Car Advice - keep what we've got or buy a new (to us) car?

[mountains_o_mustaches]

My SO and I currently have a 2002 Subaru Forester.  We're trying to decide whether we should keep the car we have until it "dies" or if we should buy a new-to-us used car with better gas mileage (like a Honda Fit or something similar).  We keep going back and forth - if we get a new car now, the Subaru currently is in good running condition, so we'd be able to sell it for ~$3k to 4k and put that money toward a new-to-us car that is newer, so would last us longer, and get better fuel efficiency.  If we keep the car we don't spend any additional money on buying a car now; however, we do lose some money on gas (even though we keep our driving to a minimum) and if we drive it until it "dies" then it won't have much resale value. 

What do y'all think - which is the more Mustachian decision?

[mountains_o_mustaches]

Sorry here's more info -

Annual fuel spending for the Forester is about $750 (I bike commute, SO has to drive to work - with our jobs there was no way to be central located enough for both of us to bike).  The MPG ranges from 19-27 depending on the type of driving we're doing that month.  I'd say an average is 20-21 mpg.

The Forester had 178xxx miles - no rust or other major problems.  We recently replaced the windshield after it was hit by a rock on the highway and we'll need to replace some belts soon.  We do routine maintenance like oil changes pretty regularly. 

The new-to-us car would probably cost ~$6-7k, as we'd be looking for a car like a Honda Fit from like 2009/2010.  The mpg on a 2009 Honda Fit is 28/35.  We mostly do city driving, so my guess is our average would be closer to the 28 mpg.

Other potentially useful information - we've paid off all debt (student loans, we never had credit card debt) and we're currently saving up a down payment for our first home.  Mostly the hesitancy is if we buy the car then it's less money toward our savings for the house down payment and the other costs that come along with buying a house, but I'm also trying to not just think in the short-term, but in the long-term what would be financially smartest.

[ketchup]

You can crunch numbers to really figure it all out, but only doing ~6,000 miles/year means you wouldn't save all that much in gas. 

Rough numbers: If you sell your current car for $3k and buy the new car for $6k, you've bought ~$220/yr in gas savings for $3,000.  ~7% ROI.  Not terrible, but hardly something to jump on immediately.

I'd probably keep the Subaru and keep it up on maintenance until it develops some sort of major problem that makes you question its reliability, and then approach this again, with an eye for efficiency.  Until then, enjoy very-low-depreciation miles.

[chasesfish]

I'm probably on the other side of this debate - Start searching out a deal on the 09 fit now since you don't have to change.  If you can negotiate well for one, the ROI goes up.  You might also find the $6000 is too low and it makes the decision for you

[Landlady]

I'm a Subaru Forester 2003 owner. Fist-bump!
Have you had to change your head gasket yet? This is a common, really expensive fix for our age subarus. Usually you would have run into it at around the 100k mark. I'd say, if you've already gotten that major maintenance complete and done correctly you should be good to go to ride 'til it dies (with regular maintenance of course).
Since I live in the sticks and far from tow trucks I will likely sell mine once I feel it isn't reliable enough to support my family. Last thing I want to deal with is a disabled car on a snowy day far from a tow truck. But I am hoping to get another 5 years out of mine. I have 140xxx on mine.

[mountains_o_mustaches]

Thanks for the input everyone!

@Landlady - we did hear about the head gasket issues - we haven't had to replace ours, so that is part of our concern.

I think we're going to take somewhat of a middle road - I'm going to keep searching for Honda Fits (and similar type cars) on Craigslist - if a really good deal comes up we'll bite.  If not, we're happy to bide our time with our Subaru until it "dies" or until we're well settled in our new home.