Lazy Man and Money

We Own Two Cars!

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I hope you had a good Columbus Day. Yes, I’m a day behind (as usual). I’m still trying to figure out what kind of holiday it is. The kids and wife didn’t have school or work, but the stock market was open. At this point, if I don’t haven’t figured it out, I probably never will.

That four word title has been nearly 6 years in the making. Let me recap:

The Subaru Forester

In late December 2012, we bought a Subaru Forester. The move back to New England with a newborn made my old Ford Mustang not practical.

I wanted to buy a gently used car to take advantage of someone else paying the depreciation. However, there were very few gently used Foresters in New England. I think people tend to drive them for years. The dealership had a couple of used Foresters, but the discount was only about 8% off a new one, not a big savings. In addition, there were some dealer incentives with the new cars that weren’t available with the used ones. I felt like they wanted to keep those used ones around to bring in new customers into the showroom.

One of the dealer incentives was 0% financing over 60 months. Why yes, we will take your interest-free loan, Mr. Subaru!

Many personal finance gurus will say we made the wrong financial decision buying a new car. The numbers worked out better with the new car. It was a reasonable new car purchase at $25,000. Finally, we put a premium on safety with the newborn. We had an incident with the old car and it reaffirmed to us that life is very different when you are new parents with a newborn.

The Acura MDX

Eight months after the Forester, we found ourselves buying an a luxury SUV, the Acura MDX. We were expanding the family with another son. It made sense to move sell the Jeep from 2004 with 125,000 miles and get one that is bigger than the Forester for longer family trips. Two kids, big dog, and strollers take up a lot of space. When we travel with luggage to the airport, we get very close to using every square inch of space.

From a personal finance perspective, a new luxury SUV breaks ALL the rules. It’s a cardinal sin. There’s no way to justify spending a lot of money on a depreciating asset, right?

Wrong.

As I wrote in that article, my wife’s previous two cars had been the “junk college car” and the “need a car right now” car (2004 Jeep). At the time of the car purchase, she’d been a pharmacist for a dozen years. That’s another way of stating what I wrote at the time, “she’s earned a luxury car and then some.” She commutes 90 minutes a day a couple of times a week to her office – a tremendous reason for a luxury car. Finally, did you notice from the above that she was pregnant twice in a very short time?

We went through a dozen luxury cars (as mentioned) and eliminated a lot of the 70K+ luxury SUVs. The Acura MDX checked off all the luxury boxes. It also was only $42,000. I realize that “only” in this case may mean different things to different people. Personal finance is relative. However, when you are looking at spending $70K, $42K is a bargain.

We financed the Acura through USAA which had a partnership with TrueCar. It was 60-months at 1.35%. If someone wants to loan me thousands of dollars at a nearly 1% interest rate, I’m not going to say no. Unfortunately, it’s not as good as Subaru’s deal.

Fast forward to today. The 5 years (60 months) have passed and we have the titles. We moved from “buying” two cars to “owning” two cars.

The plan is to drive both cars for many more years. I’m hopeful that we’ll get 8 more. At that point this 50-year Lazy Man will have yet another mid-life crisis and buy the Mitsubishi 3000GT that caught his eye in college. (I try to plan my next mid-life crisis because that means I’ll live forever, right?)

Like everything in life, plans change. We’ll re-evaluate all the time like we always do.

Picking the Best Luxury SUV (for us)

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So a couple of days ago, I dropped the news that I’m going to be a father again. I went through a few of the financial changes that I could easily anticipate. One of the most obvious ones was that we’re going to need a bigger boat car. Two growing boys, a 75 pound dog, wife, and strollers is pushing the limits on the Subaru Forester. In fact we recently went on a trip with just the one child and putting luggage in with the dog was a stretch.

Regular readers will note that I bought the Forester at the end of last year. It’s only 8 months later (I’m a mathematical whiz, I know). Perhaps a little more forward thinking or some more efficient family planning would have lead to some different decision making there. Perhaps not, as it is still a very good mix of price, fuel economy, size, and snow-busting ability. We’re a two car family and the Forester can do about 90% of what we throw at it.

