Tuesday, February 9, 2016

Pitfalls in Preparedness: On Cars

                 
This used car is for sale by owner.





            One of my adult kids has a job in finance. She has a perfectly acceptable car that is as reliable as anything else, and yet one of the frustrations of her job is that co-workers often tell her that her "car needs a tow truck" or its time to "go buy a new car".  It's as if buying a new car is an insulation to them against difficult financial times. If you have a new car, then you must be doing well. Looking as if you are doing well will help you continue to receive promotions or keep your job. This type of thinking is the equivalent of automotive magical thinking.  She used to simply accept this or make another joke, but it has become trying.  Yesterday, when someone she didn't know commented about her car as it sat next to a larger model BMW, she did.   "I'm going to make this quick" she said.   "#1, I have no car payment, and #2, my car gets 39 mpg.  In addition, I have decided to hold on to my house during the next financial collapse, how about you ?"   They didn't comment further.  Perhaps companies who are heavily invested in the perception of easily flowing money just can't think sensibly.

                     I have a lot of friends in the preparedness community who have bought vehicles they believe will help them with either rapid family evacuation or with looking the part of a survivalist.  First of all, any car you take on with a payment can be counterproductive to your preparedness. I suppose there are circumstances where buying an economical car on a short term payment that will be paid off quickly can make some sense, but a five or six year loan for a new vehicle cannot really be considered preparedness. About all you've done is become prepared to be poor in the days ahead, or become prepared to experience a repossession.  Remember that although it is your wish, you may or may not have fewer repair bills with a brand new vehicle. In addition, a car with a payment will necessitate a higher level of car insurance than you might buy otherwise. This is more money flying out of your household.  

                   Before buying a vehicle, do some consumer research.  You might want to seek a vehicle that has a six dollar oil filter rather than one with an oil filter that costs fifty.  Oil changes and filter changes add up.  Carefully analyze what you need a vehicle to do.  I need mine not only to have fairly good mileage per gallon of fuel, but I need it to have a good range.  I need it to go eight hundred miles between refuelings, and a few of them can.  Does your family of two really need an Escalade ?   What do you do with your vehicle ? What do you plan to do with your vehicle.

                 Next, take a look at your area used car dealers.  Some of them are scam brokers, but I know a few who aren't.  Some of them sell reliable vehicles that have been gone over with a fine tooth comb by a reliable mechanic. Sometimes this is your best alternative.  Does your area have a car auction ?   A couple of friends of my adult sons have done very well there also.  Take a look at Craigslist.  I have bought a back up farm vehicle and a couple of vehicles for kids on Craigslist from individuals.  So far, all the vehicles turned out to be excellent cars that were excellent buys.

                  Don't let the misperceptions of co-workers or neighbors make you feel that you need to overspend to keep up with their expectations.  Will they help you pay for that car when the economy collapses ? Will the company where you both work even be in business then ? Are they going to help pay for your food when your money for prepping continues to be diverted to that car payment ?

           Lastly, don't misallocate your assets.   If you're making thirty thousand dollars a year then you can't reasonably expect to buy a thirty thousand dollar car.  Whether you are a prepper or not, you shouldn't have all your assets in plastic and metal flying down an interstate highway in all weathers.  Cars are depreciating assets for the most part and they always will be.  Get what you need. Don't buy an eyesore, drug dealer's car, or a proverbial powdered do-nut cop magnet vehicle, but if your concerns are financial stability and preparedness, then don't overinvest in a vehicle either.    A car is a tool, a lot like a hammer, a mattress, a gun or anything else that is a consumer good.  Don't buy any of these things on impulse.