Sunday, April 13, 2014

Living On One Income, Part Four

Still with me?  Got some gears turning on how to make your housing expense a little lower?  Now let's focus on another biggie for the budget.

Next to housing, autos are usually one of the next biggest expenses.  It's actually not unheard of for people to pay almost as much on their auto loans as they are on their housing.  So let's take a look at how to cut your car/truck/SUV expenses.

Number one, be happy with less.  Do you really need the super cool model with all the gadgets?  Do you know how to drive a stick shift?  A vehicle with a manual transmission, while becoming more difficult to find as less and less people know how to drive them, is cheaper right off the bat than an automatic.  If you are shopping for a brand new ride, ask the dealer what the price is on the same make and model with a manual transmission.  Most likely they won't have one in stock, but if the manufacturer makes that option, it can be ordered for you if you are willing to wait a little bit and not drive your brand new vehicle home tomorrow.

Also cheaper is a one year old model versus a brand new one.  They can be sitting side by side on the lot, and most likely look pretty identical (being an auto engineer's wife, I've learned a few things over the years--big huge changes don't usually happen from one year to the next in car design or performance) but the one from 'last year' is going to cost less.

If you can get it out of your head that you have to drive a new car, and just be happy with new-to-you (a nice way of saying "used"), the savings is even greater.  And if you can be patient, and save up the money for a vehicle so you can pay cash instead of getting a loan, you will save more.  I do realize most people cannot save up that much cash.  Let's be mean again, though, and say with brutal honesty: most people want to drive a fancier, newer car than they could ever pay cash for.  Once you are willing to change your thought patterns, a whole new world of options opens up.

When DH first got hired directly with his employer, after working for them for over three years via a contract engineering firm, we were excited about his new ability to purchase brand new vehicles with an employee discount.  In fact, the first time a big repair loomed on our 14 year old, 200,000+ mile vehicle that he'd been driving, that was a great excuse to go buy a brand new, custom ordered (because he went with a manual transmission!) small pick-up truck and use his employee discount. Woo wee!  Weren't we cool!  Brand new truck for several thousand less than MSRP.  Except that brand new truck that we 'saved' so much money on with his employee discount came with an interest rate from our credit union, who'd given us the loan to purchase that truck with, and a big insurance bill for full coverage (as required by terms of the loan) on a brand new vehicle.  Ummm, not such a savings after all.

We made notes to not do that again.  So when the next vehicle needed replacing (hard to fit 4 kids in the backseat of a car; with baby #4 on the way, it was time for a minivan. . .) we went a slightly different route.  Instead of buying brand new with employee discount, we tried company used through a program where DH's employer uses a vehicle as part of their fleet (perk for the VIPS and upper level engineers) for six months or so, then sells it.  It qualifies as a brand new vehicle as far as loan purposes go, but you get a discount based on how many miles are on the odometer plus you get to use your employee discount.  We bought the next two vehicles this way, before we realized that not having to take out a car loan at all would be the smartest thing to do in the future.

So that is how we've done it in the last five years.  If we needed a vehicle, we looked at how much money we had on hand (or might be coming in--tax refund!), and started scouring the used car sites for the makes and models with the options and price range we were looking for.

Back to the brand new/company used vehicles for a minute.  We realized, after purchasing (and going into debt) for them, that the smartest thing to do would be drive them to death.  In other words, not sell them off or trade them in after two or three years for even newer ones, not even to sell them after they were paid off (in four or five years).  But to keep them and drive them until they could no longer be kept running.  Hence our string of vehicles that we drove to over 200,000 miles before replacing.  Currently our family truckster, the Suburban, sports 186,000 miles.  It is our youngest vehicle (the last one we bought on a loan, company used) at 9 years old.  We should be able to get at least five more years, and about 64,000 more miles out of it before it becomes a judgement call between repairing whatever goes wrong at that point (based on life expectancy after the repair) or replacing it.

An option I have absolutely no experience with, because our research revealed that with the amount of miles we usually drive, plus hauling four kids around (and incurring all the spills, stains, dents and dings that kids put in a vehicle), is leasing.  Some people say leasing is a good deal, because when the lease is up they just turn the car in and no longer have to deal with an aging vehicle.  Like I said, we never tried it, because when we ran the facts and figures for our wear and tear on a car, leasing was a losing proposition for our family (we definitely would have owed money at the end of the lease for the extra miles or the 'damage').  That is a decision you will have to make for your family, and if it does save you money both now and a few years down the road when it's time to turn the car in, go for it!

After cost to purchase a vehicle, there are two other areas to look at for vehicle expenses: insurance, and maintenance.  If you have a loan on your car, you don't have much leeway in how you insure.  The company who issued to loan wants their risk covered, and therefore requires you keep full coverage insurance on the vehicle.  Once the loan is paid off however, or if you managed to pay cash in the first place, you have more options.  You can insure it fully, or just for collisions with other vehicles, or just for things like deer hitting your car or trees falling on it, or with the bare minimum required by the laws of your state in order to drive it on the road.

As for maintenance, in some ways that has become a lost art.  So much computerization of cars has made it harder to be a home mechanic.  Harder, but not impossible.  You can still learn how to check fluid levels (or at least where the ports are for when the readout on the dash says your oil level is low, or you need more washer fluid!)  and then add the necessary fluid.  You can air up and rotate your own tires.  You can learn to do the repairs that don't require highly technical tools. In fact, for almost ten years, our basic car repairs were done by our teenage sons.  If a 13 year old boy can do simple repairs with a few wrenches, so can you!

And for the repairs that are beyond your scope--or your tool box--you can find a good local mechanic, often a small sole proprietorship, to do the repairs for you instead of a chain place or dealership.  Anything that DH can't fix, since our boys grew up and left home (boy, does he really miss then when the vehicles break down!), goes to the small shop in the village owned by a family who lives nearby.  Their prices are lower than the dealerships, and they are always willing to take a look same day as you call.  When their ability to put food on the table for their family depends on word of mouth advertising and satisfied customers who come back time and time again, they will do good quality work.

To Be Continued. . . 

No comments:

Post a Comment