The other day we did something we have been thinking about doing for about 5 years, something we have had as a big goal for a long time. We’ve had our eye on the prize and weathered some bumps in the road on our way to the big day like always happens – but we did it!
We added a brand new member to our family!
There she is – our new beauty! A 2014 Chevy Captiva Sport.
What a process it has been deciding to buy the vehicle. To give you an idea of what she is replacing, we now drive a 2005 Chevy Equinox with 224,000 miles. We love our Equinox; we bought her brand spanking new off the lot in 2005 (yes, we know now never to do that again if you are trying to be smart with your money) and she has been really good to us. Aside from normal maintenance and few minor repairs we have not had to deal with costly fixes. She isn’t exactly pretty; she has a chunk missing from her grill from when we hit a turkey (yep, true story), she has a dent in her side from where a deer ran into the door (again, true story), the air conditioning doesn’t really work and she has rust popping out in a bunch of spots. Those are all visual things we were OK with because we knew she still ran OK. That was until the past couple of months when she started to really show signs of mechanical age. She is tired and we knew it would come sometime. As the odometer crept up we felt like we were in some ways driving a time bomb that would one day just decide she had enough. Our trusted mechanic advised us that we have at least $2300 in repairs facing us in the very near future if we want to continue driving it. That is a lot of money to invest in a vehicle in this condition, with that many miles.
When we bought the Equinox we took a 5 year car loan (again, not a decision we would make again now that we are much more smarter financially). We have not had a car payment in over 5 years, which we have enjoyed!
In the past year or so we have also started to listen to Dave Ramsey and combining his train of thought with our own goal to be as debt free as possible we knew we did not want another car loan saddled around our belts. We have been saving money for some time that we earmarked for a new vehicle purchase and had hoped to buy our next vehicle with all cash.
Then reality hit and we started shopping for vehicles. We had some requirements that ruled out 99% of cars, meaning we’d be looking at SUV style vehicles. There is a ton of options out there but to stay anywhere close to our budget we knocked out quite a few options. We then started scouring the car dealerships, emailing sales people, checking Craigslist and the online ads. How confusing and frustrating that can be. There were several times during the process we just had to step back and take a break because our minds kind of felt like jelly and it hurt to think about all the decisions we needed to make.
We also had to make a hard reality check and realize that what we had saved, $10,000, would indeed buy us a new vehicle but not one with the size, towing capability and lower mileage we wanted. We live in a rural area and we drive a lot. Anywhere we go means at least a 15 minute drive. We own 2 old vehicles we use for hauling (a really really ugly old beater truck and a similar in age van) but we use the main vehicle for 99.9% of our driving. Plus Jim will be driving the vehicle to work most days adding more miles. Doing the math you can see that we put an average of 22,400 miles on per year; at that rate we did not think it smart to buy a vehicle that is high in miles because we figured chances were that we’d be doing this same vehicle dance in a few years.
So we shopped, and shopped and shopped around. We also came to terms with the fact we had 2 choices: dip into our emergency fund savings account for the extra cash required to buy a vehicle outright or take a small auto loan for the balance of the new car purchase. We like the idea of having a savings account that could sustain us for a few months if something catastrophic happened (being a cancer survivor we are well aware of how life can turn at the drop of a hat). After much discussion and thought we decided to jump in and take a small loan. Gulp!
By making the decision that a small loan was possible, we were able to look at much newer vehicles with low miles; mileage was the key factor in buying the Captiva. She is a 2014 and has under 15,000 miles. Because I am an analytical thinker I ran the math in my head and if we continue on our 22,400 a year pace that means we can drive her for 4 years before she would hit the 100,000 mile mark. And if she is anything like our Equinox, 10 years before she needs to be retired.
We took out a 3 year auto loan and the payments are very manageable. Our goal is to make double payments every month and have it paid off in half that time.
We are keeping the Equinox for now, we know that given the present condition we wouldn’t be able to sell it for much and the trade in value was next to nothing. We’ll decide what to do with it in the next few months and any money earned from her sale will go towards the new auto loan.
In a nutshell, this is one of the proudest moments in our life.
Up until this vehicle we have always been up to our eyeballs in debt with a vehicle purchase and we know that is not smart. We knew we did not want to make those same mistakes again. Yes we have a car payment now, but we are still celebrating our victory and are thrilled with the money we were able to pay – in cash – for our new ride! We are almost debt free!
What is your proudest financial moment in your life? Please share in the comments below.
