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You and your hubby don't "need" new cars if you have two that run well. You don't have enough saved to blow $25k cash on a new car. Wanting to impress coworkers is a want, not a need...unless he's in a job where he entertains clients and it's important to have a nice car to drive them around in. Did it ever occur to your hubby that his coworkers may not really be able to afford those BMW's? You have no idea if they are leasing or if they have family money or if they're also able to save for kid's college tuition and retirement.....or if they are one layoff away from being foreclosed on and repo'd. Take care of your own finances; don't worry about Others.[/quote]
No, we don't need new cars but we can afford them. While it would take our cash down to 4mths in our emergency fund, we do have other investments (mostly mutual funds), about 40K which we don't want to touch...outside of retirement and college funds which are well into the six figures, we are 34. And yes, we are well aware that those BMWs are probably leased. I would never finance a car in any way.
My question isn't really if we can afford a new (to us) car (just one, mine will last many more years) but when you decide its time for one.
I agree with what others are saying. I think you and your husband should ignore what other people think and drive your paid for cars until they break down. If his co-workers think he should be driving a new beamer, he should tell them to pool together the money so he can buy one. That will probably shut people up nice and quick.
That said, if you do want to replace your husband's car, why does it have to be a brand new one? Why not buy a nice used car after trading the current one in? Let someone else absorb the depreciation from the initial purchase of the vehicle.
Dave Ramsey advises people not to buy a brand new car until they have a $1 million net worth. That may be a tad extreme, but I don't think it's horrible advice, either.
A car is a wasting asset. It starts losing value and costing you money to run it the minute you take title.
This means a couple of things:
1. It's foolish to replace the car you have as long as it still works.
2. It generally makes no sense to buy a new car because a late model used car will almost always cost less. (The reason I say "almost always" is that sometimes a manufacturer will have an offer, like free financing, that will bring the total purchase costs below a recent model used car of the same model.)
Based on the miles you have on it so far your Toyota is probably about a third of the way through its useful life. Keep it maintained and you have many low-cost driving years ahead of you.
My general attitude about cars these days is that even if you're a "car guy", overspending on cars is a foolish waste. I've been down that road. Aim for a bargain deal on a clean but used car you know you'd enjoy driving that somewhat allows you to have your cake and eat it too.
I'm not going to tell you that you should never finance a car, but my advice to anyone is to stick to a fairly strict price range that would allow you to pay it off in 12-18 payments. Most people don't have any problem keeping a car for 1-1.5 years, but when you get on the 60 month never-never program it gets too easy to to trade the car in 2-3 later having never owned it, for another new car to start the process all over again. Only the banks and car dealers come out ahead in that scenario.
Or just pay cash if you feel comfortable giving up that amount in one lump sum.
I just spent about the same on a major repair ($2900) as the blue book value of my truck (1998 F-150 4WD, maybe $3500). I don't expect to spend that annually. For $2900 I have a car that "most likely" will only need the standard maintenance and perhaps some minor repairs. But even if that is $1000 a year, it's still cheaper than buying a new car at close to $30K. It's only a "get to work" car so it won't go on long trips - I don't care if it breaks down. The wife and kids are in a newer safer more reliable car.
The best time to replace, not buy, your cars is when there is a valid need for replacement.i.e. car to small,car wrecked,car body/frame failing. There is no other valid reason to replace a fully functional car. REMEMBER, NEVER EVER FALL IN LOVE WITH A CAR!
Oh, Tightwad.... all my cars have NAMES... The Matrix is named Mickey. After Mickey Dolenz, from the Monkees. The Saturn was Sam, short for Samantha. The Corolla was Bud (Five car pile up, and I walked away...unhurt), and the Sentra was Sheldon.
A car is a wasting asset. It starts losing value and costing you money to run it the minute you take title.
This means a couple of things:
1. It's foolish to replace the car you have as long as it still works.
2. It generally makes no sense to buy a new car because a late model used car will almost always cost less. (The reason I say "almost always" is that sometimes a manufacturer will have an offer, like free financing, that will bring the total purchase costs below a recent model used car of the same model.)
Based on the miles you have on it so far your Toyota is probably about a third of the way through its useful life. Keep it maintained and you have many low-cost driving years ahead of you.
