I'll just walk to work.
For the past two months, I’ve listened to every podcast episode from Dave Ramsey. It started off as wanting to learn more about how to manage my personal finances and get out of debt, or more accurately, out of student loan debt. I don’t have any money on credit cards, we don’t have a house mortgage (we rent a one bedroom for $1,200/month), and my $300/month car lease is ending next year.
My Kia Sportage is the best, but I’ve always had a leased car because my parents always had leased cars and I truly didn’t understand my other options. I was gifted a used Hyundai by my parents when I was 17 and I proceeded to run that into the ground...until eight years later when a man and his SUV actually ran me into the ground and a corner light pole. I was 25 and in grad school when my first car was totaled and then turned into a small payout from the swerving man’s insurance company.
A university assistantship, grants, and program scholarships covered all of my graduate degree expenses. I made just enough to cover the $850/month apartment and some groceries. Yet, somehow I didn’t think twice about walking into a Honda dealership by myself and then out with a brand new Honda Fit and an incredibly unaffordable payment plan (and a bunch of accessory insurance add-ons that I somehow approved). The worst place to be by yourself when you don’t have money or a form of reliable transportation is a car dealership.
A few years later, I didn’t even need a new car, but those damn tuxedoed Kia hamsters convinced me that my life would be greatly improved if I moved into a Kia Soul, and then a few years later into a Kia Sportage.
I obviously needed to upgrade by getting larger vehicles for the zero people/animals/items I regularly transport. No backseats have ever been more pristine. The back bumper on the other hand....may have run into a golf cart service vehicle.
My first used car gave me 8 good years of driving, yet I’ve since managed to lease three new cars in that same time span. Come October 2020 when the Sportage lease is matured, I’ll either be borrowing a paid-off vehicle from the family or buying a used car with cash money - no more monthly car payments are going to suck the life out of my budget.
As Dave Ramsey likes to tell me and his 13 million weekly listeners, leasing or “fleecing” a car is the most expensive way to finance a car and the worst way to purchase a car. This investment is one of the few that actually depreciates over time, so there is just no financially sound reason why you’d pay full price on something for years, only to turn it back in to the dealership and walk away with nothing, or buy the lower valued vehicle outright. If you're going to invest in a car, it is recommended that it not take up more than half of your annual income. If you make $50k a year, your car shouldn't be worth more than $25k.
I'll surely miss the convenience of having the dealership take care of every issue within warranty, the rarity of out-of-pocket costs, and zero break-downs. But, besides my apartment, I don't want anything else for which I'm paying hundreds of dollars every month without being able to call mine at the end of the day. It's a good thing work is less than two miles away and I've got a bike and two good legs.
