Author Topic: Buying my first car! Stop a disaster now and improve your Karma!  (Read 2792 times)

makane

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Income: 32,000 / After tax: 24,000
(asset) Emergency fund: 12,000
(asset) Stocks: 25,000
(liability) Debt: Student Loan 27,000 @ 0.81% per annum
Net worth: (37,000 - 27,000) = 10,000
Tax Filing Status: Single
Tax rate: 25.00%
State of Residence: Netherlands
Age: 27
Desired Asset allocation: 100% stocks / 0% bonds

Dear all,

Since car ownership is such a big Mustachian item, I'd thought I'd ask for advice here.

I've been commuting bike, train, bus and another bus for 2 hours to work, and then the same 2 hours to get back home for the past year. My employer paid my commuting fees of 300/month. But still it was 20 hours of commuting per week, with 40 hours of work per week and often overtime, often put me at 12-14 hours of being busy with work every day.

My new employer no longer pays for public transportation, so now I pay about 300 out of my own pocket for transportation. It no longer makes sense to commute this with public transportation, since with a car it should be a 30-40 minute drive, a 66%-75% reduction in my total commuting time. My quick estimate of small car commuting would be 400 per month (assuming car lives 10 years), similar to public transportation here. And I can use 20 hours more of free time a week.

Is it worth commuting at all? Definately yes, I moved back in with my parents and pay zero rent. My monthly expenses are about 500 (150 food, 80 healthcare, 300 commuting). 75% savings rate has been hit quite a few times over the last year.

But it's time for a car to significantly reduce commuting time. I know of three colleagues and a friend who bought 5-10 year old second hand cars of ~6,000 and drove them succesfully for many years. But my dad keeps insisting on buying new around 15,000. That would make an unsightly dent in my stash: about a whole year of near-maximal savings.
Is buying new at 15,000 just not Mustachian at all?

robbyho

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #1 on: July 27, 2015, 05:45:00 PM »
buying a brand new car is pretty much the least mustachian thing you can do. You're dad is probably not on these forums. The rule of thumb stateside is a car depreciates 25% every year. Get a good, lower mileage used car like you had thought.

CowboyAndIndian

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #2 on: July 27, 2015, 05:51:38 PM »
Why are you not moving closer to where you  work?

You do not include house ownership, so if you are renting, you should move.

From what I hear, Netherlands a bicycle paradise. Go ahead and move closer so you can bike to work.

lbmustache

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #3 on: July 27, 2015, 07:22:12 PM »
Why are you not moving closer to where you  work?

You do not include house ownership, so if you are renting, you should move.

From what I hear, Netherlands a bicycle paradise. Go ahead and move closer so you can bike to work.

OP lives at home for zero rent. So moving out to be closer and paying rent will probably be a wash or maybe even more compared to commuting costs.

I would tell dad that it's not his money ;) caveat is that he is "paying" your rent! Maybe compromise - get a 5 yr old car instead of a 10 yr old car. You save money, dad isn't as worried about the car being a pile of crap?

Buying new is not mustachian because you pay for the depreciation. If you must, maybe a 2-3 year old car would be okay: the major depreciation has been taken by someone else, but there is still room for additional depreciation through you. Once a car is 5-6yr +, the depreciation tends to be slower (and lower).
« Last Edit: July 27, 2015, 07:24:10 PM by lbmustache »

RWD

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #4 on: July 27, 2015, 09:53:28 PM »
A new car would be overkill for your situation.

Susan

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #5 on: July 27, 2015, 11:46:16 PM »
I wouldn't buy a new car. You say you will pay about 400 a month on commuting. Not sure where in the Netherlands you live, but in the more expensive cities you can get room in a shared apartment for about 500. Wouldn't it be better to start living in the city that you work in? Would only cost a bit more than owning a car, and you wouldn't have to commute anymore.

gooki

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #6 on: July 28, 2015, 01:30:34 AM »
If you insist on a car, 3,000 euros should easily get you a nice reliable car.

makane

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Re: Buying my first car! Stop a disaster now and improve your Karma!
« Reply #7 on: August 02, 2015, 06:33:39 AM »
I wouldn't buy a new car. You say you will pay about 400 a month on commuting. Not sure where in the Netherlands you live, but in the more expensive cities you can get room in a shared apartment for about 500. Wouldn't it be better to start living in the city that you work in? Would only cost a bit more than owning a car, and you wouldn't have to commute anymore.

Actually, thank you for this comment.
I guess it's interesting for the readers of this thread to know which city we're talking about:
Rotterdam, Population: 2,261,844 (metropolitan region), former biggest harbor of the world, still the biggest harbor in Europe and...
I discovered it's still surprisingly affordable to live in; and there are some decent high salary jobs around, even though I don't yet have one of those.

1. I found a 8 m2 room 15 minutes biking distance from the office for 300 per month, all bills included.
I'd refer to it as the monk-room. High sleeper, desk under it, wardrobe, that's it. 3 flatmates.
This would be the same as my current commuting costs ( 300), but is only 10 hours of commuting biking per month, versus my current 80 hours of commuting.

2. Now if I were to go all luxurious and extravagant, there is also a 30 m2 room for just over 400 per month, bright and spacious, all bills included.
Nice double bed, sofa, table and desk; kitchen/bathroom is nice and clean. 2 flatmates. Still 15 minutes biking distance from the office.

So thanks for the hint. Like the last MMM post described, it's possible to live quite cheaply in the middle of big cities.
« Last Edit: August 02, 2015, 06:39:33 AM by makane »