By on December 1, 2011

 

Ryan writes:

Sajeev and Steve,

I find myself perplexed by a vehicular conundrum. A year ago I purchased my first new car, a 2010 Subaru WRX STI SE. It is a great car. Previously I daily drove a 1997 Toyota Land Cruiser. Another great car. I drive about 20,000 miles a year, mostly on the highway.

My wife and I both work. We contribute heavily to our 401K’s and IRA’s. About a month after I purchased the car my wife decided to go back to school, for an MBA. No problem. She now has a year left. For the year we will be setting aside just shy of $1000 per month to pay for her schooling. This leaves us saving very little over the next year. We have emergency funds to last a few months should the need arise. I want to eliminate debt as soon as possible (currently 2 car loans and a mortgage, nothing more).

My inner cheapskate has become uncomfortable with the nearly $1100 a month operating costs of my beloved STI. My inner car guy misses the Land Cruiser terribly. I’m without a truck. Replacing the STI with another 80 series Land Cruiser or Land Rover Discovery I do not save much money because of the fuel costs.

I am contemplating selling the STI, and picking up a truck and a commuter. The commuter would need to be somewhere around $10,000 or less. Cash for one vehicle, maybe a loan for the other. The ideal commuter would be more comfortable than the STI, get around 30 MPG, have four doors and possibly be all wheel drive (for ski trips). Cadillac CTS? Lexus something? Nothing soulless, please. I can turn a wrench and can maintain both vehicles no problem.

What say you? Do I keep the STI and buy a truck when I can? Sell the STI, buy the truck and commuter? If so, what kind do you suggest?

See the attached spreadsheet. (Ryan’s Car choices)

Steve Answers:

My assumption is that you can cash out the STI. Because if you can’t there is no need to read beyond this sentence.

Well now… you apparently want a Euro car in an American market. Before we cross the bridge of dread known as ’10 year old European car’ I have to ask you three questions (cue Monty Python bridge scene).

  1. Have you ever spent more than five hours performing a major maintenance or repair… and succeeded?
  2. Are you one of those people who enjoys reading up on enthusiast forums at odd hours?
  3. When someone tells you about ‘electrical issues’ with their ride, is your first gut reaction to flee and/or throw up?

If you have the courage to brave a parts network that arguably lead to the fall of the EU, then by all means have at it. Audi sells the A3, A4 and A6. BMW has the 3-Series and 5-Series. Mercedes has… well, let’s not go there.

If saving money and having a fling is your thing, then ask Sajeev. Or get a Lexus IS300 SportCross.

Sajeev Answers:

Don’t ask me about having flings, but I am a damn good tightwad…maybe that’s the problem?

So what does the lady in your life drive?  I hope it’s a Panther, as that would make my job much easier.  But I still might give the same answer: if it ain’t broke, don’t fix it.  Odds are your wife’s ride doesn’t suck down money like the gas/insurance/monthly payment of an STI.  Even if it isn’t a “commuter” car.

Definitely sell the STI. You like trucks, so get one. Take it from me, people are actually excited to go for a ride my stupid little 4cyl/5-spd Ford Ranger. I really don’t get it. For some reason being inside a truck with a stick shift is exciting and different to most folk. Which is a sad (but true) statement about our overweight, over-leveraged, conspicuous consumption society. You can both appreciate a cheap little truck’s charm AND enjoy it, considering your love affair with the Land Cruiser. Not to mention you need the money. So be a tightwad like me, at 33MPG highway in my case you won’t regret it. At least not initially.(cough)

You are in Tacoma land, or Ranger land**.  Neither are soulless, as my experiences have shown. Drive them both and see if the Taco is worth the price premium…buy it with cash and get one loan payment out of the way. Worry about the wife’s car later, that is a separate problem.

**If you are upside down on your loan for the STI, you might very well be in $8000 Ford Ranger territory.

Need help with a car buying conundrum? Email your particulars to sajeev@thetruthaboutcars.com , and let TTAC’s collective wisdom make the decision easier… or possibly much, much harder.

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76 Comments on “New or Used: Eliminate Debt, Eliminate Subie?...”


  • avatar
    MarkP

    Eliminating debt is a great idea. So is saving. But Ryan sounds young enough that not putting in huge retirement contributions for a year makes virtually no difference in his long-term prospects. So it seems to me that this boils down to “want” rather than “need.” My advice is to choose one course. Be pragmatic and go the cheapest route, or follow your “wants” and dump the Subaru for whatever it is that you really, truly want. Don’t try to disguise the second choice as a variation of the first; if you go that way, just go. One further piece of advice: make sure your wife is OK with your decision.

    • 0 avatar
      A Caving Ape

      Actually skipping one year of retirement savings when you’re 25 makes more difference than skipping 10 years when you’re 45.

      But is a crapload of money to spend during retirement better than moderate amount of money to blow on what you love when youre young? There’s a better question.

      • 0 avatar
        Piste

        A Caving Ape nailed the higher level question on the head. I’ll post what I ended up doing down below.

      • 0 avatar
        Piste

        A Caving Ape nailed the higher level question on the head.

        I’ll post what I ended up doing down below.

      • 0 avatar
        MarkP

        Maybe. Maybe not. It depends on your assumptions, and, as they say, past performance is not a guarantee of future performance. But the point is that he should not have a heart attack if he can’t afford to put as much into retirement saving during this one year. He will have lots of years to make up for it. As a later commenter notes, putting the money into his wife’s education is a form of investment, assuming the degree is in an area in which an advanced degree will actually pay for itself.

        Also, regarding some of the later comments, I think borrowing money is a bad idea if you have the money you need to do the things you actually *need* to do, plus enough to tide you over if bad things happen. It’s an especially bad idea to borrow if you don’t have what you need.

