MONEY OBEDIENCE

Buying A New Car

Having kids always has a major impact on a family. Having kids also impacts us financially quite a bit. I don’t really want to discuss how kids affect our financial lives. That’s way too big of an area to cover in one blog entry. So I want to discuss only one topic that relates to kids. What car should we drive?

This is our situation. We have two little fellows, aged 2 years and 6 months. And we are adopting an 8 year old girl. Like most people, we do not have an unlimited budget. But we are fortunate enough that we can afford to buy a car up to, say, $40,000. If we don’t have cash, we can finance the car or lease it. Well, leasing is not really an option for a family car with three little kids, since the car will most likely not stay in good shape during a three-year lease, right? When you return a leased car that is beaten up by kids, you will most likely have to pay a hefty penalty of a few thousand dollars. Imagine! You have to pay money to get rid of a car! (I knew a guy who had to pay for $3500 worth of repairs to return a leased car. – Ouch!)

Anyway, all considered a minivan is the obvious choice except that we have a little problem with a minivan. Mom does not want to drive a “mommy car”. She thinks of herself as way too cool to do so. (She also owns a VW Turbo Beetle, which she had financed with a five year loan that is totally paid off.)

So we did what many people do? We looked at SUVs, even though dad had a problem with SUVs. He is too green to feel comfortable in a car that gets less than 20 miles to the gallon. Maybe he is also too cheap, since most SUVs require premium gas. But if mom wants to look at SUVs, what choice does dad have? – Happy wife, happy life, right?

This is what we found. You spend close to $40,000 to get an SUV, which then costs you a lot of money to drive around, too. As it turned out, most of the SUVs we looked at did not have a lot of space inside. So what am I paying for? Being able to run up steep mountains in treacherous conditions? How often do I have to do that? Never? Are SUVs safer than sedans or other cars? From what I know, as a group SUVs are not safer than sedans, for example. So what are we going to do?

I was lucky that a friend of mine told me about the Mazda5. I have never heard about this car before, but it turns out that the Mazda5 is a great alternative to a minivan or an SUV. It has six separate seats. Well, the third row is kind of small, but so are our kids. Our third child does not have to squeeze into a three-seat bench between two baby car-seats, which is probably a lot more uncomfortable than a tight third row. She can sit in the back by herself. (I get the feeling that a third row seat will be the favorite seat for either one of the kids in the future.)

All seats fold over separately. This allows for ample room to transport stuff. We can fit three kids and a double stroller on the space where the second seat of the third row is folded over.

Surprisingly enough the Mazda5 is also kind of sprightly, certainly a lot more so than a minivan. That made mom happy.

The car gets about 23-28 miles to the gallon. That is a good feature considering how much a gallon of gas costs these days. And it is priced below $20,000. That made dad happy!

We bought the car more than six months ago and are very happy with it.

How does this purchase affect my finances compared to getting an SUV for $40,000? I obviously saved $20,000 by getting a cheaper car. Let’s say I buy a car every ten years, which makes it four cars during my working years – probably more, but let’s stay with this example. Let’s further assume that I get 4% on my savings. After 40 years I will have accumulated almost $235,000. Not bad, even with conservative assumptions, right?

I also save money on gas. If I pay $3.00 instead of $3.30 per gallon, if I get only 5 miles more per gallon with the smaller car, and if I drive 12,000 miles a year, I will have saved over $40,000 during the same 40 year period. That amounts to a total of approximately $275,000 in savings over 40 years.

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