Too ambitious for my income?

[FrugalRican]

It's not argumentative, it's a reasonable discussion, and you make valid points.

The problem is the difference between $300 and $150.

That $150 could make a world of a difference when it comes to bills and eating.

That $150 easily adds up to a $1800 difference in one year alone. You want to make it easier on you in times of duress, not harder.

And you're right, that's why I don't have a cable bill and only have a prepaid cell phone bill. ;-)

For me, I'd personally rather save the money on a car and use it for other things.
I don't want you to think I'm a shut-in and I try to skim pennies off of every single expense, it's not like that... but sometimes you can get more car for less (amongst other things). I'm very adamant about not falling for the "Depreciation as you drive off the parking lot" rule. It drives me banana sandwich. But that's me, and as they say,  YMMV.

[AZHeather]

I am one of those people that was hit with disaster - a divorce and loss of a business (equivalent to loosing your job).  Since them I am much more careful and put a lot more thought into the "long-term" and want vs. need.

When you are in a position in life that you have minimal financial obligations and few responsibilities (just yourself and no spouse or children), it is real easy to say, "I can afford that!"  But you are committing yourself for several years.  What if the day after you buy that expensive car you meet the guy/girl of your dreams and suddenly the spouse, the kids, the house are all next year instead of 5+ years away?  It happens.  

Me personally, because of my experience, I would ask myself several questions: (1)  Can I get this same car a couple of years older for $5,000 to $10,000 less?;  (2) Am I in a position were I will likely be making more money annually in a year or two?  If so, can the new car wait for the better income so that I am able to not only comfortably pay the monthly payment, but also put money away for that "rainy day"?; and (3) Will doing this prevent me from being able to get/use other credit to help build the much needed credit file for the best possible rate on a mortgage when I am ready?

Be happy, but be smart too.  Best of luck no matter what you decide! 

[Anonymous]

I just want to pop back in to discuss buying a used car in today's market, because I know it's been recommended that I look toward that direction in this thread. My opinion? It's a total rip off. It used to be you would drive a car off the lot and you would "lose x% right off the bat!". Not so anymore for vehicles under $30,000. Sure you drive a Luxury Sedan or fully optioned Sports Car off the lot and you will feel that depreciation.

I've been looking at vehicles for the past 6 months and unless you are gambling with a private party (no warranty what-so-ever), you will pay a premium price.

Perfect example: My girlfriend had been in the market for a car to replace her dying (blown head gasket) Buick. She struggled to find anything newer than 2006 with <150,000miles on the clock for under $8,000. Those were the terms her loan officer gave her for allowing her to purchase a used vehicle on her limited income.

Some of the final candidates (and this was after scanning every lot in 100mile radius of us)

2006 Honda Accord 136,000 $10,000 -- $23,000 for a brand new 2012 model

2006 Hyundai Sonata 101,000 miles $11,000 -- $21,000 for a brand new 2012 model

2007 Subaru Impreza 110,000 miles $11,000 -- $20,000 for a brand new 2012 model

These cars were all driven a lifetime of miles, were all 6+ years old, and still cost about HALF of their brand new 2012 counterparts' sticker value. We were eventually able to find a high mileage '06 Accord for $7950 after looking at EVERYTHING. I felt this was a terrible price, but that's just where the market is here. She was given a 6-month warranty, and on a prayer, I hope she doesn't have problems with this thing. Trying to shrink that age to even 3-years and we are talking maybe $2,000-$3,000 difference between brand new.

And if you believe in the "time is money" philosophy, the time we spent looking for that car was clocking in the "full work week" of at least 40hrs, not to mention the gas money spent to go look at these things.

I think there is a lot to say about the value of a bumper to bumper warranty being part of the "value" of owning a new car. It's certainly served me well with my Dodge Avenger. It's been in numerous times in its short life for repair work that would've erased ANY price savings had I gotten something used. And that's a big motivating factor in wanting to get out of this vehicle before my warranty is completely out.

I'm not saying everyone will run into this exact situation, but we did, and I don't think it would be that much different than what others may experience. It has dissuaded me from even CONSIDERING buying anything used. The only thing MAYBE would be a certified pre-owned situation with a reasonable warranty attached.

[delayedinsanity]

The market in your area may provide a little bias, but the rule generally holds in most places I've lived. Buying used doesn't mean you have to buy heavily used. Gently used, or "certified pre-owned" is usually the way to go. You can get a car one or two years old with 10-20 miles on it for 10-40% cheaper than the current years model... it's not a myth. It's also not a myth that you can let the dealerships do the shopping for you. If you haven't seen that methodology, search for "buying a car over the phone". Add "ramit" to the end of that query on google to watch a video which sums up everything you may have read on the first search.

[Revelate]

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@delayedinsanity wrote:

The market in your area may provide a little bias, but the rule generally holds in most places I've lived. Buying used doesn't mean you have to buy heavily used. Gently used, or "certified pre-owned" is usually the way to go. You can get a car one or two years old with 10-20 miles on it for 10-40% cheaper than the current years model... it's not a myth. It's also not a myth that you can let the dealerships do the shopping for you. If you haven't seen that methodology, search for "buying a car over the phone". Add "ramit" to the end of that query on google to watch a video which sums up everything you may have read on the first search.

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Only 10% off after two years?  What common car holds their value that well?

I'm a pretty big fan of purchasing gently used personally, though CPO is admittedly designed to make the manufacturers more money (they wouldn't have created that segment otherwise).

[delayedinsanity]

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@Revelate wrote:

Only 10% off after two years?  What common car holds their value that well?

I'm a pretty big fan of purchasing gently used personally, though CPO is admittedly designed to make the manufacturers more money (they wouldn't have created that segment otherwise).

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There are actually a few that hold their value, though everybody with any history knows cars in general are not an investment, but an expected loss. Evolutions are actually selling for more now than when they were new. Supra's too. Performance cars, but my point is that I wasn't trying to be 100% technical (despite the percentages)... just illustrate that even if you bought a car one year old and saved ten percent, it's a better deal than paying full price. Most warranties will transfer, though a lot lose miles off the end when they do, and CPO whether or not it's intent is to make somebody else more money (what isn't designed for that?) is a good place to shop.