The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: ThriftyMiss on October 11, 2020, 01:19:12 PM
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I'm a 59 yr old Canadian female, and although I only made about $40,000 a year, I am now set for life. $500,000 in RRSP, $100,000 in TFSA, and $150,000 in non-registered. I've always owned second hand cars...and I'm thinking it's time to treat myself! I'm excitedly looking at spending $32,000 cash for brand new SUV, which still doesn't touch the investments listed. Thoughts? (...and I love my parttime job, so I still have $$ coming in...)
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After the initial thrill of buying a new car wears off, you'll realize that the only difference between a new car and a lightly-used off-lease vehicle is that you're the one taking the big depreciation hit. Whatever SUV you're looking at, browse around (Autotempest.com is a handy site to search with) until you find a nice used one that has the features/colors you want and go look at it. Compare it to the brand new version and see if you really care to pay the extra money just to be the first owner.
If that's the case, hey, it's your money, but I have to say that the used cars I've bought (all returned lease vehicles) have been like new. My current car still had the plastic from the manufacturer on the door sills, and still looks like a new car inside at ten years old.
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Are you really coming to the MMM forum asking permission to buy a new car?
I can't tell if you are looking for support for this decision or to be talked out of it.
You are a grown ass person who is obviously very good with your money. Do whatever works for you, you don't need our permission.
Enjoy the new car if you decide to buy it. Have fun.
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This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstances: https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/ (https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/)
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I don’t think it’s mustachian, but we’re a 1 car family that has had bad luck with used cars, so I’m pretty keen on buying new. It’s worth it to us. YMMV.
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I’m pretty utilitarian about cars - I don’t understand the “treat yourself” part. It’s all about getting where you need to go, reliably.
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Awww, thank you for your excellent replies! And you're right, I'm probably looking for "permission" because it's such a foreign concept to me to "indulge" myself and actually spend money!! But I also look to my dear 93 year old Dad who never spent anything on himself, and who's locked in his care home because if covid, yet has over $1,000,000 in savings...that he can't spend. :-( And I want to learn from that example and balance saving with "treating myself"...
So thank you all so much for your replies.
All the best & Happy Thanksgiving to my fellow Canadian MMM's!
Thrifty Miss
A few well placed phone calls might get him "hookers and blow" to help spend that money.
You might get asked questions about his various "nieces, granddaughters" and such the next time you visit though :-).
Being frugal has a real component of having excess money at the end of life. The key is happiness. I'd rather "fail" on the rich side, but others are OK with the other side.
It is really hard to balance the budget to croak with exactly $1 (plus death expenses) at the end.
FWIW, I'd go with a just off-lease vehicle AND a comprehensive inspection or written warranty.
Under no circumstances would I ever buy new, unless my disposable income was 4x my next year need+wants expenses. Or I just wanted to spend it to spite my inheritors.
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After the initial thrill of buying a new car wears off, you'll realize that the only difference between a new car and a lightly-used off-lease vehicle is that you're the one taking the big depreciation hit.
And the new car smell from the outgassing. Don't forget that.
Thankfully, there's a spray that can emulate that smell.
</s>
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Again, it's really up to you if you think this is the best use of your money.
What I always advise is to ask yourself if this is the thing you would rather spend your money on more than anything else you could possibly imagine for the same premium?
If you want a new SUV more than anything else in the world that the added money could buy, then buy the new SUV.
Only you can decide if that's the case though. No one else's permission matters. Generally though, if you start looking for outside permission, it says something about what you are trying to talk yourself into.
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Only is the SUV is a Toyota and you intend to drive for at least 20 years at under 5,000 miles per year.
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Well, I’m a 59 year old Canadian and have bought the only 2 cars I’ve ever owned brand new and have no regrets. The first was a 1986 Toyota Corolla that I had for 16 years and I’ve had my current 2003 Toyota Matrix for almost 18 years and plan to keep it as long as possible. I liked knowing the maintenance history (since I was in charge of all servicing) and took very good care of them both. The lack of stress from not having breakdowns or unexpected problems was worth a premium to me. I drove them for work also, so needed a reliable car. However, I would never buy an SUV because I just don’t think they’re worth it and a large hatchback or small van is just as useful.
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If you want a new SUV more than anything else in the world that the added money could buy, then buy the new SUV.
Please, no. The world really doesn't need the purchase of any more brand new SUVs.
OP, how about you buy the SUV used then donate the difference to that new one to action on climate change? I'll personally match you one penny on the dollar.
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Well, I’m a 59 year old Canadian and have bought the only 2 cars I’ve ever owned brand new and have no regrets. The first was a 1986 Toyota Corolla that I had for 16 years and I’ve had my current 2003 Toyota Matrix for almost 18 years and plan to keep it as long as possible. I liked knowing the maintenance history (since I was in charge of all servicing) and took very good care of them both. The lack of stress from not having breakdowns or unexpected problems was worth a premium to me. I drove them for work also, so needed a reliable car. However, I would never buy an SUV because I just don’t think they’re worth it and a large hatchback or small van is just as useful.
My present car is the best of both worlds. It was a demo, so discounted price, no hard driving. I am meticulous about maintenance, it's now at 11 years and over 280,0000km and going strong.
If I knew I would want a particular car for only a few years I would buy used. If I could do a lot of my own maintenance I would consider used. For a car I will keep "forever" I want to be the only driver and have been in charge of maintenance from the beginning.
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This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstances: https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/ (https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/)
From this:
Reasonable fuel economy starts at 35MPG (US, highway), and much higher is possible.
fwiw, our small suv gets about this on the highway.
Now... if we're talking a fullsize SUV/truck sure they get terrible mileage but "suv" basically has no meaning now that manufacturers converted station wagons into "small SUVS" since those are apparently are way cooler to a lot of people than "station wagon." So you have station wagons in the same category as land yachts.
But of course, buying a small compact/sedan will certainly get you better mileage but a lot of small SUVs are into the 30 range already for highway mpg.
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I've found that while treating yourself can be nice, and sometimes a very good thing, the effect will usually wear off. At some point that new car will just become a regular part of your life. And even when it's new, it's no guarantee it won't have problems, so you really have to do your research on the make and model, and maybe don't buy the first car in a new series or generation, as engineers are always changing things up to justify their existence, and they usually get it wrong on the first model that attempts to do something fancy and new (and usually unnecessary).
I think of it this way: a new/rebuilt engine or transmission costs about $4k. I'd rather pay that than watch a $30k vehicle lose $10k of value via depreciation over several years. I "treat" myself by putting quality components in a reliable, older car, and knowing those components won't need to be changed, probably ever again. But that's just me.
If you are going to treat yourself, maximize for satisfaction and value. The best treats are the ones that retain their value and make you happy in the long run. The not-so-great treats are the ones that are only temporary. That's not to say the rare donut is bad, but treats that don't have a lasting impact usually have better alternatives. Just a thought
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After the initial thrill of buying a new car wears off, you'll realize that the only difference between a new car and a lightly-used off-lease vehicle is that you're the one taking the big depreciation hit.
This is a largely false misconception that gets tossed around a lot here.
The depreciation rates you are quoting are based on the MSRP of a new vehicle.
No intelligent consumer is paying MSRP for a mainstream new vehicle.
I bought a new vehicle last year for ~$7,000 off MSRP.
Seven months and 5000 miles later, I got a Carvana quote for MORE than I paid for the car.
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This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstances: https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/ (https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/)
This post is nearly a decade old and largely irrelevant now.
Back in 2012, many (most?) "SUVs" were traditional truck-based body-on-frame SUVs with poor gas mileage.
Now, most SUVs are car-based unibody vehicles that are MUCH more efficient.
Many SUVs today have comparable gas mileage to their car counterparts.
Additionally, many automakers are abandoning traditional cars, making this article even more irrelevant.
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This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstances: https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/ (https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/)
This post is nearly a decade old and largely irrelevant now.
Back in 2012, many (most?) "SUVs" were traditional truck-based body-on-frame SUVs with poor gas mileage.
Now, most SUVs are car-based unibody vehicles that are MUCH more efficient.
Many SUVs today have comparable gas mileage to their car counterparts.
Additionally, many automakers are abandoning traditional cars, making this article even more irrelevant.
I haven't ever seen MMM say anything positive about SUVs in the last eight years since that was published. If anything, these days SUVs look even worse compared to the new alternative of zero gas vehicles, given that MMM is about environmentalism and not finance.
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This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstances: https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/ (https://www.mrmoneymustache.com/2012/09/04/its-never-too-late-to-ditch-your-gas-guzzler/)
This post is nearly a decade old and largely irrelevant now.
Back in 2012, many (most?) "SUVs" were traditional truck-based body-on-frame SUVs with poor gas mileage.
Now, most SUVs are car-based unibody vehicles that are MUCH more efficient.
Many SUVs today have comparable gas mileage to their car counterparts.
Additionally, many automakers are abandoning traditional cars, making this article even more irrelevant.
I haven't ever seen MMM say anything positive about SUVs in the last eight years since that was published. If anything, these days SUVs look even worse compared to the new alternative of zero gas vehicles, given that MMM is about environmentalism and not finance.
+1. You can get a new fancy spaceship PHEV for that kind of money nowadays.
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I haven't ever seen MMM say anything positive about SUVs in the last eight years since that was published. If anything, these days SUVs look even worse compared to the new alternative of zero gas vehicles, given that MMM is about environmentalism and not finance.
What is your definition of an SUV?
Toyota Rav4 Hybrid or Prime?
Tesla Model X or Y?
And manufacturers are increasingly moving from cars to SUVs.
By next year, Ford will make ZERO cars besides the Mustang.
Also, many "SUVs" today are simply cars with black plastic cladding stuck on.
Should we stay away from all SUVs, regardless of how efficient they are?
https://www.motortrend.com/news/best-gas-mileage-suvs/ (https://www.motortrend.com/news/best-gas-mileage-suvs/)
Do you see why "SUVs are evil" argument doesn't really make sense as we go into 2021?
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I am now set for life. $500,000 in RRSP, $100,000 in TFSA, and $150,000 in non-registered. I've always owned second hand cars...and I'm thinking it's time to treat myself! I'm excitedly looking at spending $32,000 cash for brand new SUV, which still doesn't touch the investments listed. Thoughts? (...and I love my parttime job, so I still have $$ coming in...)
Good grief, some of the responses in this thread are ridiculous.
The OP is set for life.
What is the point of earning and saving money if you don't ever intend to spend it?
Buy the new car, drive it for 12-15 years, then repeat the process.
Or you can hoard your money, buy beater cars every few years, and increase the chance of being stranded on the side of the road.
As an added bonus, you can request to be buried with the $32,000 you saved buy not buying the new car!
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I haven't ever seen MMM say anything positive about SUVs in the last eight years since that was published. If anything, these days SUVs look even worse compared to the new alternative of zero gas vehicles, given that MMM is about environmentalism and not finance.
What is your definition of an SUV?
Toyota Rav4 Hybrid or Prime?
Tesla Model X or Y?
And manufacturers are increasingly moving from cars to SUVs.
By next year, Ford will make ZERO cars besides the Mustang.
Also, many "SUVs" today are simply cars with black plastic cladding stuck on.
Should we stay away from all SUVs, regardless of how efficient they are?
https://www.motortrend.com/news/best-gas-mileage-suvs/ (https://www.motortrend.com/news/best-gas-mileage-suvs/)
Do you see why "SUVs are evil" argument doesn't really make sense as we go into 2021?
