November 30, 2019
There’s no other way to describe it. Outrageous Extravagance!
In an uncharacteristically spendy move, the Strong Money household has let loose with the purse strings this month. I opened up my wallet, let out the family of moths, then dusted off the old debit card and swiped my life away.
It felt naughty and strange at the same time. And if I’m being honest… a bit exciting. So, what the hell am I talking about? What did we buy?
Now, maybe you’re thinking, “Dave, who cares!?”
OK, I get it. People buy cars all the time. So why does this rate a mention? Am I running low on content ideas?
The truth is, I’m talking about this like it’s a big deal… because it is a big deal! A purchase this size should never be taken lightly. Instead, it requires examination, questioning and even some soul-searching.
But to be honest, the end decision matters less than your willingness to question yourself over it. Because it’s this layer of scrutiny – this filter – that helps you make drastically better financial decisions, creating the difference between a broke employee and being a wealthy, free individual.
Well, despite being nicknamed “The Rolls,” and “The Limo” for the last few years… it was anything but!
Our old car was a dinged-up 2000 VT Commodore. I bought it almost ten years ago for $4k. It had low kms and the price was freshly discounted thanks to damage from a bad hail storm in Perth at the time.
Since I was saving aggressively to build an investment portfolio for Financial Independence, I wanted to spend as little as possible. So forking out much more than this was not even on my radar! I had zero interest in the car’s aesthetics, so the hail damage was actually preferred lol!
This car served us well over the years. But it had reached the stage of increasing upcoming repairs… where once you start taking things apart to fix one problem, other issues are very likely to pop up and it soon becomes a game of whack-a-mole.
The hoses needed replacing, oil was leaking into the coolant, it needed 4 new tyres and the rego was about to expire. The immediate or near-future costs were multiple times the value of the car itself!
And given we couldn’t limp The Rolls along until the robots take over (more on this later), we figured we’d need to purchase another car anyway. So, with those excuses out of the way, let’s dive into the details of our car-buying experience.
How did we decide what type of car to buy? Window shopping? Best finance deal? The sexiest SUV in the market? Bzzt. Nope.
We sat down and thought about what would be a sensible choice based on our needs. There’s only two of us, plus our dog, so a small hatch is more than enough. We wanted something reliable, fuel-efficient and with enough space for bags and the dog when we go on road-trips around WA.
After reading too many car reviews, we narrowed it down to either a Toyota Corolla, or Hyundai i30. Both cars rate well by customers and car sites. And both models have a good reputation, though Corolla more so due to its longevity.
After looking online for about a month, we had a decent idea of which were reasonably priced and which were not. At that point, we found a couple we liked and went shopping for our new car!
Before I reveal the car we bought, I’ll tell you which car we didn’t buy. It was a very well-priced Corolla in a burnt-orange colour. I’m not much for colours, but this one was quite nice.
Anyway, we rolled up to the dealer, wandered around the vehicle having a look. We sat inside and the condition was good. I got out and went to open the hatch. Looking at the space inside with me, the dealer said (with a straight face), “you could fit a couple of dead bodies in there.”
I smiled and assumed he had a dark sense of humour, while at the same time being surprised and thinking I’d never say something like that to people I’m trying to sell a car to – whether they got the joke or not lol.
We hopped back in the car and looked around as he went to fetch the keys. He came back and we started the engine… well, we tried to. It wouldn’t start! So, off he went to find jumper leads. We decided to play around with the screen and tech while we waited. But that wasn’t working either!
It wasn’t looking good at this stage. After a few minutes, the dealer returned. He lifted the bonnet and grumbled to us, “Bloody youngster left these under the bonnet of another car. It’s lucky there’s a law against killing people, or there’d be corpses everywhere.”
Hmm okay, sensing a pattern here. Maybe I didn’t misunderstand his humour after all? Maybe this guy is a genuine psychopath! Car dealer, or self-appointed undertaker… you tell me!
As you can imagine, we didn’t get the best vibes from this place and left soon after (while we still could!). Alright, no more suspense. Here’s what we ended up buying.
We bought a 2014 Hyundai i30. It’s in excellent condition, has done 86,000 km and has full log-book service history.
Price paid – $12,000. Less a few hundred bucks for The Rolls which we decided to trade-in last minute, instead of trying to sell it privately for a bit more.
Why this car? We wanted something in the sweet spot of not too new, yet not too many kms. Something around 5 years old, with less than 100,000 km on the clock, which would comfortably last us 10-15 years seemed to fit the bill.
