Have you ever had a terrible purchase? One you walked out of the store thinking – why the heck did I just buy that? Buckle up for the worst nightmare purchase JR and I have ever made.
When we first got married we had two cars and one car loan. JR had a little green manual transmission Mazda (that was paid for) and I had a 2014 Jeep Patriot with an $8,000 car loan. We had two problems: Kylie can’t drive nor has any interest learning how to drive a stick shift, and we had a car loan. If you know Dave, car loans are the ball and chain of the middle class. We started on our debt snowball and I realized I didn’t really want to pay $8,000 for a car I kind of liked. So we sold it and our debt snowball took a dramatic roll down the mountain.
This is the positive part of the story. We don’t regret selling the Jeep because it gave us one thing we really needed when you first start out: MOMENTUM.
So we sell the Jeep and in turn trade it in for a $5,000 Land Rover LR3 – because that is the responsible thing any newlywed couple would do. We drove away thinking how exciting it was to have such a fun car and at the same time be rid of our nasty car loan. That was until we got it home. Bit by bit we learned why this fancy Land Rover was only $5,000.
First the keys. If you know anything about foreign cars you know they are super hard to get parts for and tough to keep up. One of the key fob’s didn’t work and as luck would have it we lost the other key fob within a month of owning it. (Yes, this is a true story.) It would have cost us $500+ to get a new key fob so we stuck with the broken one and had to manually insert the key to unlock it. Fancy, right!
Just wait, it get’s better. The second day driving it we heard a major squeaking noise. LR3’s have a suspension kit that allows the car to essentially raise 5 inches or so when you go off-roading. That car salesmen probably oiled that bad boy up because we didn’t hear a thing on the test drive but the next day it was out of control. JR being the car-savvy guy he takes the SUV to his friend’s house to swap out the suspension for the regular stuff. (I too am car-savvy. Ha.) He does his research and finds out he needs a “little orange box” (the technical term) to override the security system so it knows the suspension is ok to go. He goes to change the security system and the alarm goes off and completely shuts down the vehicle. So we are down to one key, the key now doesn’t work, and our car won’t start.
Can you say HOT MESS? We scour the internet forums and online Land Rover manuals to figure out how to deactivate the alarm suspended engine. JR calls the nearest dealership in Omaha and it will be about $200 to tow and then more to get it fixed. We were just saving money left and right! Not. We decide if we can’t get it fixed by the end of the week we didn’t really have any other option.
The next day I stumble on a forum that said to roll the window down, lock the car from the outside, open it from the inside, disconnect the battery, turn the key on, then reconnect the battery. So obvious, not sure how we missed that. *eye roll* It totally works and resets the computer – we are back in business. Sort of.
We drive the car for a few more months but the alarm goes off 1-2 times a month and in not so fun places (read anywhere other than our house). So we are on eggshells driving this thing thinking if we lock it we are for sure going to get stranded. So we have a fancy Land Rover that we can’t lock, has one crappy irreplaceable key, an alarm that goes off randomly, and an engine security system that could immobilize us at any moment. Oh, and the transmission leaked. So fun.
So we did the next thing any responsible newlywed couple would do. We went and got a $14,000 car loan for a GMC Terrain. SO SMART. (are you drenched in sarcasm yet?) Yep if you do the math on that it’s almost double what our original car loan for the Jeep was. Palm to face. We still have the car loan and love the Terrain but if we could go back we definitely wouldn’t have bought it. It was an emotional purchase because we were so sick and tired of the Land Rover.
Ok, so ready to hear about the best purchase we ever made? Remember that little green Mazda? We sold that car and bought a 2008 used Hyundai Sonata and it is the best car we have ever owned. We bought it thinking of it as our “beater” car but it is super reliable and runs great. We would make that purchase 10x over.
So that’s our nightmare car loan story. If you are starting out on your debt snowball know it’s ok to make mistakes as long as you get back up and continue on the path to financial freedom. As for cars below are a few tips if you are in need of a new car or currently have a car loan.
If you need to buy a new-to-you car (no current car loan):
- Halt your debt snowball and save – Make sure you have your $1000 emergency fund and then start piling up money to buy a new car. Check the value of your current car if you have one and see if you can get by doing a private sale (you get the most bang for your buck this way) and then purchase a used car. This might mean biking to work for a few weeks or carpooling with co-workers.
- Look for vehicles in the $1000-3500 range – You do not need to spend a ton of money for a car to just get you by. Most people pay off their debt snowball in 2-3 years so remember, this isn’t a forever car. After you complete baby step 3, Dave suggests saving up a bit and then upgrading your vehicle.
- Find a hidden gem – JR’s tips for finding a good car include doing your research (check the title, search for common problems with the model), look for common cars (Camry, Malibu, Taurus – these will be easy to find parts and fix), and don’t be afraid to take a test drive to a mechanic to look it over. You are paying thousands of dollars so a $30-50 mechanic fee is worth it.
- If it’s too good to be true it probably is – the Land Rover. Gah.
- Start a sinking fund for your current vehicle – start a sinking fund for your current vehicles to take care of repairs until you can buy a new one.
- Do not get a car loan – don’t do it!
If you have a car loan:
- Run a Kelly Blue Book (private sale) evaluation – check to see how much your car is worth and then subtract the amount you owe. If this number is negative you owe more on your car than it is worth. Not good.
- Total up your engines – add together the total value (not what you owe, not what you paid – what they are currently worth) of anything you own with an engine. That is cars, boats, riding lawn mowers, jet skis – all of that. This amount should be no more than 50% of your total income. If you are over it is time to sell, sell, sell.
- Decide to keep or sell – if you like/love your car and are not in over your head, Dave says to keep it. If you are having a hard time making monthly progress on your debt snowball then think about selling it. We like our car and have a manageable monthly payment so we decided to keep it. If we were upside down on our loan or weren’t making as much progress as we are we would definitely sell.
Here is the dreaded Land Rover in all its glory. My mom actually ended up finding that lost key in one of my dad’s jacket pocket’s that JR borrowed five months after we sold it. GAH!
If you’d like more information on our debt-free journey to check out our finances and budgeting page. We have a fun set of 3 budgeting forms you can use to get started on your budget and debt snowball today. If you are interested in Dave’s plan I highly suggest his book Total Money Makeover and/or signing up for his Financial Peace University class. (We took it and loved it!)
If this or any of our other posts have helped you, feel free to send me a message, a question, or any ideas for future posts! (I respond the quickest via Facebook Messenger!)
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