Given that the comparison would be zero emission cars, and the planet is burning due to our rampant overconsumption and fossil fuel usage, and MMM IS NOT ABOUT MONEY BUT THE ENVIRONMENT, then YES buying a new gas-powered car and actively working to destroy the planet faster is not in line with MMM.
OP, whether you do it or not is your business, but you're asking if it's in line with MMM, and the answer is 100% NO. If MMM was about money, maybe the answer would be different, but the entire premise of MMM is that the typical middle class lifestyle is an exploding volcano of wastefulness, the planet is burning due to our wasteful overconsumption, and for god's sakes we need to stop doing bullshit things like "treating ourselves" with new cars.
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But then the issue isn’t new/used it’s gas/electric, which isn’t really the question on the table.
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Given that the comparison would be zero emission cars, and the planet is burning due to our rampant overconsumption and fossil fuel usage, and MMM IS NOT ABOUT MONEY BUT THE ENVIRONMENT, then YES buying a new gas-powered car and actively working to destroy the planet faster is not in line with MMM.
OP, whether you do it or not is your business, but you're asking if it's in line with MMM, and the answer is 100% NO. If MMM was about money, maybe the answer would be different, but the entire premise of MMM is that the typical middle class lifestyle is an exploding volcano of wastefulness, the planet is burning due to our wasteful overconsumption, and for god's sakes we need to stop doing bullshit things like "treating ourselves" with new cars.
You're not even following along with your original position. You said...
"This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstance."
Your stance was about purchasing an SUV vs a car.
It was NOT about purchasing an internal combustion vehicle vs an electric vehicle.
No one, in this thread OR the article you linked, said the "comparison would be a zero emissions car".
Also, you linked to a very specific MMM article.
The ENTIRE content of that article was about the financial aspect of the decision. It was all about the MONEY.
There was ZERO direct discussion about the environment in the article you cited.
Again, your stance is NO SUV.
I'm saying that makes absolutely no sense.
Why are you against electric SUVs? Hybrid SUVs? SUVs that get comparable gas mileage to the Prius MMM is so in love with?
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I bought a brand new Honda Fit for about $16,500, but only because the alternative was for example a used Honda Fit that cost only $1500-2500 less with 60k miles on the clock. The trick was to order the car from the dealer with NO options or dealer-add-on features. No floor mats. No pinstripes. No tint. No appearance package. No sport package. No bug guard. No bumper appliqué'. No nothing - stripped down and straight from the crate. The dealer reluctantly agreed as I forced the conversation on price and was quite tedious. Then I revealed I'd be paying cash. My stripped-down base model was shipped in from out of state a week or 2 later. Every car nearby had already been loaded with extra "features".
The savings from the dealer-add-ons amounted to a couple of years worth of depreciation for this particular model. Eight years later it's worth $9k less than I paid (avg. $1,125/y or $3.08/day depreciation) and there is no need to trade and pay sales tax again for at least the next 8 years. Do the math, approximate that, and you have my permission to buy new. However, I doubt a RAV4 would look as good when you run the numbers.
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I bought a brand new Honda Fit for about $16,500, but only because the alternative was for example a used Honda Fit that cost only $1500-2500 less with 60k miles on the clock.
I'm glad there is another voice of reason here.
If you aggressively negotiate on a mainstream new car, you are not getting hit with these wildly inaccurate depreciation numbers.
And these people never account for the amount of life already eaten up on the used vehicles.
Yes, a vehicle with 50K miles on the odometer is cheaper than a new car, but it also has 1/4 of its life already used up.
Which means you will be buying another used car 25% sooner, and paying sales tax/tags/doc fees/maintenance/repairs more frequently.
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Given that the comparison would be zero emission cars, and the planet is burning due to our rampant overconsumption and fossil fuel usage, and MMM IS NOT ABOUT MONEY BUT THE ENVIRONMENT, then YES buying a new gas-powered car and actively working to destroy the planet faster is not in line with MMM.
OP, whether you do it or not is your business, but you're asking if it's in line with MMM, and the answer is 100% NO. If MMM was about money, maybe the answer would be different, but the entire premise of MMM is that the typical middle class lifestyle is an exploding volcano of wastefulness, the planet is burning due to our wasteful overconsumption, and for god's sakes we need to stop doing bullshit things like "treating ourselves" with new cars.
You're not even following along with your original position. You said...
"This is an easy one. Pretty sure MMM would tell you to NEVER EVER buy an SUV under any circumstance."
Your stance was about purchasing an SUV vs a car.
It was NOT about purchasing an internal combustion vehicle vs an electric vehicle.
No one, in this thread OR the article you linked, said the "comparison would be a zero emissions car".
Also, you linked to a very specific MMM article.
The ENTIRE content of that article was about the financial aspect of the decision. It was all about the MONEY.
There was ZERO direct discussion about the environment in the article you cited.
Again, your stance is NO SUV.
I'm saying that makes absolutely no sense.
Why are you against electric SUVs? Hybrid SUVs? SUVs that get comparable gas mileage to the Prius MMM is so in love with?
Yes, MMM does not explicitly mention the environment in that post - he doesn't explicitly mention it in most posts, because it's an environmental blog disguised as a financial blog (he has been very clear about it), but for long-time readers familiar with and goals of the project, it's pretty obvious. And that article predated the widespread availability of electric cars, so they're obviously not mentioned, but if the article was written today, it definitely would (as MMM has written more recently about electric vehicles)
I'm only mentioning SUVs at all because that's what OP is thinking of buying. I would say the same about a truck or whatever if they were thinking of buying that. I've personally never owned or driven a car and think most of them are fairly equally stupid/shitty things to inflict on the planet. I think cars make us fat and unhealthy in addition to fucking up the planet, and we should all be trying to reduce or eliminate their usage. Another good oldie post on the topic: https://www.mrmoneymustache.com/2012/09/18/is-it-convenient-would-i-enjoy-it-wrong-question/ (https://www.mrmoneymustache.com/2012/09/18/is-it-convenient-would-i-enjoy-it-wrong-question/)
This whole thing just seems very strange to me because MMM is very clear on his anti-car stance, particularly cars that are worse for the environment, so it's just really weird to see someone essentially looking for approval to do the opposite, followed by so many people here posting "treat yourself!" and "buy it if it makes you happy!".
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OP is a 59 y/o Canadian female who is set for life financially,
do your research on what you need based upon your driving habits (snow, kilometers per year, kpg, etc), negotiate a price down as low as you can and get what ever you want, brand new or slightly used doesnt matter really,
there likely aren't many electric snow capable (OP is in Canada) SUVs out there
i bought a new left over model for 15% off msrp at 0% interest almost 10 years ago, i would do it again without a doubt
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I'd rather buy lightly used and take an extra vacation with the money saved vs. buying new. It's OK to treat yourself,, but think about which treat you want the most; I'm pretty sure brand new car will never make it to the top of mine.
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I purchased a brand new Corolla sixteen years ago and have no regrets. I'm hoping to get another ten years out of it.
If you plan to drive the same car into the ground, I don't believe there's really much difference in the lifetime cost of buying a car brand new and buying several older cars over the same time period.
They have a cheaper book value, but there's greater risk with older vehicles if you're not a good automobile mechanic. There's the additional time necessary to find a new vehicle, the possibility of not being able to find the vehicle that you want because of the local market, and the potential loss of income from not having a reliable car (if you're driving the cheapest old beaters).
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I purchased a brand new Corolla sixteen years ago and have no regrets. I'm hoping to get another ten years out of it.
If you plan to drive the same car into the ground, I don't believe there's really much difference in the lifetime cost of buying a car brand new and buying several older cars over the same time period.
They have a cheaper book value, but there's greater risk with older vehicles if you're not a good automobile mechanic. There's the additional time necessary to find a new vehicle, the possibility of not being able to find the vehicle that you want because of the local market, and the potential loss of income from not having a reliable car (if you're driving the cheapest old beaters).
This. Plus if you buy at the end of the model year you may be able to get a better deal. Or a demo. Dealership owns and maintains it, a sales agent in the car for test drives means it hasn't been abused, it doesn't go for a new car price because it isn't new. I bought demo end of year and the price was good. And ask for throw-ins. It's mid-October, get them to throw in winter tires (and rims for cheap). After all, someone selling privately would have all-season and winter tires.
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I'm only mentioning SUVs at all because that's what OP is thinking of buying. I would say the same about a truck or whatever if they were thinking of buying that. I've personally never owned or driven a car and think most of them are fairly equally stupid/shitty things to inflict on the planet. I think cars make us fat and unhealthy in addition to fucking up the planet, and we should all be trying to reduce or eliminate their usage.
This whole thing just seems very strange to me because MMM is very clear on his anti-car stance, particularly cars that are worse for the environment, so it's just really weird to see someone essentially looking for approval to do the opposite, followed by so many people here posting "treat yourself!" and "buy it if it makes you happy!".
The OP asked about buying a new SUV.
Your response was..."NEVER EVER buy an SUV under any circumstances"
But what you REALLY meant was that the OP should NEVER EVER buy any type of vehicle of any kind under any circumstances?
What country/city/state do you live in?
Do you realize there are HUGE swaths of North America that aren't part of a dense city center with public transit?
Are you proposing that the entire North American population should move to a large city with public transportation?
So we should completely abandon entire states/regions, all in the name of no one owning a vehicle?
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I'd rather buy lightly used and take an extra vacation with the money saved vs. buying new. It's OK to treat yourself,, but think about which treat you want the most; I'm pretty sure brand new car will never make it to the top of mine.
Can you explain this "money saved vs. buying new"?
How much less do you think a "lightly used" Honda/Toyota SUV is vs. an aggressively negotiated new model?
And any money saved by purchasing used should not be spent on an extra vacation.
It will need to be saved for your next car purchase, because you'll be buying another car sooner than you would had you bought new.
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I'm only mentioning SUVs at all because that's what OP is thinking of buying. I would say the same about a truck or whatever if they were thinking of buying that. I've personally never owned or driven a car and think most of them are fairly equally stupid/shitty things to inflict on the planet. I think cars make us fat and unhealthy in addition to fucking up the planet, and we should all be trying to reduce or eliminate their usage.
This whole thing just seems very strange to me because MMM is very clear on his anti-car stance, particularly cars that are worse for the environment, so it's just really weird to see someone essentially looking for approval to do the opposite, followed by so many people here posting "treat yourself!" and "buy it if it makes you happy!".
The OP asked about buying a new SUV.
Your response was..."NEVER EVER buy an SUV under any circumstances"
But what you REALLY meant was that the OP should NEVER EVER buy any type of vehicle of any kind under any circumstances?
What country/city/state do you live in?
Do you realize there are HUGE swaths of North America that aren't part of a dense city center with public transit?
Are you proposing that the entire North American population should move to a large city with public transportation?
So we should completely abandon entire states/regions, all in the name of no one owning a vehicle?
Canada, like OP. I think vehicles here can be reasonable, but the vehicles traditionally thought of as SUVs (i.e. excluding something that's listed as an SUV but really an efficiency car in disguise) really have no place in the modern world. Those giant expensive gas-guzzling trucks shouldn't exist either outside of things that directly need them (like a farmer).
If a person genuinely needs a vehicle (i.e. they're not just lazy), secondhand is a generally a much better option both financially and environmentally. Buying new and then driving it into the ground is fine too, but hardly anybody actually does that.
