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Financial Planning - Financial planning in general. (Moderated)
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Posted by Bhoot Nath on July 5, 2008, 5:15 pm
My wife and I are planner, saver types; we also had good fortune of
being born to families who stressed hard work and education and as a
result, we both have good careers, and have become financially
comfortable, without any inheritance :) Spouse was able to switch to
1/2 time, as one child started kindergarten last year, and seocnd will
start next year.
One of the elements of frugal planning is that, until we got quite
secure, we only buy what we needed, not what is advertised. So we
stayed, 1 car family, from 1996 thorugh 2004. During this time, the
1996 model Honda civic was driven an average of 25K miles/year. In
2004 we got another car (smallest SUV), and since then the 1996 civic
has been driven about 4K/year.
I have done every scheduled maintenance, without fail, and oil changes
all along, so the car runs (and has always run) without any issues,
and the emissions are very low, always only 2% to 5% of the levels
required for SMOG. So that's not at issue.
Now the civic paint is peeling, and a cheap repainting at Maaco is
estimated at $800. The car will hit 180K miles in a few weeks, and is
due for the major maintenance + the timing belt + water pump stuff
that is done at every 90K miles. All of this is estimated to be about
$1500. I estimate tires and brakes also, probably within a year, for
another $700 or more. So, within a year, it will add up to
$800+1500+700 = about $3000.
The car is probbaly worth 3500 due to mileage + usual wear and tear
after 14 years (& some dings), but no mechanical problem. We would
like to keep this car (we are not itching for a new car smell), but
does it make sense to put $3000 into a $3500 car? How critical is to
replace timing belt and water pump stuff every 90K?
We can afford a new car, without loan, and it won't impact our other
savings, yada, yada, but I feel crummey having to "throw-away" a
perfectly good car...
I would appreciate how prudent people who post on this newsgroup make
such decisions...
Thanks.
Bhoot Nath
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
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Posted by joeDOTweinsteinATgmailDOTcom on July 5, 2008, 5:44 pm
I would seriously consider keeping the car and keeping it road-worthy.
My '93 Dodge Caravan is still going strong with good maintenance and
replacement of wear parts. Do you really need to get it painted
professionally?
If your wife is picky/embarrassed than maybe, but after the 15th year,
I just
do a bit of hand-sanding and paint away any peeling with a spray can.
If your timing belt breaks, your motor may self-destruct. Stay safe
and
stay frugal. When it's time to replace it, buy a fairly late-model
second-hand
car. The previous owner has already paid for the most depreciation.
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
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Posted by Mark Bole on July 5, 2008, 7:34 pm
Bhoot Nath wrote:
> [...] So, within a year, [repairs] will add up to
> $800+1500+700 = about $3000.
>
> The car is probbaly worth 3500 due to mileage + usual wear and tear
> after 14 years (& some dings), but no mechanical problem. We would
> like to keep this car (we are not itching for a new car smell), but
> does it make sense to put $3000 into a $3500 car?
No. Just try to sell it "as is" for $3K, someone will buy it for their
teenager, or perhaps a retiree who doesn't drive much (I've had personal
experience with both).
> How critical is to
> replace timing belt and water pump stuff every 90K?
Pretty critical, you don't want to stall out on a bridge, in a tunnel,
or outside of easy urban access. There are two types of engines when it
comes to timing belts, one kind self-destructs and the other just stops
working, you can do an Internet search to find more. Having stalled
out myself one morning, with a broken timing belt, on one of the busiest
bridges in the country, I can tell you it's no fun.
> We can afford a new car, without loan, and it won't impact our other
> savings, yada, yada, but I feel crummey having to "throw-away" a
> perfectly good car...
>
> I would appreciate how prudent people who post on this newsgroup make
> such decisions...
Let's not go to extremes. Unless you are on financial life support, buy
a newer used car when the annual cost of repairs to the old car exceeds
50% or more of the car's resale value. And don't forget to drop
collision insurance well before that time.
It's not just the finances, but the personal safety issue of avoiding
mechanical failures while driving in commute traffic, or being pulled
over because your car looks poorly maintained on top of some other minor
violation, plus the image of reliability and sensibility you project to
your neighbors and co-workers (unless you are lucky enough not to have any!)
-Mark Bole
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
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Posted by Douglas Johnson on July 6, 2008, 10:36 am
>Let's not go to extremes. Unless you are on financial life support, buy
>a newer used car when the annual cost of repairs to the old car exceeds
>50% or more of the car's resale value. And don't forget to drop
>collision insurance well before that time.
Let me suggest that the resale value of the car is relevant only if you are
going to resell it. If you are going to keep driving it, then the issue is the
cost of repairs vs. the net cost of buying another car.
>It's not just the finances, but the personal safety issue of avoiding
>mechanical failures while driving in commute traffic, or being pulled
>over because your car looks poorly maintained on top of some other minor
>violation,
Reliability and safety are real issues, but are hard to quantify. That makes it
easy to justify an unnecessary trade-in.
>plus the image of reliability and sensibility you project to
>your neighbors and co-workers (unless you are lucky enough not to have any!)
Or lucky enough to have neighbors and co-workers that don't judge people by
their cars. "Those that matter don't mind, those that mind don't matter."
-- Doug
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
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Posted by Ron Peterson on July 6, 2008, 11:57 am
> >Let's not go to extremes. Unless you are on financial life support, buy
> >a newer used car when the annual cost of repairs to the old car exceeds
> >50% or more of the car's resale value. And don't forget to drop
> >collision insurance well before that time.
>
> Let me suggest that the resale value of the car is relevant only if you are
> going to resell it. If you are going to keep driving it, then the issue is the
> cost of repairs vs. the net cost of buying another car.
If your car is totaled, the insurance will only pay approximately the
resale value. Collision insurance is reduced for older cars, so it
makes sense to keep it.
--
Ron
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
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