I passed on buying a car - good decision?

[Tester]

Recently I found out about a car sold by a colleague.
2000 Hyundai Elantra wagon GLS.
The car had two owners, my colleague's grandmother and my colleague.
110000 miles.
The car was well cared for, it showed 51 records in Carfax - don't know what the records were about, did not pay to see them as in the end I decided not to buy.
The car would have needed the following expenses after buying:
1. Break rotors and pads (plus calipers?) replaced - qoute from the mechanic - 350 USD. The car would "wobble" at 70 mph because of this.
2. Timing belt plus water pump plus tensioners plus accessories belt - mechanic quote of 650 USD.
3. Tires - 400 USD?

The asking price was 2200 USD.
The car looked good, it did not show signs of accidents (as far as I can tell it did not have accidents, the paint was looking very good).

Last month we paid 400 USD for rental cars.
In the last 5 months (since we moved to the USA) we paid 1000 USD on rental cars.
We had several trips to Vancouver, BC to my aunt to make the transition easier on our kid (he sees my aunt as a grandmother - and he is missing his grandparents).

So, first we thought it would be a good idea to buy this car, but then we thought that if we buy it now we would have to keep it for about 4 years to make it worth it.
We decided to first finish saving an emergency fund - right now it is at 2000 USD, contributing just 500 USD/month since we increased the 401k contribution to be able to max it by the end of the year.
Then we want to pay at least 10000 USD off our debts - in fact we plan to pay 40000 USD using some RSUs which will be vesting in November.
Then we would look to buy a car - a newer one we think.

Why we passed in the end:

We have around 63000 USD debt - 22000 USD at 4%, 30000 at 10% and 11000 at 10%.
We are just trying to adjust to saving more of our income, so we are not yet saving enough.

Income:

Gross pay: 9900 USD

Federal income tax: 1378 USD
Social security tax: 595 USD
Medicare tax: 139 USD

Pre-tax:
Dental: 65 USD
Medical: 256 USD
Vision: 4 USD


401K : 2477 USD - increased this to be able to max by the end of the year - as I started working in March I missed some months of contribution.


Net income: 4963 USD.

Rent + utilities: 2000 USD.
Mortgage (if we pay just the minimum): 750 USD. We pay in fact more, we pay 1500 USD/month
Groceries: we are paying around 750 USD - two adults and one 3 year old child.
Child activities: 200 USD - not in daycare yet, wife stays with him and goes to Gymboree activities (paid) and to public library activities (free).

This leave 750 USD for everything else.
After paying the debt we plan on using those 1500 USD towards saving for the kid education (pre-tax) and to also have some after tax savings.


Please let me know if we made the wrong decision in not buying the car.

Another question - I realize that nobody can know if shares will be up or down, but keeping in mind the recent evolution I might want to keep the shares and sell them at a higher price. They are up 68% year over year - which could mean they will go down abruptly :). I even saw the shares going down 50% in one day after the earnings reports several years ago... Should I pay off the 40000 USD or should I wait some more time for the shares to grow more?
I never regretted selling the RSUs because when the price was too low I did not sell and in the other occasions I sold when I "needed" the money.

[Bikeguy]

I would put the 750 extra on the mortgage into paying off the 10% loans.  That is a guaranteed 10% rate of return.

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[GreenPen]

Last month we paid 400 USD for rental cars.
In the last 5 months (since we moved to the USA) we paid 1000 USD on rental cars.
We had several trips to Vancouver, BC to my aunt to make the transition easier on our kid (he sees my aunt as a grandmother - and he is missing his grandparents).

So, first we thought it would be a good idea to buy this car, but then we thought that if we buy it now we would have to keep it for about 4 years to make it worth it.

Wow -- it's a bit uncanny reading this post, since just last week I turned down an offer to buy a friend's car for $2000. So I was just adding up rental car receipts and doing similar calculations!

One thing to keep in mind is that when you own a car, it's often the case that you will find excuses to use it, which obviously costs money.

But $1000 sounds like a lot for rental cars in 5 months. How often were you renting a car?

If you don't own a car, insurance can really be a drag when renting (sometimes, insurance will cost much more than the car). It might be worth looking into a non-owner liability policy with an insurance company, so you don't have to pay a crazy amount for liability with a rental company. Some credit cards will also provide primary coverage for collision -- you can save a lot of money if you can do these two things for insurance.

Are you using something like Kayak to book your rentals? I would recommend always checking Kayak, since they search a lot of budget companies for you. And sometime in August, Enterprise will be starting up their weekend special again ($10/day), so it's worth looking to see if this is offered in your area.

You might already be doing all of these things, but $1k just seems like a lot for rental cars.

[Tester]

Thank you for your reply.
I only payed the insurance once, when I went to Canada the first time as I was not sure about the coverage of my credit card insurance.
I usually pay around 200 USD for renting a car between Friday morning and Monday morning.
It is cheaper than getting the Amtrak bus to Vancouver and back.

I looked at Enterprise and they only start the 10 USD/day weekend on 08/21.
I would have used it, as I will make another trip to Vancouver on 08/15.
But anyway, I found out that with Enterprise I would be able to get the weekend at 160 USD opposed to what I got from Avis right now - 240 USD (the cheapest car I was able to get for that weekend).
So I am changing my reservation right now :).