Personal Expenses Mangement – Eight Things You Should Not Buy New

Thanks Angie. I’ve been a newbie for a while but you’ve enlightened me on some alternatives. I’ll definitely keep this in mind next time I take out my wallet for a purchase. Any ideas on restaurants or second hand bottles of wine?

My dad was a mechanic and always bought really, really used cars. I bought a few used cars at first, but several of them died – so I bought a new car. Its a Chevrolet Aveo. Would I do it again? Maybe not. But it wasn’t that bad. Our second car was used however, and it seems to be pretty good as well…so in the future I will probably buy “slightly used.” The problem is going with the stuff that is really used.

I agree with most of the points made by the author except the point about cars. The author does not take into consideration cost of maintaning and repairing a used car. If you do buy a new car and are not too particular about having the latest model every few years buying a new car and driving it, till it dies saves on an average $20,000. The used though being cheaper does not have the same time period and the user will eventually have to buy another car and go through the same costs again. Extended warranty (not from the manf.) will further increase the life-cycle of the new car.

Dave:

You’re kidding, right? The average car payment in the US is $378. That’s $4536 a year.

A reliable used car can usually be maintained for less than that.

Buying new cars just doesn’t make sense.

And extended warranties make absolutely no sense.

Buy a used car and save the car payment. That’s what rich people do.

Michael Knaply:

You are missing the point of using the new car until it completely dies out therefore saving you the cost of buying another car again.The used car you are going to buy will not last the length of time. This is assuming you do buy a reliable model.

@Dave:

I think you’re missing Michael’s point.

You could buy a new $20k car and use it for 10 years…

Or you could buy a 3 year old model of the same car for $11-12k and use it for 7 years.

Oversimplifying a bit, the cost of a new car over the period of ownership is $2k/ year, vs $1.6-1.7k for the used car.

The value of this strategy is especially obvious if you compare owning a new car for 7 years (more realistic than 10) with buying a 3 yr old car and using it from years 4 through 7. In this case, the impact of maintenance costs on the calculations is lower.

My experience suggests that of the total maintenance received by a car over 10 years, the first three years accounts for <10%, excluding regular oil changes and similar. The next 4 years account for maybe 30%, with the bulk of the maintenance required later in the car’s life.

So if you can verify that the car’s condition is pretty good, the used car is a better value, hands down.

If you are buying a Refurb Apple product be sure it is Apple Refurbished & sold by an authorized Apple Retailer, so it carries a full one year Apple factory warranty. Check http://www.PowerMax.com &
http://www.SmallDog.com and of course look for the refurbs at the online Apple Store too. (Special Deals are at Lower left side of Store page).
http://store.Apple.com

Always check eBay. We just built a new home and were able to find all kinds of things on ebay for half price or better. Every sink and faucet was from ebay and even things like wire for the range and stove. What is scrap to one person is enough to do the whole job for someone else. This goes for new homes or fixing up older ones. If you can plan ahead and wait a week to get what you need, you’ll save big.

I agree with almost all of your suggestions…except the part about Apple products! Used iPods are fine with me and probably with anyone else who doesn’t really want to ruin their eyesight squinting at a 2″ version of The Office. But I hate getting a used computer with the AppleCare half used up. Great suggestions though.

Great article! Thanks.

1) It’s illegal to sell a CD after you’ve made a copy of it? This is a serious question. Was it illegal to sell an LP (that’s a record, people) after you made a cassette tape of it? Again, not sarcastic, just curious.

2) Angela, someone may have said this and I missed it (skimmed), but we have an Amoeba in L.A. now, too. Maybe there are more? Anyway, there are independent record stores everywhere, selling used CDs (and maybe breaking the law?) for a fraction of the cost.

I clicked on Blufly and went to shoes. The first pair I saw was $237-ouch! Why not recommend Zappos?

I will never buy a brand new vehicle again. They depreciate as soon as you drive them off the lot. Certified pre-owned is the way to go!

