A few months ago I was talking to this girl I know, and she told me she had gotten a shiny new, used Volkswagon Bug Convertible in pale baby blue! 2009 edition.
Of course, I oohed and aahed over the car, but then she said something terrible: “I’m financing a car for the first time.” My jaw dropped all the way into my stomach. I tried to recover the best I could, but honestly, I was horrified. The girl didn’t even put any money down!
She was like, “You know, I’m growing up. Having a car payment is something adults do.”
No. It’s something broke people do.
When I met her, she was a savings machine. She drove a paid for Jetta, she didn’t use credit cards, and she had an ancient iPhone because, hey, it still worked. But I guess it’s easy to say no to debt when you can’t even afford the payments. Been there.
Over the last year or so I’ve noticed she’s been paying with a credit card, splitting payments between cards, buying new gadgets, and generally acting like a broke person. Not being extra nosy – she shops where I work, I see these things. Plus, we get along really well and we talk when she comes in.
Basically, her reasons for wanting a newer car was because her other one was always breaking down and she wanted something more “reliable.” A 2009 vehicle isn’t crazy splurging, but that tiny car cost $15,000. To get a payment she was comfortable with, she had to finance that car over five years!
So, let’s play calculator. If you can truly afford a $300 payment, here’s what that looks like over 5 years if you saved it in box under your mattress instead: $18,000! So who do you think is getting the extra $3000 in this scenario? It’s not her.
When I asked if having a newer car was less stressful, she said, and I quote, “No, because I have a new kind of stress now. Like, what if the new car breaks down before I finish paying it off?”
Yes, what if, indeed. What if the car needs anything at all? And let’s face it, it’s already 6 years old. Instead of paying out just a couple hundred dollars to tune it up or whatever it needs after three years, she’s now going to have to pay a couple hundred dollars to tune it up, PLUS her few hundred dollar car payment.
Now, I couldn’t afford a $300 car payment if I still wanted to save any money at all. That said, I can still save up and buy a $15,000 car within a few years. In fact, I’m enroute to that as I speak. Her excuse was that “saving money is hard” and she didn’t have “that much money in savings” and even if she did, she didn’t “want to spend it all.”
Now, she’s giving $300 a month to some dealership instead of herself. I really felt like she had just ruined her life. Especially since I’m pretty sure she didn’t get a very good deal on that car.
I understand her point of view a little bit. When I bought my current car, I about went into shock. That was only $8400. The problem, of course, is that I only had $10,500 in my account; buying that car almost completely wiped me out. This won’t be the case next time. I didn’t have an emergency fund back then. I know better now. Still, I can’t imagine having a car payment.
The thing is, if people can truly afford the car payment, then they can afford to save up and pay for it. Having a car payment is stressful, you’re paying more for it in the long run, and if you do your research and buy a reliable car, you’ll save even more money.
People act like brand new cars don’t cost any money. There are oil changes, filter changes, windshield wipers, batteries, tires, tune ups, gasoline. New tires are just as susceptible to nails on the road as used tires, after all. Not to mention what you lose in value the first week of owning the car. If you buy a brand new car at $25,000, in two years, it’s worth $10,000 less. I don’t know about millionaires, but most people wouldn’t just throw $10,000 out the window for fun if someone handed it to them.
Broken down: that’s over $100 a week!
But her car isn’t brand new. Her car is 6 years old. On average, around the 7 year mark is when most cars start needing a little more TLC. It’s a pretty sad day, I think, if you have to finance a 6 year old car.
I’m actually thinking about spending $15,000 on my next car, but that would be for a two year old hybrid. There’s a chance I’ll just get a newer version of what I already have. Save $5,000. Paint it purple. 🙂 But if I go ahead and save for a hybrid then I can buy whatever I want when the time comes. 😉
The saddest thing about the situation is that this is exactly what “normal” is. It’s the very definition. Doing what everyone else is doing. Wanting other people to be impressed with your life. I didn’t buy my car because I wanted other people to ooh and aah over it. I bought it because I wanted a Honda and I liked the color. It does have some kind of weird smudge on the bumper though. And thanks to my excellent maneuvering skills, there’s a section of paint peeling off one corner from where I bumped into a rail trying to get out of a tight space in a parking lot. I still don’t know why that happened – why it’s peeling instead of scratched or something. *shrug
It’s interesting. But having a flaw on my car will keep me from freaking out when someone inevitably scratches it in a parking lot one day when they swing their door open too hard – if it hasn’t happened already.
I do understand the fancy car thing a little though. It makes you feel special to drive a nice car. I rented a car once on vacation. It was really fancy pretty midnight blue Altima (to me it was fancy). Made me feel a little fancier than the unpublished writer that I am. I would never jeopardize my financial future for that feeling, but I understand why other people might. Still, none of this makes financing a car any less stupid. And debt is unattractive, no matter the interest rate. Why have payments when you can own the car outright and do something else with that monthly payment?