- May 3, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Need for a New Car Despite Savings
Two years ago, I landed a new job that significantly boosted my income, allowing me to save about $1500 per month. However, despite this financial stability, I have been stuck with an aging car that is on its last legs, with over 200,000 miles on the odometer. The onset of the pandemic caused a surge in car prices, prompting me to hold off on purchasing a new vehicle until the market stabilizes. Fast forward four years, and I am still driving the same unreliable car, hesitant to part with my hard-earned savings.
## Financial Dilemma and Fear
Even though I have enough savings to buy a new car outright, the thought of letting go of $40,000 is daunting. This amount represents all the money I have diligently saved over the past two years and then some. On the other hand, taking on a car loan also terrifies me, as it could potentially reduce my monthly savings from $1500 to $1000 or even less. The idea of deviating from my current savings routine fills me with anxiety, despite the fact that I would have been thrilled to save $1000 per month just a couple of years ago.
## Overcoming Financial Paralysis
The fear of depleting my savings has paralyzed me, making it difficult to make a decision about purchasing a new car. This hesitation stems from a deeper fear of seeing my hard-earned money diminish. While I am aware that investing in a new car would alleviate the stress of driving a deteriorating vehicle, I am conflicted about disrupting my savings pattern.
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****** just grabbed a
> But the idea of letting go of $40k terrifies me.
I don’t blame you. As long as you are making wise choices, you should do it without guilt.
Just so that you know: your options aren’t just the current terrible car or $40k. You can buy a pretty reliable car that will last you without issues for at least 10 years for half that much.
There’s kind of two separate questions here:
* How do you get more comfortable spending on things you need?
* What should you do about your car?
To the first I’d say, it’s actually a pretty good thing to have a bias towards living below your means. This is basically a superpower that will make much of the rest of your life much easier. Doesn’t mean you should live life riddled with anxiety, but you’re right to be skeptical of consumption generally. (PS, hope you’re investing some of that extra money and not just looking at it in a savings account.)
To the second…dude, it doesn’t take $40k to get into a car that’s not a 200,000 mile rust bucket. That’s a very large amount of money to spend on a car! Buy something cheaper or used or whatever. You could spend $8k on something you’ll feel a lot better about than what you’re driving now.
Last year I spent that much on a pickup and it was tough to do; never spent that much in one go before. The one thing that helped me get over it was knowing that I had planned on it for a long time, it was not impulsive, I had a very explicit use case for it, and my emergency fund was still intact. I built up the excitement over time shopping for a deal and finally found one while reminding myself that it will not financially break me. It’s really nice too when you get the vehicle title in the mail pretty soon after.
You’d pay that money, if not more, getting a loan so you may as well just rip the bandaid.
Why do you have to drop $40k on a new car? Get a car that’s a few years old for $20-26k.
Drive that car to its death bed. The car you would have bought 4 years ago has depreciated 10k since you put it off. After the funeral service buy yourself another car guilt free…keeping in mind that the 10k depreciation has since become 17k. Every day that you drive your beater you win. Ride the ride.
Practice: Money only has utility when it’s SPENT.
Certainly it helps create the feeling of success, feelings of safety / make potential future struggles easier to get by, but at the end of those days, those are feelings (and feelings come and go). None of those feelings put food on the table (You buy food right?), put a roof over your head (You spend it on housing right?), make your life easier. Food and housing are REQUIRED spending, so there is less emotional turmoil when it comes to that spending, but literally any other spending have less and less “REQUIRED-ness” to them. What is the value of feeling good? Having nice things? Experiencing experiences? Supproting causes you are about?
At some point in the past, past you was hoping “I hope I have money so that I can spend it so that I can ease my struggle.” This is that struggle.
And you have to do emotional work. You’ve been driving your rust bucket for years now, so its very easy for you to convince yourself “We can drag it along just a little more”. But then, what is the risk of dealing with a car that needs fixing here or there? Or it’s statistically more likely to leave you stranded in a random place. Or it’s definitely less safe (fewer features) than new cars. You can’t let the anxiety feeling of letting money go block out all those other feelings (That you aren’t feeling right now, but would definitely feel in in the car accident scenario).
