How Much Should You Spend on a Car?

I am so proud of this number! I know some folks will think that it just proves I drive an old clunker but honestly my car is in great shape and runs so well. 

I love knowing that something we invested in has lasted so long and was worth the money we spent on it. I actually deserve none of the credit because my wife bought it the day of our first date so she deserves all the credit, but she is great at everything. I’m looking forward to 250,000!

Broken Down Pieces of Junk

My parents had the worst cars ever! It seemed like we were always broken down in some random spot every couple of months while I was a kid. There is nothing more frustrating than constantly spending money on something that you spent a lot of money on earlier. 

Cars to some people are transportation and to others they are trophies and to others, the extra debt and stress help them feel better as they drive around town showing off their debt to everyone else.

Generational Lessons with Cars

The first car I remember when I was just a little kid was a huge white boat that I really liked and was so mad when my parents traded it in for a bright yellow station wagon. I don’t even know what kind of car that white one was, I just liked it because it was huge and I could lay in the back window area because it was so big (you know before seat belts were a big thing). But it always broke down.

The yellow station wagon did better but one time while crossing the Nevada desert we broke down in the middle of the night and there was no one around. My dad hitchhiked into the next town and left his wife and two small kids behind and we didn’t know if we would see him again (we did). But experiences with cars breaking down taught me to buy something better for a little bit more. 

It is worth the extra investment for peace of mind. Plus I find we actually spend less because we don’t pay for constant repairs and have fewer car purchases than what my parents had while I was growing up. Many cars are also built better for the most part.

My dad also had an old beat-up green javelin car that was just awful (not the picture here, but imagine chipping paint and doors that barely closed), but my dad only had to travel two miles to teach school and often rode his motorcycle when the weather was nice. He eventually sold the javelin and wanted $700, but the guy talked him down to $600 because he had just recovered from cancer. My dad was a cancer survivor as well so he was sympathetic.

One week later we got a call from the police saying the car had been used in several robberies and was impounded in another city. My dad forgot to remove the plates before selling it and when we picked it up the floor of the car was covered with beer cans a foot deep, which I got to clean out (and recycle for a few pennies!). 

It was an interesting lesson about not trusting people over cancer stories (which wasn’t true), taking your plates off, and selling it again and making twice the profit because we made $700 the next time around and kept the $600 from the first dirt bag. I appreciate the life lessons that other people live so I can avoid them in the future.

Traveling More – Spending More

I spend far more on gas though compared to anything my parents or grandparents did. We simply just spend more as a nation on travel and cars. We live further away from work, we have bigger homes, we have smaller families, and consume more. It is a trend pretty much all over the place. We spend for the freedom to move around and convenience. Just last week when I was filling up at Costco I asked the guy how many times they fill up the tanks and he said three times a day which is 36,000 gallons a day!

Any time finances are involved it’s good to look big picture and see how this will impact you for years, not just tomorrow. We saved $100,000 off our house by building where we did along with property taxes being significantly lower, but I’d recommend you do the lifetime math before making what is likely your largest debt investment.

My Vehicles & Lessons

My first car happened to be my mom’s first car. When my mom came out to college from California, because she wanted to ski and go to school, she bought a sports car. It was a Datsun 240Z. A few years later when she got married she traded the car to my hardcore grandpa (her dad) for another car. So that 240Z sat at his place and faded away.

When I turned 16 my mom asked for the car back because my grandparents didn’t use it and I was old enough. 

Honestly, while it was a sports car it was old and faded, My grandpa had painted it Mercedes Blue and it was in pretty bad shape. It was also a stick shift so I had to learn how to drive that when I visited my grandparents. It didn’t run very well, but was still fun to drive because just being able to drive at 16 was awesome!

We brought it home and had it painted fire engine red and it looked awesome. It didn’t run very well, but it was nice to pull up to high school in the car. A lot of people wanted to go for a ride, it only fit two people, but when it took so long to warm up the cool factor went away quickly.

After graduation, I went to live in Argentina for two years on an LDS mission and one of the first letters I received from my family was a picture of my car with a giant for sale sign on the window. I was devastated, but it didn’t make sense for a car to sit for two years while I was gone.

My dad bought a new truck when I got home so he let me use his old truck but it broke down all the time. I was so frustrated by broken-down vehicles that I vowed I would spend extra money to not break down.

A Car is an Investment (Good or Bad)

To be honest, I liked riding my bike more than driving, and I still do. I rode my bike to high school and most days to college and work because I liked it and the exercise is a bonus. I could also make it to class faster because I could ride my bike to the front door of my class rather than park across campus and walk all the way across to the building.

So because of the bad experiences with my parent’s cars constantly breaking down and having a few of those myself, when I earned enough money, I said I would buy something that would run well for a long time.

Plus when I moved out I knew I was on my own with my car. My dad could fix a lot of things when the cars broke down, but I remember the first time my car didn’t start when I was out of state and I thought, “oh crap, now what.” But it was a good experience because I had to learn a few things to be able to work my way around a car.

The first car I bought was a Toyota 4-Runner. I bought it from the mom of one of my mom’s students. My mom taught 3rd grade and one of her students said her mom was selling her car. My mom told me and I went and checked it out and it was exactly what I was looking for.

The car was in amazing shape even though it was 10 years old. It was a 4-wheel drive but had never been put into 4-wheel drive and the owner didn’t even know how to put it into 4-wheel drive. It was in great shape. They only used it to take their kids to school and back. It had very low miles and they gave me an extra $1,000 off the price because they liked my mom. So I gave them cash and I had my first owned car and my first real big purchase in life.

That car worked great for me and lasted for a total of 19 years. I always joke with people that my wife married me for my car and not my looks, which is always followed by an eye roll.

My second car is the one I use now, basically, I took my wife’s car and bought her a new one. We tried to convince the sales person with that purchase. So in the last 17 years, I have only had 2 cars that I have driven around. Again I am all about quality and not breaking down. You end up paying more with repairs than you would just pay a little extra up front for something a little nicer.

The Ugly Cars

Whether you buy or lease is up to you. There is a lot out there already written about the pros and cons of each way so I’m not going to spend time debating one over the other. You do the math and see which way is best for you. However, I have observed the following over the years.

One of the people that I worked with on advertising bought a car and had a $1200 monthly payment on the car. I didn’t know that high payment could even exist. We were at lunch and she mentioned her new car and how it cost more than her mortgage. I said there is no way and she told me the price and payment. Yep, more than my mortgage as well.

I had an employee buy a new car after a raise. I’ve always wanted a mustang and he was so proud of it. Months later he asked me if I wanted to buy it from him. The newness of the car went away and the reality of the higher payment and poorer gas mileage compared to his trade-in vehicle was hitting home.

Questions to Ask Before Buying a Car

Again I really think it’s good to take a 10,000-foot view on major purchases and have at least someone else involved to give a second opinion on any big purchase.

  • Do I need this vehicle or am I buying it to make myself feel better?
  • What else could I buy for a little bit less?
  • How much will the insurance increase? What about gas and maintenance?
  • Does it fit in the garage? (you may laugh, but I have a brother-in-law that proudly drove his brand new black truck home only to scrape the top of his garage and find out that it is also 6″ too long to close the garage door).
  • Did I negotiate the best deal?
  • Could my current car last a little longer? The best payment is no payment.

Cars can be wonderful, and they can be awful. What experiences have you learned (good or bad) from your cars?

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