Basically, I think people should try very hard to live car-free or car-light, and if they absolutely need a car, don't buy a stupid one like a traditional SUV or giant truck. Which is basically exactly what MMM says.
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I think vehicles here can be reasonable, but the vehicles traditionally thought of as SUVs (i.e. excluding something that's listed as an SUV but really an efficiency car in disguise) really have no place in the modern world. Those giant expensive gas-guzzling trucks shouldn't exist either outside of things that directly need them (like a farmer).
If a person genuinely needs a vehicle (i.e. they're not just lazy), secondhand is a generally a much better option both financially and environmentally. Buying new and then driving it into the ground is fine too, but hardly anybody actually does that.
Basically, I think people should try very hard to live car-free or car-light, and if they absolutely need a car, don't buy a stupid one like a traditional SUV or giant truck. Which is basically exactly what MMM says.
You've taken at least 3 contradictory stances in this one thread...
Your first stance: Never buy an SUV.
I explained that the article you linked to was largely irrelevant, because the vast majority of modern SUVs are NOT the truck-based fuel hogs mentioned.
You then switched the argument: Every type of vehicle (gas/electric, car/SUV) is evil.
I then pointed out that huge parts of the continent could not possibly live like you do, without some form of motorized transportation.
So you switched again: Vehicles "can be reasonable", but not the old-school SUVs discussed in the decade-old article you cited.
Which mean you are in complete agreement with my initial response...
It sounds like your revised advice to the OP is that it is perfectly reasonable to purchase a new car-based SUV and drive it for 10-15 years.
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I'd rather buy lightly used and take an extra vacation with the money saved vs. buying new. It's OK to treat yourself,, but think about which treat you want the most; I'm pretty sure brand new car will never make it to the top of mine.
Can you explain this "money saved vs. buying new"?
How much less do you think a "lightly used" Honda/Toyota SUV is vs. an aggressively negotiated new model?
The whole dealership models is designed to make you think you got a good deal. Everyone who buys new says they got a good deal.
I would rather be subject to waterboarding than undergo "aggressive negotiation" with the finance guys at a dealer. It's unnecessary and archaic. I put it in the category of gambling: it's entertaining for some, but is a completely worthless pursuit and should in no circumstance be considered standard operating procedure. I've tried to do it, but I end up walking out due to the complete BS theater of the whole operations. Same with shopping different dealers and emailing them all separately and having a PHD in psychology and all of the intricate rigmarole that people who tout the benefits of negotiating on cars state. It's such a waste of human capital when we could just have a number and sell it.
Can you tell that I am slightly opinionated about this?
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Doesn’t MMM own a work van of some sort?
If I had to pay for delivery every time I needed stuff from the hardware store, I could buy a much fancied car than we have (which is not fancy, but we did buy it new.)
I don’t think an electric car is practical if you need to drive very far, at any rate.
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I think vehicles here can be reasonable, but the vehicles traditionally thought of as SUVs (i.e. excluding something that's listed as an SUV but really an efficiency car in disguise) really have no place in the modern world. Those giant expensive gas-guzzling trucks shouldn't exist either outside of things that directly need them (like a farmer).
If a person genuinely needs a vehicle (i.e. they're not just lazy), secondhand is a generally a much better option both financially and environmentally. Buying new and then driving it into the ground is fine too, but hardly anybody actually does that.
Basically, I think people should try very hard to live car-free or car-light, and if they absolutely need a car, don't buy a stupid one like a traditional SUV or giant truck. Which is basically exactly what MMM says.
You've taken at least 3 contradictory stances in this one thread...
Your first stance: Never buy an SUV.
I explained that the article you linked to was largely irrelevant, because the vast majority of modern SUVs are NOT the truck-based fuel hogs mentioned.
You then switched the argument: Every type of vehicle (gas/electric, car/SUV) is evil.
I then pointed out that huge parts of the continent could not possibly live like you do, without some form of motorized transportation.
So you switched again: Vehicles "can be reasonable", but not the old-school SUVs discussed in the decade-old article you cited.
Which mean you are in complete agreement with my initial response...
It sounds like your revised advice to the OP is that it is perfectly reasonable to purchase a new car-based SUV and drive it for 10-15 years.
I'd never heard of fake SUVs before now, so I originally assumed we were all talking about what has traditionally been considered an SUV. Certainly in my experience living in Canada, like the OP, most people here referring to SUVs are talking about the huge things. I have never once heard a person call anything remotely car-like an SUV - maybe that's more of an American thing?
To clear up the confusion on my stance - I operate on a tiered system. The ideal is no car, obviously. If that's not possible for whatever reason, next level down is no stupid cars, if that's still not possible, then the next best option would be the most eco-friendly option available of whatever cars were options. I think it makes a lot of sense to apply the same logic to transportation options even if you do have a car - like, if you want to go somewhere, ideally you would walk/bike, next tier down would be public transport, next would be carpooling, and driving yourself would be at the bottom for after you'd exhausted everything else.
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I'm a 59 yr old Canadian female, and although I only made about $40,000 a year, I am now set for life. $500,000 in RRSP, $100,000 in TFSA, and $150,000 in non-registered. I've always owned second hand cars...and I'm thinking it's time to treat myself! I'm excitedly looking at spending $32,000 cash for brand new SUV, which still doesn't touch the investments listed. Thoughts? (...and I love my parttime job, so I still have $$ coming in...)
If you want a new car to keep for the next 15 years or so, that's not so bad. Not the most Mustachian option, but if you get something inexpensive and efficient and keep for a long time, it can be OK. Especially if used cars rust out early over there and it's hard to find something over five or ten years old that isn't a pile of rust.
May I ask why you are looking at an SUV? Do you require ground clearance? All wheel drive? Towing capacity? Carrying 6 or more people? What do you need it to do that a Corolla or Elantra or similar cannot?
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I think “fake SUVs” are mostly called “crossovers” now, and they seem to be much of the car market now.
We have a Subaru Impreza, which is fine for short local trips but honestly a little too small for many things.
Also, I don’t actually drive and did many errands on foot back when I could do errands. Sigh.
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I bought a new car this summer.
It's fine. It's a car. If you aren't a new car person I'm not sure how thrilling it will really be after the first few weeks.
I like it because it was easier to buy and I won't have to deal with buying a new car for longer hahaha. It was not particularly financially advantageous, but also not particularly detrimental due to the high price of used cars and the low price I got on account of getting a good deal on a less popular last year model.
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I bought a brand new Honda Fit for about $16,500, but only because the alternative was for example a used Honda Fit that cost only $1500-2500 less with 60k miles on the clock.
I'm glad there is another voice of reason here.
If you aggressively negotiate on a mainstream new car, you are not getting hit with these wildly inaccurate depreciation numbers.
And these people never account for the amount of life already eaten up on the used vehicles.
Yes, a vehicle with 50K miles on the odometer is cheaper than a new car, but it also has 1/4 of its life already used up.
Which means you will be buying another used car 25% sooner, and paying sales tax/tags/doc fees/maintenance/repairs more frequently.
Used cars are becoming a worse deal too.
From https://www.marketwatch.com/story/consumer-prices-rise-more-slowly-in-september-inflation-stays-low-11602594078?mod=home-page (https://www.marketwatch.com/story/consumer-prices-rise-more-slowly-in-september-inflation-stays-low-11602594078?mod=home-page)
The cost of used cars and trucks jumped 6.7% in September, posting the biggest increase since 1969.
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Used cars are becoming a worse deal too.
From https://www.marketwatch.com/story/consumer-prices-rise-more-slowly-in-september-inflation-stays-low-11602594078?mod=home-page (https://www.marketwatch.com/story/consumer-prices-rise-more-slowly-in-september-inflation-stays-low-11602594078?mod=home-page)
The cost of used cars and trucks jumped 6.7% in September, posting the biggest increase since 1969.
This is a somewhat misleading interpretation. The rise in the cost of buying used is pandemic related as people try to avoid public transit and the supply of new cars and trucks dwindles. There's no evidence to suggest that this is a long term trend
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This is a somewhat misleading interpretation. The rise in the cost of buying used is pandemic related as people try to avoid public transit and the supply of new cars and trucks dwindles. There's no evidence to suggest that this is a long term trend
This is wrong.
Used car prices have been trending upward for years, well before the pandemic hit.
https://www.forbes.com/sites/jimgorzelany/2017/02/24/used-car-buyers-dealers-squeezed-by-a-lack-of-beaters/#db3b92571184 (https://www.forbes.com/sites/jimgorzelany/2017/02/24/used-car-buyers-dealers-squeezed-by-a-lack-of-beaters/#db3b92571184)
So there IS evidence to suggest that this is a long-term trend.
And this used car trend will become even worse in the months/years after the pandemic.
Used car inventory is shrinking due to demand.
While new car sales have declined due to the shaky economy, meaning there will be fewer used cars available in the future.
https://www.wsj.com/articles/car-sales-are-down-almost-20-but-prices-are-setting-records-11599219000 (https://www.wsj.com/articles/car-sales-are-down-almost-20-but-prices-are-setting-records-11599219000)
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This is a somewhat misleading interpretation. The rise in the cost of buying used is pandemic related as people try to avoid public transit and the supply of new cars and trucks dwindles. There's no evidence to suggest that this is a long term trend
This is wrong.
Used car prices have been trending upward for years, well before the pandemic hit.
https://www.forbes.com/sites/jimgorzelany/2017/02/24/used-car-buyers-dealers-squeezed-by-a-lack-of-beaters/#db3b92571184 (https://www.forbes.com/sites/jimgorzelany/2017/02/24/used-car-buyers-dealers-squeezed-by-a-lack-of-beaters/#db3b92571184)
So there IS evidence to suggest that this is a long-term trend.
And this used car trend will become even worse in the months/years after the pandemic.
Used car inventory is shrinking due to demand.
While new car sales have declined due to the shaky economy, meaning there will be fewer used cars available in the future.
https://www.wsj.com/articles/car-sales-are-down-almost-20-but-prices-are-setting-records-11599219000 (https://www.wsj.com/articles/car-sales-are-down-almost-20-but-prices-are-setting-records-11599219000)
+1
The oft repeated meme that new cars are way more expensive is annoying.
Some brands are a lot more expensive to buy new but for many vehicles it's hardly much more to buy new.
Not to mention that price shopping + internet makes it easy to get a decent deal on newer vehicles (compared to older ones).
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This is a somewhat misleading interpretation. The rise in the cost of buying used is pandemic related as people try to avoid public transit and the supply of new cars and trucks dwindles. There's no evidence to suggest that this is a long term trend
This is wrong.
No, it's really not wrong. September 2020 data were presented to support long term trend: this is misleading, because of the ongoing pandemic. Perhaps I should have said "this rise", for anyone keen to quote me out of the original context.
Thanks for the Forbes link, I learned something that supports your long-term trend argument. The WSJ article is timestamped September, so the ripple from the pandemic will be felt in the future, but again, this isn't evidence of a long term trend, merely a lagged transient effect.
I maintain that buying a brand new status-signalling SUV is one of the shittiest things you can do for the planet and everyone else who lives on it. I'll clarify that I'm not intrinsically opposed to buying new if the market demands it.
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The oft repeated meme that new cars are way more expensive is annoying.
Yes, that meme is annoying, along with avoiding car loans, which are useful financial tools.
