retired2pa
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I'm a newbie here and hope this is where I would post this question.
My husband and I are retired and own 2 vehicles. One is paid for and the other is a newer, more luxury type vehicle. The one that is paid for is our "everything" vehicle that we use most of the time. The newer one is 4 years old and only has 21,000 miles on it. You can see that we don't use it much and it sits in our garage all winter because my husband doesn't want it to get rusted out. We brought it with us from South Texas so the last 2 years is the first it's seen any cold weather. Anyway, our monthly payment for the newer vehicle is $517 and we owe about $13,000 yet. Kelly Blue Book appraises it around $19,000 trade-in. I have been trying to decide if we should get rid of it and get a nice used vehicle as a second car (but you don't really know what you're getting in a used vehicle, do you?) or continue to pay this off and in 2 years pocket $517/month. I would like to get rid of both vehicles as the paid off one is 10 years old and get a 4WD or AWD for the area we live in now. I think we could get by with one vehicle but my husband is hesitant about doing that.
What do you think would be the smartest thing?
Thanks so much 
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Mon Feb 15, 2010 8:13 pm |
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oldguy
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So you retired and moved from South TX to PA? I'm going to have to think about that - LOL.
Modern cars provide about 200,000 miles of trouble-free service, so, unless you drive a lot, the 10-yr old is probably a good choice to keep as a second car. But, if it has much over 200,000, that becomes part of the decision.
The new car has lost about half of its value by age 4, so that $20,000 is gone no matter what - and that is about $1 per mile just for depreciation, doesn't even count gas, insurance, etc - you can't undo that.
As for used cars - they seldom have problems these days - the olden days of 'sawdust in the differential' and 'oatmeal in the radiator' are mostly gone. Eg, consider your own car - the buyer will get a like-new car for only $19,000 that will run another 180,000 miles and still be worth $8000 - the second owner is the one who gets the super bargain - his depreciation will be about 6 cents per mile (comapred to your $1/mi).
So you could probably get a good 4 yr old Japanese (top reliability, good mileage, unlikely to have been abused) SUV with AWD or 4WD for about what you will sell your car for. But you'll probably have to accept 60,000 miles on the odo - not likely to find a 21,000 car.
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Mon Feb 15, 2010 11:37 pm |
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littleroc02us
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I'm not retired by any means so I can't relate to that, but when I do I don't want to be making payments on anything and that includes the house. When I retire, I plan on spending all the money I make from investments. So, yes I would sell the car and take the equity and buy yourself with cash a used car. These days you can get great deals from the Mom and Pop's shops. I just bought a 2007 Mitsubishi Galant ES w/ 48k miles for $9000 cash from the dealer. They arent' like the dealers these days that have turned into robots, because they don't have the ability to negotiate pricing. They now all seem to have lowest price/no negotiation rules here in Minnesota. The car has been awesome and is still under warranty for another 8k miles. I'm 39 years old and have no debt except the house. Your $500 a month can go towards something much more rewarding then a car payment. The funniest thing happened that week. I went to my Dentist and we got to talking about buying cars. I told her that I saved up the money on my middle of the road salary and her belief was that she will always have a car payment because that is the American way. I laughed inside and basically said to myself, "You are a Dentist with a much higher salary, but you still lease them (rent them I mean.). She is what I would call as the classica UAW. (Under achiever of wealth.)
“If you want to stay in debt forever, keep borrowing money.”
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Tue Feb 16, 2010 6:37 pm |
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retired2pa
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oldguy....Just to let you know we haven't lost our marbles completely by moving from S. TX to PA (or have we??). We have relatives here and none in TX so that's why the move. We lived here in PA for over 20 years before going to S. CA to work in '85 (we also have 3 kids there and our 2 grandchildren); retired in 2001; sold home in CA and bought a 5th wheel and truck and spent the winters in S. TX. Believe it or not...I missed the change of seasons and have really enjoyed being back here.
Thanks for the great input from both of you. Actually, you confirmed what I've been thinking for about a year now. Convincing my husband is a different matter. I think spending $500/month for a car that sits in the garage for 4 months a year is ridiculous and a waste of money. I just wanted some confirmation from someone else that I wasn't off track on this. FYI, when I said that there is 21000 on the vehicle, it had 5,000 on it when we bought it and we took 1 trips from TX to PA when my husband's mother passed away and back and then when we moved from TX to PA. That adds up to 4500 highway miles. So that leaves 11500 miles of just "normal" driving around, which averages 2875 miles a year!!!! I don't even want to figure out how much that is costing a day...LOL
Wish me luck that I can talk my husband into getting rid of this car and payment....and insurance. Thanks again.
