Well, something has happened that has forced us into getting a new car. My wife’s car had decided to accelerate on it’s own and cause a minor accident. This incident caused us to feel unsafe driving the vehicle, which drove our decision to trade in the vehicle for a new one. I thought I would [...]
Well, something has happened that has forced us into getting a new car. My wife’s car had decided to accelerate on it’s own and cause a minor accident. This incident caused us to feel unsafe driving the vehicle, which drove our decision to trade in the vehicle for a new one. I thought I would never buy a brand new car again, but in this case we were able to rationalize it pretty easily, which, fiscally, scares me a bit .
As I mentioned, we purchased a brand new car. We didn’t set out intending to buy new, but in the end it made sense (kind of? hopefully? Am I just trying to make myself feel better?). When we first went out looking we intended to buy a 1-3 year old SUV that had the equivalent towing capacity of my wife’s current car. This would have cost us around $18,000-$21,000 depending on brand, mileage, and amenities.
Due to the “surprise” need for a new vehicle, we didn’t have one particular model in mind that we really knew we wanted. Thus we set out to test drive a bunch of vehicles quickly. We tried the following:
- 2008 Ford Edge – A little underpowered, and the fuel economy was not quite what I would expect from that size of a vehicle. The 2011 model got an engine upgrade, but we never got around to trying one that new. This vehicle was also a bit smaller cargo wise that my wife’s prior car.
- Nissan Murano – I can’t remember what year we tried. The car actually drove and rode very nice, but it had a CVT transmission. I’m anti-CVT .
- 2011 Kia Sorrento – I was very impressed with this vehicle. It had a high level of base amenities, drove very sporty, and was priced very competitively. But alas, I think it was the smallest of the SUVs that we tried.
- Honda Pilot – Ugh. This was a truck in a shiny package. Drove terrible, rode terrible, underpowered, poor MPG. Overall the one we liked the least.
- 2011 Ford Explorer – The 2011 model year was a complete overhaul for the Explorer. It became a crossover instead of a truck based SUV. This improved MPG without sacrificing too much tow capacity. This, or something similar, would probably what we would have decided to purchase if we had “planned” on getting a vehicle when we were ready to upgrade Anne’s car. And so the rationalization began….
We saw in a dealer’s online inventory that they had a used 2011 Explorer, so we tried to schedule a test drive but it was sold already. Instead we tried a brand new one just to get a feel for the vehicle. We loved it, and unfortunately didn’t have much time to wait for another reasonably priced used one to pop up. We didn’t want a pre-2011 model because it was truck based and would likely have liked it about as much as the Honda Pilot. The post-2011 models are an upgrade in cargo capacity, people capacity, and tow capacity for us. This would allow us to upgrade our camper in the future to something larger without requiring a new vehicle. It would also give us room to grow our family. Knowing what I know now about all the stuff you have to haul around with kids, this was important.
This got me looking into current incentives on the 2012 Ford Explorers. It turned out they had $1,000 cash back, $500 trade in bonus, $500 recent graduate discount that I qualified for, and I got a $300 discount through my work at a local dealer. This dealer also happened to have “take it or leave it” pricing, so I knew their prices and also knew that I would actually be getting the discounts without having to negotiate price. After all of the cash back incentives, it turned out I could purchase brand new for ~$1200 more than what that same dealer charged for the used 2011 model that they had already sold. I felt that was a reasonable trade to make to get a brand new vehicle that I knew no one had abused.
Trading In vs. Selling
Normally I would sell an old vehicle when purchasing another to not take the value loss that you get when trading in. However, due to our safety concerns about my wife’s old vehicle, we felt we had a moral dilemma about selling it to someone face-to-face. Therefore we decided to take the “loss” and trade it in to make ourselves feel slightly better, even though we know someone else will still be driving it in the future. So overall I think I lost $2-3k that I could have gotten had I sold it, but sometimes life gives you lemons that you just can’t make lemonade with.
