Financial Mistake #5: A New Car – To Buy or Not To Buy?

Have you ever bought a brand spankin’ new car? 

I have.  Was it a bad decision?  Unfortunately, it’s not as simple as every FI blog in the universe makes it out to be.  Like everything in life, the answer is it depends. 

So, if I just contradicted myself above, why is the title: Financial Mistake #5? 

Because financially it was a mistake, but happiness-wise, I’m not so sure it was… 

— 

In July 2016, I bought my first new car, a 2016 Toyota Avalon Touring, that I still drive today.  The final walk-out-the-door-tally after taxes and fees came to a whopping $38K.  To some this is insanely expensive, and to others this is merely chump change. 

What was this amount for me? 

Well, let’s first start at the beginning… 

In my life, I have owned 2 cars and driven 3.  I’ll explain shortly what I mean by that, but let’s go through my automobile history so that you can judge for yourself. 

The first car I learned to drive was an old, copper-toned Ford Aerostar van – not a sexy piece of machinery by any means.  It also had a dent in the left bumper that my parents decided not to fix, and I had to share the use with my sister during high school. 

To give you some context, I went to wealthy private Catholic high-school – and I emphasize the wealthy part and not the Catholic, because make no mistake, this was a school that loved to take your money.  When my classmates were getting new Beamers and Mercedes for their 16^th birthdays, I was driving the beat-up van, if I could even get it from my sister.  And I don’t say this to pity me (I’ll have another post coming about how I struggled as a middle-class kid in an affluent high school), because I still had more than most – access to a car, a loving family and all my needs taken care of – but I say this so you know that I never had a car of my own. 

I bought my fist car my sophomore year of college, a blue, 1998 four-cylinder manual transmission Nissan Frontier pick-up truck (and no, I did not know how to drive stick and had my mom try to teach me in a day before I drove it back up to school – that was an adventure).  I called it the “Frontizzy.”  Because growing up and never having a car, I heard you had to name your first… hahaha!  So I did.  The Frontizzy and I had many grand adventures together over the years. 

And this little pick-up was perfect for me.  Since I had to move every year in college the truck was great for packing up my things and because I was a drummer, it came in even more handy to transfer my drums and music equipment to and from gigs.  And just being a guy in general, I found a ton of other uses for it. 

I’ll interject here, when it came to cars, lifestyle inflation never happened for me.  That little four-cylinder truck was reliable, great with gas and I never felt the need to upgrade when I began my professional career.  I owned the Frontizzy from 2001 all the way to 2015 (14 years). 

Furthermore, I Q-FI, am not a car guy.  So if that is you, you’ll probably have an entirely different opinion on this.  I drove a car for transportation from point A to point B.  It was a tool, nothing more.  Status, speed, fun and wow-factor were all irrelevant to me. 

I bring this up because I drove this little truck during my MBA from 2010-2013, in which I attended a school in Los Angeles built on image.  So all my classmates would joke with me about my truck and what a piece of shit it was (to their defense, by this time the paint was chipping off and you could see rust patches, so it did literally look like a piece of shit).  And I’d play along with them laughing, but secretly knowing I had no car payments and wasn’t taking a loan out for my MBA.  I may have looked like I couldn’t afford a nicer car, but I didn’t care.  At this point in my life, image didn’t matter to me one bit.  If you were driving a financed car, then I thought you were a moron for taking out a loan on a depreciating asset.  My focus was to keep costs down and keep on saving. 

And then the change happened… 

What was it you ask?  Hey, Q-FI, what the fuck could make you abandon your sweet little cash saving Frontizzy… that good ol’ lil’ gem of a gas-saving machine? 

In 2015, shortly after I had been married, the company car finally came… 

And let me tell you.  My ego shot through the roof.  In my mind… I had arrived. 

At my company, I hit the right level at the right time, and was told to order myself a brand new 2015 Ford Taurus SEL.  Now, if you’re a car guy, you might stick your nose up at me and say that is a piece of shit sedan.  But to me, coming from driving a four-cylinder paint-chipping-off 1998 manual Nissan Frontier for 14 years! – that new Taurus might as well have been a Ferrari. 

