Rethinking the Conventional Wisdom on Used Cars

Just about every PF-type site out there has a post about how buying a used car will save you tons of money over new. So when my parents gave me some money for a car last month, I immediately decided to buy a used one. I've been looking for about three weeks now, and I'm really rethinking this used car idea.

First off, it's really hard to find a late-model used car that hasn't obviously been abused. I've looked at cars with water in the trunk, cars with black stuff coming out of the tailpipe, and cars with both. I've got one good prospect so far - a friend of mine's job pays to lease her a vehicle, and she'll be trading it in next month. It's a 2006 Infinity G35 with 35K miles on it. I know that she's a cautious driver, and I had my mechanic check it out, and he says it's in good shape. I can get it for $19,150 (not including taxes and fees).

I assume that I am going to drive my next car for 10 years and 150K miles. I deduct years and miles accordingly for a used car. So my friend's Infinity has about 7 2/3 years left on it. And a new car would have 10 years.

The new cars that most appeal to me are the 2010 Ford Fusion Hybrid and the Acura TSX. According to Consumer Reports, the pricing for the Ford in the trim I want is $30,094 (without taxes) and the pricing for the Acura is $33,463. Tax is 8.5%, so I'm guessing 9% including all fees. So the total cost for the Infinity will be $20,873.50; the Ford will be $32802.46; the Acura will be $36,474.67. So the Infinity is $2722.63/yr; the Ford is $3280.25/yr; the Acura is 3647.47/yr. In other words, the difference is $557.62/yr for the Ford and $924.84/yr for the Acura.

But the price difference alone does not capture the entire story, because the maintenance in the first three years of ownership can be expected to be negligible, with costs rising as the years of ownership increase. So the gap between the ownership costs is smaller than even these numbers.

Is the increases uncertainty of buying a used car really worth $46.47 a month or even $77.07 a month in savings versus a new car?

In my specific instance, there is another factor. According to my mechanic, Infinity parts are both expensive and difficult to obtain compared to other luxury car parts. So when I have to do maintenance, it will be more costly than either the Ford or the Acura.

So it looks to me like, while I'd save money up front buying used, over the life of the car my savings would be negligible to none, depending on how much maintenance the car requires over its lifespan.

There is one way that buying used saves money - if you buy a clunker that you expect to last a year or so. Then when the car breaks, you have less invested in it, and you just trade it in on a new one. If you could pay $2K (in today's dollars) per car over 10 years, and you did no maintenance on any of them, then you could save money. However, the cars that I've seen bought in this price range tend to be not only unpleasant but also unsafe. Not only are they 8-10 years behind on safety features, they usually have structural or engine problems that make them more difficult to drive safely. Now that I don't absolutely have to, I'm not willing to drive cars which compromise my safety to save money. (I don't understand drafting behind an 18-wheeler to save money either.)

I still haven't quite decided, but I'm seriously thinking of jumping off the used car bandwagon and getting a new car in the mane of long-term economy. What would you do?

How much would you spend on ...

J.Money over at Budgets are Sexy has an interesting thought exercise up - how much money he would spend on various items.  I decided to take the idea a step further and try to remember (1) what I spent on the last item of that sort that I purchased and (2) the most I've ever spent on a similar item.

CATEGORY Purse (or Wallet): Winter jacket: A pair of (knee-high) boots: Formal dress (or suit): Pants (inc. jeans): Computer: Tennis Shoes:	J. Money $20 $100 $40 $100 $40 $1,500 $40	Krystal $200/100 $350 $250 $300 $150 $3,000 $250	Fab. Broke $200 $400 $300 $200/$100 $50 $1,000 $50
	Would $1000 $400 $125 $1500 $300 $3500 $150	Last $350 $25 $100 $165 $8 $3000 $65	Most $550 $150 $325 $800 $150 $3000 $125

Apparently, I'm willing to pay quite a bit more for these items than J. Money and (mostly) the other PF bloggers he polled. This is because, to me, most of these items are long-term purchases. For instance, the $550 purse was bought in 2004, it's still in nice condition, and I still use it. The $150 jacket was a fox fur jacket bought on ebay in 2003 and last worn three weeks ago. The $800 suit was bought in 2001 and used for interviews until I lost 30 pounds last year and couldn't wear it anymore.

It's not a typo that I'm willing to pay less now than my previous high price on boots. It reflects my high level of disappointment with the Irish Setter Snake Boots I bought for farm work at that price and how happy I am with my MuckBoots . Often price does not indicate quality, and I'm not hot to buy stuff just because it is more expensive.