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No, it's really not wrong. September 2020 data were presented to support long term trend: this is misleading, because of the ongoing pandemic. Perhaps I should have said "this rise", for anyone keen to quote me out of the original context.
Thanks for the Forbes link, I learned something that supports your long-term trend argument. The WSJ article is timestamped September, so the ripple from the pandemic will be felt in the future, but again, this isn't evidence of a long term trend, merely a lagged transient effect.
The fact is, there has been a long term rise in the price of used cars, which pre-dates the pandemic.
The fact is, this trend will continue in the coming years, and likely get worse due to...
- Greater demand & shrinking inventory of used vehicles
- Decline in new car sales, which will limit the used car inventory in the coming years.
- Decimation of the rental car industry, which was a huge source of used car inventory.
I maintain that buying a brand new status-signalling SUV is one of the shittiest things you can do for the planet and everyone else who lives on it. I'll clarify that I'm not intrinsically opposed to buying new if the market demands it.
How are vehicles like the car-based Toyota Rav 4 hybrid or Ford Escape hybrid a"status-signalling SUV"?
And how are those types of vehicles "one of the shittiest things you can do for the planet"?
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I maintain that buying a brand new status-signalling SUV is one of the shittiest things you can do for the planet and everyone else who lives on it. I'll clarify that I'm not intrinsically opposed to buying new if the market demands it.
How are vehicles like the car-based Toyota Rav 4 hybrid or Ford Escape hybrid a"status-signalling SUV"?
And how are those types of vehicles "one of the shittiest things you can do for the planet"?
Go read the main blog and do some of your own research into how consumerism is playing a huge role in climate change. I learned something about used car trends today, but I don't think you are genuinely open to learning anything that contradicts your currently held view from another forum member.
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A lot of the rising price of used cars is due to the rising price of new cars, which have become more complex and more loaded with features. The percentage of cars with leather interiors, power mirrors, aluminum rims, and other luxury items has increased, while the number of cars you can still buy with crank windows or bench seats have decreased. Then there is the now-ubiquitous infotainment and networking equipment that has replaced the old AM/FM CD player. An economist would call this rising quality, while I would call it lifestyle creep on a nationwide scale.
The shift in demand towards luxury pickups/SUVs and away from basic economy cars would, in itself, raise the average when these vehicles are resold. That is, a luxury truck/SUV that cost $60k new will cost the next person $30k in a few years when it's lost half it's value. A stripped-down Nissan Versa that was $16k new will cost $8k in the same timeframe. Hybrid drivetrains, while a good thing that adds utility to a vehicle, also contribute to higher average used car prices.
All this is an effect of rising income inequality, or if you prefer the hollowing out of the middle class. If the demographic profile of people who can afford to buy new cars shifts away from the lower-to-mid middle class, and toward the upper middle class and upper class, then the rest of us will have to eventually inherit used cars originally bought by people whose income is much higher than ours, rather than perhaps slightly larger than us.
Similarly, the car manufacturers will have to respond to the demand for luxury by making more luxury cars and fewer basic cars. Taken to extremes, most cars on the market in a world of have and have-nots be loaded with features, oversized, and with a cost of ownership (i.e. energy, insurance, taxes, depreciation, and maintenance) unaffordable to blue-collar families. Imagine if your only automotive choice within your budget was 20-year old Mercedes Benzes. You'd have to buy worn-out luxury instead of reliability, efficiency, or durability.
The opponent process to this escalating trend of car fanciness is that when there is a surplus of supply for 3-10 year old luxury vehicles that exceeds demand, then such vehicles would have to sell for lower prices. Thus, the upper middle class buyers of such things would get hit with bigger depreciation losses as they try to sell their used vehicles to financially stretched lower middle class buyers. This is why a Civic depreciates much less than a Range Rover. Five-digit depreciation losses discourage people from buying the loaded Cadillac Escalade in the first place, and encourages them to either buy used themselves or reduce their levels of luxury, e.g. the new Rav4 with cloth seats instead of the new Escalade.
The current imbalance between what the wealthy can afford to buy new and what the working classes can afford to buy used is also apparent in housing. More large houses than small houses are being built because only higher-income people are buying new homes. Thus, the young family with a working-class income who could live an efficient lifestyle in a 1k square foot house does not have the choice to buy that in many cities with tracts full of McMansions and 3-car merchandise storage units. So the young family stretches to buy a house twice as big as they need, and pick up two too-large used luxury vehicles because that's all that is for sale.
In this way, income inequality perpetuates itself. The family described above will be in a permanent state of financial struggle due to being house-poor and car-poor. And yet they can look around and see their lifestyle is completely normal.
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Go read the main blog and do some of your own research into how consumerism is playing a huge role in climate change. I learned something about used car trends today, but I don't think you are genuinely open to learning anything that contradicts your currently held view from another forum member.
My point is that your perception of an "SUV" is antiquated and no longer relevant.
SUVs from a decade ago were mostly big, overweight body-on-frame gas hogs.
But that is no longer the case.
Your original point was NOT about consumerism in general. It was a specific attack on a specific type of automobile...
"buying a brand new status-signalling SUV is one of the shittiest things you can do for the planet."
I'm just saying that viewpoint is largely outdated and irrelevant.
How is buying a Toyota Rav4 hybrid any worse than buying a Toyota Camry?
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How is buying a Toyota Rav4 hybrid any worse than buying a Toyota Camry?
A quick internet search tells me that the SUV body shape is a little more than a fifth less fuel efficient.
2020 Toyota Camry Hybrid - 51/53 city/hwy
2020 Toyota RAV4 Hybrid - 41/38 city/hwy
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Thanks for all your replies (except markbike528CBX - what you said about my dear 93 year old Dad who hasn't left the four walls of his carehome since March 18 was appalling, and really hurtful.)
So...even though dear friends were encouraging me to "treat myself" - I guess ya can't teach a Thrifty old dog new tricks! I am thrilled to announce my brand new car! A 2018 Toyota Corolla, 35,000 K's, with sunroof & cruise control!! (two things I never had with my 2008 Yaris, that I bought in 2009) as well as bluetooth technology, back-up camera, heated seats, etc...! And I still have $16,000 for travel, whenever the world opens up again!
Thanks again and all the best to everyone (except markbike528CBX, of course.)
ThriftyMiss
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Excellent choice!
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I apologize for my attempt at humor.
You did the right thing with your purchase.
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The newer Corollas are quite nice.
I'm envious of your sunroof.
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buying a new car is not 'mustachian' but you don't need to live your life by someone else's rules. I think the value of this forum is 'take what resonates with you, ignore the rest'.
I buy new cars (1991, 2003, 2020), but I buy last year's model when the dealerships are motivated to get rid of them. Is it the smartest thing to do with my money, no.....but......I don't do it very often, I get exactly what I want, and I drive for a very long time. I don't get a 'thrill' out of a new car, cars are someone utilitarian to me and that first door ding from some careless jerk pisses me off (buy hey, extra steps from the farthest corner of every parking lot now)
I am not a good negotiator, I find that stressful. Someone on this forum suggested unhaggle.com to me, and I used it for my recent car purchase.
The point of having money is to live your life on your terms, not MMMs, not mine....the goal in life is to not be the richest person in the cemetery.
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buying a new car is not 'mustachian' but you don't need to live your life by someone else's rules. I think the value of this forum is 'take what resonates with you, ignore the rest'.
I buy new cars (1191, 2003, 2020), but I buy last year's model when the dealerships are motivated to get rid of them. Is it the smartest thing to do with my money, no.....but......I don't do it very often, I get exactly what I want, and I drive for a very long time. I don't get a 'thrill' out of a new car, cars are someone utilitarian to me and that first door ding from some careless jerk pisses me off (buy hey, extra steps from the farthest corner of every parking lot now)
I am not a good negotiator, I find that stressful. Someone on this forum suggested unhaggle.com to me, and I used it for my recent car purchase.
The point of having money is to live your life on your terms, not MMMs, not mine....the goal in life is to not be the richest person in the cemetery.
I assume the 1191 vehicle required rather extensive work?
MOD NOTE: This was reported as mocking the poster for a typo. I assumed it was a joke, and laughed just picturing a wagon like in Monty Python's Search for the Holy Grail or something. Hopefully we can all approach things from a spirit of good faith. Cheers!
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A lot of the rising price of used cars is due to the rising price of new cars, which have become more complex and more loaded with features. The percentage of cars with leather interiors, power mirrors, aluminum rims, and other luxury items has increased, while the number of cars you can still buy with crank windows or bench seats have decreased. Then there is the now-ubiquitous infotainment and networking equipment that has replaced the old AM/FM CD player. An economist would call this rising quality, while I would call it lifestyle creep on a nationwide scale.
The shift in demand towards luxury pickups/SUVs and away from basic economy cars would, in itself, raise the average when these vehicles are resold. That is, a luxury truck/SUV that cost $60k new will cost the next person $30k in a few years when it's lost half it's value. A stripped-down Nissan Versa that was $16k new will cost $8k in the same timeframe. Hybrid drivetrains, while a good thing that adds utility to a vehicle, also contribute to higher average used car prices.
All this is an effect of rising income inequality, or if you prefer the hollowing out of the middle class. If the demographic profile of people who can afford to buy new cars shifts away from the lower-to-mid middle class, and toward the upper middle class and upper class, then the rest of us will have to eventually inherit used cars originally bought by people whose income is much higher than ours, rather than perhaps slightly larger than us.
Similarly, the car manufacturers will have to respond to the demand for luxury by making more luxury cars and fewer basic cars. Taken to extremes, most cars on the market in a world of have and have-nots be loaded with features, oversized, and with a cost of ownership (i.e. energy, insurance, taxes, depreciation, and maintenance) unaffordable to blue-collar families. Imagine if your only automotive choice within your budget was 20-year old Mercedes Benzes. You'd have to buy worn-out luxury instead of reliability, efficiency, or durability.
The opponent process to this escalating trend of car fanciness is that when there is a surplus of supply for 3-10 year old luxury vehicles that exceeds demand, then such vehicles would have to sell for lower prices. Thus, the upper middle class buyers of such things would get hit with bigger depreciation losses as they try to sell their used vehicles to financially stretched lower middle class buyers. This is why a Civic depreciates much less than a Range Rover. Five-digit depreciation losses discourage people from buying the loaded Cadillac Escalade in the first place, and encourages them to either buy used themselves or reduce their levels of luxury, e.g. the new Rav4 with cloth seats instead of the new Escalade.
The current imbalance between what the wealthy can afford to buy new and what the working classes can afford to buy used is also apparent in housing. More large houses than small houses are being built because only higher-income people are buying new homes. Thus, the young family with a working-class income who could live an efficient lifestyle in a 1k square foot house does not have the choice to buy that in many cities with tracts full of McMansions and 3-car merchandise storage units. So the young family stretches to buy a house twice as big as they need, and pick up two too-large used luxury vehicles because that's all that is for sale.
In this way, income inequality perpetuates itself. The family described above will be in a permanent state of financial struggle due to being house-poor and car-poor. And yet they can look around and see their lifestyle is completely normal.
Lots of good points made in this post. My observations from this forum is that plenty of mustachians are not overly concerned about income inequality, particularly the educational inequality side of things (many posts reference "good schools" without noticing that this very accepted practice of hoarding resources does so on the backs of less fortunate citizens).