Therapy can be helpful if accessible.
Buy a car that’s closer to 30k. Toyota Corolla last forever. $22k
(1) Start by giving your money a job. Don’t “just save”- start naming accounts.
So, instead of just putting $1,500 in an account, make a new account (or bucket) and name it “car” and put $500/month there. This is a mental trick: It weens you off seeing the account go up $1.5k. It also tells you that you have a plan for the money, and that makes it easier to use according to plan.
(2) Having a ton of money in a savings account is not a good long term strategy. Once you have an emergency fund, you need to be sure you are investing. Are you also putting $1,000/mo in a 401k or retirement?
(3) $1,500x 24 = $36k. Is that all of your savings? That’s a good emergency fund, but it actually isn’t enough to buy a $40k (or even $20k) car.
(4) I agree with others that depending on what “rusting apart” means, you can wait to get a newer car. You can also replace your car a LOT more frugally than $40k. There are plenty of reasonable used cars available out there for $15-$20k. In fact, you could buy the “brand new” car you could have bought in 2020, for a lot less now. A 2021 Corolla LE is around $20k, saving you $5k off the 2024 price.
(5) In the meantime, start bossing your money around. Emergency fund, car replacement fund, vacation fund, retirement. Take some smaller steps toward feeling comfortable spending on what you need.
Drive that car until it dies. Your gut is telling you something – it’s stupid to spend money on the fastest depreciating asset in modern society
Drive what you have into the ground and then buy a lightly used Corolla.
Just enjoy your life and get a wild car crikey what’s the point of working so hard and anyway It seems like you really want one too! Go for it friend!
Regardless of how big the number in your savings account is, if you never spend any of it it might as well be $0. You earn money so that it can be spent. Some of it is spent much later (savings and retirement) but the rest of it can be spent as you see fit.
You’ve been saving for years. You have (I’m assuming) a stable income. You obviously don’t spend frivolously. Buy the car.
If you really can’t handle seeing your balance drop that much turn it into a game. Can you find a way to set aside $2k a month? 2.5k?
Start doing your research. You should be able to find a quality vehicle that’s 3-6 years old and put a decent down payment on it.
My car is 25 years old. If it runs, it runs. Keep in mind, there’s a lot of cars that have been produced. You don’t have to buy a new one.
There’s no shot I would get over paying 40k for a daily driver car because it’s just not worth it.
I think part of this answer goes into what your usage of the car is.
For me and my situation, I’m in my car anywhere from 2-5 hours a day. I didn’t want a large car payment but I knew that I wanted something I was going to be ok with being in for as long as my life requires.
You definitely don’t have to drop 40k of savings. You don’t have to have a $500/month car payment. You can find something more reasonable and math it to a payment you are happy with for savings too.
How much is the maintenance on your 18yr old car? Does that cost (and gas) outweigh the expense of a newer vehicle?
Get whatever new car you like and finance it. Your savings interest will offset your loan interest. You will have less to deposit every month, but your savings will continue to grow.
First of all, don’t buy a new car.
You seem to think your only options are one extreme or the other. Beat up rustbucket with 200k miles, or brand spanking new. You can just buy a car thats a few years old with a few tens of thousands of kms and good service record or something instead.
Honestly, my advice is to not get over it. The most saving I ever did was right after university where for about 5 years I mostly lived life on much the same budget as I did while at school. Once you get used to spending money, its hard to go back. Theres a balance, but most people spend based on what they earn. You don’t need to do that. You can commit to a savings goal and then spend within a budget that allows that savings.
You dont mention what your savings are, but it sounds like you could probably just pay cash for a reasonable car, which obviously reduces your current saved amount, but has no effect on your ability to save going forward (and avoids interest costs).
