CHEAP DOESN'T HAVE TO BE BORING AND CAN BE FUN ! ECONOMICS 301
You work hard for your money. You want it to go as far as possible. Transportation is your second most expensive expense after shelter. Here are some ideas on how to save trainloads of money on this major expense.
1. Drive an older car. A new car is a terrible investment. "The rich have assets. The middle class have expenses they think are assets. The poor have expenses." This is a quote from Rich Dad, Poor Dad; a great book probably for sale here on ebay.A new car is a terrible investment in a depreciating asset. As soon as you drive it off the showroom floor you have lost 20%! On a $30,000.00 car/truck that is $6,000.00. You're not even home yet! In 5 years you will have lost 50% of the value. That's $15,000.00. New cars are being advertised with up to 84 months financing these days. 7 years! Why do you think dealers advertise "If you're upside down in your vehicle-NO PROBLEM! Come on in we'll fix ya right up :] At some point the car is worth less than what is owed on it. Some are worse than others. If you crash it or have not maintained it, where are you going to find xxxx number of thousands of dollars to get another one? All this is designed to keep you permantly in debt.
There is a better way. Look for something at least 4 years old. SOMEBODY ELSE HAS TAKEN THE DEPRECIATION HIT . The car makers are making or importing and not necessarily selling about 16,000,000 [that's 16 million] cars and light trucks in this country. There is currently way more supply than demand! As this is written in late 2006, the new 2007's are on the street, but there are still new 2005's on dealer lots.
Now, you must be careful. If you are not automobile maintanence literate, have a trusted mechanic or car inspection service check out any possible candidate. If you are so much the better!
Ok-this is a very broad brush. Generally speaking the larger the car the faster they depreciate and the better they are taken care of. The Pontiac Bonneville/Buick Le Sabre will be the case in point. These are the GM top of the line in their respective divisions. A quick search turned up a 2003 Bonneville SE with 69,000 miles for $9,000.00 ASKING PRICE at a car dealer. This car had a new MSRP of $27,000.00! These are excellent automobiles with world class 3800 V-6's that get upwards of 28 MPG and with reasonable care will run almost forever.
Ask me how I know? I bought a 91 Bonny with 98,000 miles on it, ran it to 240,000 miles, and gave it to a college student friend who is still driving it. It had high quality 3-4,000 mile oil changes with the long [big] oil filter, a trans cooler, and a 180 degree thermostat for cooler operation. Maintanence is cheap compared to buying the car in the first place. I currently [well my wife] has a '99 bonneville that we bought to replace the '91, with 60,000 miles for $10,000 which was less than half a new one. It is currently over 130,000 miles and runs like new with similar conditions to the 91.
Perhaps my all time finest buy was a '77 Pontiac Catalina Station Wagon that in a nutshell; I bought with YES 98,000 miles for $1,000.00 in 1987. I raised 3 kid's and we went all over the country in it. I finally parked it in 1998 with again; 240,000 miles on it. It sat for 6 years until my son made it run again and drove it until he sold it to someone for the 400 Pontiac motor and THM350 tranny it had. It can be done and will save you trainloads of cash! And besides how cool is it NOT to have car payments?
Now here is a twist to this whole concept; but you really have to be mechanicaly literate or it will not be economically feasible. Most automobiles go through a deprectiation curve, bottom out and stay there. Some actually reverse and start to gain value again. This takes decades usually. Some cars that come to mind are, the 70's muscle cars, and Corvettes. There was a time in the late 70's and early 80's where you could buy say a 1970 Hemi 'cuda cheap. No more. How about a 1970 Purple 'Cuda converible Hemi 4-speed for $500,000.00? This is a car that sold new for $4,000.00? Hmmmmmmmmmmm!
Remember the picture at the top of this page? That is my daily driver. A 15th Anniversary 1984 Pontiac Trans Am. Pontiac made-yes-1500 of these. I bought this car cheap, I won't tell you how much, with 109,000 miles on it in 2004. It is almost 2007 and I drive it 50 miles round trip daily. Today it has slightly over 130,000 miles on it.
I am slowly going through it and making everything that matters anyway, new. All fluids and filters first; tires, alternator, I rebuilt the carb., tires, trans cooler , 160 degree thermostat, etc. etc. See the pattern? I did pay to have done-front struts and lower ball joints-$450.00, A/C compressor and assorted parts $1,000.00. On tap new water pump, power steering pump, rear brake calipers, and because I'm rabid about this stuff; the list is actually never ending. This car is quick, speeding tickets are a major concern, but most of all I bought this car since out all possible cars out there I wanted IT.
The First Gen Firebirds 1967-1969 are getting very expensive now. The Second Gen Firebirds 1970 1/2-1981 are getting very expensive now. Go price a 73 SD455! The Third Gen Firebirds are at the bottom of their depreciation curve now. The Fourth Gen Firebirds are going down, but very slowly. To be continued . . . . .