Every once a while, I get into a spending fever. I'd feel that I've "deprived" myself because my family have learnt to deny ourselves of today's luxuries.
In 2004, we felt it was time to buy something.... anything nice for us. So, we looked into a Chevy Tahoe - something I love very much (at that time)..... The payments were going to cost us $500-$600 per month. Yikes!!! Like all consumers think, we could afford it (those famous words)!
So, what did we ended up with?
For $500 - $600/month, we ended up moving up in house (yes, Frisco real estate!) . No doubt that we make to make this extra payments for 30 years, instead of the car for 5 years, I still think it is worth it.
Stephen Wolfe's (the real estate expert in Birmingham, Alabama) blog about Dont Buy That Car! brought back memories of this specific experience.... I had to investigate if my purchase was still justifiable.
That same Tahoe I would be driving today would be worth $20,000 at BEST CASE scenerio. I would have paid $38,000. A depreciation of $18,000. Ouch!
In comparison, my house appreciated at least $20,000 - yes in this slow depressing market so Jim Cramer said. I also assumed that my house has maintained a zero appreciation value for the past 18 months. My family turned our first home in 2004 into our rental property. That property probably appreciated $20,000 - a very low ballpark estimate.
Per Dave Ramsey famous words, "Dropping like a ROCK!".... and he is right. At this point in our financial life, we cannot afford to purchase a brand new car with the depreciation rate like it is. And guess what?
I'm driving a RX 330 today. I bought it 3 years used (and yes, it still depreciates but not like I would if it is brand new). I "feel" it is a much better car for me too.
My houses continue to appreciate and someday my car will be worth $500. A huge divide!!!