I would recommend buying a used Toyota Corolla instead of new car considering mileage so you do not need to see most of your savings gone. Doing this may leave you with more remaining savings AND you have a better car than your last one.
If you make a plan to find a vehicle that suits your needs and is affordable you have maximum control over the process. If you wait until your current vehicle quits on you then you will be a slave to the process of finding a vehicle. You don’t have to spend $40k on a brand new vehicle. You can find a lower priced vehicle and put a hefty down payment down to lower the payments, if you have payments at all. Say you find a vehicle that fits your needs for $12k. Still stings but you have plenty money left and you can keep plugging away to get your savings back up.
Why not spend $20k on a used car?
My last several new cars were only $250/month. You just need to get what you really need instead of what you want.
I’m also a save first kind of person (as is my wife). I retired at 35 (the first time), and retired again at 55, probably forever this time.
Drive that piece of shit until the wheels fall off. Unless you’re putting a bunch of money into it to keep it running who cares? Every year you don’t buy a car means, in theory, you’ll be able to buy a nicer car. It’s a depreciating asset. But regardless of what you do don’t buy a new car.
There’s a middle ground between driving a 20 year old 200K car (assuming you’re asking because it’s in poor condition/huge repairs coming) and dropping 40 grand on a new one.
Get a three year old off-lease vehicle. Someone will have already taken a bite out of the depreciation, and you’ll spend quite a bit less than 40K!
Whatever you buy, consider that if you can get a low enough interest rate, it’s better to finance. Future money has less value than right now money. If you can catch a close-out sale with 0% financing and leave your money in a high yield savings account, you’ll come out ahead in the long run.
Don’t know about cars, but I can’t spend savings either. For me savings = control over my life. I can handle anything as long as I have savings. You probably felt you had no grip on things when you were poor, too. Money is your safety net
Of course, it’s all bullshit. You have no control over life and what happens. ‘Life happens when you’re busy making other plans.’
Some therapy might help. I did the free Yale happiness course on Coursera (the science of wellbeing) which really drove the point home that money ≠ happiness, that helped too.
Don’t get over it – but learn to reframe now that you are at a different stage.
Specifically, learn to recognize when spending money will *save you money over the long-term*.
This is a luxury we don’t have when we are poor – you rarely have the option to do the most economical thing, because too often, the most cost-effective choice has higher upfront costs. Buying in bulk, to name one of many examples.
On an avg per-year basis, driving a car that needs constant repairs is actually very costly. The cost of fixing it, the cost of it breaking down and losing work (and income) at random moments. The impact on your job due to loss of goodwill for the absenteeism.
So you need to retrain your brain to see THAT sort of false economy as the enemy to building wealth, and not just going with the cheapest choice right now.
I think it can be worthwhile to take stock of things you’d gotten into the habit of neglecting when you had no choice. Start making a list:
When was the last time you had a full medical checkup?
What about a routine dental visit?
Do you have insurance – term life (if you have dependents), disability?
Exercise doesn’t have to be massively expensive, but is there equipment that would help you be more motivated to do it if you got it?
Are there things around your house that need maintenance?
Do you regularly get your oil changed, etc?
Are you buying cheap Ikea/walmart furniture that has to be regularly replaced because it’s just not sturdy? Can you get something of better quality that you actually *like* and that will last multiple times longer? (Note, there is good quality and then there’s paying for name-brand bragging rights. I’m all for buying quality so I don’t have to waste time doing it ever again, being poor taught me to not care less about status.)
Are there things you can spend money on, that saves YOU time/energy, freeing you up for something more productive/income-producing/quality-of-life-improving?
Prioritize all the things on the list by asking yourself – how much money / time / stress will I save if I spend a little more to get this taken care of?
Note, sometimes time needs to be the priority over money. DIY is great if you enjoy it and/or it gives a relaxing change of pace. But there are only so many hours in the day. If you paid someone else to do a chore (such as mowing the lawn, for instance) would it allow more to get done overall? While giving someone else a chance to do good, honest labor for fair-pay?
