Nov 17 2008
Looking for a better deal to save money
Let me blog here a bit about panic selling and trying to save money.
My husband, bless his heart, is a very good reasearcher and lets-fix-it planner. When gas was about $3 something per gallon he researched selling his truck (16 MPG) and downsizing to something more economic. After picking out three or four vehicle options that met his needs, we talked about how and when.
Something didn't set right with the concept in my mind. So I put a spreasheet together calculating the purchase price (of various new and used models he selected), cash down, loan amount, monthly payment, average MPG and compared it to his current vehicle.
Part 1: We owe $2400 on the truck at $310/month, and it's close to being paid off. We can't sell it for bluebook value due to the market being flooded with gas-guzzler trucks and SUVs. So we'd be lucky to walk way with $6K cash after it's paid off. Buying a new vehicle is nice, but it would increase our debt, monthly payment and length of payments another 4 years. The only cost-saving solution over time would be to buy a more economical vehicle with cash. Period. And what can you buy that will be under warranty or reasonably reliable for $6K? So we exchange a $310/month payment (that ends in about six months) for unknown vehicle with unknown problems. Not smart.
Part 2: When you calculate out the difference at $4 per gallon for a 16 MPG vehicle being driven 36 miles a day vs. a 24 MPG vehicle ….. you know what the difference is in commuting gas cost over a month? About $60.
Conclusion: To save $60/month we can become indebted for another 4 years of car payments? How does that save money?! Guess what? Three months later problem solved: gas prices drop 20% and my husband is carpooling to work. The carpooling alone is saving us over $90/month even if gas goes back to $4/gallon.
Moral of the story: Take time to compare your options carefully and run the numbers. Following the market trends may not be the best solution for your pocketbook.
