The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: frugalaltruist on March 28, 2018, 08:31:50 AM
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Hey folks,
Ten months into the post-college life, and I'm finally starting to consider buying a car. Here's my situation so far:
- I live in Madison, Wisconsin, about 8 miles and a 15-minute drive from work at a large tech firm; those of you who live here can probably guess which one. Madison is cold in the winter but very bike-friendly. My roommate works at the same place and drives to work every day, so I carpool with him - and when he's traveling or on vacation, I live next to the bus stop so getting to work isn't an issue even when it's cold. I biked to work 1-2 days a week last summer and hope to ramp that up this year but I'm not badass enough to do it during a Wisconsin winter yet.
- I make about $4000 per month. Currently I have about $17,000 in savings + checking account, plus $13,000 in my 401K (which isn't relevant for this discussion, but I'm proud of the amount I've saved so far).
- My expenses are about $1200 per month; allowing $300 per month of unexpected expenses, that works out to $9000 as the cost of six months of unemployment.
So why do I want a car? I certainly recognize at this point that it's a want, not a need. However, I'm thinking it may be a good idea to get one at some point for these reasons:
- I'd like the capability to carry large objects and other people! The apartment is still missing a proper table to play games on. I don't want to buy these things new and have them delivered, but picking things up from Craigslist and thrift stores is hard without my own vehicle. I'd like to shop at Costco but it's too far away for a large-scale bike grocery run at my current level of skill. Also, I feel bad always needing to ride with someone when we're traveling to an event.
- I'd like some more flexibility on when I get to work and come back - right now, I'm bound to the schedule of my roommate or the bus. Biking helps with this but it does take about an hour each way counting prep time and taking a shower when I get to work. If I want to leave at 3 PM for a dentist appointment I'm pretty much stuck, short of calling an Uber.
- I don't get out enough! I used to really love hiking and camping, but living in a city means it's a lot harder to do those things without finding folks that are willing to drive.
- I'm out of practice driving! I didn't own a car during college so I haven't driven a car for nearly a year; this makes me pretty nervous about renting a car or borrowing someone's. It also limits my options when I travel for work, since the company won't let me have a rental car if I don't drive on a regular basis.
- I think I'll want one eventually! I might decide to pursue a different job with less convenient transportation options, or move.
So with those things in mind, here are some questions I have:
- How much money should I be prepared to spend? I'm fine with a used car and it seems dumb to do anything but pay cash up front, so I don't think I would want to spend more than $10,000 (and my intuition is that I'd have trouble finding something good for less than $5,000). However, I want something reliable to start - as the opposite of a car expert, I'd like to ease in gently to learning to maintain a car. I also understand that there are other expenses I'll likely end up paying for after buying a used car, although I'm not clear on what those are.
- What kinds of cars should I look for? MMM's post (http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/) seems like a good starting point but it is from 2012 so I suspect the used car market may have changed since then. I don't expect to be doing tons of driving in general, since carpooling, biking, and taking the bus already cover a lot of my transportation needs. I'm also curious about model years and mileage, neither of which I understand the importance of very well.
- What should my process be when I'm looking for a car? I'm not sure where I should be looking (Craigslist? Used car dealerships?) or how intensely I should be searching. Should I get a friend with a car's help for a weekend in which I check out a bunch of options? Should I check occasionally for several months/over the course of the summer?
- Is there anything I should look out for buying the car itself? I'm mostly thinking of common scams or things that aren't advertised, although I understand that negotiating can save some money buying a used car as well.
- Is there anything I'm overlooking?
Thanks in advance for all your help! If anyone has any helpful links, I'm also happy to do the research myself - I'm just not sure where to start.
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You're being very thoughtful about this, which is great!
First, I think you should consider (and you may have already) if you can fill these needs and wants with Uber and car sharing such as Zipcar. You could budget $150/month for those things and still spend less than you would if you bought a car. For reference, I have spend $217/month on expenses related to driving in the past 6 months. That is one $750 repair/maintenance bill plus insurance/gas/parking/registration. That is for a paid off 2003 Toyota Corolla.
If you decide you really want a car, given your use cases for the car, I think you would be best served by an older used car. Something in the 2008-2010 range. You could go a bit older, but that might mean more maintenance costs. I love hatchbacks in general and the Honda Fit specifically. I see a few on the Madison CL for $4000-$4500.
I would also probably be looking for a private sale, but in order to do that, you need a mechanic who you trust to look at the car before you buy it. I haven't done a private sale since the mid-90s, so someone else can talk about how that works better than I can.
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Here are some resources I use to narrow down the list of potential cars:
http://www.dashboard-light.com/ (reliability)
https://www.fueleconomy.gov/feg/powerSearch.jsp (fuel economy)
http://www.iihs.org/iihs/ratings/TSP-List (safety)
Based on your post I suspect you'd be best served by a hatchback or wagon. One popular option is the Honda Fit. You may also want to look at the Scion xB and Toyota Prius. There are tons of options, but hopefully this will point you in the right direction.