This gives us a reliable and efficient vehicle which should last until humans are banned from driving cars. No I’m not joking!
The stats on self-driving cars will eventually be so clear that humans are insanely dangerous compared to a computer driving. Then lawmakers will have no choice but to ban humans from driving, in the interest of safety and public health.
For example, Tesla Autopilot is already significantly safer than the average human driver and continuously improving. It sounds scary now, but as a society we’ll eventually come around to this idea.
Just like we did with having our bank details online and all new technology as it rolls out.
By the way, we’ve called our car Holly the Hyundai! Anyone else got a name for their car? Here are some pics…
This IS a new car!! Anything 5 years or less is still basically a brand new car! 5 to 10 years old is still in the new-but-not-quite-as-new range.
Age 10 to 20 is a ‘middle aged’ car. If your car is older than 20, THEN you’re allowed to call it an old car 🙂
If you’re thinking in terms other than this, you’re doing yourself and your wealth a disservice. You may have even fallen into the novelty trap, seeking constantly new things for the sake of it.
This trap sucks happiness from our lives in pretty obvious ways. Like increasing our spending, debt levels and associated stress, while simultaneously keeping us playing the fake status game with our peers – you know, trying to act like a wealthy person, instead of actually becoming wealthy!
Since you’re reading this blog, you’re way too intelligent for that nonsense now!
Let’s consider for a minute how an aspiring early retiree buys a car versus the average person.
Average person: What’s the most I can afford?
FI-minded person: What’s the most affordable car that meets our needs?
Average person: Which new car is my favourite?
FI-minded person: Which used car is the best value?
Average person: What finance and warranty deals do you offer?
FI-minded person: I’ll be paying cash. And don’t even ask if we want extended warranty, window tints, and any of the other crap you’ll try and up-sell us.
Average person: Completely ignores depreciation of new car, fuel efficiency and ongoing costs. Mostly concerned with weekly repayments and enjoying the car for the next 3 years, when a further upgrade is in order.
FI-minded person: Considers depreciation and ongoing costs, questioning whether there’s a way around this purchase entirely! Thinks about the lifespan of the car and enjoyment over the next 10+ years.
Average person: Has a perpetual car payment due to constant upgrades, huge depreciation on brand new cars and no savings.
FI-minded person: Has zero debt for cars, ever. Due to good savings habit, sensible purchase and long term ownership.
Average person: “Oooh yeah baby, my friends are gonna be sooo jealous when they see me!” (snaps 7 selfies from various angles to show everyone straight away)
FI-minded person: “Oooh yeah, this car is gonna last us soooo long, we’ll practically NEVER need to buy another one. It’s super compact and efficient and perfect for us” (snaps zero selfies… due to being a grown adult!)
Maybe that’s a little harsh, but I don’t think it’s all that far from the truth. By the way, I wrote a post on cars a while back titled, “Driving Your Wealth, with Frugal Car Ownership.”
Overall, we’re happy with our new car. It feels insanely new and very luxurious! We actually consider it our ‘forever’ car, due to the future of self-driving cars. I have to admit something though…
Transferring the five-figure sum felt like the equivalent of giving birth. And we also had to say goodbye to The Rolls, which was a little sad. But that’s okay. Being able to buy a car with cash is one of the lovely benefits of building a solid financial life for yourself.
You no longer have to rely on loan-shark finance, because you’re regularly saving and have your spending under control. But you’ll probably still feel equal parts pain and satisfaction, forking over the cash for a car purchase. That’s because you’ve learned that money is much more useful elsewhere!
Even though it feels like pure extravagance having this sexy new car parked in the driveway, this silly display of excess could hardly be labelled a reckless decision. Especially since it represents something like 1% of our net worth.
You know you’ve fallen deep into the loving arms of frugality, when buying a sensibly-sized, efficient car with cash seems like a huge blowout! And that’s when you know the habit of maximising enjoyment while minimising waste will help you throughout your life.
Whether you’re already FI or just starting out, your decisions small and large determine your financial destiny. And just to put your mind at ease, the debit card has now been firmly placed back in its happy home… in the deepest recess of my wallet.
Rest well, good friend. I may need you again someday.
What do you think are ideal car options for frugal FI-minded Aussies? I’d love to hear your thoughts in the comments below!
And were we justified in our opulent purchase? Or are these just convenient excuses so we could treat ourselves? 😉