My Next Car(s)
September 1, 2015
By Scott Lewis
Last month I mentioned that I lost my "photo studio," a two car
attached garage, making the need for a bright red coupe less important.
Also, the house is on the market. Until it sells and I know exactly how
much equity I will get I can't start looking for a car.
I am doing my best to try and stay afloat until the equity comes in. Regardless of how much it is it will not be enough to cover all my debt. I have to decide how much to put toward debt, and how much to put toward a car (or cars!!!). I promised my youngest son a car for his senior year of high school, just as I got my oldest son a car for his senior year.
The easy solution is to pass my Ford Focus onto my son and get something else for myself. But how much to spend, that is the dilemma. I know I am paying off some of my debt. I was thinking of just paying off some credit card debt and leaving my debt consolidation loan as-is. It has about 2 years left, and it is from my 401K plan, so I am just paying myself back. If I choose this path I have a few options on how to spend the remaining money.
If I choose to pay off the debt consolidation loan (giving me the biggest boost to my monthly income) I will be extremely strapped for cash. In fact, until the house sells and I know exactly how much money I get, I don't even know if this is possible. The loan could be more than the equity I get. That would suck.... big time. Assuming it is possible to pay off my debt consolidation loan, that would mean I would have a budget of around $15K for a car (I would need to keep my payment at $300/month, or less).
Here are my 4 options (that I have thought of so far):
1) Pay off two credit cards and my Focus. This will allow me to use the payment that went to the Focus toward a new (to me) car for myself. I will likely have $300-400 to spend on a payment for myself. Depending on how much is left over for a down payment... I should be looking for a car in the $20-25K range (at the low end if the equity is low). This option would pull from the previous 5 columns on Cars For Photography, as well as my regular columns on Cars Worth Waiting For.
2) Grin and bare it! I would pay off the debt consolidation loan. Assuming this is possible, it would leave me with a budget of around $15,000 for a car ($300/month and no down payment). Eventually this will gain me the most, but it will be a long road, and certainly the least fun.
3) Buy a 93-96 Camaro Z28. As long time readers of this site will recall, this car has been on my Affordable Future Classics column. I used to own one, and I will eventually like to add one to my collection. This could be the start of that collection. I could afford $8-12K for this car (hopefully). I would still have a payment on the Focus (a little under $200). The difference between this and the car payment from option 1 would go directly toward savings. The Camaro would be a daily driver until my debt consolidation loan is paid off (about 2 years). Then it would become a collector car driven occasionally, and I would get something else for a daily driver.
4) Buy a classic. This has several issues. It is similar to option 3 above, but I would need a reliable daily driver. To keep my promise to my son I would have to A) buy him a car, or B) give him the Focus and buy myself a car. I would have to pay cash for this car, and it will come directly from the house equity. Of course, I then would have to have money left over to buy a classic. This could stretch my money pretty thin. I was hoping to have $0-15K cash (since I would not be paying off my Focus). That money would have to be split between a reliable daily driver (on the cheap) and the classic. That is a tight budget for 2 cars. This also leaves me with the least amount of cash. About the same as the debt consolation plan above. So I am not sure I want to strap myself for cash that badly. However, this is the most fun option, and the classic would be valid equity I could sell if push came to shove.
Those were all my options... until...
Just before the house went on the market my brother-in-law asked if I was interested in buying his daughter's car for $3,000 (when the house sells). It is an 04 or 05 Honda Accord. It should be more than good enough for my son for high school. Then again, it might be good enough for me to use as a "beater" so I can get something cool. I am thinking this would go great with option 4, buying a classic. It would likely increase my budget for a classic, or leave more cash available for working on the classic (or just to pad my savings).
I could even use this as a chance to do something different with option 1 above. Pay off the Focus, buy this car, then go looking for a modern car that I would normally look past due to the possibility of high maintenance costs, such as a Porsche Cayman or Boxster or BMW M3. I would still be in the low $20K range, but with a backup car so if the high maintenance car has to sit for a few weeks while I save for a repair that would not be a problem.
Next month I will hopefully be able to tell you which direction I am leaning towards. Let's hope for a fun ride. I WILL be getting at least 1 car (so my son has a car to drive to school). The rest is completely up in the air.