The end result is we have a new vehicle that we will be tracking at cost until Kelly Blue Book starts to track used 2012 car values. The total cost, after incentives but before trade-in, was $28,652 for us. After trade-in, tax, and an additional $3,000 down payment, we have ended up financing ~$13,700. We went with a 5 year loan at 3.39% to keep the payments low. This will help keep our cash flow up to continue investing and saving for the down payment on our next house, while giving us the option to pay extra on the loan and pay it down sooner.
Wow that’s an expensive car, but I think it was the right decision for the long term.
Anna and I got engaged in May of 2011. It’s been kind of a whirlwind romance, considering we met only a year before that–in that time we dated long distance, and after 7 months she moved here and started a new job. I proposed to her the day we moved in together and we immediately [...]
Anna and I got engaged in May of 2011. It’s been kind of a whirlwind romance, considering we met only a year before that–in that time we dated long distance, and after 7 months she moved here and started a new job. I proposed to her the day we moved in together and we immediately started planning our nuptials.
In our discussions we had two dates in mind, either this October (to take advantage of the lovely fall weather, and keep on our already pretty accelerated courting schedule), or next April which would give us longer to save money and get married on the anniversary of the day we met. In the end, we decided to go for the closer date for a variety of reasons, but above all: we just really want to be married.
I put together a spreadsheet in the first week and have been refining it ever since. Our back of the napkin estimate for a wedding party with ~100 guests (including catering, photography, location, booze) started at $10,000 and has remained around there even as we’ve ironed out the details. Add our honeymoon in there (7 days in Mexico!) and our current estimate is a grand total of $13,925.
After purchasing the ring, I had about $1,800 left over. That became the seed around which the rest of the savings have grown.
The first thing I did was to create a new ING Direct account. ING is where I keep all of my short term savings: it’s easy to move money around online, you can create multiple accounts for free and earmark them for whatever you’d like, and it still pays some interest (1% as of this writing). I currently have the following accounts set up:
- Home Improvement – About to be totally cleaned out by my siding contractor
- Car Insurance – A way to pay myself every month and get some interest before paying State Farm every 6 months.
- Motorcycle Accessories – $25/paycheck goes a long way when you shop very rarely for the bike.
- Travel – This allows us to have a cash buffer for vacations when we feel like it.
- Emergency – I’m not going to tell you the balance here, but trust me: it needs work.
- Wedding & Honeymoon – The new addition!
Anna is an incredible saver, even though she’s pretty disorganized about it. She had about $6,000 sitting in her checking account and we immediately moved $4,800 of it into the Wedding & Honeymoon fund, giving us a huge head-start at $6,600. After that, we had $7,325 (give or take) to go, and 23 weeks (11 pay checks) to get there.
With that goal and that timeline, we were looking at $1330 per month that needed to be put away in order to make it in time. I immediately diverted all of my monthly savings to the Wedding & Honeymoon account and added a bit more on top of that. That turned out to be $600 per month. It may not sound like much, but I let my salary pay for all of our fixed expenses (with the exception of Anna’s car payment) while she covers more of the fun stuff.
Since she had moved into my house, that freed up at the very least the cost of her rent, or $725 per month. Rather than impose an automatic savings plan on Anna, we let her savings grow organically in her checking account, but as she is by no means a spender, this was not an issue.
That put us just shy of our target at $1325 per month.
Gifts and Happenstance
We were very fortunate to receive $3,000 from Anna’s grandpa and an additional $1,000 from mine, along with Anna’s $1,850 deposit from her apartment. All of this brought us closer to our goals.
As always happens, there are other things to spend money on. We had some house work that required about $3,000 which was not in the Home Improvement account, so this came out of the Wedding & Honeymoon fund, dropping us back a bit.
With 5 weeks left to save, we have $110 remaining to pay for the wedding and the honeymoon. This puts us in a great position, and well ahead of schedule. We can continue saving into the wedding account, and after the wedding divert anything left into the Emergency fund and start growing the bottom line there.
Later I’ll write a post about our personal savings plan going forward–as soon as we have one. Don’t expect it until after we get back from the honeymoon.
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