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A lot of the rising price of used cars is due to the rising price of new cars,
Citation needed?
It's certainly the case that some new cars are increasing in price (though this doesn't fit with historical data on inflation adjusted car prices, I'll grant you can spend more - inflation adjusted - in 2020) but the value you get for economy new cars in 2020 is astronomical compared to that of 20/30/40/50 years ago.
And even though prices of cars aren't massively increasing the value you get from the vehicles is considerably higher.
There's tons of articles easily findable talking about the inflation adjusted price of cars not rising which refute this underlying premise.
And this is all ignoring the fact that buying a car in 1970 and expecting it to go 100k miles basically no matter what would have been insane. Cars have not only been constant or decreased in inflation adjusted cost but the quality of those vehicles has gone up astronomically.
In fact, it's so much less what your whole argument is about and more that the quality is high. If a car usable lifespan goes from 50k to 150k miles... the depreciation curve is basically 1/3 as much.
So naturally as vehicles last longer, they depreciate less, meaning value is lost more slowly. Why would a car that lasts so much longer depreciate as quickly? It doesn't.
If you figure a new car at $25k in 2020 dollars has a lifespan that goes from 100k miles to 200k miles and depreciation reflects this, after 100k miles - how much will the first car be worth? Basically $0. But the second car might be worth $10k or something because it's only 1/2 used up.
You can pretty easily see this, just pick a fairly common vehicle and put in new prices and then find used ones over time. Plot them vs each other - you will see that the trend has the "$0 point" way past what it would have been historically. We bought new last time since you had to drive 200k miles before the new car depreciation curve was steeper than equivalent 3-4 year used vehicles.
tldr: This assumption here is just not true.
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I am thrilled to announce my brand new car! A 2018 Toyota Corolla, 35,000 K's,
Congratulations.
Did you happen to research what the negotiated price of a brand new Corolla with 0 miles would have been?
I'm seeing discounts of $4000+ off MSRP, including manufacturer rebates of up to $2000.
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I am thrilled to announce my brand new car! A 2018 Toyota Corolla, 35,000 K's,
Did you happen to research what the negotiated price of a brand new Corolla with 0 miles would have been?
Dude...
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Great choice - it will last you the rest of your driving life.
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buying a new car is not 'mustachian' but you don't need to live your life by someone else's rules. I think the value of this forum is 'take what resonates with you, ignore the rest'.
I buy new cars (1191, 2003, 2020), but I buy last year's model when the dealerships are motivated to get rid of them. Is it the smartest thing to do with my money, no.....but......I don't do it very often, I get exactly what I want, and I drive for a very long time. I don't get a 'thrill' out of a new car, cars are someone utilitarian to me and that first door ding from some careless jerk pisses me off (buy hey, extra steps from the farthest corner of every parking lot now)
I am not a good negotiator, I find that stressful. Someone on this forum suggested unhaggle.com to me, and I used it for my recent car purchase.
The point of having money is to live your life on your terms, not MMMs, not mine....the goal in life is to not be the richest person in the cemetery.
I assume the 1191 vehicle required rather extensive work?
MOD NOTE: This was reported as mocking the poster for a typo. I assumed it was a joke, and laughed just picturing a wagon like in Monty Python's Search for the Holy Grail or something. Hopefully we can all approach things from a spirit of good faith. Cheers!
FWIW - I took it as a good hearted poke at a mis-type. Thank you to whomever thought I needed protecting, but my skin is much thicker than that.
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buying a new car is not 'mustachian' but you don't need to live your life by someone else's rules. I think the value of this forum is 'take what resonates with you, ignore the rest'.
I buy new cars (1191, 2003, 2020), but I buy last year's model when the dealerships are motivated to get rid of them. Is it the smartest thing to do with my money, no.....but......I don't do it very often, I get exactly what I want, and I drive for a very long time. I don't get a 'thrill' out of a new car, cars are someone utilitarian to me and that first door ding from some careless jerk pisses me off (buy hey, extra steps from the farthest corner of every parking lot now)
I am not a good negotiator, I find that stressful. Someone on this forum suggested unhaggle.com to me, and I used it for my recent car purchase.
The point of having money is to live your life on your terms, not MMMs, not mine....the goal in life is to not be the richest person in the cemetery.
I assume the 1191 vehicle required rather extensive work?
MOD NOTE: This was reported as mocking the poster for a typo. I assumed it was a joke, and laughed just picturing a wagon like in Monty Python's Search for the Holy Grail or something. Hopefully we can all approach things from a spirit of good faith. Cheers!
FWIW - I took it as a good hearted poke at a mis-type. Thank you to whomever thought I needed protecting, but my skin is much thicker than that.
It was indeed intended as an attempt at humour, not an insult.
I'd be terrified of insulting someone for a typo . . . they're a way of lfie for me.
:P
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buying a new car is not 'mustachian' but you don't need to live your life by someone else's rules. I think the value of this forum is 'take what resonates with you, ignore the rest'.
I buy new cars (1191, 2003, 2020), but I buy last year's model when the dealerships are motivated to get rid of them. Is it the smartest thing to do with my money, no.....but......I don't do it very often, I get exactly what I want, and I drive for a very long time. I don't get a 'thrill' out of a new car, cars are someone utilitarian to me and that first door ding from some careless jerk pisses me off (buy hey, extra steps from the farthest corner of every parking lot now)
I am not a good negotiator, I find that stressful. Someone on this forum suggested unhaggle.com to me, and I used it for my recent car purchase.
The point of having money is to live your life on your terms, not MMMs, not mine....the goal in life is to not be the richest person in the cemetery.
I assume the 1191 vehicle required rather extensive work?
MOD NOTE: This was reported as mocking the poster for a typo. I assumed it was a joke, and laughed just picturing a wagon like in Monty Python's Search for the Holy Grail or something. Hopefully we can all approach things from a spirit of good faith. Cheers!
FWIW - I took it as a good hearted poke at a mis-type. Thank you to whomever thought I needed protecting, but my skin is much thicker than that.
It was indeed intended as an attempt at humour, not an insult.
I'd be terrified of insulting someone for a typo . . . they're a way of lfie for me.
:P
I see what you did there........... :-)
and thank you for spelling humour correctly.
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I'm a 59 yr old Canadian female, and although I only made about $40,000 a year, I am now set for life. $500,000 in RRSP, $100,000 in TFSA, and $150,000 in non-registered. I've always owned second hand cars...and I'm thinking it's time to treat myself! I'm excitedly looking at spending $32,000 cash for brand new SUV, which still doesn't touch the investments listed. Thoughts? (...and I love my parttime job, so I still have $$ coming in...)
Simply put,, there is nothing wrong with buying a new car, or anything, if it doesn't affect your financial goals.
As you already mentioned, you can't take the money with you. You might as well enjoy it IF you are happy with your financial position and life circumstances.
The only problem happens when you start compromising your financial goals with unnecessary expenses.
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I would say, Spoil yourself with an exotic second-hand car hahaha..
She got a second hand Toyota. Can't get more exotic than a Japanese car!
:P
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To the OP's question, purchasing a new car could be Mustachian if the factors that contribute to that decision are grounded in objective considerations about your actual (not perceived) needs, available alternatives, ongoing costs, opportunity costs, depreciation, etc. If you weigh those quantifiable factors against the non-quantifiable factors related to the happiness, peace of mind or gratification you get from the new car, you've done a Mustachian calculus.
If the factors that contribute to your decision are limited to the thrill you get from the idea of driving around in a shiny new car with the latest tech, that's not Mustachian.
In your particular situation, just because you're paying cash doesn't make it a "bad" or "good" decision financially. Consider the opportunity cost of not investing all or a portion of that $32k, look at less expensive alternatives, add up the extra cost of insurance, think about how long you'll own the car, and understand the depreciation on your purchase (caredge.com). You may still end up buying the SUV, and that's fine. As long as you quantify the stuff you can quantify and weigh your options rationally, you'll make an informed decision.
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How is buying a Toyota Rav4 hybrid any worse than buying a Toyota Camry?
A quick internet search tells me that the SUV body shape is a little more than a fifth less fuel efficient.
2020 Toyota Camry Hybrid - 51/53 city/hwy
2020 Toyota RAV4 Hybrid - 41/38 city/hwy
Additionally, because of physics, 4WD and AWD can never be as efficient as 2WD on the same vehicle.
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I'm just going to say it -- I prefer new cars. We've bought the gently used cars several times in the past, but our most recent car was bought new. It's a compact car (Mazda3 hatchback). I wanted new safety features and we got a great deal because it was the last year of the model. KBB still shows the lowest range of private party value at more than we paid 21 months ago. It's also our only vehicle for 4 adults, so dependability is important as we don't have a backup. Mustachian? Who gets to decide? Does someone who commutes to and from work everyday in a car get to call themself Mustachian? We haven't driven to a job since 1996.
I know it isn't logical, but I don't care. I know we don't drive enough miles for a new car to make sense -- still don't care. And no, the thrill of the car hasn't worn off. Every time I drive the car I love it. I love it more than the gently used Mercedes I drove before this.
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... and we got a great deal because ...
everyone who buys a new car says this. Or at least the majority of them do. I am genuinely curious why I hear it so often.
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... and we got a great deal because ...
everyone who buys a new car says this. Or at least the majority of them do. I am genuinely curious why I hear it so often.
When a person walks onto a new car lot, they want to buy a new car. If the salesperson can get them to agree they are getting a great deal (e.g. because they let the person negotiate below some anchor like MSRP, or because they waived some fees they added on) then the person will buy the car because they think it's a great deal. Thus, almost all who leave with a new car will believe they got a great deal. Those who did not leave with a new car will believe the deal was not great enough.
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... and we got a great deal because ...
everyone who buys a new car says this. Or at least the majority of them do. I am genuinely curious why I hear it so often.
When a person walks onto a new car lot, they want to buy a new car. If the salesperson can get them to agree they are getting a great deal (e.g. because they let the person negotiate below some anchor like MSRP, or because they waived some fees they added on) then the person will buy the car because they think it's a great deal. Thus, almost all who leave with a new car will believe they got a great deal. Those who did not leave with a new car will believe the deal was not great enough.
Well, let's see. In early 2019 we bought a 2018 Mazda3 Grand Touring hatchback for $17,600 (MSRP was $24,995 + destination fees, although I agree MSRP means nothing since there are various dealer incentives and holdbacks). We've put a little over 8K miles on the car since we bought it. Current KBB private party range is $18463 - $20488, and that was choosing "very good" condition and not "excellent", although the car is like new. Registration and insurance on the Mazda are lower than what we were paying on the 9 year old Mercedes, and we also sold a small pickup, making the Mazda our only car. Overall our car expenses are much, much lower than they were. We jokingly refer to the Mazda3 as "our truck" because we can haul so much in it. And in nearly 2 years we've needed to rent a Uhaul exactly once.
We didn't walk onto a car lot until we had decided on a car, used TrueCar, called multiple dealers, and negotiated a price. The only thing they got us on was quoting a sales price without mentioning it required we finance with their low interest rate finance deal (I think it was 1.9%). It wasn't a big deal though; we put down the maximum we could and paid off the loan the day we received our first statement -- they got us for about $13 in interest.
