The title says it all. Random Gal and I bought a NEW car! I know what you guys are thinking. How can someone writing a personal finance blog about saving money do such a thing? How could someone who still owes more than $140k in student loans splurge on such an item? How does someone who regrets buying a new car in the past make the same mistake twice? In short, it’s because we could.
Just Because You Can Doesn’t Mean You Should
Just because we could afford a car doesn’t mean we should buy one. It’s like, sure, you can easily take candy from a baby, but that doesn’t mean you should. In all seriousness, we actually needed to buy car. We had to upgrade Random Gal’s car as we’re expecting the arrival of Little Random Guy in about one month. My wife had a two-door 2000 Honda Accord. I have a 2002 Subaru WRX, which is a sedan but rather compact. Our car seat barely fits in the back seat of my car, even with the passenger front seat moved all the way forward. And it’s a manual transmission, which my wife can’t drive. So we had to upgrade to a bigger car, at least to another sedan.
We’re Not Frugal
I wouldn’t consider Random Gal and I frugal people. We both drive our cars to work and use them to run errands. We like to go out to eat more often than stay home and cook. We like to go on trips from time to time. No, I wouldn’t consider us frugal people. I would call us “financially responsible”. Although we spend money on stuff like food and the occasional trip, we don’t spend a lot on consumer items like fancy electronics, designer clothing, or shiny jewelry. We’re not really about the bling. The car was actually our first big purchase since getting married. And when it comes to the things that we do spend money on, we try to find good deals. The same can be said for the new car. We shopped around for about a month for a good deal, mainly by communicating with dealerships through email. We were able to get multiple quotes and avoid the annoyance and hassle of going to the dealership in person.
Rollin’ in Style!
So what did we end up getting? BMW? Audi? Mercedes? Tesla? Lexus? Ferrari? Well, we upgraded to a 2017… Honda Accord Hybrid. We actually weren’t looking much into the luxury brands. We just wanted something reliable and functional. In terms of cost, the MSRP of the car is $35,955. We were able to buy our car for $35,323 including taxes and all fees, so overall I think we got a pretty good deal. We paid in cash after saving over the course of several months, and we did so without impacting our other financial goals, like saving for retirement or paying off my student loans.
Are there any financial ramifications of such a purchase? Well, sure. If we took that $35,323 and invested it in the stock market for the next 20 years, assuming a 5% return, we would end up with an extra $94k in retirement. Extend that an extra 10 years and we would get almost $153k. That could mean reaching financial independence two years earlier. Also, we do pay slightly extra for car insurance, but I think that’s somewhat balanced out by saving money on gas. In the end, I didn’t think too much about these calculations. We approached the car purchase in a planned way, saving money over the course of several months. It wasn’t an “impulse buy” that was financed with a car loan. And we were still able to work toward our other financial goals without taking any significant hit.
Random Guy’s Final Thoughts
Buying a new car now was so much different than when I bought my car 14 years ago. I did a much better job the second time around. I bought a car that I could afford, paid cash, and took on no additional debt in the process. And, sure, I could have saved some money by buying used rather than new. But sometimes you just gotta put away your financial calculators and live a little, especially if you’re doing so while also being financially responsible.