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Thursday, January 29, 2015

Do you really NEED a new one?

"Distinguishing between needs and wants, and controlling the urge to spend over your budget on the wants, can be the difference between making a recovery and falling back to rags."

do you really NEED a new one?

Your car is old and seems to break down more often than it should. Your smart phone isn't so smart anymore; it glitches, and stalls, and runs out of memory right when you're trying to do something important. You're tired of wearing the same clothes to work over and over again.

You need to upgrade. (or so you tell yourself.)

iPhone options
image from slashgear.com


But do you really need to upgrade, or do you want to upgrade?

Distinguishing between needs and wants, and controlling the urge to spend over your budget on the wants, can be the difference between making a recovery and falling back to rags.

That old clunker

Remember that morning you got ready for work, jumped in the car, and heard that dreaded "click" - the battery didn't start. And then your emotional frustration kicked into high gear: You spent $300 last month because your car needed new brakes and rotors, and $500 a couple months back on a new timing belt. And now this?! Stupid blankety-blank piece of blank car! (this has happened to me more than once.)

Too old. Too many miles. Too unsafe. Too unreliable. Too much money being spent on something you don't like anyway. You continue to dwell on all the things you don't like about that old car, building each one up as a significant reason to ditch it for something new.

And then comes the moment of truth: Is it time to buy a new car?

new car
image credit: freeconsumerwatch.com


A new car will buy you piece of mind, reliability, comfort, and pride (at least until that new car feeling wears off.)

However, that new car will come with a new car payment - let's say $300/mo for the sake of example. That's $3,600 per year your going to spend, like clockwork. Oh yeah, and in the 3rd year you'll have the extra bonus of buying new tires and brakes as well.

Your old car may be costing you more than usual lately, but I doubt you're spending $3,600 per year on it. Maybe you want the new car more than you need it..? If you're considering allocating $300/mo towards a car expense, you could start by saving $150/mo to build a car repair fund for your current car. It would be easier on your budget, and then these old-car repairs won't be such a big deal - you'll have money available for just that purpose.

My Story

Personally, a couple years ago I was driving a 1998 Toyota 4Runner with over 300,000 miles on it. At the same time my wife was driving a 2007 Honda Accord with about 150,000 miles on it. Both cars were paid for, and both cars were regular visitors to the mechanic shop next door to my office. (2-3 breakdowns per year per car meant that just about every-other month we had a car issue.)

my Toyota 4Runner


We were frustrated with the number and the cost of the repairs, but I couldn't justify adding a new car payment to the mix. On a side note, due to our family's size and the activities we enjoy, we needed to have at least one larger-sized car, so trading the 4Runner for a compact or sedan wasn't an option.

Then we reached a tipping point. The 4Runner started acting funny, and the mechanic diagnosed repairs that would cost about $3,000. (The car was worth $1,000 on KBB at the time.)

We sold the 4Runner for $1,800 cash, and bought a Honda Pilot with a payment we could manage.

The good news is we now have a very reliable car for traveling and for my wife & kids' daily use - I don't worry about them anymore. The lucky news is that the Accord has only needed one small repair since then - knock on wood! The other good news is I was able to reduce our "car repair" budget, since I'm only budgeting for one car's breakdowns right now. The bad news is we're spending money on the car now, each and every month, whether it breaks down or not.

In the end

I'm not here to tell you that you need to live a minimalist lifestyle without any nice or new possessions, or that you're not allowed any luxuries. And I'm certainly not going to point fingers and call names if don't choose the least expensive option at every turn. However...

When you're trying to rebuild your financial life, and you're scratching to save a few dollars here and there, distinguishing between a want and a need can be the difference between getting yourself up into the black or falling back down into the red.

Make good choices, consistently and over time, and you'll get to where you want to be.

-Chris Butterworth


On Amazon - a couple related items you might find useful:

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