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Tue Feb 16, 2010 7:24 pm |
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oldguy
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Yeah, not much point to keeping an un-needed late-model high depreciation car around.
Unlike 'littleroc' I don't see the payments as the problem, the depreciation expense is the problem.
Eg, I'm 71, retired for 11 yrs - I 100% finance our cars. I make use of the <5.5% low cost capital. I could sell $33,000 out of our stock funds, use $3000 to pay the tax and use the $30,000 to pay cash for a car. Or, I can 100% finance the car at a cost of about $34,000 ($4k of interest over 5 yrs) and leave my $33,000 invested where it has doubled every 6 to 7 years for 35 yrs on average. So, I spend the $34k and I allow my fund to grow to $66,000.
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Tue Feb 16, 2010 8:45 pm |
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retired2pa
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I totally agree. Why use all your money? The payment really isn't the problem...although it would be nice to have an extra $500/mo. to put in something that would actually grow
My husband is friends with a man that owns a nice (small) dealership in OH (about 30 miles from us) and he sells a LOT of vehicles because he deals. He told my husband to bring the car over and see what he could do. I think we'll take a ride one of these days. Last summer we took it to a large city not far from us thinking we could "downsize". They practically insulted us and said they didn't really want the vehicle and we should go somewhere else because it's not a 4WD! They were going to give us $11000 for it!! I was so mad. I guess because we are older they thought we didn't know what it was worth. This is a very big dealership but their sales people are very snotty. I would never go there again and I've told a lot of people how they treated us. Guess they didn't want our business.
My husband's older car is less than 200,000 miles and in excellent condition because it is also from TX so we'll hang on to it for a while longer.
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Tue Feb 16, 2010 9:34 pm |
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littleroc02us
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You will always find two sides of every story. The question is do you believe more in being leveraged in everything or would you rather be debt free and have strong cash flow with the power to invest with less risk?
“If you want to stay in debt forever, keep borrowing money.”
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Fri Feb 19, 2010 3:54 pm |
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angdeer
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Keep the paid car and sell the one that you are making payments on. Then you could get a fairly new car with a warranty yet to drive all the time with AWD and not pay for something your not using. Also the old car with no payments lets you both have a vehicle if need be so he doesn't feel trapped. Use the newer for long trips and feel safe.
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Fri Feb 19, 2010 4:47 pm |
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rppearso
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I would find a way to keep 2 vehicals, I could not imagin being a one car family, my fiance has her own and that way im not stranded.
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Tue Mar 02, 2010 5:37 pm |
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oldguy
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quote:
Keep the paid car and sell the one that you are making payments on. Then you could get a fairly new car with a warranty
I could not imagin being a one car family, my fiance has her own and that way im not stranded.
LOL - you youngsters fall right in to the 'me' & 'now' generation. (Especially the "new car/warranty" comment.) And that is OK, at least you are stimulating the economy.
But it is also a testimonial to why so many people live paycheck-to-paycheck and are unable to understand why other people seem to be wealthy. I avoid long warranties on cars, don't like the 100,000 mile warranties (Kia?), I prefer to self-insure for my car repairs. And I plan car purchases to avoid depreciation, drive cars 200,000 miles.
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Tue Mar 02, 2010 6:10 pm |
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Creditnet_com
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Keep the old car, run it in to the ground, sell the new car, pay off your loan, and use the residual to buy another used car. Use your friend's dealership if he'll give you a good deal OR I'm a firm believer in Craigslist! I've sold more than a few GREAT cars on Craigslist and bought a couple as well. If you go with a dealership, JUST SAY NO to the extended warranty!
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Wed Mar 03, 2010 7:42 am |
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rppearso
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quote:
Originally posted by oldguy
quote:
Keep the paid car and sell the one that you are making payments on. Then you could get a fairly new car with a warranty
I could not imagin being a one car family, my fiance has her own and that way im not stranded.
LOL - you youngsters fall right in to the 'me' & 'now' generation. (Especially the "new car/warranty" comment.) And that is OK, at least you are stimulating the economy.
But it is also a testimonial to why so many people live paycheck-to-paycheck and are unable to understand why other people seem to be wealthy. I avoid long warranties on cars, don't like the 100,000 mile warranties (Kia?), I prefer to self-insure for my car repairs. And I plan car purchases to avoid depreciation, drive cars 200,000 miles.
My fiance and my trucks both have just at 100k miles on them and we pay for the maintence as it comes and they are both paid for and well taken care of, I went to college without a car and I will never live without a car again quality of life was way to low, if that means I cant have 20 million when im 80 years old so be im going to enjoy my good health years. Try getting laid without a car lol. I will do what I can to become wealthy but im not toing to live in a hovel and take a bus just to get there lol.
