Monday, February 18, 2008

Buying a Minivan

We're working toward buying a minivan. Driving two little ones and/or tons of camera equipment around in a Toyota Corolla is... interesting. And our second vehicle is needing to be replaced.

The plan was spurred by a commenter several months ago as I was discussing our plans for the tax return.

So here is where we're at:
$4269 tax refund
$2000 trade-in value (Ouch! When I started looking, this was more like $3000.)
$500-$800 savings
$1200 tax rebate, possibly

= about $8,000

So, what do we do?

Part of me (you know, the part that listens to Dave Ramsey every day) says to buy what we can buy outright.

BUT, the part of me that drove junky cars for years does NOT want to go back there, and envisions myself stranded on a highway with babies or stuck at Wal-Mart with a vehicle that won't start. Or spending all of our debt snowball money on van repairs.

SuperDad wants to buy a nicer van, and take out a small loan - $4000-$6000 or so. Which would add at least couple of years to our debt snowball.

So, what would YOU do?

17 comments:

aadland said...

Hey there,

I found your blog on Aberdeen newspaper website. I have been stalking you since!! LOL. :) Anyway, regarding buying the van. I would recommend buying outright. For $8,000 you can get something fairly new & nice. My boyfriend just bought a 02 Dodge Durango last year for $8,000. It came with a 1 year warrenty. I would do some shopping around. My Dad has always told me not to let them know you are trading in until after they give you the final/best price. Also, you can usually get more for your vehicle by selling it yourself vs. trading in.

Later,
Heather (Aadland) Rohr
(May Overby rocks!!)

Deb said...

I agree with my fellow stalker. :-) Buy it outright. If you take a loan out, your debt repayment will suffer (one step forward, 2 steps back) and what will you give up to accomodate the new loan you'll have to take out to pay for this vehicle?

Having driven my share of minivans, believe me when I say this - a minivan is a minivan is a minivan. The more bells and whistles it has, the more likely you'll run into trouble with it.

You are doing so well with your budgeting! I'm proud of you! Don't give in to temptation -- listen to your inner Dave Ramsey! LOL!!

Love your blog!!

Deb

Tenille said...

Heather! What's up? I haven't seen you in forever! Hope all is well!

Oh, wait... what were we talking about? Thanks for the the vehicle input! We'll have to see what I can talk SuperDad into.

And thanks to everyone for the comments - keep 'em coming!!!

M said...

I also found your blog on the Aberdeen American News website and it's help spur my own debt repayment process. (I have one semester of college left and I want to get little debts paid off before the big student loans kick in, plus I've started paying interest on them to help in the long run).
I would go with buying outright. You work so hard to live within your means. You can get a decent quality vehicle for $8,000. My brother sells cars and one thing that he recommended when I was looking at buying a new car, was to be brutally honest when figuring the worth of your trade in. So when you're using a site like Kelly Blue Book or whatever, really read the descriptions and be super honest because over half the time, people think their vehicle is worth more than it is and end up disappointed or have to go with another option all together.
And it never hurts to check safety ratings either :D

Carrie said...

I have to admit that my husband and I would side with superdad. We both have had our share (mostly mine) of old cars that we ended up paying more for repairs, than it would have cost us in car payments, so we are gratefully making payments on a car we can trust and rely on. If I didn't commute to work an hour and back, we would sell the reliable vehicle for one we could buy outright, but since I have such a long drive and I HAVE to have a reliable vehicle to get to work we make payments. Sometimes it's a really tough decision and i think it completely depends on your situation! Good luck!

Stefan, Sarah and Lukka said...

We have a debt that is very similar to yours. We just paid off our credit cards and 'baby bills' (from hospital) with our tax return and will have made a $10,000 debt vanish in one year. BUT we also have about $10,000 left (the first was credit cards/baby) the second is ONLY students loans. We have two junky junky cars (seriously, I've had my oldsmobile for over 7 years) and we are about to sell my husbands. We NEED a better car with a baby!! We HAVE had it break down or "get too hot", whatever...and it stinks! What we plan on doing (which you could do better than us with $8,000) is buy a used (but nice--remember, 2-3 years of "used" means sometimes up to $9,000 less than off the lot) car and just put the money into a checking account that would "automatically" make your payments every month from that savings....soooooooo you wouldn't even have to worry about it, because teh money would already be there (or do this with $4,000, to make a substantial down payment)...which at the same time as paying for a nice car, you could still be 'saving' or 'paying off your debt snowball'./....I really hope I clarified myself! Good luck with whatever you decide!~!

