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Hey, Picky people! Today we have a post from Mr. Picky Pincher on our adventures in car ownership. 

Mrs. Picky Pincher and I still have a car payment.

So how can we have a car payment when we have the lofty goal of retiring in the next ten years?

It’s a little complicated.

It all started before Mrs. Picky Pincher and I had gotten married; in fact we had only been dating for a few weeks when the car saga began.  When we met, I was borrowing my mother’s car while I saved up for a down payment on my dream car.

2008 Subaru WRX: $20,000

Since I was in high school, I’ve always had friends with cool cars.  Even as an adult, I had only owned unreliable used cars.  But I was a salaried worker, dammit!  I was a few years out of college and finally making a decent living.  The least I could do was to finally treat myself to a cool car. …Right?

I was in my mid-twenties with $5,000 in credit card debt and $45,000 in student loans.  Why would I want to commit myself to another $20,000 in debt for a hobby car?  Well, we all know how this story ends.

I took a loan out on a used 2008 Subaru WRX as-is. I drove 10 miles down the road and the dashboard lit up like a freaking Christmas tree.  As it turns out, this car was in a major wreck and had suffered severe engine damage.  I had no choice but to drive my new car payment around for the next year.  It had poor performance that accompanied a sinking feeling that I would end up stranded on the side of the road.  My options were to rebuild it completely or drop a new engine in this thing.

I should have sold the car and dialed in my budget.  This really should have been a wake up call to pay off some debt. Instead, I priced out an engine rebuild and figured I would just throw it on my credit card.

Then it finally happened: the thing broke down on me the day I was going to propose to Mrs. Picky Pincher.  A diagnostic test revealed that the transmission was totaled.

$3,000 later, I hit rock bottom.  I just wasn’t in the financial position to own a car like this.

Luckily for me, this kind of a money pit was in high demand.  I decided to trade it in for a brand new sedan.  I was ecstatic that I escaped this irresponsible pursuit of masculinity.  The alternative was to continue paying for a car that I couldn’t afford to get in working order.  Part of me felt defeated and even reassured myself that I would one day be in a position to buy such a luxury again.

My near brush with ‘cool’ was short lived.

I realized that this scarce good was not so scarce and a lot of people were in a position to do it better than me.  But more importantly, I realized that other people’s perception of me didn’t matter. It didn’t matter if I drove a ‘cool’ car if I was in debt up to my eyeballs. 

2015 Toyota Corolla: $21,000

I traded in my WRX for a brand new 2015 Toyota Corolla. This car was not fast, not sexy, but it was new and functional.  It was a clean slate and had some creature comforts that my previous car lacked.  This car was definitely worth the monthly payment of $300.

Or, at least until someone rear ended me six months later.  My clean slate was now marred.  Throw a hail storm into the the mix and my wise investment was proving to be another pain in the ass.  

But dings and spider cracks aside, we’re hanging onto this car for now for a few reasons.

First of all, we owe more on it than what it’s worth.  How did that happen!?

You know that low 6-year car payment you opted for when you negotiated financing terms?  As it turns out, the rate you pay towards the principal can’t keep up with the rate the car depreciates in value.

And second, to cut this car payment out of our lives, we would have to save about $5,000 to pay toward the principal just to owe what the car is worth. Then, we could sell the car private party and look for a used car to buy with cash.  We would have to deal with driving one car again while we look for another car.  We will likely end up doing this soon, but this would be too much for us to take on while looking for a house.

So we’ll keep this $300 car payment for now.

2007 Ford F150: $6,500 Cash

We decided Mrs. Picky Pincher’s monthly car payment of $450 for her Honda Fit had to go. With a $300 payment on the Corolla, that meant we were paying $750 every month just to pay off our cars. 

Instead, we wanted to buy a used car that we could afford with cash.  We would only need to pay for maintenance and insurance, which was pretty alluring.  We were selective and had a hard time giving up the money we worked hard to save.

Finally we found a work truck that looked like a good deal.  It was a former fleet vehicle and I figured that this was the truck for us.  It would be also helpful once we bought a home and had countless repairs to deal with.

On our drive home I had an all too familiar moment of disbelief: every single damn light lit up on the dash.  I figured this was par for the course.  I thought I would pull the codes and get to the bottom of this, so I blew it off.  While I haven’t got to the bottom of this problem, I think this was still a good deal.

What We Learned

At the end of the day, vehicles are just tools. Some are nicer than others, but they all break down.  Is the operating cost aligned with your goals?  Does a new car with a certain manufacturer’s emblem enhance your life?

We decided that this status symbol no longer interests us.  Cool or new cars are subject to routine maintenance as well as performance maintenance.  Be ready to pay for it!

While sensible and reliable, the new car was just as prone to freak occurrences as any other vehicle. The truck, however, did not suffer any damage from the hail storm. Nor was it appealing enough for a rat bastard crook to break into.

I think people have come to terms with the fact that they spend a lot of time on the road.  Society has addressed that assumption by buying cars that are nicer than our houses.  But Mrs. Picky Pincher and I are no longer interested in keeping up with the Jones’s.  When we think of a better tomorrow, that image is not centered around two Ferraris in the driveway.

We’ll take our money and financial freedom as we drive away into the sunset in our used vehicles.

We want to know: Have you eliminated your car payment?

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