They’re Your Wheels: Don’t Make Them Your Overlord

After the gloomy seriousness of the Booby’s last two posts, let’s move on to something a little less dramatic. Today’s topic is autos: as in cars and trucks and things that go with the help of a motor.

Most of us fellas have a somewhat irrational fascination with our rides. That’s OK. Vehicles are amazing products of technology and human ingenuity. They can look damn good, too!

Whether you’re into a classic 1930s beauty, like the Hispano Suiza K6 (see here); a bare-chested muscle car from the 1970s, like the Plymouth Barracuda (see here); or one of the garish luxury models that no one can afford, like the Lambourgini Roadster (see here) damn near every fella has a favourite… or two.

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The 1934 Packard Sedan: A 30s icon.  Photo:  Guy Dugas

This is OK. The Booby’s not trying to ruin all the fun, but a brief pit stop for some perspective is required. You see, it’s likely just as many men have indentured themselves by pursuing the wrong kind of vehicle at the wrong time, as have destroyed themselves by pursuing the wrong kind of woman.

So, be honest. If you’re like most men, your dream vehicle is unaffordable. Yet, you can still make it happen, eventually. It must be a long-term goal, without compromising what should be your principle goal: increasing your life-options by increasing your financial independence.

A car you can’t afford gives the illusion of power to the superficial. A car you can afford, on the other hand, takes you on the road to greater power in ways superficial people simply won’t notice.

She’s a Seductress
A beautiful, well-made car (or truck) is a joy to drive and possess. No one is crazy for falling in love with the greatest of these machines.

Still, any man who’s serious about financial independence has to approach owning a vehicle with that bigger goal in mind. Unless he has rich parents, a young man should think about his dream car the same way he (hopefully) thinks about his dream home: that is, as something unattainable today, but maybe some day in the future…

Until that future arrives, a vehicle is nothing more than a tool. It is a tool that gets you to work and back, around town, and maybe even generate some income (think Uber, for example).

Since your vehicle is a tool you’ll need a quality tool – so fear not! buying a cheap, unreliable clunker isn’t advised, either. Let finding the balance between quality and your true needs (as opposed to imagined needs, like trekking off-road across the Mojave Desert like in the commercial) guide your decision-making.

If you’re lucky enough to not need or want a vehicle, and can still earn a solid income, then you have a great advantage. Take advantage of it by accumulating savings and investments. Going carless, if practical, can provide the young with a head start in the savings race.

Going carless sounds good, but most fellas, especially in North America, will prefer the benefits of owning their own vehicles, so each must decide how much of his potential savings (“investment capital” in dork-speak)  he can devote to this tool.

The Booby will be blunt. Unless you can afford a new or newer car that meets your barest needs then you may not be able to strategically own a car at this time. To be clear, “new” doesn’t mean expensive. There are lots of entry-level and subcompact models available to be had in the $15 000 range. Or, you can buy one used, though of no more than two or three years, and spend even less… any older than two or three years and you risk spending as much on maintenance/repairs than you saved by not buying newer.

Sticking to this strategy takes discipline. The Booby knows how easy it is to fall in love with a beautiful automotive machine. But she’s a seductress, guys. Just an extra $200/mo in car payments equals $2 400/year that could have gone toward building your financial fortress, either by saving, investing, or paying down other debt.

The Exception: A Long-Term Love Affair
Of course there’s an exception! There’s an exception to every rule.

If you’re one of those mechanical genius/gear-head types, the kind the Booby bitterly envies, you can have a long-term affair with your dream car. If your dream car is a souped-up ’71 AMC Javelin, say, then owning one today might be impossible or ill-advised. But, should you come across an old wreck one day for cheap, you can just maybe start a torrid affair with your fixer-upper, and spend a good and happy part of your life bringing her back to glory.

Of course, this requires physical space and adequate tools. For a young guy starting out that probably isn’t realistic. But if you’re a dude in his 30s, who earns a good income and owns his home… well, you just might be the exception if you have the skills and the time.

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The ’71 Javelin, AMC’s flagship muscle car. Photo: Wikipedia

This means embracing a long-term love affair which will one day produce your dream car. It won’t cost you a lot up front, and if you’re patient you can keep the annual costs contained by stretching the project out over 10, even 20 years. Then one day, you will actually drive that ’71 Javelin joyfully off the driveway.

Whether the ultimate value of your restored prize eventually equals or exceeds the investment you put into it may not be all that important. At least it’s a tangible asset which, if well maintained, should at least retain value and perhaps even increase it. And you had one hell of a time.

The Many Faces of the Seductress
So that’s the exception. And exceptions are “exceptions” because they aren’t the norm… obviously.

For most fellas these days, fixing up a couple tons of potential isn’t an option. We must therefore cement our financial independence first, the dream car will come later. Doing otherwise will hit you in ways that are hard to see, but slowly add up:

In what ways?

Depreciation. Yeah, everyone knows a vehicle is a depreciating asset, but few appreciate how much. It’s pretty safe to say that the very act of driving your new car off the lot will cause it to lose 10% of its value instantly. After the first year that number typically jumps to 30%.

How much are you sinking into those car payments again? The money you’re coughing up for a car you can’t afford is not only evaporating as the car depreciates, it represents money you could have grown with savings or investments. For example, instead of forking out for something that loses 30% of its value after one year, put it in a GIC that will actually grow 3% per year. Alternatively, put that money towards paying down debt. That $200/mo you won’t be spending to pay for that SUV can help reduce the principle owing on your mortgage.

Up front and regular costs we don’t consider. This is a good one. You’re finally ready to part with your old compact car and get the SUV you dream of. Well, there’s the sticker cost, of course. That part is obvious.

But what about insurance? Do you really expect the premiums for your new SUV will be as low as they were for your old car? Not likely. And if you’re financing the vehicle, as most people do, your insurance company will probably require you to take on full coverage, well beyond what you were used to paying for.

How about gas? Consider the extra money you will each month for fuel.

Add it up. In addition to the sticker price, hidden costs will probably eat into your income and delay you from achieving your true goal of financial independence.

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A good subcompact from a reputable automaker can be had in the $15 000 range. Photo: Dung Nguyen

If you’re a young fella, then consider whether you really need a car. If you do, settle for an affordable compact or subcompact model from a reliable auto-maker. Read reviews online. Buying one that’s two or three years old can save you some more money, as the original owner had to eat the initial depreciation.

As the years pass by, and you get closer to achieving financial independence, you will suddenly be able to start thinking about treating yourself. That dream car may not be out of the question any longer.

And why not? You earned it.

 

 

 

 

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4 thoughts on “They’re Your Wheels: Don’t Make Them Your Overlord

  1. Excellent advice, Booby. The young would he wise to extend your advice to their other problem areas.

    2 years in community college to complete general education requirements and 101 level classes in your major will cut educational debt in half.

    Laying the foundation for your career in a moderately priced city at a lower salary will put you in a better position both financially and career wise a lot earlier. You can then choose where and how you want to live.

    ——
    I was a fool for the Grand Torino when I was a teenager(70s). The time and money I spent on that still make me cringe.

    Liked by 1 person

    1. Excellent points, oldvannes.

      The Booby did the first two years of his BA at a community college, and it saved the Booby a bundle. Those who were too good for that sort of thing graduated with piles of debt.

      Like

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