As a young mom (meaning I’m new to motherhood, not that I’m young in age), I was interested in the sites that you outlined for used maternity clothes and baby items. I do think that there’s a lot of potential for the market but with shipping and handling costs, it doesn’t seem to be very practical right now.

My husband and I recently came up with the idea http://www.happyloaner.com which allows you to borrow items from friends, acquaintances or people in your general community. I found that people had become loath to loaning out items–we lose track of our things and never get them back. Happy Loaner is a very simple way to track items and sends an email reminder to both parties when the item is due back based on a date you’ve determined.

Used cars are clearly the way to go, in terms of sheer value for your money (and lowering your environmental footprint). My problem is that I can get 0% financing on a new car and only 7.5% on a used car, so it seems that the new car will actually be less per month for me. Am I missing something?

I used to subscribe to NetFlix and Blockbuster (at different times) which are good services, however, when I got TimeWarner cable, I canceled my subscription. TimeWarner has on demand movies that you can watch for $3.99 and since I’m not a big movie watcher, this made more sense for me rather than having a subscription that I pay $6 a month for regardless of whether I rent a movie or not.

Another good book site is fetchbook.info. But I agree, you can’t beat the public library! Since I’ve been short on funds lately, I’ve been using the library more. It’s also a good way to preview a book before buying it. That way you don’t end up buying something that you later find out is not what you expected. If it’s a book you really like or you haven’t been able to get through it as quickly as you’d like, renew it! Unless it’s in high demand, most books can be renewed several times. You can also rent DVDs as well from the library.

My favorite store to shop in is any store going out of business. I wait unti the prices drop to 70% off and then stock up anything that I know I will use and can’t spoil or go bad. Favorites are compact flourecent bulbs, band aides, tooth brushes, paper products and shampoo/soap/laundry soap. I keep going back every few days and watching certain ‘big ticket’ items. Recently a Linens and Things store was having a Going Out of Business sale and on the last day we picked up enough luxurious bath towels to last a lifetime at 10% of original price or $2-3 each! We also bought 4 down comforters for under a hundred dallars! (The people working in these stores may be loosing their jobs, but if you speak to them and tell them you are sorry that their jobs are ending, it makes them feel a lot better.)

re: Car buying advice, you will be driving on public roads. There are idiots driving other cars on these roads. You do not control the idiotic behavior of said idiots. Your idea of buying new and driving a car for 10 years depends entirely on the naive perspective that believes these idiots are not going to demolish your precious new car.

Hopefully they at least give you the ability to drive around long enough that you aren’t caught upside down, and that means you need the foresight to allow the dealer to ream you for gap coverage. Most of the idiots will at least let you get right-side up before they decide to destroy your purty new automobile, though the chances of the vehicle being 100% paid-for are relatively slim since most people who think they will drive a car for 10 years have no problem financing that purchase over 7 years so they can get either a nicer car or lower payments. Yup, 84 consecutive months where YOUR money leaves your account and goes into the pockets of a manufacturer who makes cars. Dumb, de dumb dumb; dumb, de dumb dumb DUMMMMMMB!

Pay cash for cars, and you will suddenly understand exactly how much car you can afford. My 2000 Accord DX was bought in 06 for 10k cash drive-out, and other than oil changes, has needed zero maintenance until this year (08). This year, it needed the A/C compressor valve thingy fixed, a new timing belt, new tires (60k mile rating), and a few filters. Grand total $1250 in maintenance on an 8 year old car, and that’s basically the first maintenance required on the vehicle in at least the last 2 years. But to make it less of a landslide, we’ll count that as the total maintenance for 1 year, so $100 and change per month in maintenance cost. What car can I buy for $100/mo that doesn’t require a 15 year loan? Guess it’s a landslide anyway.

Insurance payments may be higher than monthly loan repayments? I plan on shooting for that the rest of my life, as my monthly payments will never go over ZERO again.