Take your time, sleep on decisions, maintain habits that encourage thoughtful spending & frugality – but start knocking those things out. This can and probably should be a gradual process.
DO give yourself a bit of fun-money. It doesn’t have to be a lot – but let yourself have an allowance. If it helps, tell yourself that being stressed out all the time is not actually good for your health and need to recharge. (It’s convenient but also still true.) (And free is still good, will always be grateful for public libraries.)
There’s another angle worth pondering here – there can be some psychological effects that are hard to explain to anyone who has never been poor.
Maybe you had to suppress wanting *anything* just to stay sane, but it okay to treat yourself now – as long as you don’t lose the guardrails entirely.
Maybe you feel you don’t deserve to have nice things. It’s akin to survivor’s guilt – even if no one has died, you never lose the awareness that you escaped and not everyone does. And we know perfectly well it’s not because you are a “better” person – there are many beautiful souls who have to survive on very little material goods.
You don’t need to punish yourself for getting out. (Reread that as many times as it takes.)
On the other hand, you probably had, here and there, people who helped along the way – mentors and teachers and donations that went to scholarships, etc etc etc. So if it helps you to be kind to yourself, then be kind to others and pay it forward – mentor someone in turn, volunteer, etc.
Just buy the darn truck and scratch your itch. If you don’t really need a big truck bed consider the base trim Ford Maverick Hybrid which starts at 25k.
I don’t know what car financing is like, but if you can get it for around 5%, then it makes sense to do payments (~5% is the current rate for a HYSA), so what you do is take the chunk of cash you have, drop most of it in a HYSA, and then finance the car (assuming it’s close, or less than 5%). This maintains your liquidity, but if you need to pay it off at some later point because the interest rates change significantly, you have that option.
Dropping $40k at once is a chunk, but it’s because you’ve already been “making payments” on that car for the last several years, and that cost is really something that amortizes over the number of years you own the car. So it’s more like $333/mo if you keep the car for 10 years, assuming it is worthless at the end.
There have also been a ton of safety/convenience innovations in the last 10 years that make a new car _much_ better than a 10 year old car, even if the overall reliability is about the same.
The TCO on cars can be *really expensive*, but you seem to have the right mindset, take some time, pick something you really like, and plan to keep it for 10+ years.
So, what I take away from this (without giving car advice) is that you are terrified of seeing your savings depleted. I think this is mostly a good thing unless it is debilitating.
You need savings goals. Especially for retirement. I’m not sure your age, but get an idea of what you have in retirement funds, what you are adding and how it will grow. Do continue putting a lot of money aside for retirement. Figure out where you need to be to retire comfortably at the age you choose and whether you are contributing enough to get there. It is constant adjustment year by year until you retire. Your finances are work, unfortunately, but satisfying when you manage what you have well. I’m also a fan of having more than one needs in retirement. Just enough never really is enough.
If you know retirement is going to be taken care of, it will alleviate some of your fears in spending the money. You won’t have to worry about retirement as you are doing the work. Then you can still hate spending the money on the car but have confidence you are not robbing from your retirement.
After you have your retirement plan in place and are acting on it, start saving for other things. I have multiple special purpose savings accounts. Let’s say I have one for vacations, power tools, hobby supplies, etc. And in an emergency, it would get tapped first no matter if it had $5,000 in it, or $50 before I even touch the emergency fund.
You say you have 20 years on your house left. You can get a lot done retirement wise in 20 years. Stop worrying about what you didn’t do. Knowing how much you will likely have in 20+ years will help with your question.
for one month, use that 1500 & donate it to a local charity & see how you feel.
also, you can just take the bus or cycle or walk
Buy a three year old car with 30k miles on it. You’ll get a much better deal.
Don’t get a new car. Get a high quality used car with 80k miles. You might spend 5k fixing at some point, but the 20-25k savings over a new car will cover the costs pretty easily.
Last year i spent twice that on a pickup. Difference is do you have any net worth retirement equity etc. if thats all you have my answer would be no. If you have a million or two then go for it