Would You Rather Travel or Drive a Cadillac?
I think you know my answer. I’d rather travel. I’d rather have the month of August off than just two weeks. I negate Cadillac’s notion that the rest of the world is lazy because they take the month of August off when we, as proud overworked and overwhelmed Americans, only take two weeks off. Like most Americans, I receive around three weeks of PTO a year. Let me repeat. Three. Weeks. A year. That’s 15 days to catch a cold and recover, visit my family, visit my wife’s family, attend a friend’s wedding, take a personal day, and vacation. No wonder why I feel that I only skim the surface on my travels. It’s because I am only skimming the surface.
I hate it when I’m travelling and meet a person from (pick a country) and hear about their month in Thailand. I had ten days to get there, dip my toe in the water, and return. While I’m barely poking at the culture temple hopping and eating Pad Thai, they’re getting ready to trek into hill country and camp in a tribal village. While they’re exploring the interior, I’ll be back at my desk slamming a Quiznos’ sub in between conference calls. So no, Cadillac, I’d rather not have your car. I’d rather have more time and money to explore the world.
I can’t believe the audacity that Cadillac has calling the rest of the world lazy because they take more time off from work than we do. That it’s justified because we accumulate more stuff. This is the land of the free, right? What’s freeing about having more stuff? More interest payments? Nothing. Those are only shackles that keep us imprisoned to our work cubicles in financial slavery. Shackles that prevent us from seeing the world. Shackles that prevent us from living our dreams. I want my readers to live their dreams. I want them to see the world. Here is a financial tip on how to make that happen.
Buy a Used Car and Pay Cash
Hear me out… Last month I wrote a quite popular post about affording travel – that anybody can afford to travel like we do, you just have to make it a priority. Making travel a priority means understanding the concept that while you can’t afford everything, you can afford anything. If you truly want to see the world, then don’t buy a new Cadillac (or any new car).
Buying used will save you thousands in depreciation. Dave Ramsey equates buying a new car to driving down the street, rolling down your window, and tossing out hundred dollar bills. So, unless you have the bankroll to pay cash and can afford to take the sucker punch of vehicle depreciation, don’t buy new!
A quick search on autotrader.com revealed that there are 8 cars 2010 or newer sold by private parties within 25 miles of my house all for under $10k. My eyes were drawn to a 2012 VW Jetta S Sedan with only 17,500 miles. The price tag? $9,950 or best offer. This is a safe, reliable vehicle. I know because we owned one that was totaled in an 8 car pile-up on the interstate from which Mrs. G. emerged unscathed.
That same car new today starts at $17,715 without any whistles or bells included. After the first year of depreciation from ownership the value drops to $13,360. That’s over $4,355 thrown away just for the new car smell. Or, in travel terms, a week backpacking in Europe for two.
Pay cash for the used car! What? Pay cash? But where will the money come from? Easy answer. Work and save for it. I’m not saying that we as Americans shouldn’t work hard when I say we don’t have enough time off of work. We should work hard. Our country was built on working hard. Our country wasn’t built on personal debts and entitlements. Figure out what used car you want to buy, how much it will cost, when you want to buy it, and tuck enough aside each month to meet your goal.
If you were to finance the new Jetta mentioned above with a 60 month loan at 3.9% APR (for well qualified borrowers), you would be giving the bank $1,825 in interest payments. This is money we are losing for the privilege of buying something we can’t afford. That savings on interest added to the savings on depreciation just banked you $6,180! That trip to Europe is starting to get nicer.
Buy your used from a private owner and not a dealer. I don’t trust car dealerships. I could write a novel with personal experiences on how car dealerships have tried to screw me in the past from the dealer who refused to give me back my keys until I signed that I would buy his car to the dealer who held my license hostage in the same manner to the dealer who openly lied to me about the price of a vehicle I was buying under my father’s Ford employee plan to the dealership who sold me a warranty but never gave my money to the warranty company. No thanks. They’re slimy. Don’t trust them.
Plus, buying from a dealership will only further tempt you to finance that car. Car dealerships make more money per square foot from the finance department than from any other department. They will do what they can to force you to forget the price of the vehicle and focus on the affordable (and profitable for them) monthly payment.
The same used Jetta found on AutoTrader for $9,590 from a Private Party would cost $12,433 at a dealership according to Kelley Blue Book. That’s $2,483 more for the privilege of buying from someone who is trying to screw you! The savings from buying private added to the savings from depreciation and interest equals $8,663. That backpack experience in Europe is starting to look more like a five-star experience.
Spend the money and order your own CarFax report. I know every other tip above is about saving money, but view a CarFax Report as an insurance policy against making a bad decision that will cost you even more down the road. I once bought a used car from a car dealership with a fraudulent CarFax report. That $40 in savings from not ordering a CarFax Report cost me thousands in resale value. (Yet another reason why I don’t trust dealerships.)
Be patient and expand your range. Finding a quality new car is not a quick process. It can take weeks or even months. Have patience and don’t be afraid to look beyond your metropolitan area. We drove 3 hours each way for the last car we purchased. That drive saved us thousands for a small inconvenience which really wasn’t that inconvenient. We had a pleasant drive through rural South Carolina, and I had the chance to test the hell out of that car on the way home down some desolate country roads.
