Well, the verdict on the car is it’s leaking oil from the head gasket (or something like that, which I’m not very clear about) in addition to needing a new timing belt. To keep it running is going to cost around $1,200 or $1,300.
Rather more than I’d like to spend on a car that’s well over 11 years old.
I have enough money in savings to buy a new vehicle, if I don’t go overboard. However, this just does not feel like the time to go out and drop fifteen or twenty grand on a car. On the other hand, with permanent unemployment a fact of life, no time is the time to go out and drop fifteen or twenty grand on a car.
On the third hand, I know the clunk is not going to run forever, and sooner or later I’m going to have to give up and buy a new car.
The issues are more complex than they seem on the surface:
Before I was laid off, I had a Vanguard short-term corporate bond fund in which I’d saved more than enough for the next car purchase. That piggy-bank was raided when M’hijito and I bought the downtown house, which is now so deeply underwater that it looks like we never will get out from under it. Basically, everything we put into that house is gone, including a large chunk of the car-buying fund.
When GDU canned me, I consigned what remained of that money to my financial managers, who invested it intelligently. So, now that the market has revived a little, there’s just about enough to buy one more modestly priced car.
The stock market is on its way down. I really would like not to pull around $15,000 out of the market on the down-tick.
However, the new accountant tells me that 2012 is the last chance I’ll get to withdraw that money without taking a tax wallop. The dividend tax will kick back in at the beginning of next year, and so if I want to use my savings to buy a car, I need to do it before the end of 2011.
The vehicle won’t run more than another few weeks without major repairs, and so I actually need to do this pretty quick, if I’m going to do it.
Insurance and Registration
I called The Hartford to see what buying a new car will do to my auto insurance bill. Add about $420 a year is what it’ll do.
To register a new car in Arizona costs $370. Although that amount dwindles as the car ages, it doesn’t drop fast enough to make the cost affordable, not for a very long time.
Right now I self-escrow enough from my monthly income to cover the annual insurance bill. However, the amount I set aside is not enough to cover the outrageous cost of new-car registration. The annual registration and emissions fees for an 11-year-old junker are so low I can pay them out of pocket; if I buy a new car, I’ll have to start self-escrowing enough to cover the new tax bill as well as the larger amount for insurance.
($420 + $370)/12 = $65.83 a month
I am just making ends meet on my piddly little scrabbled-together income. The truth is, I’m spending more than I earn almost every month, because every goddamn month some new unexpected expense comes up that causes me to go over budget. And “budget” = every after-tax penny that hits my bank account.
To save $66 a month on gas, I’d have to buy a Prius. The trade-in on the Dog Chariot is not enough to make it possible for me to afford a Prius. Nor am I even faintly interested in repeating my friends’ experience of having to pony up $3,000 for new batteries after five and a half years.
Thus I’m looking at something like a Hyundai Sonata, a Hyundai Elantra (too small for safety in this city, really, and uncomfortably low to the ground for an old lady to be climbing in and out of), or a Hyundai Tucson. The Sonata gets about 24 mpg in town; 35 on the highway. The Tucson, the Elantra, and Toyota’s RAV4 all get similar mileage: about 22/28. My car, in its decrepitude, registered 20 mpg on the last fill-up. IMHO the desired vehicles don’t do that much better than the Dog Chariot…certainly not enough better to save $66 a month on gas.
Honestly, I don’t know where an extra $66 a month is going to come from. Every time I cut expenses—which I just did, by shifting the cost of the DSL to the S-corporation, which pays for it with before-tax funds that cost me money to access otherwise—the cost of living goes up by just about the amount I save. Mostly it’s the cost of blindsiding, actually: the nasty little surprises never seem to stop, and they’re always worst when living costs are highest, during the summer months.
Jeez. I could not believe the $300 the damn Medicare would not cover. Did you realize Medicare does not cover what its bureaucrats regard as “preventive” care? So if you go in for a routine physical, most of the costs, except for some of the blood tests, are not covered? This means that you get to wait until you develop symptoms of, say, cardiac failure or diabetes, before you can have the treatment needed to prevent astronomically expensive medical costs, which of course Medicare will then have to pay. Makes sense, doesn’t it?