The items that I don't consider long-term are computers and tennis shoes, but as a gamer and a runner, I've bought bargain-basement stuff and lived to regret it. I bet Krystal does something that requires good shoes as well. If I wore tennis shoes for less vigorous activity, I wouldn't be willing to pay nearly as much. As for computers, my non-gaming activities could easily be accomplished on a $500 machine. And actually, the numbers there are deceptive, as a generally upgrade my rig one part at a time - the 3K computer was a Mac for Mr. Goat to use for work.

I also haven't put my money where my mouth is on several of these items - I can imagine a situation where I would pay that much, but it hasn't occurred yet. And it's not like I don't like a bargain as much as the next person (see my last winter coat and pants purchases). So maybe this exercise doesn't show anything except that I like making tables with lots of numbers.

Christmas 2010 Savings Plan

This year, I've decided to start saving earlier so that I can have a bigger budget for Christmas in 2010.  In 2009, I saved $250 but ended up over budget by about $200 (fortunately, my husband agreed to use an anniversary present we received to cover the shortfall).  This year, I plan to save $500.  Since my housekeeper quit, that's a $85 savings already for next year (unless I get another one), so surely I'll be able to come in under budget.  I've already added a new savings goal at Smarty Pig and the first $46 will be coming out of my bank account tomorrow.  I can't wait to buy everyone I love fabulous presents next year!  Anyone else beginning to save now?

Saving money with a phone call

Well, I finally did a PF-like thing and saved money with a phone call.   I use Progressive Auto Insurance, and I ran a quote on my policy on their website, and came up with a number $24 / month cheaper than what I had been paying.  Made the phone call to Progressive to ask them to change it; found out I'd forgotten to include something and was only overpaying $22.50 a month.

According to the nice saleslady "We recently changed our billing rates in your state, and you would have gotten this new rate when we renewed your policy."  Since they just renewed us on 12/24/2009, I have my doubts.

Anyway, I went ahead and payed the full six months to get the slight savings and so that I could put it all on a credit card (I'll take cash back on anything they'll let me;). 

So I saved myself $150 for six months, although I imagine that I'll pay that and more when I add the second car (of course, I have to buy a second car before this becomes a problem).  But it is a nice reminder to check every once in a while whether my fixed expenses can be lowered without any diminution of service.

2010 Goals

What I am going to get done in 2010, by category, with all the steps I can think of to get there.

1) Religious / Spiritual:
     A)Never miss church unless sick or out of town. Can be accomplished by not partying so much on Saturday night that I oversleep the next day.
     B) Participate in a mission or outreach with my church.  We have a very tiny church, so we don't  do this right now.  However, I know I am not the only one interested.  I need to talk to the people I know are interested, find out what they would like to do, and contact organizations that do it to find out how we can help.  Then I need to arrange for a time and place.
      C) Read The Message: The Bible in Contemporary Language.  At some point, I believe that I've read every word in the Bible, but never through an entire edition.  I'm not sure if this will take me a week, a month, or all year - my plan is to start from the beginning and read as I feel guided to do so.  Can be done by setting aside the time every day, and not by putting it off until I fall over dead tired without having done it.
     D)Write every day in a prayer and gratitude journal. I was very touched by Debbie Macomber's Testimony as to the effectiveness of a gratitude and prayer journal on her life..  I must set aside a time every day to read my Bible and to write in my prayer/gratitude journal.
     E) Continue to Tithe. Figure out our 2010 take home and set up an automatic debit every month.

2) Health
     A) Maintain my weight between 145 and 155 pounds.  I just lost 30 pounds last year, and I am not sure where the best  balance between maintainability and healthfulness is yet.  This can be accomplished by going back to strict Weight Watchers point counting and regular exercise (see below).
     B) Swim or do Physical Therapy 4 times a week.  I want to get back into better cardiovascular shape and work on my core strength.  I am going to sign up for a gym on Monday and set myself times when I will swim, same times every day, every week.
     C) Do Physical Therapy Exercises Every Day. Continue to work on my core strength by doing the exercises recommended by my physical therapist every day.
     D) Practice Aikido Every Day.  I have been neglecting this, because I am not healthy enough to take the falls and such that I enjoy.  This year, I will set aside time every day to do the daily solo kata 6 times and to do 1000 cuts with the Bokken, both of which my health does allow.