But what if I can’t afford to pay cash right now? Then ask yourself, do you really need to replace your car? Are the wheels truly falling off or are you more concerned with impressing your neighbors? If the wheels are truly falling off, then put together a grand or two quickly and buy something just slightly better than what you are driving today. Work overtime to make this happen or sell junk around the house on Ebay.
What would you rather do, enjoy the freedom of affording to travel to Thailand and ride in a tuk-tuk, or sit at a desk all day to keep up with interest payments on a new Cadillac?.
I wish we had time off like Europeans too. Bummer.
You work for The Bank! You get as much time off as they do..
Really nice post. I found that ad obnoxious.
Obnoxious. Rude. Arrogant. Ignorant. Any other words we can add? Any Celtic terms?
Gobshite 😉
I have no idea what that means, but I like it.
http://www.urbandictionary.com/define.php?term=gobshite
🙂
I hate that commercial. I would much rather have more time with family than material riches!
Amen my Hurricane Sister!
Agree on the Finance Department. I’ve had only one Finance Department that gave me the straight story (he saved my ass when I totaled a car when it was upside and I was young and stupid). I remember when it was the 3 hrs haggling the price was winning the battle. Now you spend more than 3 hours in the Finance room. The last time I came in with Financing, the Finance person said take my loan offer. I looked at it and said I’m sorry why am I going to pay an extra 3% over 5 years?! She replied, but I won’t make any money on the deal! I nearly went nuts on the audacity.
On that note, if you are going to finance, at least come in with something and shop your rate. Not the terms, the rate. And don’t say I want to pay $xxx. The auto financier will extend the term, raise the rate (under Finance 101, you have to increase the rate over time), and make your “payment”. Only as your examples state over the life you will pay more $$$.
Also, if you can pay cash and you can get 0% financing or really low financing. I would almost say invest the money in CDs that payout over the life of the loan (short term, since rates will eventually go up). You might end up making money on the spread (it’s what banks do) and use that for your travels.
I like how you are pushing financial freedom, I hope it helps your readers.
I understand the principle behind taking a 0% APR loan and reinvesting the money. But how many people do you think actually do that? Most spend the money, get behind on the car payments, and pay penalties to the bank. The banks study human behavior. They are in it to make money. 0% is just a trick. Plus, as someone who has been laid off twice and predicts another one in the coming months, there is a lot less fear when you are debt free.
I don’t want to get on a financial freedom soap box, but my first post came out of frustration with the “wish I could afford to travel” comments. Next came this stupid Cadillac ad and I had an “Aha!” moment.
With you 100%. Financial freedom is the best.
Never cared for Cadillacs, really. Nothing against them, but compared to travel? No contest!
Halfway through the blog, I realize I may or may not be reading a blog of the guy I sold my car to. I think? i do live in Rural South Carolina, and sold my car to someone a year or to ago. I can tell you they got a really good deal and a much better deal than what I got when I bought it the first time. Was it you? Anyway, great blog. If you really want to save some money to travel with, buy a Prius. I charted my first year in the Prius and I spent 6 cent a mile. If I drive using a certain, “Pulse and glide” method I learned from youtube and overfill the tires just a tiny bit, I can get 60 miles per gallon. Although I will admit to missing my last car’s smooth ride almost on a daily basis. Also any time there is any kind of dip in the road my Prius sounds like I just drove over a speed bump going 88 mph. I can now hear road noise on any bumpy highway. But there is something to be said for driving to Athens, Georgia for Athfest (a music festival), driving all over town, then driving to visit my wife’s parents in Prosperity, SC, then home and then driving to work every day for 5 days before one on tank of gas. That makes me smile really big. If you are the person I sold my car to, I hope you are enjoying the car. If not sorry for the confusion but great blog. –Jason in S.C.
Jason, you are you correct! I did buy the Acura from you about a year ago. The car is holding up great. We are about to buy the extended warranty on it. I’m curious, how did you stumble upon my blog?
I appreciate the insights on the Prius. I didn’t cover buying a hybrid in this post but they definitely deserve evaluation as they can save thousands in gas. It really depends on the individuals situation though. We thought about it, but the premium for the car didn’t make sense for us given our commutes, etc.
Thanks for stopping by!
Hey man! Glad you are enjoying the car. To answer your question I found the article surfing the web. That was a long while back so I could not tell you what I search for. Just going from site to site. Sorry for the delayed response. The day I found this article and left my comment I saved it into my iPhone’s bookmarks and then forgot about it until today when I was cleaning out my bookmarks and saw you had responded. Yeah. I am pretty sold on hybrids now. I am now researching electric cars. (Leaf, plug in Prius etc etc) However the only upgrade from the Prius (as far as gas mileage) is a Tesla vehicle. But for the same reason the investment is just not worth it. The Tesla Roadster is a beautiful vehicle. If I won the lottery that is the first thing I would buy for myself. I kept an excel spreadsheet and figured my first year I paid 6 cent per mile for fuel. That is skewed a bit because I use Bi-Lo fuel perks to get 10 – 15 cent off per gallon. Usually the fuel perks card only saved me about $2-$3 per fill up.