I don't agree with your reasoning, I think as long as one has enough money set aside to live if a major tragedy were to occur and one doesn't have a mound of debt or bills that need to be paid; a new car can be an alright purchase even if the older vehicle still has life in it.
I don't believe there is anything wrong with just saying "I WANT a new vehicle" if you can financially afford it. Because I trade up every 3 years, I usually don't have to pay much out-of-pocket for my new vehicle and to me, it makes better sense to trade up while my trade is still worth something than to wait until I get peanuts for it. If I trade in a vehicle and say get between $30K-$35K for the trade and buy a new vehicle for $45K-$50K, I'm only paying between $15K-$20K out of pocket versus waiting for 6 years and getting $15K for my trade and buying a vehicle for $45K-$50K and paying $30K-$35K out of pocket.
Mmmmmmm....rrrrrrr....yeah...I don't think there is a 'one size fits all' answer here.
First of all, it always boils down to finances. What can you afford to do and still maintain a good rate of savings? How important is your car to you? Is it a means of transport or is it something you're into? What is the point of the car? How many do you have? How stable are you financially?
Let's start off by echoing one thing other have already said here: DO NOT buy a car (or anything, for that matter) because of what other people buy/do/say/think. Don't ever make ANY financial decision based on other people's opinions like that. It's a waste of time and the 'good feeling' you get is fleeting, pointless, and immature. Sounds like your hubby already understands that, though sometimes it's tough to see new and shiny all the time and never get to partake.
Me...well, it depends on the car. I LOVE cars. I have since I was a tot. I don't buy clothes (boring), jewelry (boring)...I don't have a fancy cell phone (boring and unnecessary), I don't eat out much (too salty and unhealthy and...frankly...boring)...but I will drop a HUGE load of cash on a car.
My 2002 suv is paid for...has 60,000 miles on it, is kinda cruddy lookin' and worn (I use it for the dogs, hauling 'stuff', dirty jobs, snow/bad rain days)...given that I rarely use it, it's the kind of car I will keep till I run it into the ground. Sometimes I have an urge for a new truck, but I ignore those feelings despite the fact that I could easily afford it, because I know it's pointless and a waste of money.
My classic car is paid up and mostly is a garage queen.
However, my daily commuter is my treat. My reward. I have a long commute...and very hard physical/mental/emotional days at work. So I get a really, really nice car. And I switch it out every 3 years. I lease this (I come under mileage) and have actually come out ahead financially (vs buying and then trying to sell the car)...and as soon as my lease is up, it's the next latest and greatest fastest and baddest. I know that this is a complete luxury...but this car is not supposed to be practical. It's supposed to feed my soul.
I tend to get a "newer used car" when the old one becomes unsafe or unreliable, definitely over 120k mileage. I am a simple minded person and I want to spend the least amount of time commuting, so I don't care about the features of the car as long as it handles well (good turning radius is a must), has an AM radio for news, and is safe. My husband is a car freak and he will detail all the used cars until people think they are completely new... once we got asked how much our shiny 2001 BMW was... because somebody thought it was the 2010 model...
I just spent about the same on a major repair ($2900) as the blue book value of my truck (1998 F-150 4WD, maybe $3500). I don't expect to spend that annually. For $2900 I have a car that "most likely" will only need the standard maintenance and perhaps some minor repairs. But even if that is $1000 a year, it's still cheaper than buying a new car at close to $30K. It's only a "get to work" car so it won't go on long trips - I don't care if it breaks down. The wife and kids are in a newer safer more reliable car.
Frankly I think the "get a new car when 1 yr of repairs matches or exceeds the car's value" is completely arbitrary. A car either runs (safely), or it doesn't. I would say if *one* single repair bill on any given day you own the vehicle meets or exceeds it's value, that's when you dump it and put the money you would have spent on repairs towards a newer one. In your case the repair bill was still less than what you could get for it, and you couldn't have bought a better truck with $2900 so I would agree that spending the money to repair yours was still the financially wiser decision. It almost always makes more sense to repair an oldie, at least strictly from an economic $/mile standpoint. (Of course practically nobody is this cold and calculated when it comes to anything with 4 wheels and an engine, but that's a different equation all together.)
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