3) Financial
     A) Pay off loan from relatives in the amount of $1000.  I have this set up to be auto-paid; I make the last payment in February.
     B) Pay off loan from relative in the amount of $30,000  In combination with my other financial plans, this will require an additional $927 a month that I am not sure where it will come from.  The easiest thing would be not to tithe this year, and use that money, but I have rejected that option because I feel that tithing is the only way that I am consistent in expressing to God my joy and thankfulness for his eternal love.  I am contemplating several small business ventures including a) buying things at yard and thrift sales and reselling them on ebay, b) restarting my old document review business on a less than full time schedule, c) finding a part-time job (this is contingent on finding more help for the farm), or d) turning old feed bags into shopping bags and selling them on etsy or similar.  It will be hard, but if I can pull this off, the only debts I will have left are one more family debt and a school loan at 1.65% APR.
     C) Fully Fund 2009 and 2010 Roth IRAs.  I have funded Mr. Goat's 2009 Roth and I have the money for mine, but I want to make an appointment with my financial adviser to discuss mine when I deposit the money. (I have until April 15, 2010 to get this done).   The 2010 money should mostly come out of the present that my parents gave me, if I can find a nice car cheaply enough.  Since we don't get employer matches, I have limited our retirement contributions to Roths until we are debt free.

4)  Dreams
     1) Write something besides this blog.  I plan to purchase the 2010 Writer's Market and see what is out there.  I'd like to enter a couple of short story competitions this year, and maybe even try to get paid for writing, if I see something that I think I can do (and the editors will take unsolicited stuff).
     2) Learn how to Accompany on the Piano.  I'd like to be able to accompany people when they sing.  My Dad, who plays the piano, has offered to give me lessons on Monday afternoons.  I also need to set aside about 30 minutes a day to practice if I plan to make any progress.
     3) Get officially affiliated with a dojo.  Since there is no dojo for my Aikido system in my area, I've not been affiliated with any since I left Dallas.  Once I get well enough to travel, I need to figure out whether I should have the guys in Houston or Dallas be my teachers and get a regular training schedule going.
     4) Keep up with my Chinese.  I've let my Chinese lapse again.  My plan is to write characters every day, so I don't forget my vocabulary.  If I add a new character every day, then by the end of the year I'll be writing 365 characters every day, and in a few years years I'll be writing all the ones I learned, everyday.

5) Prosaic
     1) Practice with my carry firearms at least once a month.  This is the bare minimum, and I have not been making it.  Of course, I'm also so full of pain medication that I don't carry right now, but I have high hopes that I will soon be carrying again, and then I'll need to be in practice.
     2) Keep my house in a reasonable state of neatness.  My housekeeper quit yesterday and I've decided not to replace her.  I'm hoping to be able to keep my house in a reasonable enough state of neatness that I don't go crazy. This isn't a financial-based decision, it is because Mr. Goat hates having people in his house messing with his stuff.  We'll see how this goes - I may need to get some kind of monthly deep clean service to keep up with myself.  But it's not as though my late housekeeper really kept up with me - the house was never in good enough shape for me to be comfortable having company over.  So I'd just as soon live in a pile of mess for free as pay for it.

In Summation:
What my goals will require for implementation is time.  I believe that I can come up with this kind of time by cutting down on the time I waste on things which do not reflect my value system.  I am going to cancel my subscription to Aion because I spend my time playing it stressed, not relaxed.  I also need to cut back on my internet browsing; I spend way too much time reading news and blogs.  When I canceled my online WSJ subscription I thought it would help, but honestly there's not much difference between the paid and the free content on their site.

In 2010 I will spend my time with projects and people that reflect my goals and values.  I will not allow inertia to steal time, my most valuable possession, away from me.

Used Car Shopping, Day One

I went shopping for a car for the first time ever today!  (OK, the first time ever to buy a car for me, but it's still exciting).  I took my little brother along with me; he trained to be a mechanic for a while, and cars are his hobby.  I tested, in order:

An 07 Honda Element -  verdict: If I want to drive something that feels like a big, stiff, bumpy truck, I'll get a Dodge Dually and have something that can do real work.

An 08 Honda Accord - verdict: virtuous, but boring.  It had a pretty low trim level though; I might look for something higher.

An 08 Acura TSX - verdict: good.  Smooth ride, seat and steering wheel fit well, headroom felt a little cramped, but my 6'1' brother fit just fine, so it's a feeling, not a reality.

An 05 Acura RSX  - verdict: better.  The best fit I drove all say in terms of seat and steering wheel.  A bit more road noise than the TSX, but the model I was driving was kind of a junker; I'm looking forward to finding one that has been better maintained.

An 08 Honda S2000 - verdict: a poorly maintained death trap, but cute.  The one I tested was red, with some of the body panels replaced with a black racing material.  The seat belt warning dinged at me for my entire test drive, which was quite amusing.  According to my little brother, all signs pointed to the previous owner having left it out in the rain with the top down.

