Almost Bought a New Truck

[Snowman99]

Hi, I am new to this forum and just getting into this.

After living in a fog for so many years, my wife and I just recently signed onto the goal of early financial independence, and we began strictly budgeting just recently.  We will be able to eliminate our car loan and last student loan this year (our only non-mortgage debt), after which we plan on either throwing everything possible (approx 60% of our net income) at our mortgage (3.25% fixed- 30 year) and/or investing.  Haven't quite decided yet.  We are in our mid thirties with one child and another on the way.

Anyway, this plan was decided but I've been bringing my '07 Civic with about 150k miles into the shop a few times this month for very minor, yet inconvenient, issues, and almost strayed and bought a brand new diesel pick up truck I've been eyeing for a while (approx. $40k)- due to factors I need not get into, I have a weakness for trucks.  We have enough saved to pay for the truck in cash, and I'm sure we would have qualified for an easy 0% loan.  My parents and everyone in my office told me to get rid of my "piece of junk" because it is not "an adult car" or worthy of someone in my profession.  Thankfully, I did not cave, and glad that I didn't.  Civic still runs great, and I plan to keep it for another 150k miles.  I would be a liar, though, if I told you that I didn't come close to buying that pickup.  But for the advice I've been reading here, who knows if I would have made the right choice?

This website is great and I wish I discovered it in my 20s.  I'd probably be retired by now!!!  Thanks.

[2Cent]

Congrats. Don't know your income, but given average income you just saved yourself from adding a year to your FI date

[falcondisruptor]

Nice work!  It's hard when everyone is telling you that you're doing things wrong when it feels so good!  Worst case scenario is that you've bought yourself some time to weigh more options and choices.  Best (most likely) scenario is that you're now a Badass!

[affordablehousing]

Ha! This made me laugh as I work in finance and drive an 2007 Civic and clients frequently comment on my auto choice when I have to drive them somewhere. I respond that what I'm sacrificing in their comfort now, I'll make up for in free advice when I retire.

[Snowman99]

Drive that Civic with pride! 

[marielle]

Screw the naysayers! Drive that car with pride. Laugh at them all the way to the bank!

Personally...I'd be embarrassed to spend that money much on a car considering the environment I work in. I work in a very rural, poor area...spending $20k-$30k on a car is more than what people here make in a year. Not something I'd be proud of at all.

My car is 14 years old with 150k miles as well, I really hope it lasts another 150k...and even if it doesn't, I'm just going to get the engine rebuilt. Repairs almost always trump a new car.

[runewell]

Encourage you not to pay down your mortgage, over a 30-yr period you should be able to get a return better than 3% in the stock market.  Be sure to request a calculation of how much money you would throw away by not getting an assumed 7% return over that time period.  It would be a lot worse than buying a new truck, for sure.

[Sdeeze]

due to factors I need not get into, I have a weakness for trucks.

You, me, and a lot of other people on this planet. The thing about trucks is that there are times, more or less depending on the person, at which they are genuinely useful for people to have. There are certain tasks that are made much easier to accomplish by having a truck available at all times, and there is definitely a convenience factor associated with it. However, for the vast majority of people using trucks as their personal vehicle, this convenience will be exponentially less than the amount of extra money/stress that it'll take to own that truck, me included. That little kernel of truth is what makes the advertising and culture surrounding trucks to pervasive and hard to get people to see through, because they can always immediately think of a quick trip to Ikea or running to Lowe's to get some lumber for a project, etc. Congrats on stepping back and clearing your head of it all!

I definitely feel your pain though! My fiance and I recently went from having two cars to one. We each had one when we entered the relationship so it just kind of naturally happened we had two of them. It was fine for a while, they were both paid off, cheap to own/operate, and reliable. Mine was definitely maintained a lot better as far as the interior was concerned though and I did kind of baby it a bit more. I can get a bit weirdly protective of larger investments of mine like cars. So we decided to downsize, but we decided to sell my car instead so we could get more money for it! Hearing both of our family's reactions to it has been, frankly, super amusing. They seemed ready to barely understand and tolerate that we'd keep mine and sell hers but not get anything else. Since we did the sale (all of last weekend!) they've been letting us know how confused they are about everything. "And are going to get another car to replace his?" has come up at least twice now.

I think the biggest downside for my fiance is maintaining it with me. I told her we could totally use her car, but I wouldn't drive around with a shitty interior without giving it a good cleaning first. Maybe the stains will come out, at least a little, and if they don't then at least I know I tried to make it nice.

[Car Jack]

I guess if you work in a job where you're always going to construction sites or sawmills, a diesel truck would fit in better.  In one of my jobs, where we were constantly seeing customers and the company paid us a monthly car plan of $625 a month, the Civic actually fit in the car plan.  The truck would not (no trucks over 1/2 ton, must have 4 full doors, must be top trim line, must have hard locked bed cover), which would have resulted in zero payment and eventual termination.

[Snowman99]

Encourage you not to pay down your mortgage, over a 30-yr period you should be able to get a return better than 3% in the stock market.  Be sure to request a calculation of how much money you would throw away by not getting an assumed 7% return over that time period.  It would be a lot worse than buying a new truck, for sure.

I'm aware of that math, and yes our mortgage is almost "free money" when you consider inflation.  There are a myriad of factors we are considering, though, including that the market right now is at an all time high and there hasn't been a correction in many years (paying mortgage, on the other hand, is guaranteed, tax free, return), we will likely be able to scrape and pay down the mortgage within a few (approx. 5-6) years (not losing out on that much compounding), and the "priceless" factor of having the house paid for (except for ongoing taxes, maintenance, etc.).  When you think about all of that, the decision is not so simple.

[Mr Chin Stubble]

You might find it easier to do some of the work yourself. It's a pain in the neck too, but at least you have the pride of doing it yourself and don't have the other hassles of bringing it to a garage and not having the car. Not to mention $100 for this or that.

I have met some at previous jobs who are good with money but mostly at my current job they are not. I'm the youngest at my job and my boss and the other person rents still and now are talking about buying with no kind of down payment ... they are the lease car types, with 170 dollar cable internet plans , cell phone planes, 7 dollars a day for outside lunch types etc. and save 100 bucks a month for retirement. Maybe they are happier though so who knows..hope this helps.

[Snowman99]

Indeed.  The same co-worker who told me to junk my car and get "free money" for a new car takes about an hour of his time every day to go out for lunch and coffee because he "doesn't have enough time" to make his own lunch and coffee in the morning! 

We have friends who are in the "high income low savings" category.  There are a lot of those around.  Typically both work and earn a lot of money on paper, but this all goes to taxes and servicing various forms of consumer debt, student loans, mortgages, cable bills, maids, daycare, etc.  They put zero down on their houses, have beamers in the driveway, and eat at a lot of restaurants.  Just thinking about doing that gives me a headache.

[Batteman87]

Congrats on the savings. I would recommend driving the car into the ground and not care what all of your broke friends think. If you have "truck fever", I would sell it and get a good 2-3 year old USED one and spend 10-15k. I would pay down my mortgage with the rest. Imagine how much you could throw at retirement with no house payment. And with absolutely no debt payments...you have options. Thats my 2 cents.
Cheers!