It’s just that other 10% that isn’t going to work.

Fortunately, my wife’s car has 120,000+ miles on it and she’s looking for a new one. Her whole life she’s had to take whatever car was available. There was the bargain junker that got her to her pharmacy residencies in college. My wife got the car she has now after an accident just days before we met. (I still remember calling her when she was on her medication. Explains why she’d go with me, right?) That car was another situation of, “Gotta have a car now!”

This time it’s different. We’ve got a few months to prepare. My wife has also expressed the desire to have a lifestyle inflation luxury brand car. And while I’d rather buy businesses and assets that appreciate, she’s earned a luxury car and then some. She’s always liked Audis but their focus on iPhone connections on our last test drive soured her a lot. We looked at the BMW X5, but the third seat seemed too small (and I thought the price was a little large). We looked at the Volvo XC90 and were impressed. If the dealership wasn’t inexplicably closed on a Saturday at noon, we might have test driven it.

I have to admit that when we first started looking at cars, I let my wife lead me from one place to the next. After all, it’s her car and it’s going to have to fit her luxury standards. However, as we started to look at these cars, I realized that this was for real and I should put in a little time researching what’s out there. Truth be told, I didn’t know anything about SUVs with third rows. I really just knew that my wife didn’t want a mini-van, and I wasn’t going that.

So with a couple of cars to help guide me (BMW X5, Volvo XC90), I was able to figure out what class of car she was looking at. (You might be able to tell, I don’t stay up with all the car companies and models). My research lead me to this this list of luxury SUVs with 3 rows by US News and World Report. US News isn’t your typical car authority, but they crunched the reviews from other car authorities and made things much simpler for me.

The list was eye-opening. The Volvo was the 2nd to last car on the 14 car list. The BMW was right in the middle at #17. In between were a bunch of other cars. I systematically went through them with my wife:

  1. Mercedes-Benz GL-Class – Starting at $60,000, we’d have to look at a used one to fit the budget. My wife isn’t a fan of Mercedes anyway.
  2. Two Infinitis – My wife’s former fiancee in college got killed in a Nissan. That whole family of cars is blackballed
  3. Two Lincolns – My wife: “I am not 75 years old!”
  4. Two Cadillacs – Out of the price range that we are looking for.
  5. Land Rover – MPG: 12 City and 17 Highway. No thanks!
  6. Land Cruiser – $75,000 and 13/17 mpg? Worst of both worlds!
  7. Lexus GX – My wife simply didn’t like the feel of the last Lexus she test drove.
  8. Audi Q7 – Nixed from the aforementioned iPhone issue. Perhaps petty, but I think it’s reasonable to be petty when spending $45,000 or more.

There’s one car that stands out on the list, the one at the top… the Acura MDX. My wife didn’t really have an opinion about Acuras. In some ways that was a blessing as it gave the car a chance unlike the Lincolns.

I was able to convince my wife to give the Acura MDX a look. We took a test drive of a 2010 and a 2014 and loved them both. The newer model was better in just about every way. It was a smoother ride, had better technology, and the kicker… a spot to put your purse. (Car makers should just focus on this and cup holders.) All joking aside, it actually seems like a new Acura MDX is the way to go.

The 2010 had 42,000 miles on it and it was $27,000. If you think of a car as having a 12 year lifespan, it’s already used up a third of that. So let’s pencil in 8 more years or $3,375 a year. A new MDX is $45,000 or $3,750 a year (again presuming the same 12 year lifespan). You are getting the best years with the new car and the better technology. The biggest difference though comes in the gas. The 2010 Acura MDX requires premium gas and gets 18mpg combined. The 2014 doesn’t require premium gas (though it’s recommended) and gets 21mpg. The plan is that this car would get mostly highway driving and there’s a 6mpg difference there. It seems like a no-brainer to go with the new one, right? Maybe there would be more room to negotiate the used car, but I’m not convinced a used car is what she had in mind when looking for luxury.

I think we’ll be going forward with the Acura MDX, but we’ve got a little time. I’ve been looking into the TrueCar buying service and it seems promising in getting a good deal. Anyone use that? Let me know in the comments.