Guns, Cars, and Tech

Category: Debt Free Living

  • About that car you have…

    [youtube http://www.youtube.com/watch?v=BKyV8CTHeJ0&w=420&h=345]

    I love cars. I think that’s why I’ve owned so many of them. I’m 31 years old and I have literally lost count of how many cars I have owned at one time or another. I remember having three cars at the same time shortly after I moved to Nashville.

    The thing is, the total value of all three cars combined was about $5,000. The most expensive vehicle I’ve ever owned was a 1997 C1500 that I paid $14,000 for in 1999. The cheapest vehicle was a 1992 Saturn SC1 my brother got for $300.

    Guess which one I lost more money on? The thing about a $300 or even a $3000 car is they’ve pretty much lost all the value they can. I had that truck for three years and got $6000 for it after having it on the market for about 4 months. I bought my 1999 Jeep Cherokee 4×4 with 95k on it for $4000 in 2008 and 50,000 miles later I can probably still get $2700 for it without even trying hard. $3500 if I detailed it. Even if you factor in the small repairs I’ve had to do I come out WAAAY ahead compared to someone who buys a new car.

    A lot of times people say they need “nice car” because they are reliable. Well, all cars are reliable until the day they aren’t. If you find yourself in an unreliable $1000 car, go find a reliable $1000 car! You could get a different $1000 car every other month and STILL be ahead of most people since even a non-working car will easily bring $300. (Though I don’t advocate this as a plan. Buying a car is a PITA because of all the government-mandated crap you have to go through.)

    One of the things we’ve sacrificed is newer cars. My wife drives an Accord worth probably $2500 and it’s exactly the car she wanted for the money we had at the time. I only pay cash for cars. If I need a new car and only have $1000, I buy an $800 car and then pay sales tax and tags. That car was a 1995 Plymouth Neon affectionately called Barney. I bought Barney in 2007, put 16,000 miles on him, and then sold him with non-working air conditioning for….$800. Barney was never in a shop, either. That was probably the best car deal I will ever get.

    I say all that to say this: You should probably sell your car if you ever want to get out of debt. That $500/month payment is just a huge boat anchor around your neck, and that’s not even considering what your insurance cost is. Do you know how much insurance is on an $800 car? Like $18 a month. I think I paid $40/month when I was single and under 25, because all you need is liability.

    And I gotta tell you, after driving sub-$3000 cars for almost ten years now, I would be uncomfortable driving a $30,000 SUV.

    Do I plan on driving $3000 cars the rest of my life? NO! Hell I’m probably buying a $7,000 car later this year and I’ll be slightly paranoid driving that one! The rule about anything with a motor is that, combined, the total value of all vehicles (including boats, ATVs, motorcycles, etc) should be less than half your household annual income. And you should pay cash.

    Will I ever buy a brand new car? YES! ABSOLUTELY! I have promised the wife that when we have a million dollars, she can get a brand new car. Since my retirement goal is somewhere north of $17 million, she’ll get that car eventually.

  • On being debt free

    I’ve been doing the Dave Ramsey Thing for almost 7 years now. I became debt free in 2007. A year later, I paid cash for my wedding and honeymoon and by 2010 we had paid off Mrs wizardpc’s credit cards and student loans, and had also purchased a house with a 20% down payment. We have been debt free except the house since October of 2010. We’ve had 6 months of expenses in the bank since this past spring. We were about to start paying off the house early the day we found out lilwizard would be joining us.

    At every point in my journey, there have been people who have said “Well, that’s great in theory, but just wait until X! You’ll have to borrow money then!”

    So far, the values for X have been:

    • When you get a girlfriend.
    • When you get engaged.
    • When you get married.
    • When you get a house.*
    • When you have kids.

    And I have a few ideas about what the next ones will be. At every point, I’ve just trucked along without any problems.

    I’ve done this single. I’ve done this while trying to convince a girl I was worth marrying. I’ve done this while keeping the wife happy and increasing her standard of living. I’ve done this as a renter. I’ve done it as a homeowner. I’m about to do it as a parent.

    No matter where you are in your life, you can do this. Just like quitting smoking, though, quitting debt is hard. You have to want it.

    I want $17,000,000 at retirement more than I want a new $35,000 truck instead of a $2,700 Cherokee. I want to be able to buy my kids houses as wedding presents more than I want to live in a $400,000 house 5 minutes from work. I want my wife to be able to be a stay at home mom if she wants to more than I want all the cable channels.

    Life is about trade-offs.

    *Yes, I got a mortgage, but that’s not what I’m referring to. People kept telling me I’d need to build my credit. We bought a house, but I got a mortgage. With a 15 year fixed rate conventional mortgage and 20% down, I was able to get a 4.375% mortgage during a time where 4.5-5.25% mortgages were the norm, despite not having any consumer debt since 2005 or any debt at all since 2007. I didn’t have to go out and “build my credit” like so many people told me I was going to have to do. The wife had a much more recent credit history but adding her to the mortgage would have negatively affected our rate. Think about that. ETA: mrswizardpc reminded me last night (and in comments today) that the problems we had adding her to the mortgage were related to her just having graduated college and therefor having less than a year of professional work history.