I've been alive long enough to know they play games at dealerships, including cutting prices in one place and adding fees in others. I can admit when I was younger I definitely didn't get good deals, and at best maybe got a decent deal. You can choose to think we got played this time because you don't believe it's ever possible to negotiate well on a new car. But this isn't even about whether or not it was a good deal or a smart financial choice. It's about whether or not someone else thinks a new car is worth it. Plenty of mustachians will say no, and then go on to buy a late model used car that costs more than what we paid for our new car.
Our money, our rules. We're FI and have zero debt (we even went against mustachian advice and paid off the mortgage). Buying a used car would have done nothing to improve our situation. I already said I prefer a new car, which doesn't even require that I get a good deal.
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Our money, our rules. We're FI and have zero debt (we even went against mustachian advice and paid off the mortgage). Buying a used car would have done nothing to improve our situation. I already said I prefer a new car, which doesn't even require that I get a good deal.
So, I wasn't trying to point fingers. Genuinely!
You don't have to defend your actions. I don't really care (not in a bad, dismissive way. I actually don't really mind). I don't think defining yourself as "mustachian" or not has much bearing on how good of a person you are. At the end of the day we are all making an impact so if we start trying to one up each other for vanity reasons we'll be sitting in a circle drinking our own piss. And, technically, MMM himself paid off his mortgage early so if we are definine "mustachian" then you are actually doing quite well (as opposed to, say, a "boglehead" which would spend more effort on the accounting and less on the lifestyle). But the definitions are silly, other than to give general context.
It was more of a casual thought. I always hear "but I got a good deal". Whether or not you did I cannot actually say (and again, I don't really care). But it echos of the "I saved $50 by spending $200" mindset that consumers often make. That's not directed at you personally- it's just a general statement.
Anyway, I love the Mazda 3's. I hope that yours continues to treat you well.
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Another Mazda 3 owner! My almost new (dealer demo model) 2010 Mazda 3 Sport hatchback is still going strong at over 280,000 km. I've bought used and I've bought new, and for me the ability to be in total control of maintenance is a big advantage to buying new. I tend to be a bit compulsive about having maintenance done on schedule. I trust me to do it. If I bought used I would want to see all the maintenance records, have a local dealership give the car a thorough inspection, you know, totally OCD about it.
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I tell this story all the time, but since you asked...
DH is a painting contractor by trade.* He bought his Ford F150 XLT Extended Cab brand new in 2002. He paid cash for it - $20,000, including tax & license. It just turned over to 100,000 miles. It looks great and he says he's never getting rid of it. My biggest fear is that someone will steal it.
He's sitting beside me, so I asked him how much it would cost now. He laughed and said, "Probably about 45,000."
So yeah, sometimes buying new makes sense.
Also, it bugs the crap out of me when people say they're going to keep a vehicle and "drive it into the ground". No, just no. That's not the mustachian way. We take care of our shit, even when it's old./end rant
*Bonus points if you instantly knew the truck is white, the painter's favorite color.
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I always thought "drive it into the ground" meant you drove it until the repair/maintenance costs just weren't worth it any more. Is there a more common meaning?
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I always thought "drive it into the ground" meant you drove it until the repair/maintenance costs just weren't worth it any more. Is there a more common meaning?
(https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2Fcdn.images.express.co.uk%2Fimg%2Fdynamic%2F1%2F590x%2Fsecondary%2FToyota-Celica-stuck-in-Mud-on-Beach-Mudflats-in-Somerset-215374.jpg&f=1&nofb=1)
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Yeah, I'm pretty sure when people say they want to drive a car into the ground, they typically mean that they'll maintain it really well in order to drive it until it can't reasonably be repaired anymore.
I don't think that most people mean that they'll neglect it until it falls apart, although that is what a lot of people do.
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Yeah, I'm pretty sure when people say they want to drive a car into the ground, they typically mean that they'll maintain it really well in order to drive it until it can't reasonably be repaired anymore.
I don't think that most people mean that they'll neglect it until it falls apart, although that is what a lot of people do.
"Drive it until the lease is up" is neglect it until it falls apart.
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Yeah, I'm pretty sure when people say they want to drive a car into the ground, they typically mean that they'll maintain it really well in order to drive it until it can't reasonably be repaired anymore.
I don't think that most people mean that they'll neglect it until it falls apart, although that is what a lot of people do.
"Drive it until the lease is up" is neglect it until it falls apart.
Still better than "Drive it like a rental car" which means to operate the vehicle at all times with the intent to get the worst longevity possible from each component.
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Still better than "Drive it like a rental car" which means to operate the vehicle at all times with the intent to get the worst longevity possible from each component.
Which is why I can never understand all of the love on this forum for purchasing former rental cars.
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Still better than "Drive it like a rental car" which means to operate the vehicle at all times with the intent to get the worst longevity possible from each component.
Which is why I can never understand all of the love on this forum for purchasing former rental cars.
I liked buying my demo. Reduced price because it wasn't "new", but test drivers don't drive crazy when a dealer rep is sitting in the passenger seat.
If a rental car isn't "sporty" is it likely to be badly driven?
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I managed to throw the transmission of a rental minivan into park while in motion a couple of years ago. It made horrible noises. But after I settled down, it drove normally, park held normally while parked, and there was no apparent damage... maybe. I wouldn’t know because I returned it and ne’er a word was spoken about the mishap.
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Still better than "Drive it like a rental car" which means to operate the vehicle at all times with the intent to get the worst longevity possible from each component.
Which is why I can never understand all of the love on this forum for purchasing former rental cars.
The theory is they were maintained on a schedule. However, I don't think they ever come with any documentation of maintenance done, and if I was an evil car rental corporation, I might realize that if I am selling the car at 35,000 miles it doesn't matter if I do any preventative maintenance. It'll last that long and sell for around blue book.
Of course, used car lots also do not provide any documentation. Your best bet is always a FSBO used car so you can flip through the receipts that are still in the glove box to find out things like was the timing belt ever replaced or how old the tires are.
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We have an 09 corolla bought as a one-year ok rental car that came with all maintenance records and is doing well at 115k miles. Recently sold an 06 Jetta, also bought as one-year old rental. Wouldn't buy a VW again but it served us very well.
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If a rental car isn't "sporty" is it likely to be badly driven?
Yes, of course it is.
People beat the sh*t out of any type of rental car.
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If a rental car isn't "sporty" is it likely to be badly driven?
Yes, of course it is.
People beat the sh*t out of any type of rental car.
I don't but look at the forum I hang out on.
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I don't but look at the forum I hang out on.
I'm not saying that every single renter beats the crap out of rental cars.
Though I certainly have in the past.
Think about it...it an easy numbers game.
Say a rental car has 30,000 miles, and an average of 300 miles put on by each renter, that means there have been 100 separate drivers.
If just 20% abuse it, that means 20 separate people have beat the crap out of it during their rental period.
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A lot of the rising price of used cars is due to the rising price of new cars, which have become more complex and more loaded with features. The percentage of cars with leather interiors, power mirrors, aluminum rims, and other luxury items has increased, while the number of cars you can still buy with crank windows or bench seats have decreased. Then there is the now-ubiquitous infotainment and networking equipment that has replaced the old AM/FM CD player. An economist would call this rising quality, while I would call it lifestyle creep on a nationwide scale.
The shift in demand towards luxury pickups/SUVs and away from basic economy cars would, in itself, raise the average when these vehicles are resold. That is, a luxury truck/SUV that cost $60k new will cost the next person $30k in a few years when it's lost half it's value. A stripped-down Nissan Versa that was $16k new will cost $8k in the same timeframe. Hybrid drivetrains, while a good thing that adds utility to a vehicle, also contribute to higher average used car prices.
Yes. More and more people are buying luxury cars whether they can afford them or not. It's another symptom of our society's consumerism, search for instant gratification and poor understanding of personal wealth management. If more people wanted to buy economy cars then more would be available.
All this is an effect of rising income inequality, or if you prefer the hollowing out of the middle class. If the demographic profile of people who can afford to buy new cars shifts away from the lower-to-mid middle class, and toward the upper middle class and upper class, then the rest of us will have to eventually inherit used cars originally bought by people whose income is much higher than ours, rather than perhaps slightly larger than us.
The current imbalance between what the wealthy can afford to buy new and what the working classes can afford to buy used is also apparent in housing. More large houses than small houses are being built because only higher-income people are buying new homes. Thus, the young family with a working-class income who could live an efficient lifestyle in a 1k square foot house does not have the choice to buy that in many cities with tracts full of McMansions and 3-car merchandise storage units. So the young family stretches to buy a house twice as big as they need, and pick up two too-large used luxury vehicles because that's all that is for sale.
In this way, income inequality perpetuates itself. The family described above will be in a permanent state of financial struggle due to being house-poor and car-poor. And yet they can look around and see their lifestyle is completely normal.
I see this differently. Many people are buying new cars and fancy houses. It's not just the upper-mid and upper class. In fact, most people are buying way more house and car than they can afford. Lifestyle creep sets in and "everybody" buys as much as they can afford whether they are making $25,000/year or $250,000/year. Go shop for a new car and one of the first questions asked will be "what monthly payment can you afford". An 84 month loan is now common to keep the payment manageable on a vehicle they can't afford. Many people don't even look at what they can afford, it's what they qualify to borrow. A basic sales principle is to upsell everyone and it's tough to resist.
This has very little to do with how much people make but has everything to do with how much they have in the bank. We to learn to manage money as a society. Upper class (income) people are broke just like the lower and middle class.
I know tons of people who make lower or middle class money but drive vehicles they can't afford. In my area, that's usually a fancy truck or SUV which is not only expensive to buy but also gets terrible MPG.
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OP. There are two parts to this answer, finances and environmental.
Financially, you are in a position to afford a reasonable new car. A small SUV like a Toyota RAV4 or Mazda CX-5 isn't unreasonable for you if that's what you really want. You will probably lose a few thousand dollars over buying used but you can afford that if it's what you want to spend your money on. I'm not sure I would call it "mustachian" but it's not a terrible decision either.
Environmentally, a new car is probably a bad decision for the planet. This comes into play because influencing others to have less environmental impact was one of MMM's primary drivers in writing the blog. So, a new car is not "mustachian". But, new vs used has a much smaller impact than what type of vehicle you drive and how many miles you drive.
Personally, I wouldn't be afraid to buy new in your situation if you get a good deal and the vehicle is reasonable for your uses. Definitely compare the cost of a new car (purchase price, not MSRP) with one that is 1-3 years old. That way you can decide if the premium is worth it to you.
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I sometimes buy new cars and I sometimes buy used cars. It depends on the depreciation curve for the specific car I'm looking to buy.
Examples: 2014 Jeep Wrangler Unlimited (I know this is THE vehicle to have here). I searched and documented for 6 months. What I found was that the best I could do was to MATCH the new car price with a 3 year old used vehicle. Wranglers at that time held their value like crazy. I then ordered exactly what I wanted which saved the money that most used vehicles added cost with the electric dog polishers and gasoline powered radial floor mats.
Used: Well, any GM that's not a Corvette. GM regularly dumps vehicles near year end. I drive by a GMC dealer regularly and in the dumping times, they always have pickups out there with big "save $12,000 on this truck" signs. Look at a 3 year old GM brand SUV and it's 50% of it's original price. So there, you'd want to buy used.
What I've done: Bought a 1 year old 2017 Subaru Legacy Limited. Mid sized sedans are out of favor at the moment and they all drop like a rock. So by buying one year old, I saved maybe $5k of cash AND instead of buying a premium, for that money, I bought a Limited.
