rather unusual situation. Expect a PM from me in the next few hours. :)

thurston howell iv

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Re: Mustachian Car Juggling
« Reply #14 on: October 23, 2012, 12:09:39 PM »
Got it Paul. Responded...

jpo

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Re: Mustachian Car Juggling
« Reply #15 on: October 25, 2012, 10:28:20 AM »
jpo: What $500 does the car need in maintenance?

I once had this same issue. A car was a mysterious machine that could only be serviced by "mechanics". I was 17 and got ripped off (at least in my estimation) by a local shop that claimed to be doing me a favor. They charged a couple hours labor for something that could clearly be done in a few minutes. From then on, I vowed to try and learn and do it myself (mind you this was before the fancypants internet)!
  • Transmission fluid - never been changed
  • Spark plugs - never been changed
  • Engine Intake Valve (?) - engine sometimes is not idling properly, they diagnosed the issue but I have forgotten the name of the parts

I could probably replace the spark plugs myself and save some cash.

I do trust the mechanic I go to. They aren't the cheapest in terms of labor but they do good work and are thorough and honest about what needs to be done.

Also, after talking with my dad, probably not going after that Fit because it has so many miles in such a short time. I did do some additional searches and there are some cheap Nissan Versa's with low miles to be had.

gdborton

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Re: Mustachian Car Juggling
« Reply #16 on: October 25, 2012, 10:48:30 AM »
You might want to pick up a Haynes manual (~$15) and check out the pcv valve (~$2), and possibly clean your egr valve (these are expensive but can usually be cleaned to help idling problems... ~$6 for carb cleaner).  Also spark plugs are normally very easy to change with basic tools + $.25 gapper, difficulty really depends on where they are.  Wires and a new coil pack might be a good idea too if you've never changed the plus, these are a little bit harder but not by much.

For the transmission fluid I'm assuming you mean a flush?  I've read differing opinions on whether this is ever needed as a car gets older, and that it might cause some tranny problems when you get it.

jpo

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Re: Mustachian Car Juggling
« Reply #17 on: October 25, 2012, 10:50:39 AM »
For the transmission fluid I'm assuming you mean a flush?  I've read differing opinions on whether this is ever needed as a car gets older, and that it might cause some tranny problems when you get it.
Yes. I asked the mechanic about this, he said that can happen if the fluid is very dirty but mine isn't quite that bad yet.