Sheltie Girl said...

So much depends on your overall financial situation. If you have no other debt and your salaries are secure, then taking out a small loan to buy a car might not be a bad thing. On the other hand, buying anything out right is always a good thing. Eliminating your debt and living on cash is the best way to live.

You can look for a used car or for a lease turn in. Sometimes with a lease turn in the car company will give you a better deal than you would get on a used car. For example, we just bought a lease turn in (1 year old) and the manufacturer gave us all the old warranty plus the extra year. So essentially we have the warranty of a new car and didn't pay the new car price. The significant depreciation on the vehicle was taken by someone else.

I wish you the best of luck with your decision.

Sheltie Girl @ Gluten A Go Go

huddtoo said...

Well, I'm in the agreement with your part of mind that says you don't want to be stranded with two kids and your car won't start! I know NOTHING about cars. But, then again, I don't go very far that often. I live in town (well, right now) I can walk to work, or ride my bike. So, I don't go places really far away, and there is always someone I could call to help. But, I worry having an old car. Will it "nickel and dime" me to death with repairs?

You really have to think, if you just go with $8,000, will that hurt your savings that you've worked to get up? But, if you take out a loan PLUS use some of your cash on hand, you'll be doubly in debt, having a loan, plus not much in savings. Tough call I guess.

Cars are too darn expensive if I must say! I hate my huge payment! LOVE the car, hate the payment.

Good luck!

Li loves David said...

I'm placing my vote with the majority here - buy only what you can afford. As long as you buy something decent to begin with, and make sure you keep up with the regular maintenance, you shouldn't have any problems.

All cars have issues occasionally, and my friends with new (and expensive) cars spend just as much time, if not more, in the shop as I do with my 12 year old and 9 year old cars.

Good luck with the decision!

zdoodlebub said...

I wanted to go see this famous whatchamahoo in the Aberdeen paper, but I have to PAY to read the archive article. And I think in all your frugal glory, you'd support my decision not to, even though I'm DYING to read what everyone was talking about!

I'm leaning toward SuperDad's view. Something nicer that makes all your sacrifices more bearable. And not stranded. Then again, I'm not hardcore like you. But I also agree with some of the other commentors...sell your vehicle on your own, you'll get more cash in hand, without a doubt.

Please tell me the story about how you got so famous and also, do you still need a bread machine?

Tenille said...

This is probably a mistake, but... http://www.aberdeennews.com/apps/pbcs.dll/section?category=XY

No, not the article about me taking a sewing class, the OTHER one, down lower.

And YES on the bread machine! :)

Jennifer said...

We have found that if one is really careful and patient in choosing a vehicle, one can find quite a nice one for $8000. And then, by investing a fraction of what the payments (plus interest) would be in preventative maintenance, a vehicle can be kept in good running condition for a long time. Seems to have worked for us, but maybe your situation is different.
Best wishes to you!

Tenille said...

Hmmmm... You've all got me really thinking on this one!

I think what we need to do is some serious shopping to see what we can get for the price, then decide if it will work for us.

Tracy & John said...

I think taking out a loan (even a small one) would be a slippery slope for you guys. Once you cave in to the idea that a little new debt is OK, it will only make it harder to fight the temptation in the future.

I'm speaking from personal experience. In what seems like a lifetime ago, we were trying to eliminate our debt after taking a "invest in debt" class. It was great right away. We paid off a car early and made huge strides in paying down student loans.

But...

Then life happened and we switched back to using debt to buy crap. We just did the van thing too(18 months ago), and we bought a rather expensive one that while is nice, is also major drain on the pocketbook.

When I stumbled upon your blog ( thanks to the AAN) it got me energized again to pay off our debt rather than drown in it. Looking back if I had to do it all again, I wouldn't have bought the vehicle we did.

Good luck in your decision & Happy Van Shopping!

John

Tenille said...

I think we've made a decision on this , and I'll post later, but I had to comment -

John - LOVED your movie! So would have voted for y'all in every category if I could have!

Frugal Finds said...

I would buy a nice used van and put some money down and take out a small loan. I too have had my fair share of cars that let me sit and I do not want to go there again.. especially now that I have kids. You have to do what is best for your family. What is more important to you? Being debt free or feeling better about what you are driving on the road. You never know what happens when you go looking though. You may find a van that is with in your cash price. Make sure you tell them you are considering paying cash - they will most likely give you a cash only price.
Good luck!!
Frugal Carol

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