I bought a new 2019 Subaru Crosstrek Premium manual transmission with zero extra options. This model holds value too well and finding one of these with a manual and no options used is near impossible. So yah....I could find a 2 year old one, but it had $3k in options and a price matching what I paid for new.
So after all that, the answer is "it depends".
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...electric dog polishers and gasoline powered radial floor mats.
Damn it! That's what I've been missing all my life!
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This question is really dependent if you’re making $30k/yr or $300k/yr.
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In my opinion, no. I think the sweet spot is to get a used car that's 1-2 years old. The care may still be under warranty for a while (helpful if you happen to get a lemon) and hasn't had much time to get worn out, but someone else takes the huge, initial depreciation hit.
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Absolutely not.
That we are debating this topic shows how strong the brainwashing car culture is in this country.
According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
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Absolutely not.
That we are debating this topic shows how strong the brainwashing car culture is in this country.
According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
This depreciation argument has been thoroughly debunked.
You are the one being brainwashed by blindly accepting these fake depreciation articles as fact.
The losses/depreciation quoted in this article and others is based off the new car MSRP...
and NO rational consumer pays MSRP for a mainstream vehicle.
To accurately calculate depreciation, you must use the ACTUAL sales price, not MSRP.
Savvy shoppers pay significantly less than MSRP for new vehicles, meaning the "new cars lose 20% value after 1 year" claim is completely bogus.
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According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
I just used their own site to determine the value of my exact vehicle I purchased new 1 year ago....
Typical car depreciation calculators can give you a rough idea of how much value a vehicle has lost over years. If you want more accurate information, however, you can rely on the Carfax History-Based Value tool. https://www.carfax.com/value/ (https://www.carfax.com/value/)
The CARFAX Private-Party value is OVER $1,000 MORE than I paid for it new last November.
So I've used/driven the vehicle for the last year, yet I could sell it now for more than I paid for it.
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According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
I just used their own site to determine the value of my exact vehicle I purchased new 1 year ago....
Typical car depreciation calculators can give you a rough idea of how much value a vehicle has lost over years. If you want more accurate information, however, you can rely on the Carfax History-Based Value tool. https://www.carfax.com/value/ (https://www.carfax.com/value/)
The CARFAX Private-Party value is OVER $1,000 MORE than I paid for it new last November.
So I've used/driven the vehicle for the last year, yet I could sell it now for more than I paid for it.
Are you including tax, license and the higher insurance premiums? Asking for a friend.
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Are you including tax, license and the higher insurance premiums? Asking for a friend.
Sales Tax
As I just pointed out, had I bought this vehicle now as a used model, it would have cost MORE than what I paid new last year.
That means I actually spent LESS on sales tax by purchasing new.
Secondly, you can't make a direct comparison of the sales tax paid between new and used.
You'll end up buying fewer new vehicles than used vehicles, so you must compare the total sales tax paid over a given time period, not per car.
License
I believe you incorrectly understand how most states in the US treat license/registration.
In my state (and the majority of states), the license costs for a brand new vehicle are the EXACT SAME as a used vehicle.
Insurance Premiums
You are also misinformed on this topic. Newer vehicles, with their advanced safety & security features, don't necessarily come with "higher insurance premiums."
In fact, my insurance premiums DECREASED when I replaced my two 10+ year old vehicles with brand new vehicles.
My insurance premium on the vehicle discussed above is $240 PER YEAR for full coverage.
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Are you including tax, license and the higher insurance premiums? Asking for a friend.
Sales Tax
As I just pointed out, had I bought this vehicle now as a used model, it would have cost MORE than what I paid new last year.
That means I actually spent LESS on sales tax by purchasing new.
Secondly, you can't make a direct comparison of the sales tax paid between new and used.
You'll end up buying fewer new vehicles than used vehicles, so you must compare the total sales tax paid over a given time period, not per car.
License
I believe you incorrectly understand how most states in the US treat license/registration.
In my state (and the majority of states), the license costs for a brand new vehicle are the EXACT SAME as a used vehicle.
Insurance Premiums
You are also misinformed on this topic. Newer vehicles, with their advanced safety & security features, don't necessarily come with "higher insurance premiums."
In fact, my insurance premiums DECREASED when I replaced my two 10+ year old vehicles with brand new vehicles.
My insurance premium on the vehicle discussed above is $240 PER YEAR for full coverage.
I asked a reasonable question. Thanks for pointing out my obvious stupidity.
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Absolutely not.
That we are debating this topic shows how strong the brainwashing car culture is in this country.
According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
This depreciation argument has been thoroughly debunked.
You are the one being brainwashed by blindly accepting these fake depreciation articles as fact.
The losses/depreciation quoted in this article and others is based off the new car MSRP...
and NO rational consumer pays MSRP for a mainstream vehicle.
To accurately calculate depreciation, you must use the ACTUAL sales price, not MSRP.
Savvy shoppers pay significantly less than MSRP for new vehicles, meaning the "new cars lose 20% value after 1 year" claim is completely bogus.
A simple google search reveals countless sources with the same depreciation info. For example, the article here uses "average transaction price," not MSRP: https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/ (https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/)
On the other hand, I couldn't find any sources referencing your argument. Where is all this debunking you mentioned? Or did you pull it from thin air?
The answer is clear...sell your clown car. Further reading: https://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/
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A simple google search reveals countless sources with the same depreciation info. For example, the article here uses "average transaction price," not MSRP: https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/ (https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/)
On the other hand, I couldn't find any sources referencing your argument. Where is all this debunking you mentioned? Or did you pull it from thin air?
You apparently didn't read the Carfax article that YOU posted a link to!
This is what you said...
According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
And this is the very first sentence from the article you quoted...
If you’re looking to put a brand new $40,000 car in your driveway, we’ve got some expert advice: Buy a vehicle with a sticker price closer to $45,000.
They are explicitly calculating depreciation based on the STICKER PRICE (MSRP) of the vehicle.
They are NOT calculating it based on the actual sales price of that vehicle, which would be significantly less.
Your own article, that you posted, is what proves my point that MSRP gets used to calculate depreciation.
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Absolutely not.
That we are debating this topic shows how strong the brainwashing car culture is in this country.
According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
Following up on this.
I went back to the site you linked above that discusses depreciation.
When I first checked the value of my vehicle using your site, I didn't realize I needed to select the vehicle condition.
After selecting the correct condition, it shows the Private-Party Value is $2,000 MORE than I paid for it new last November.
This is a perfect example of why you can't just drink the Kool-Aid offered up by whatever website you stumble across.
You need to look critically/independently at the data for your particular vehicle and situation.
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Absolutely not.
That we are debating this topic shows how strong the brainwashing car culture is in this country.
According to Car Fax, the average new car loses 20% of its value after 1 year and 40% after five years. (https://www.carfax.com/blog/car-depreciation).
Following up on this.
I went back to the site you linked above that discusses depreciation.
When I first checked the value of my vehicle using your site, I didn't realize I needed to select the vehicle condition.
After selecting the correct condition, it shows the Private-Party Value is $2,000 MORE than I paid for it new last November.
This is a perfect example of why you can't just drink the Kool-Aid offered up by whatever website you stumble across.
You need to look critically/independently at the data for your particular vehicle and situation.
+1
Our brand new car we bought in 2016 has depreciated about 1k/year over the first nearly 4 years we've owned it compared to what we paid. It's worth approximately 25% less now than our out of pocket cost if I use KBB tradein numbers. If I use their private party number, it's only gone down about 16% in that timeframe.
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Cars depreciate most in their first 3 years and I find they depreciate significantly at the end of that period when they run out of manufacturer warranty.
Here in Australia the best time to buy a car is right after the warranty expires. People get 'scared' of buying a lemon. What they don't realise is that in most states you get a 12 month statutory warranty from the dealer you buy it off. You also have rights under the Australian Consumer Law to ask the manufacturer or seller to repair any defect if it would not have been expected for that defect to arise given the price of the good and the marketing of the good. In other words we have strong statutory protection which most people - due to ignorance and an inability to understand the nuances of our small claims legal system - never end up using.
So, here in Australia:
- Buy at the perceived 'most dangerous' (not actually dangerous) period - right when the warranty expires.
- Get a mechanical inspection ($200).
- Ask the dealer by email whether there's any known fault with the car. It will be useful as part of an ACL claim later on.
- Buy from a dealer, so you get the 12 month statutory warranty.
- Profit. You have a 12 month statutory warranty and an extended de jure warranty under the ACL.
Other people's insecurities (about coming out of warranty, etc) are your gain.
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I feel like I'm missing something in this thread.
Why does depreciation matter at all? A car that I buy brand new and drive for four years may well depreciate 25%. But that number means nothing unless you plan to sell at that point. If you're planning to keep driving the car for another 16 years, the number is meaningless.
"Ah, but the 4 year old car will be cheaper!" everyone starts to scream. Buying a 4 year old car is very different than continuing to own a 4 year old car that you bought new. With the former you don't know how it has been driven/maintained with the latter you know that it has been babied and is unlikely to have any abuse related hidden problems. If you buy a car 4 years old and manage to drive it for 16 years, you're still shopping for a new car sooner . . . something that takes time and effort out of your life and adds in stress.
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It can matter if you get in a wreck and your car gets totaled with low miles. But even then, assuming you’re physically okay, I guess you just end up getting a low mileage used car as a replacement.
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Why does depreciation matter at all? A car that I buy brand new and drive for four years may well depreciate 25%. But that number means nothing unless you plan to sell at that point. If you're planning to keep driving the car for another 16 years, the number is meaningless.
This is a good point, but there is more nuance. Depreciation is somewhat indicative of quality/utility so often we substitute it for quality (but with vehicles this gets messy). So if something costs $50K one year and $25k the next, it is assumed that it has lost $25k of it's utility. But utility for the market isn't necessarily utility for a mustachian.
It would be easier if the value of a car didn't have so many things tied to it (luxury, reliablity, mpg, image, etc.). If it were pure reliability/function, then depreciation would really matter in analysis because the price of the car would correlate pretty evenly with the remaining cost of ownership. But vehicle depreciation also incorporates the "newness" factor in it, which varies greatly depending on brand and person buying a car.
Another way to look at it is: would you get more utility from a $10K 2010 Honda Civic or a $10k 2010 Mini cooper? The Civic is objectively more reliable (all things being equal). If we are only looking at price, both options are the same. But if we look at depreciation, the Mini cooper has depreciated almost twice as much as the Honda since new. (maybe just 1.5 times if we go off of purchase price and not MSRP). A good portion of that depreciation is due to the fact that the Mini has used up quite a bit more of it's average lifespan as the Civic. But not all of it. An argument can certainly be made that good maintenance will more than make up for average reliability, but that takes us out of the realm of general data and back into anecdotes.
In general, depreciation is an indicator of loss of utility. Cars that loose 10% as soon as they drive off the lot are perhaps depreciating more because they don't have that "single owner" auroa to them. Some vehicles are worth more then next year when they are reliable and in demand (happens to Toyota pickups all the time).
I'm rambling here with no real point other than that we can't use depreciation as an end-all, but we can't dismiss it either in my opinion. Even if we're not going to sell the vehicle, it's current value vs original value is at least somewhat tied to it's remaining utility (unless we get into the realm of exotic cars an the like).
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I feel like I'm missing something in this thread.
