My car. My car debt.

Okay. Let’s talk about it.

(This is not a photo of my actual vehicle but a car with the same make, model, and color.)

One of the things I appreciate most about this blog is that I can be entirely transparent about my finances…if not entirely transparent about my identity. I find this not only allows me to talk about the financial stuff I wouldn’t really feel comfortable talking about elsewhere but it also means when I am in need of financial advice, you all have a much more informed perspective than any person in my “real” life. However, when I was looking at my potential budget for March (the first budget for which I will not have apartment associated costs) I realized I needed to share it with you all as things have changed quite a bit. I then realized some things, like my car payment, would come as a surprise because I have never discussed it.

For my September 2020 – Student Loan Balance(s) post, I removed my car lease debt line from my reporting. At the time, it didn’t feel like such a big deal. The focus of this blog has always been about my journey to pay back my student loans, and my relationship with them. However, in hindsight, I could also see how that might feel like I am trying to hide something from you all. That was never the case. I just hadn’t made up my mind about what I was going to do when my car lease ended in early January, and I had already flip flopped, several times on the issue. I just wanted time to think about it.

Well, like all things, late December finally arrived and I had to make a decision.

I currently owe $13,856.43 on my 2018 Ford Focus. And for now, I feel like it was the correct decision. To understand that decision, I will share a brief history of my car ownership as an adult.

2012 – I had returned to the U.S. after several years spent abroad and lived in a place where I needed a vehicle. I bought a used Prius for $10,000.00. The car had a little more than 50,000 miles on it and was a good deal. While I owned the car, I moved several times, finally settling back into a city in which I have previously lived, very close to my best friend.

2014-2015 – I was actually sharing the vehicle during this time with my best friend. She was paying me half the car payment to have access to my vehicle for 50% of the month. While this worked initially, over time, it became annoying, and she decided to buy her own car.

2015 – I took my friend to the dealership to purchase (lease) her vehicle. My friend explained all the reasons that she was deciding to lease vs. buy and at the time, it all sounded fairly convincing. What I should have done was left the dealership and reflected on how very different my friend’s and my financial situations were. But I didn’t do that. Instead, I leased my first vehicle.

2015-2017 – While in graduate school, I once again become hyper-focused on getting out of debt (this has happened at various points in my life) and was upset with the idea that I had a car lease as I now lived downtown, in a small city, with excellent public transportation. I investigated lease buyouts, selling the car and paying off the lease, etc. I just wanted out. However, at some point, I decided I was heading back to the East Coast and moving to a city where I would once again need a car.

2018 – My car lease was coming to an end and I had a decision to make. Unfortunately, I had waited to the VERY LAST MINUTE and my car lease was ending in two days. You would think this would be the moment where I took a step back, re-evaluated, and made a different decision that I did in 2015. Right? You would be wrong. Instead, I allowed myself to be again talked into getting a second car lease. Ugh.

December 2020 – So here I am. Once again, trying to decide what to do about my expiring car lease. Looking back, I realized that if I had kept that Prius I purchased in 2012, it would have been paid off in 2017. Or if I had purchased that car I leased in 2015, the car would have been paid off in 2021. This time I did take a moment and took a step back. I reasoned that whether I get into medical school or not (please, oh, please let me get in) I am likely to live in a place where I need a car for at least the next ten years. When I purchased my car lease in December, it had a little over 35,000 miles on it and was a 2018 model. There is no way I could have purchased a used car in that condition for $10,800.00.* And I like my car. So I decided to keep my car.

For now, I am happy with that decision.
_ _

A few other things… I plan to continue staying with my parents at least through June (more on that later), when my classes end. Unfortunately, this means my round-trip commute to campus in now much, much longer. My twice a week commute is about 35 miles each way, with traffic. Ouch. Gas prices this far south are still relatively reasonable so the difference between rent and increased fuel costs is almost negligible.

I still want this debt paid off prior to my debt free goal day or prior to my 40th birthday. To make that happen, I have increased my monthly car payment to $300.00. Given how low the interest rate is (lower than all but one of my student loans) it just doesn’t make sense to move it up any further in my debt payoff order.

And finally, the difference between my car’s purchase price and the loan amount shown on my statement above is state sales tax, dealer fees, registration, and an extended warranty. The extended warranty was the only “optional cost”, but covers all non-tire related electronic and mechanical failures, including lost keys, for eight years. I think this was a good choice.

4 thoughts on “My car. My car debt.

  1. As I was reading your timeline I kept rooting for you to buy the car. I’m glad you did. 🙂 I think as long as you like the car and plan to keep it for a while, it is a good buy.

    I bought my car new as a college student and while I initially regretted buying a new over used car as a broke student, I’ve since paid it off. I have kept that car for almost 10 years now and have never ran into any problems with it (knock on wood). Having the peace of mind of knowing the entire history of my car since I’m its first and only owner is well worth the money in my opinion.

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    • Thanks Avery. And thanks for sharing your experience! That is exactly my approach. I like my car and would have no problem driving it for as long as it’s in good shape. I am not really a car person and as long as folks don’t “hear” me coming, I’m okay with what I have; the car I have is what the dealer thought I would like. I know. I have a problem saying “no” to sales people.

      I do wish I had thought about buying a car at the outset as I would have made a slightly cheaper choice (Ford leases are super cheap but the buyout is not) OR gotten an electric vehicle.

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  2. I’m like you, in that I’m not a person who cares much about her car beyond wanting it to run well and get me where I need to go. So, I think paying for a car, and for car maintenance, and car insurance, is all so boring and irritating! But it’s also, often, hard to get around it. As you said, you’ll need a car in medical school and after, so one way or another, you were going to be paying for a car. I think you evaluated your options and made a fine decision. 🙂

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    • Thanks Ellen. I definitely agonized over it but at the end of the day it is a “need.” Especially as I am now living with my parents who live so far away from the city and while I continued to work for University B as it is likely that we will return to campus during the summer.

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