A used car now = multiple new cars later


In another post, How to make a POS car reliable, I talked about how I have two cheap cars right now.  As I start approaching the point where I’m completely debt free I start to think about what car I might want.   Actually, in my case, it’s plural, what cars do I want, because I think cars are tools and I wouldn’t build a house with only a hammer,. I’d also want a saw, a level, and a few other tools.

But, I definitely would not go new, but definitely I’ll take a big step up from what I currently have (~$5k worth of cars)… the affectionally named “Orange Beast” and the 2003 1.3 liter hybrid civic that my buddies with jacked up Jeeps, Land Rovers, and big diesel trucks constantly ask me things like: “When are you going to get rid of that go-kart?” or “Are you sure that thing can make it up the mountain?”  With the cars are tools mindset, you can see I have a daily driver for my commute for work and a beat up truck because civics don’t transport plywood and lumber from Home Depot very well.  Plus, as I said in that previous post, it acts as a backup when the civic needs to be fixed.

I was already on what I thought was a good path financially.  I had a good paying job, I was driving cheap cars, and would probably have paid off my student loans over the next 10 years and would probably retire with todays equivalent of $1 million in assets (inflation sucks right?).  But then a friend of mine asked me a simple question around the time I had just finished paying off that Jeep Cherokee I had and was telling him how excited I was and that I was never going to have another car payment again!  He then asked me a simple question that altered that trajectory of my life…. “Have you ever heard of Dave Ramsey?”.  I had not, and really had never read anything about finances… I just knew that with student loans, a car payment, and a mortgage… I had an extreme hatred of debt.

We were at his house and he showed me this video from Dave:


It wasn’t anything I didn’t fundamentally know already, I know math, I understood compounding interest, I knew I had paid like 50% more for a car that lost 50% of the value it was when I first “bought” it… and I even bought it 4 years old at the time.  But that video put some numbers to what I already knew and I woke up and started consuming as much info about money, finances, investments, tax laws, etc as I could.  I realized that my thought of having $1 million at retirement was no where close to what was possible.  I’m going to be able to give a $1 million away during retirement instead!

If you have 5 minutes, watch that video.  I know some of the numbers are controversial with what returns to expect or you might be saying: “but my car payment is only $250/month”.  Run your own numbers then if it makes you feel warm and fuzzy inside, but if you’re knit picking about those details, then you don’t get the point.

The longer you postpone having all those flashy things your friends have, the more of those flashy things you’ll get to have later.  You don’t have to do it like the video lays out… I’m not.  I’m driving cheap cars until I’m out of debt, then I’ll save up and pay cash for something in the $8k neighborhood and probably drive that for the next 7-8 years… who knows, maybe longer.  Maybe in 7-8 years I’ll be over $1 million net worth and I might splurge and buy a $15k car.

Drive Free! Retire Rich!  …. I have this written on my bathroom mirror.  It epitomizes why I live like I do, not just with the car, but in a small house, on a fraction of my income, in a lower cost neighborhood, with few new things and most things came from craigslist… even my dog came from craigslist!



1 Comment on "A used car now = multiple new cars later"

  1. Live like no one else, so that later you can live (and drive) like no one else!

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