An 06 Infinity G35 - verdict: drove nicely, and decent comfort level.  Liked the Acuras better, but want to take a longer look at their model lines, depending on pricing.

Shopping for a new car sure is fun!  Especially since I plan to have my cousin (who used to sell cars and mobile homes) do all the negotiation. 

Homemade Detergent, How Much Do You Save and is it Worth It?

In August, I made my own detergent for the first time.  After lobbing half a bucket of kitty litter's worth of detergent into my washing machine, I ran out in the middle of November.  I had every intention of making more detergent that weekend, but then I got lazy.  And then XTRA detergent was on sale for $1.99 a bottle, so I decided to try it.  If you haven't see it at the store, it looks like this:



As I still had half the box of washing soda left over from the last batch, though, I figured I had to make at least one more batch.  This time I decided to try Recipe #9, which is a dry recipe, in the hopes that it would dissolve (I have a front load washer, with a little cup for detergent, but the first recipe did not dissolve in it, I had to chunk it directly in).  I made a 1/8 sized batch where I pretty much followed her recipe (using Ivory rather than Fels-Naptha because I can buy the former locally), but didn't have any baking soda, so I omitted it, and it dissolved really well.  Then I bought some baking soda, and added it in, and there seemed to be more residue left behind.  So I only put two cups of baking soda into the 1/2 recipe batch I made to use up all the rest of the washing soda.

Cost: Washing Soda - $4.23, Borax - $3.00, Baking Soda - $0.58, Ivory Soap - $1.19   Total = $9

I'm using 1/8 cup per load, so figure about 128 loads, for a minuscule amount more than  $0.07 per load.  This is way cheaper than my last batch, where I estimated that each load cost about $0.16, mostly because Ivory is cheaper than Irish Spring, which I used last time because it was what was lying around and because I can't find washing soda locally, so it is my most expensive ingredient, and there's a smaller proportion of it in this recipe.

For comparison, the XTRA detergent claims 28 loads (although really it's probably more like 25 because it is hard to measure exactly), and cost 1.99 + tax = $2.15, so each load costs me slightly more than $0.075.  But it was on sale for 1/2 off, so each load would usually cost (3.99 + tax = $4.31 / 28 =) slightly more than $0.15 per load.  That's 2.5 times as much.  Figure I do six loads of laundry a week (I work on a farm), this homemade detergent is $21.93 annually, XTRA on sale is $23.96 annually, XTRA regular price is $48.03 annually, last time's detergent is $49.92 a year, and Arm and Hammer (what I bought at the beginning of the detergent odyssey) is $62.70 annually.  So I am saving $40.77 a year vs unthinking laundry purchases, but only $2.03 vs bargain detergent on sale.

This doesn't count the Major Frugal Fail I made with regards to the container. I wanted something smaller than the kitty litter box I used last time,so I went to Bed, Bath, and Beyond and bought a cute little airtight container with a pop-off top, which cost me $7.77, making the real cost of each load $0.13 each unless I can amortize the container over multiple batches of detergent.  Some times I think that Debt Ninja is right to say that men are more naturally frugal than women; I bet most men would have used whatever container was handy.
 
So the real question is - is it worth it?  As far as quality goes, I could not discern a difference between the last batch and a commercial detergent, and my three test loads seem to indicate that the new batch will perform equally well.  So then it's just a matter of how much time it takes, which is probably an hour or so per batch.  It takes about 5 minutes to mix up the dry batch; the rest of the time is spent tracking down and purchasing the ingredients.  I'll probably need to make about three batches a year, so that's about three hours, paying me $13.59 an hour to make my own detergent verses unthinkingly buying the brand I always use or $8.70 an hour versus buying bargain laundry detergent.  This is worth it to me.  (Remember that saving money this way is like "earning" money tax free, as goods are paid for using hard-earned after tax dollars.  So I am calculating based on what I consider my time worth after taxes are deducted).

I could also stock up on bargain laundry detergent when it goes on sale and save about the same amount every year.  I am not sure how much time this would take; it would depend on the frequency that bargain detergent goes on sale.  My impression is that it goes on sale pretty regularly (this week, for instance, Walgreens brand detergent is on sale for $0.07 per load in my area), so I'm guessing this could also be done in about three hours a year, or less if I had enough storage space to buy it just once or twice annually.

So I just have to decide if I'd rather spend my time shopping for deals on detergent or making it myself.  The one thing I am sure of is that I'm not going to pick up premium detergent unthinkingly again.  Which would you prefer?