And I went all out.  I paid $1,400 out of pocket to upgrade to the 20’’ rims and low-profile tires, deck out the cab with the latest technology and driving capabilities.  Then I sold the Frontizzy and 18 months later I was laid off, unemployed and without a car. Hahahahaha…. life is a bitch!  Bringing me back to where we started, July 2016 – Mr. Q-FI needs some transportation.  (To my defense on the $1,400 and since I can be a numbers guy on occasion, the monthly rate of $78 for 18 months wasn’t a bad deal, taking into consideration the company paid for all insurance, upkeep and gas.  Hahaha.  I had to put that in – it’s an ego thing, right?) 

I want to interject here, that my decision in 2016 to purchase the Avalon, wasn’t as simple as buying a new car.  There were a lot of bad things going on that played into this choice – I was fucked up on drugs, in full-alcoholic mode, laid off from my company of over 10 years in a terrible way that had destroyed my ego and my emotions were beyond a mess. 

I was a wreck. 

But financially I was fine.  I could have bought it with cash.  But instead I put $20K down and financed the rest at less than 2%, because I wanted a little more flexibility with my cashflow at the time (it’s paid off now). 

However, being newly unemployed, the smart decision according to the numbers would have been to buy a used car or get something efficient like a Honda Civic.  Don’t blow a wad of cash on an ego automobile.  But I couldn’t resist.  Here came all the normal consumption thoughts.  I gave myself the pat on the back, you deserve this Q-FI… you put in the time… you have earned it! 

And it can be hard sometimes to give up the good life once you have eaten from the apple at the Garden of Eden… kind of like switching from bud light to craft beer or cheap wine to an exquisite cab or zin pared with the perfect steak.  And that’s what happened to me, I had tasted automobile luxury and didn’t want to go back to a Frontizzy.  Drive a stick shift in LA traffic again?  Hell no! 

Like I said, I thought I had arrived. 

So, after going to car dealerships for about a month, I found the exact car I was looking for, and I bought it – a 2016 Toyota Avalon Touring, low-profile tires, decked out electronics and pristine leather seats – a beautiful luxury sedan for the beautiful new life I was going to live. 

Hindsight being 20/20, having to go detox and rehab 3 months later and spend the next year rebuilding my life, learning the hard way that low-profile tires are worthless because they cost $800 to replace when only one gets a nail in it; financially, a less expensive car seemed like the better choice. 

HOWEVER, and this just might be the however of all howevers.  I’m not sure I would be as happy in a crappier car. 

Ha!  All the FI gods cringe as I say this.  What the fuck Q-FI… that is FI blasphemy.  And I answer, “I know,” with a blissful smile stretching from cheek to cheek. 

Because I spend a lot of time in my car – north of 2+ hours a day for my 73-mile daily commute (yes, I know this is not ideal for the environment).  I need an automobile that performs, and so far my Avalon has been up to the test.  The ride has been smooth, the comfort exquisite and technology par to none.  Would I be able to take as many work calls in a louder, less expensive car?  Maybe, maybe not.  But I know that I sure as hell would not be as comfortable.  Sometimes you need to look beyond the price to the value.  In the four years of driving my car so far, there has been immense value to me personally in purchasing a high-end automobile. Yes, it has depreciated like hell since I bought it, but I plan on driving this thing for a long, long time… off into the FI sunset of my dreamland to come. 

And the icing on the cake, why not indulge in a little vanity.  I know FI people aren’t supposed to give a crap about things like that, but we all do, whether we admit it or not.  Nice things have “the shiny effect,” we can’t help turning our heads and watch them go buy. 

So was this the “right” or “wrong” decision?  I still don’t know.  And honestly, I might not ever… 

But in the meantime, I’m enjoying what I have: a nice, reliable, paid-off luxury car.  As un-FI as ever… yet as comfortable as ever. 

 -Q-FI 

— 

P.S. So how about you… ever buy a new car?  And where do you stand on the automobile divide?