A fool and his money soon part ways…

Wealthy people pay *cash* for *used* cars. They don’t pay the 20% premium for driving a new car off the lot, nor do they pay a penny in interest. That’s one reason they are wealthy.

You can be foolish or wealthy. It’s a choice.

I basically agree with this post and would like to add some of my own:

1. CDs/ DVDs – I borrow from friends and if I really liked it, I just burn a copy

2. Bookmooch.com really works for me. I have also set up a personal blog where I could post books I would like to trade

3. The web has also given me some nice deals when it comes to clothes. You really just have to b extra careful whom you deal with online.

“Wealthy people pay *cash* for *used* cars. They don’t pay the 20% premium for driving a new car off the lot, nor do they pay a penny in interest. That’s one reason they are wealthy.”

What is your definition of “wealthy”? Is it really rich like Donald Trump and Co? Do you seriously believe Donald Trump or Warren Buffett buy used cars? Have you asked them? Does Paris Hilton drive used cars?

How many wealthy people do you know? How many did you talk with? Do you have some statistics of wealthiest people in the US and the cars that buy?

OK I am neither rich nor wealthy. I think I am “comfortable”, but it depends on your definition. I have no debt; my mortgage is paid and even with over 100K loss in the value of my investments this year (causing my net worth to drop into 6 digits category… ouch), I can still afford to pay cash for a new car without wiping out the cash/CDs part of my savings. And guess what – I do buy new cars. No, I don’t pay interest, not anymore, I did have a loan on my first new car (in 1987) for about half of its value. This was my 2nd car overall, my very first car was used, and in 3 years I spent more in repairs than the premiums on this new car. Now I pay cash for new cars, although if someone were to offer me a loan with interest below that of what my money earn on CDs after taxes, I would take it.

I also have several friends with considerably higher net worth than mine – easy 7 digits in investments alone. They buy new cars too. They simply don’t have time to bother looking for an old car, checking it, etc. Some of them simply like new cars. Others just got burned on a used car or don’t have time. Yes, they pay cash for it, but they do buy new.

“As soon as the tires hit pavement, it’s only worth the wholesale value.”
Only if you try to sell it but not if you total it. But to me the car is not an investment. It is means of transportation. So I want the most reliable means of transportation possible. I don’t buy extended warranty ever, but I do like original warranty. I don’t understand much about cars; but I find it suspicious why would anybody sell a good used car unless there is a problem. Sure, some used cars are good, but I have no way of knowing.

If you don’t plan to sell the car, then the only loss you need to fear is that in an accident. But in case of a total loss, you get retail, not sale. I know because I totalled my 2003 Toyota Corolla in 2006.

“Then it drops 15-20% per year for the first three years. ”
Depends on a car. The amount I got for my Toyota Corolla from the insurance company after 3(!) years was only around 20% less than what I had paid for it. If I remember correctly I paid 16K out the door. I got 13K. This was after 3 years.

Certainly, if you cannot afford a new car you shouldn’t buy a new car. But don’t make blanket statements as to what wealthy people do or don’t do unless you have data to prove it. There is nothing wrong with new cars – if you can afford them.

To save on takeout, cook at home.
Try potluck as an alternative to dinner parties…
Instead of cooking for everyone, get everyone to bring a dish.

I’m glad they didn’t say tv’s. I just bought my first tv in 8 years. I got it at 300 dollars off the normal price.

I would buy a new car if you plan on driving it until the wheels fall off. I bought my first car brand new in college. It was a 2000 Honda Civic EX coupe, plus I got it for less than invoice (it was a newspaper ad car, you know how its 1 or 2 at this price). I was able to pay cash out the door and it been reliable 9 years later. I see no problem with this car going another 10 years since I only have 70k miles on it. I just love my car. The memories with my car is priceless. I just hope it doesn’t get stolen or totaled in an accident.