Should you buy a new car? Who doesn’t want to drive a new car? Mr. Dollabuzz sure does. So why doesn’t he? Dollabuzz discusses how a new car will get in the way of your personal finance goals and it’s impact on your money.
Dollabuzz readers whaaats up? Ya’ll know what time it is. Its time to talk about money! With auto sales near record highs today is an opportunity for us to answer the age-old question of should you buy a new car?
Everyone wants to drive the hottest auto and I am no different. I want a new(er) car so bad. Ask my wife and she will tell you I drive through the dealership quite often.
So why don’t you buy a new car Mr. Dollabuzz? First, buying a new car would not allow me to reach my personal finance goals. The money I would pay for that new car would cost tens of thousands of dollars more than the actual price of the car. We’ll cover this in more detail later but lets get to the money!
Today, we are going to show you:
The true cost (opportunity cost) of a car and its impact on your personal finances
How To Dollabuzz your car so you get more for your money
Why you should not buy a warranty for the car you just purchased
The exception to every rule
My Story: Used Cars and Money
I have driven used cars my whole life and I am tired of driving my 2008 Focus with 177,463 miles. Talk about BORING! Since graduating from college I have owned three cars. All used, boring cars purchased for around $10,000 and driven for 200,000 miles.
My previous car had over 200,000 miles and was beat up. I sold it to a guy working at a liquor store for $350 and a 40 oz of Bud Ice. I sold it because the widows no longer worked and it was almost the summer . I drove the car all winter with no power windows.
But these boring cars have contributed greatly to my Dollabuzz and allowed me to reach my personal finance goals. The money saved buying used cars allowed me to invest and put me on track to get my money right.
I can “afford” to buy the car I want. The bank would approve the loan faster than a screamin demon commin down yo street. Dang.What car have you buzzin like that? A 2013-2014 black Charger with chrome rims and a moon roof. As an additional bonus there is plenty of room for a car seat. So how come you haven’t bought one? Buying this car would get in the way of my Dollabuzz and personal finance goals. Lets see how loyal Dollabuzz reader!
Over five years you’ll also pay $2000 in interest. That is A LOT of cash money. Tack on $150 a month for insurance and now that car costs $625 a month. Insurance adds an extra $9,000 to the cost of the car so the true cost of that new whip is $37,500. Zoinks!
Dollabuzz Your Car and Your Money
You can have a nice car but at a fraction of the price of a new car. You simply Dollabuzz your car and here is how you do it:
I drove past a dealership the other day and there is a 2009 Lexus IS250 for $11,000. Add $660 in taxes, $1000 for interest and that Lexo now cost $13,660 but lets round up to $14,000 and keep our math simple. You now have a payment of $216 and add on $100 for insurance and now you are at $316 a month. Total cost of your Dollabuzz ride: $13,660
Did I mention its black with a moon roof and a sharp-looking ride? Yes it has a lot of miles (over 80,000) on it but when you buy a Lexus you will get a very reliable car. This Lexo will save you at LEAST $23,840(!!!) compared to that new car. Instead of a $625 a month payment, your payment is $316 which is a savings of $309 a month. This Lexo is HALF the new car!
Opportunity Cost: Show Me The Money!
Opportunity cost? Mr. Dollabuzz you are losing me! Hang on loyal reader because here is where the Dollabuzz comes in. Invest that $309 a month you saved buying that tight Lexo in your Roth IRA or 401k for five years at 7% and you would have $22,264.
We can talk about budgets, coupons, and frugal living all day like other blogs but at Dollabuzz, we are about big money and want our readers to think big, dream big, and become millionaires. Budgets etc are important but sometimes you need to think big about your money and personal finances.
That my readers and loyal followers is how you Dollabuzz your car. Feel free to do the money dance.
Would a business sell you something if they were going to lose money? Oh hell no. The dealership aint got no time for that and neither should you. Do not buy the warranty!
Should You Buy a New Car? Not if You Wanna Dollabuzz
I cant emphasize enough how driving used cars has helped me get my money right and strengthen my personal finances. In addition to investing in myself through education, buying used cars for $10,000 is how I Dollabuzz.
My current car is paid off which helped me purchase a rental house last year. This house cost us $45,000 but we are netting $6,500 a year for a 14.4% return. Last year I had two choices: buy that Charger or invest in real estate. Knowing the true cost of that Charger made it easy to Dollabuzz and answered the question should I borrow money for a car?