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In my opinion, the 10-15% of your income rule is pretty smart https://www.moneyunder30.com/how-much-car-can-you-afford (https://www.moneyunder30.com/how-much-car-can-you-afford)
As for which car, personally I bought a used 2007 Pontiac Vibe and honestly wish I would have gotten a hybrid (Toyota Prius or similar). Search online for cars near you first, there should be plenty of sites to give you an idea and be picky, you are not in a rush. Since you aren't driving a ton a car in the 2007-2010 range with ~100k miles should be fine. Also, have a reputable mechanic check the car out before buying it, if possible.
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I have an 09 Corolla that was given to me for my high school graduation in 2008 and I love it. It can do more than you think, too - I've strapped large couches and a queen mattress to it! You could add a hitch and tow a trailer if you ever needed to haul BIG stuff. The seats fold down and you can fit large pieces of lumber in there. Just get some ratchet straps and you're good to go.
Mine has around 135,000 miles on it and is still running like new. I've only had to do basic maintenance on it (Oil changes, transmission fluid, new tires, etc) and it's never broken down on me. When I lived in California and drove mainly freeways I easily averaged 40 mpg+. Now that I do mostly city driving, I average 32ish mpg. I also lived in Colorado Springs for a few years and with decent all-weather tires it did great in the snow (since that is a genuine concern you'll have)!
There is a 2004 Corolla on the Madison WI Craigslist right now - it has 90k miles, has only had one owner, and it's only $4800. There are a number of newer ones in the $6-7k range.
Good luck!
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Hey folks,
Ten months into the post-college life, and I'm finally starting to consider buying a car. Here's my situation so far:
- I live in Madison, Wisconsin, about 8 miles and a 15-minute drive from work at a large tech firm; those of you who live here can probably guess which one. Madison is cold in the winter but very bike-friendly. My roommate works at the same place and drives to work every day, so I carpool with him - and when he's traveling or on vacation, I live next to the bus stop so getting to work isn't an issue even when it's cold. I biked to work 1-2 days a week last summer and hope to ramp that up this year but I'm not badass enough to do it during a Wisconsin winter yet.
- I make about $4000 per month. Currently I have about $17,000 in savings + checking account, plus $13,000 in my 401K (which isn't relevant for this discussion, but I'm proud of the amount I've saved so far).
- My expenses are about $1200 per month; allowing $300 per month of unexpected expenses, that works out to $9000 as the cost of six months of unemployment.
I'd put off buying a car a little longer. Drop $5500 into an IRA for 2017 right away (deadline is April 16). Then contact HR to get your 401k set to max ($18,500/yr = ~$1542/mo). You'd still have about $1000/month surplus to fill up your $5500 IRA contribution for 2018 in the next few months while keeping a $9000 emergency fund. After that, start saving for your car.
In the mean time:
- I'd like to shop at Costco but it's too far away for a large-scale bike grocery run at my current level of skill. Costco.com offers free delivery for non-perishable grocery items.
- Also, I feel bad always needing to ride with someone when we're traveling to an event. Most people are very happy to give rides to places they are going anyway to their friends as long as you are ready when they want to leave and are pitching in for gas.
- I'd like some more flexibility on when I get to work and come back - right now, I'm bound to the schedule of my roommate or the bus. Biking helps with this but it does take about an hour each way counting prep time and taking a shower when I get to work. If I want to leave at 3 PM for a dentist appointment I'm pretty much stuck, short of calling an Uber. eBike would provide most of this flexibility and cut your bike commute significantly (plus it'd be more fun except in winter). Uber once or twice a month is probably cheaper than owning a car.
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Buy something with a hatchback - but not a VW - I love them and own several but they can be a PITA.
A hatchback is far more versatile than a sedan IMHO.
Consider parking. Do you have some place that you can park it for free?
I visited Madison last summer for work and brought my bike. Rode every evening after training, something like 100 miles in four evenings.
Really redefined what living in a city could be like for me.
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- I'd like to shop at Costco but it's too far away for a large-scale bike grocery run at my current level of skill. Costco.com offers free delivery for non-perishable grocery items.
I have no problem with the rest of the post but the whole point of Costco for me, and I suspect many people, is groceries. Costco.com has only a very limited selection of the non-perishables like fruit baskets in my market. Zipcar is a much better alternative IMO.
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There’s so much great nature around you that I get the desire for a car. I live in Milwaukee and my kids and I are regularly driving out between here and Madison for hiking and other outdoors stuff.
Most of your other reasons for a car could be solved without buying your own car and/or by getting an e-bike. An additional resource not mentioned above for large items would be pickup truck rentals from Home Depot or Uhaul. Usually about $20/hr.
If the Madison used market is anything like Milwaukee’s, I’d personally look at minimum above $4K and potentially a bit higher. Most of the cars I’ve test driven under $4K needed some obvious work right away or had semi-hidden issues that should be addressed because the prior owner deferred some much needed maintenance.
Biking in the winter here is definitely doable, I commuted year round for several years before going full time as a stay at home dad. But it takes some gear and a certain mindset.
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Every car I've purchased has gotten cheaper. My current car is a 2007 Toyota Rav 4 with 150,000 miles on it. I bought it 14 months ago for 6k cash and it has given me no problems. You don't need to spend a lot to get a reliable car. It's mostly just a huge waste of money.