Weekly Thoughts 21 June 2013

“The cynic knows the price of everything and the value of nothing.” Oscar Wilde

A couple of weeks ago while sitting at a Saturday morning picnic at my son’s school, another mom told me that she was nearly finished paying off her car – a VW Polo – and should she now buy a new one? Would it cost her too much money with the service plan now finished? She is employed, no car allowance, no car deductions.

I said ‘No’. I said she must now drive her car for another same amount of years that she has just paid it off for. She told me that she took four years to pay it off, so I said drive it for another four years, while saving the same amount of money each month that you have just been paying. After the next four years, you will have a whole bunch of cash and hopefully your now eight year old car is the deposit on a new car and the whole bunch of cash helps to pay off most of it. You now turn your car buying process into almost cash, with positive interest/growth experienced on your savings rather than negative interest charged on the finance loan. But, I said, you will also need to mentally accept and cope with driving your car for longer, driving an older car and not being pressurized by friends and society into needing to be seen in a new car so soon again. I said that this could be the bigger challenge for you. She thought about it and said ‘good idea.’ Time will tell if she manages to stick with it. We can drive cars for longer.