If you sell a new reliable vehical and buy another used one I would anticipate around 2-3k in unforseen repairs with in 3-4 years (thoes not caught in a pre used vehical purchase inspection or they may not have been an issue yet but may soon) things like your rear main seal, manifold seal, differential seals, transfer case, transmission bands, etc can cost a massive amount of money to fix and to get a good deal on the work you usually have to jump through hoops with a mechanic so your trading off piece of mind. The way I see it is get a vehical you know the maintence history on (because you had it done yourself) and just drive it until the frame rusts out or fails. If you sell the new vehical your going to eat the difference between the initial cost and your sale prices plus what ever maintence you have to have done within 3 years of buying the used vehical. Trust me getting a bill for having your engine pulled and having all the seals replaced with neopene (because why would you ahve cheap seals put back in after you paid a grand in labor to have the block pulled) will not be a fun experience, that was my fiances F150 and I am looking at having to have the bands replaced (not just tighted) in my transmission for my ranger, im guessing it will be a minimum of a grand.
Paying for the maintence yourself is generally cheaper than an extended warranty but having a low milage vehcial is piece of mind, as soon as I have some moeny saved and think I can invest its like just kidding the bands on your transmission need to be fixed lol.
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Wed Mar 03, 2010 10:55 pm |
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rppearso
Contributing Member
Cash: $ 9.05
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quote:
Originally posted by oldguy
quote:
Keep the paid car and sell the one that you are making payments on. Then you could get a fairly new car with a warranty
I could not imagin being a one car family, my fiance has her own and that way im not stranded.
LOL - you youngsters fall right in to the 'me' & 'now' generation. (Especially the "new car/warranty" comment.) And that is OK, at least you are stimulating the economy.
But it is also a testimonial to why so many people live paycheck-to-paycheck and are unable to understand why other people seem to be wealthy. I avoid long warranties on cars, don't like the 100,000 mile warranties (Kia?), I prefer to self-insure for my car repairs. And I plan car purchases to avoid depreciation, drive cars 200,000 miles.
My fiance and my trucks both have just at 100k miles on them and we pay for the maintence as it comes and they are both paid for and well taken care of, I went to college without a car and I will never live without a car again quality of life was way to low, if that means I cant have 20 million when im 80 years old so be im going to enjoy my good health years. Try getting laid without a car lol. I will do what I can to become wealthy but im not toing to live in a hovel and take a bus just to get there lol.
If you sell a new reliable vehical and buy another used one I would anticipate around 2-3k in unforseen repairs with in 3-4 years (thoes not caught in a pre used vehical purchase inspection or they may not have been an issue yet but may soon) things like your rear main seal, manifold seal, differential seals, transfer case, transmission bands, etc can cost a massive amount of money to fix and to get a good deal on the work you usually have to jump through hoops with a mechanic so your trading off piece of mind. The way I see it is get a vehical you know the maintence history on (because you had it done yourself) and just drive it until the frame rusts out or fails. If you sell the new vehical your going to eat the difference between the initial cost and your sale prices plus what ever maintence you have to have done within 3 years of buying the used vehical. Trust me getting a bill for having your engine pulled and having all the seals replaced with neopene (because why would you ahve cheap seals put back in after you paid a grand in labor to have the block pulled) will not be a fun experience, that was my fiances F150 and I am looking at having to have the bands replaced (not just tighted) in my transmission for my ranger, im guessing it will be a minimum of a grand.
Paying for the maintence yourself is generally cheaper than an extended warranty but having a low milage vehcial is piece of mind, as soon as I have some moeny saved and think I can invest its like just kidding the bands on your transmission need to be fixed lol.
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Wed Mar 03, 2010 10:56 pm |
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littleroc02us
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Used cars are always a better idea if you aren't a millionaire and can afford to buy it in cash. I don't care about all the interest rates and such. For example I just bought a Mitsubishi Galant for $9000 that had 49k on it and warranty left until 60k. The cost of a new one would be around 24k. But if you financed that vehicle for for 5 years at an interest rate of 6% your total cost at the end would be $28000. So, if I did have a problem with the car, I could three total cars for the cost of a new one. Hmmmmm let me see what the better deal is. All your paying for is the new car smell. Plus now that I think about it, aren't all vehicles out on the road used. They seem to be running fine for the most part.
“If you want to stay in debt forever, keep borrowing money.”
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Thu Mar 04, 2010 4:48 pm |
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