Well. Back to trying to make sense of the problem at hand. We have the issue of…
When I started out buying cars, I realized I couldn’t easily afford to make car payments out of cash flow. So I snowflaked and snowballed and hustled to pay off the loan on the Camry that I purchased a year or two after I divorced, and then I started saving money toward the next car. I actually saved enough in that short-term corporate bond fund to cover more than one car.
Then I got the thousand-dollar-a-day dog, who was given to sitting on the back seat of the Camry, sticking her nose between my head and the driver’s seat window, and shrieking into my ear. By the time I’d get out of the car, my ringing ears literally hurt.
To avoid losing my hearing (and throttling the dog), I decided to get a larger vehicle, which would position her further back from my head. The Camry was only about six years old at the time.
My son needed a functioning vehicle; he was driving a car his dad had gotten him in high school, and it was falling apart. So instead of trading in the Camry, I gave it to M’hijito.
This meant I used a large chunk of the car-buying fund for the Dog Chariot.
Before I did that, the car fund contained enough to buy not one but two cars. At the time I bought the Camry, I figured I could drive it for ten years, carrying me to 2004: age 59. The next car would then run until I was 69; the final car I could afford from that fund would run until I was almost 80. At that point, if I lived that long enough (there’s a good chance I won’t), it would be about time to quit driving. If by some miracle I was still living, the theory went, I would buy a second-hand car to run the two to five years left in my driving career.
When I gave the Camry to my son after six years of ownership, I torpedoed that plan.
What this means today is that if I buy a new car now, in 2011, it will be ready to crap out in 2021. I’ll only be 76 then: I should have another five to ten years of driving time left, assuming my health holds. But by then I won’t have any cash to spend on a new car, because I will have used it up on the car I buy this year.
So, in that light, it’s in my interest to keep the Tankmobile rolling for another five years. Chuck the Wondermechanic says it should run another 50,000 to 60,000 miles; since I put about 10,000 miles a year on a car, that would fill the bill.
I just dread going into a car dealership and getting sheared by some crook. And I know that’s exactly what’s going to happen. In the past, I’ve dealt with those people by proxy: through a car broker. He would apply his savvy and his male voice to extract a fair price from the Toyota sleazes, and I would not have to go through the “I’ll have to talk to my manager” torture.
The broker is retired now.
Costco and the credit union both have auto purchasing services. It’s unclear how much you save off the bottom line, but it looks like a take-it-or-leave it deal. The amount Costco claims is the price is about two grand more than Edmond publishes, so that smells a little funny. You have to go through their dealers, and you have to give up your phone number, which means you get on their phone list, which means you’ll never stop getting soliciting phone calls.
Japanese vehicles are in short supply, a situation expected to last until the end of 2011 (at least). This means prices of Toyotas, Nissans, and the like—if you can even find one—are through the roof.
Hyundai is manufactured in Korea, although you can be sure that company has been using parts made in Japan. That factor and the increased demand for alternative Asian cars probably also will drive the price of the proposed Sonata, Elantra, or Tucson.
Where the Repair Money Would Come From
The cash to buy a new vehicle would come out of the new-car-buying fund, which presently resides in the stock market.
But the cash to pay for repairs will come out of my bank account, which, assuming I get a decent tax refund next April, holds just about enough to delay my having to start a monthly drawdown from savings for about 18 months. At least, it did until the dental and medical bills came along. I think we’re down to about 16 months now. Another $1,300 bill will shave a month and a half off that, hastening that particular day of reckoning.
On the other hand, obviously drawing $15,000 out of savings to buy a car now does nothing to keep me from drawing money out savings. It may be better to take the money out of cash flow and let the future take care of itself.
But on that third hand, if I don’t take the money out of the market in 2012, I’ll end up paying dividend taxes on it, which could be around 20 percent. That will not leave enough to cover the cost of another car!
I guess I could take the money out in December (by which time, if we’re lucky, the market may have recovered from its latest swoon), stash it in a CD, and let it sit there until the clunk falls apart like the Minister’s One-Hoss Shay.
I don’t know. Well…yes, I do. It’s four in the morning. I’ve been up since 1:00 a.m., and it’s time to go back to bed.