Teaching a Man To Eat the Fish He Catches…
I inherited my fairly thrifty spending habits from my parents. Growing up, they were the epitome of smart spenders. Their combined gross income was probably around the $120,000 mark most years (my mom was a nurse and my dad ran his own lumber company so his income sometimes varied widely). We took several family trips that my parents didn’t mind splurging on, but other than that, the cardinal rule was: Do you need that, or do you even REALLY want it? There was no better example of this than the vehicles my parents drove throughout my life. Since my dad was always driving around in the forest he never bought a new truck. Sure, he could have written it off as a business expense and driven the newest models around like many people that made much less money that he did, but the goal of his truck was to get from A to B and be able to pull stuff. That was it. In fact, he liked the idea that his truck wasn’t new because then he didn’t feel bad about the inevitable scratches, dints, and ruined upholstery. Our family vehicle started out as a basic used car (I think it was an old Malibu), and then we went with mini-vans for the next several years. Both vans my parents bought were purchased slightly used, and then well-maintained as they hauled countless sports teams around on behalf of my brother and I. I’m sure there were many times when my parents momentarily thought about using a little extra cash to pick up a new SUV or the latest pickup model like many of their friends were, but their common sense priorities always won out.
Actually, their fairly frugal ways have started to make me feel somewhat guilty over the past few years. As a young adult I’ve started to sort of keep track of all of the costs raising a child would incur. My folks always had money for a couple new outfits for back to school, the odd family trip, numerous pieces of sports equipment, and also managed to put away some money in RESP accounts for my brother and I. That’s in addition to feeding two boys who consumed more food than most city blocks and all the other “usual” child-rearing expenses. When I started to look at all the sacrifices my parents made without a single complaint, I began to encourage them to treat themselves a little more. My dad has been “49 and holding” for several years now, and mom isn’t too far behind, so they are reaching the stage of their life where I believe they should be spoiling themselves.
The vast majority of the time my parents would just smile at me when I told them this, and say that they really liked the simple life they led and they had everything they needed. So when they told me they were going shopping for a vehicle to replace the 10-year old mini-van that had seen so many good times, I simply assumed they would end up with a 3-year old mid-range vehicle with minimal options and that basically had “common sense” scrolled across the side. Much to my surprise and delight they called me a couple of nights ago and said they just couldn’t tear themselves away from the 2012 Buick Enclave when they saw it. They had started off looking at other, cheaper options, and at used vehicles, but after talking about it for a couple of weeks and negotiating with a couple of dealerships (my dad is one of the most patient negotiators I have ever seen, he really should have been a collective bargaining lawyer) they decided that for the first time in their lives the would own a new semi-luxury vehicle.
New Is the New Used
Now I can hear the howls of protest emanating from the halls of personal finance wisdom.
“Do you know what vehicle depreciation is?!!!”
“A vehicle is not an asset!”
“NEW?!!! The 13th commandment that was passed down to Moses was thou shall always buy used! Don’t you know that?”
My response? Please go back to your 10 year old Honda Civics and leave my parents in peace please.
I’m so happy for my parents that they made this decision. They understand the economics of it and if anyone “knows the value of a dollar” it is them. Ever spent a day in the forest cutting trees before? You understand real quick how much sweat and toil goes into $40,000 (rough price I imagine the vehicle cost them). The thing is, my dad will keep the vehicle obsessively well-maintained and they will happily drive it for the next 15 years (at least). If this is one area of their life where they truly feel they will get pleasure from spending a little money on themselves, then all the power to them!
My dad said he was as shocked as anyone that he decided to buy a new car. He simply said that he came to many of the same conclusions that I did when I bought my new Hyundai Elantra last spring, and the same ones that several other bloggers have been reaching. Namely:
- The market for used cars right now is really tight, resulting in much less depreciation than the traditional rules that have applied for decades.
- Incredible incentives such as $4000 cash back and 0% financing for 4-5 years bring MSRPs to a much more attractive level.
- The peace of mind that came with increased warranty and several other perks related to buying new were definitely a consideration.
- The 2012 just felt perfect to them, and they had never had the feeling of buying a vehicle like that before.
Owning a nice car is simply a luxury that some people value more than others.
The Real Winner?
As a great bonus, guess whose garage the old tried-and-true mini-van is going to end up in? Yours truly of course! Now I’m pretty certain most young 20’s (ok… mid-twenties) people wouldn’t be too excited about having a 2002 mini-van, but it will be a great second vehicle for my girlfriend and I, and perfect for fulfilling my coaching duties. The tentative plan is to run it into the ground, and given how well-maintained it is, it should last us for many years. I tried to force them to take market-value for the van (obviously a very modest amount at this point), but I guess they were still on a high from the new car plastic because they refused repeatedly and just said, “It’s an early Christmas/Birthday gift.” What’s better than great deal on a vehicle? A free vehicle naturally!
This purchase might not make sense for several young adults out there who are borrowing large amounts of money to buy large and/or luxury vehicles that they don’t need, but in my parents’ case I think it makes perfect sense. They joked around about spending my inheritance, and I replied that I was dead serious that they should spend their money. The idea of a large inheritance isn’t really my thing (especially for a working class family). I know how hard my parents worked for their money and they should be the ones to enjoy it, not me. They already contributed to my financial well-being with RESPs, free rent in summers, this 2002 vehicle, and numerous other ways. For goodness sakes, go spend your own money on yourselves now!
Congrats to mom and dad for reaping the fruits of their labour after a lifetime of frugality and saving. I hope the new car smell lasts a long time!