Why does depreciation matter at all? A car that I buy brand new and drive for four years may well depreciate 25%. But that number means nothing unless you plan to sell at that point. If you're planning to keep driving the car for another 16 years, the number is meaningless.
"Ah, but the 4 year old car will be cheaper!" everyone starts to scream. Buying a 4 year old car is very different than continuing to own a 4 year old car that you bought new. With the former you don't know how it has been driven/maintained with the latter you know that it has been babied and is unlikely to have any abuse related hidden problems. If you buy a car 4 years old and manage to drive it for 16 years, you're still shopping for a new car sooner . . . something that takes time and effort out of your life and adds in stress.
Depreciation is a symbolic representation of what will be realized as a cash expenditure in the future. E.g. if I buy my car for $15k today and sell it ten years later for $3k I will realize a $12k capital loss. The importance is for capital planning. We should all have a fund for car replacement that we pay into as our vehicle depreciates, so that we can pay cash when it is time for car replacement.
I see far too many people on this board who have paid-off cars with several years of use remaining, and they are calculating their FIRE number or retirement budget based on the last couple years of cash outlays. Their budget will be trash in a few years when they swap their current vehicle(s) for newer more expensive models. “Oh, that was an unexpected $20,000 expense” they’ll say! And just like that their 4% WR becomes more like 4.5% because they pretended their car doesn’t depreciate.
Then the roof needs replacement. Then the bathroom needs remodeling. HVAC quits. Etc. It’s easy to keep cash outlays small during the accumulation phase if you can go a couple of years without replacing a big mechanical system.
Your point about having to trade cars more frequently is valid. In theory, one experiences losses due to time, the bid-ask spread, and in some places sales taxes every time you trade (and if a dealer or financing is involved, there are additional fees / losses). Yet I don’t think the optimal strategy is to buy new and sell for scrap. Depreciation is so much bigger during a car’s first few years that it far overwhelms the transaction costs involved with, for example, buying ten used cars in one’s lifetime instead of six new ones.
As for the abuse issue, I think it is also possible to get a lemon new from the car dealer. E.g. 2012 Ford Focuses have a very high rate of transmission failure, but who knew that in 2012? Used car buyers can avoid the lemons based on info from sites like carcomplaints.com.
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I feel like I'm missing something in this thread.
Why does depreciation matter at all? A car that I buy brand new and drive for four years may well depreciate 25%. But that number means nothing unless you plan to sell at that point. If you're planning to keep driving the car for another 16 years, the number is meaningless.
"Ah, but the 4 year old car will be cheaper!" everyone starts to scream. Buying a 4 year old car is very different than continuing to own a 4 year old car that you bought new. With the former you don't know how it has been driven/maintained with the latter you know that it has been babied and is unlikely to have any abuse related hidden problems. If you buy a car 4 years old and manage to drive it for 16 years, you're still shopping for a new car sooner . . . something that takes time and effort out of your life and adds in stress.
Your 4-year-old car will depreciate a lot more than 25%. Fifty percent would be standard for most mass-produced consumer cars.
As for buying a 4-year-old car being different from continuing to own a 4-year-old car that you bought new, if you assume the lifetime of a car is - say - 12 years - then you can either spend $50k on a new car (yearly price over 12 years is about $4k per year) or you can spend $25k on a 4-year-old car which you keep for 8 years (yearly price over 8 years is about $3k per year). You still save.
I can't speak for Americans, but again, here in Australia, if you buy a car whose warranty has just expired, you get the perceived "loss of utility" of having an out-of-warranty car - so the price often nosedives - but you get the hidden utility of having a statutory warranty from the dealer plus a de jure ACL warranty which, if you're clever, you can easily exploit in small claims court for only a few hundred bucks. Or even if you can't do that, the value dive for a car that's out of warranty far exceeds the actual depreciated life of the car.
A 4-year-old car is nowhere near 50% done with its operating life - but its value has dropped by 50%.
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I feel like I'm missing something in this thread.
Why does depreciation matter at all? A car that I buy brand new and drive for four years may well depreciate 25%. But that number means nothing unless you plan to sell at that point. If you're planning to keep driving the car for another 16 years, the number is meaningless.
"Ah, but the 4 year old car will be cheaper!" everyone starts to scream. Buying a 4 year old car is very different than continuing to own a 4 year old car that you bought new. With the former you don't know how it has been driven/maintained with the latter you know that it has been babied and is unlikely to have any abuse related hidden problems. If you buy a car 4 years old and manage to drive it for 16 years, you're still shopping for a new car sooner . . . something that takes time and effort out of your life and adds in stress.
Your 4-year-old car will depreciate a lot more than 25%. Fifty percent would be standard for most mass-produced consumer cars.
As for buying a 4-year-old car being different from continuing to own a 4-year-old car that you bought new, if you assume the lifetime of a car is - say - 12 years - then you can either spend $50k on a new car (yearly price over 12 years is about $4k per year) or you can spend $25k on a 4-year-old car which you keep for 8 years (yearly price over 8 years is about $3k per year). You still save.
I can't speak for Americans, but again, here in Australia, if you buy a car whose warranty has just expired, you get the perceived "loss of utility" of having an out-of-warranty car - so the price often nosedives - but you get the hidden utility of having a statutory warranty from the dealer plus a de jure ACL warranty which, if you're clever, you can easily exploit in small claims court for only a few hundred bucks. Or even if you can't do that, the value dive for a car that's out of warranty far exceeds the actual depreciated life of the car.
A 4-year-old car is nowhere near 50% done with its operating life - but its value has dropped by 50%.
If you're seeing that a 4 year old car sells for 50% less than the new vehicle . . . then sure. I would totally agree with you.
That's not the case at all for my observations though. Our Corolla was about 10% more to buy (actual post- negotiating price - not inflated sticker price) new than a 3-4 year old one. At that price differential it doesn't seem quite so clear cut to me.
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Maybe it's Australian economics or maybe Corollas have immense resale value but I have never seen a car here - other than limited edition / enthusiast models - only lose 10%, or even 20%, after 4 years.
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Maybe it's Australian economics or maybe Corollas have immense resale value but I have never seen a car here - other than limited edition / enthusiast models - only lose 10%, or even 20%, after 4 years.
Are you comparing to sticker price, or the actual sale price of a new vehicle? They're quite different in my experience.
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Maybe we should re-title the thread: When you can afford it, is it still Mustachian to pay MSRP for a Brand New Car instead of negotiating the lowest possible price?
The answer is no. Now negotiate yourself into a good deal on a new car if you want one.
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Maybe it's Australian economics or maybe Corollas have immense resale value but I have never seen a car here - other than limited edition / enthusiast models - only lose 10%, or even 20%, after 4 years.
Are you comparing to sticker price, or the actual sale price of a new vehicle? They're quite different in my experience.
Actual sale price new versus actual sale price second hand. Both prices are discounted from the headline price.
You have to remember also that the cost of options (when new) is never recouped on the second hand market. And most cars have some options.
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This is one of those endless debates that will never die. But since it reminds me of an endless debate from a totally different forum, I think the real question is - gas vs. diesel?
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This is one of those endless debates that will never die. But since it reminds me of an endless debate from a totally different forum, I think the real question is - gas vs. diesel?
I'm not a fan of diesel engines. They rev way too low. Give me a naturally aspirated petrol engine that goes in to the high 7s, 8s or 9s any day. The 20L/100km fuel consumption is worth the thrill.
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This is one of those endless debates that will never die. But since it reminds me of an endless debate from a totally different forum, I think the real question is - gas vs. diesel?
It's an endless debate because many people refuse to do math ;-)
Basically you need to calculate the average yearly cost of a car over the time you have it. For some cars, new is about the same as used. For others, it's not.
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The answer is no. Now negotiate yourself into a good deal on a new car if you want one.
Follow up question: Is it Mustachian to pay a premium to not negotiate the price of a car? I don't negotiate beyond the basic craigslist offer (will you take $40 for that $50 bookcase?). I effing hate hate hate sales people. With a passion. I forgot how much I loathe the experience when I let a door-to-door window salesman in my house. Once the pricing started, I asked them to leave. "You must sign here to day, NOW to get this offer". Well, that means I'm not buying from you. It'll save us a both a lot of time because I can already tell that I'm not going to like where this ends up. I don't like the idea that the more aggressive I am, the less money they make. I don't want to swindle people out of money. I can't do it. It's like heckling, I'm impressed and respect people who can, but it's just not in my system to do it. I've tried it at dealerships, and it just doesn't feel good. They play games with emotions and sh*t too much.
Some people it's just part of business. Some it's entertainment. I just can't handle it. I would much, *much* rather go to the dentist.
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The answer is no. Now negotiate yourself into a good deal on a new car if you want one.
Follow up question: Is it Mustachian to pay a premium to not negotiate the price of a car? I don't negotiate beyond the basic craigslist offer (will you take $40 for that $50 bookcase?). I effing hate hate hate sales people. With a passion. I forgot how much I loathe the experience when I let a door-to-door window salesman in my house. Once the pricing started, I asked them to leave. "You must sign here to day, NOW to get this offer". Well, that means I'm not buying from you. It'll save us a both a lot of time because I can already tell that I'm not going to like where this ends up. I don't like the idea that the more aggressive I am, the less money they make. I don't want to swindle people out of money. I can't do it. It's like heckling, I'm impressed and respect people who can, but it's just not in my system to do it. I've tried it at dealerships, and it just doesn't feel good. They play games with emotions and sh*t too much.
The internet has helped massively with this because pricing is more transparent.
In larger metro areas on popular cars you can search a specific one across a large area and just buy the cheapest.
You might lose out on a bit but you're going to be much further ahead than you would have been pre-internet.
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The internet has helped massively with this because pricing is more transparent.
In larger metro areas on popular cars you can search a specific one across a large area and just buy the cheapest.
You might lose out on a bit but you're going to be much further ahead than you would have been pre-internet.
Yeah, I don't buy cars that often these days anyway (thanks mmm!), and with the mileage that I drive buying one that is 5-10 years old and at 100k is just fine. For those racking up more miles this is probably a bigger concern.
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The answer is no. Now negotiate yourself into a good deal on a new car if you want one.
Follow up question: Is it Mustachian to pay a premium to not negotiate the price of a car? I don't negotiate beyond the basic craigslist offer (will you take $40 for that $50 bookcase?). I effing hate hate hate sales people. With a passion. I forgot how much I loathe the experience when I let a door-to-door window salesman in my house. Once the pricing started, I asked them to leave. "You must sign here to day, NOW to get this offer". Well, that means I'm not buying from you. It'll save us a both a lot of time because I can already tell that I'm not going to like where this ends up. I don't like the idea that the more aggressive I am, the less money they make. I don't want to swindle people out of money. I can't do it. It's like heckling, I'm impressed and respect people who can, but it's just not in my system to do it. I've tried it at dealerships, and it just doesn't feel good. They play games with emotions and sh*t too much.
Some people it's just part of business. Some it's entertainment. I just can't handle it. I would much, *much* rather go to the dentist.
There is a middle ground for those that hate the car dealer experience but still want to be in the new car market. There are car buying services that handle negotiating with the sleazy sales people for a flat fee. They just ask for what car and what required options then go off and beat the bushes to get the best price they can then add a few hundred for their service. Costco has a plan for members that kinda does this, too - pre-negotiated rates on new cars.
It will wind up being a bit more than a good negotiator could get but I'm not very good at negotiating (I hate it) so it would usually wind up a wash.