Phase 1 - The Sportscar (Almost)

With $4000.00 cash in hand the stage was set to get our Phase 1 car on the "Drive Free for Life" project. After searching for a couple of weeks straight and bringing a car to my mechanic to check out with a thumbs down we found a winner. My wife saw a 1994 Honda Accord with a new engine for sale on craigslist for $3500.00 . The car was on the other side of the city (80 miles away) but, after calling the guy selling the car it seemed like a good deal which needed to be looked into more deeply.

 Stock Photo of the 1994 Honda Accord

The first thing that made me interested was the new engine. I spoke with the seller and he explained it was installed 10K miles ago and he was using it as a daily commuter locally. The MPG is 22 City / 29 Hwy (25 combined) This would be a big change in gasoline usage (2000 Ford Windstar 15 City / 21 Hwy (21 combined)) To put this in real terms: 

I drive 66 miles round trip to and from work daily which is 17,160 miles per year.

Realistically I'm getting about 19 MPG on the Ford which is about $3161 in gas per year compared to the Honda at $2071 per year. This is with $3.50 per gallon assumption and the Honda at 29 mpg. The difference is $1090 per year. So in about 3.5 years the initial cost would pay off for itself. This is an important factor because in 1 year I can resell the car for less then what I spent on it and still have a positive cash for the year.

Initial cost      $3500

Gas Savings -  1000

---------------------

Before real loss $2500

What if I were to instead put the gas savings into the Phase 2 car fund to accelerate the quality upgrade?

That is $90 per month bonus on top of the regular savings.

The deal starts to look more interesting for me with these type of numbers. The big risks I saw was the car was over 10 years old (the age of reliability drop) and was the guys honest about the engine being new rather then rebuild. Both cars my wife and I have are over 10 years old and over 200,000 miles and both brands were on the bottom of the bucket of reliability. The 1994 Honda Accord ranked top on reliability, I saw many others for sale with excess of 250,000 miles at the same price as my target, and I had a friend who still had one in pretty bad shape still as a daily commuter so the confidence in this model and year was up. 

I saw the car with a friend and the car looked good except for the tires. The engine looked like a new car engine including all new wiring. I talked him down $100 for the tires and we became the owners.

About 5 miles down the road the car started to overheat. I guessed it had to be something stupid and I was right, one of the coolant lines had came off due to the clamp not being tight. It was a big sign of relief because you have the immediate knee jerk reaction to think you made a bad deal or got ripped off.

At the 10 mile mark the car started to vibrate at about 50 miles per hour and then get good again at 65 miles per hour. I hoped it was not the steering.

When I got home I web searched for any issues I saw with this model. The world wide web is a great money saver. I saw it was caused by not round tires. (I knew I needed to replace them anyway.) I also had the advantage of a friend who had first had knowledge of the year and model car.

So the Phase 1 car was acquired; how good a deal it was is yet to be determined but, the momentum is building to get to free car land. 

Reliability equals Value

The one factor that bugged me about the "Drive Free for Life" plan was the lack of any mention of choice of car in the equation of moving up in vehicles. If you have a bad choice in vehicle it could have an effect on your bottom line. One factor I would like to focus on is reliability.

Often people don't factor in this when purchasing a car. This is a universal factor which should be taken into account no matter what car you get whether new or used, compact electric or diesel bus, etc. I'm a firm believer in momentum building and working out issues to keep my momentum from stopping. The plain truth is I prefer to avoid issues and limit risk.

There is a big gap in the reliability of a vehicle in model and manufacturer. Keep in mind these factors are in constant flux and change all the time.

Value is also not just a function of cost. My example of this is the Yugo

1986 YUGO $3990

Invest in Yourself - Drive Free

I had come across an interesting video from Dave Ramsey's YouTube page ~ "Drive Free - Retire Rich". I would like to suggest watch the video before you read my comments.

Watch Now.

Done? Read on....

How much is my car worth?

I have a car that has 207000 miles on it from the year 2000. I would like to know what people think of how much it is worth. How do I value such a beast?

How can I value it? It has an engine that runs OK but, needs oil every once in a while. (It burns some as extra fuel.) I've heard some people tell me just look up the blue book value. Some have said I need to know the miles per gallon. There seems to be as many opinions on the value of my car as there are people.

I started the blog by asking the question of how much my car is worth. It was partially a rhetorical question. My answer is as follows:

My 207000 mile year 2000 mini-van is worth more than the blue book value. It is worth more than the car was when the original owner purchased it in 2000. In 2000 the mini-van's suggested retail price was $24,600. I purchased it for $2700 in 2009 with 155000 miles on it. In 13 years the retail price decreased by almost ten fold. It is worth to me the price of transportation to get to work to enable me to increase my income.

The increase of income will be because I have transportation to work that is higher paying then my local area. The value of my car comes not from the value it can obtain on the open market but, how I use it as a tool to reach my goals.