    • 0 avatar
      fvfvsix

      Honestly, I would cut the 401K’s to a minimum for the next 2 years, and use that to bring your “emergency funds” to weather 12 months with zero income, and reduce your debt load to just the mortgage. As far as the cars go, a commuter + truck/utility vehicle sound like a decent idea. I would consider picking up a full size if a Taco is in the mix of possibles. You won’t save much by going with the Toyota- and an F150 with the 5.0 engine should be handy for decades to come.

  • avatar
    Spartan

    1. Honestly, and this may sound absolutely mad, but I’d think about cutting back the retirement temporarily by a few percentage points and re-direct some of that $ where you can quickly access it just in case things go sour. Only do this temporarily until all is well, the boost it back to your normal levels. I do this from time to time, especially when the markets get extremely volatile.

    2. Sell the STI, especially before any hints or ideas of the next generation model start surfacing and the value plummets. You may take a hit and have to put up some $ out of pocket, but it’ll be worth getting rid of the insane monthly cost of $1,100 a month. OUCH! It doesn’t cost the much to operate my G37.

    • 0 avatar
      bryanska

      It’s the volatility that generates returns over the long term. You should be setting aside cash to boost fund purchases when the market dips. If you have home equity, open a HELOC and use that as your emergency fund. Put the cash where it grows, such as in a 12-month revolving bond fund.

      • 0 avatar
        Spartan

        Volatility can generate returns over the long term if you increase your stake in the said market during the downturn and it’s bullish enough on the upswing that you make up for your losses.

        Using a HELOC for an emergency fund isn’t exactly a good idea, especially in this credit market where HELOCs are known to be cut or revoked at a moments notice. To each his own, but I wouldn’t risk my family’s finances with an emergency fund based on a HELOC.

        A safe emergency fund is liquid cash that you can access at any given time without the risk of it being revoked (i.e. your run of the mill savings account that’s FDIC insured)

      • 0 avatar
        Piste

        I forgot to mention it in my original message, but we have a fine emergency fund set aside. So the question was more lifestyle than “we’re going to go broke”.

  • avatar
    A Caving Ape

    Sounds like you wanna sell the STI. So, sell it! Be free! Then find some temporary transit that you can stand for 3-4 months. Cause you’re gonna want to take your sweet time finding the car(s) you love.

    But to more specific advice: I like the two-car solution! I would suggest spending as much cash as you dare on a 4Runner, and financing the commuter if you’re okay to stay in debt. I suggest a nice cheap one from the 90s, here in the PNW they never seem to go out of style. You can beat on it without mercy or stress.

    Since the 4Runner will take care of your mountain needs, your fun needs, and your wrenching needs, might I suggest considering one of the latest crop of excellent Korean or domestic compacts? Normally I’m all “buy with cash! buy an E46!” but it sounds like that Land Rover covered your emotional car needs… a 4Runner could replace it, and there’s no need for two toys. The note on a new elantra or whatever will be up there with the STI’s, but the gas and insurance costs will be much, much smaller.

  • avatar
    NormSV650

    As Dave Ramsey might say your in over head and can’t afford new cars and ski trips. Twenty thousand miles is not 15 mpg ideal truck ownership.

    Or we could just blame it on the banks!

    • 0 avatar
      bikegoesbaa

      Contributing heavily towards retirement, able to save $1k a month, and having sufficient cash on hand for several months expenses doesn’t strike me as a description of somebody who is “in over their head”.

      Did you even read the entirety of what he wrote?

      I’ll echo the advice that other had – deciding whether you want an STI or a truck and deciding how to manage your expenses are two separate issues. Don’e use the second one to justify the first.

      If you want to ditch the STI and get a truck, do it; but be honest with yourself and admit that it’s what you want rather than a clever financial strategy.

      In this situation I’d be inclined to sell the STI, buy a <$5k commuter, and watch the local market like a hawk for a project/fun truck that I could buy with cash and use purely for enjoyment.

  • avatar
    ktm_525

    I second the 4Runner choice. Ideally third generation (97-2002) with the 2.7 I4 with standard.

  • avatar
    brkriete

    You don’t seem like the kind of guy who’d be happy driving an econo crap-bucket, so the “get a used Corolla and drive that until the wheels fall off” answer isn’t really applicable. Unfortunately that is the only way you are going to save significant money.

    I’m assuming you’re still making payments on the STI, otherwise your “operating cost” number doesn’t make any sense. Anything more comfortable than the STI *PLUS* a truck isn’t going to save you money over the STI (let’s say 10K used CTS plus another 10K for a used pickup in acceptable shape = 20K. If you put down a decent amount on the STI and have been making payments for two years, you probably owe about that amount). Buying TWO vehicles to save money is a dumb plan. Buying one vehicle that suits your truck needs (a used Ranger or Tacoma) isn’t going to be any more comfortable than your STI, at least not one you can buy for a reasonable price.

    If it’s really just another year until your wife is done with her MBA, your best bet is likely to stay the course. If you absolutely must get rid of the STI, go for it, but realize anything that satisfies your requirements is going to be a “lifestyle” decision, not a financial one.

  • avatar
    jmo

    For the year we will be setting aside just shy of $1000 per month to pay for her schooling. This leaves us saving very little over the next year.

    So? You’ve decided to invest the money in an education (I assume you’ve run the numbers and the ROI is favorable) rather than an Index Fund. That’s certainly a valid choice.

    Also, you’ll sell your ’10 Subaru (that with mostly highway driving) will go another 10 years and 200k miles. You’ll take the depreciation hit and buy a commuter for 10k than might only have 100k miles left – and will be getting deep into expensive repairs much sooner?

    You need to look at the big long term picture and not focus so much on the $1,100 a month.

    • 0 avatar
      Spartan

      Focusing on the $1,100/month cost is focusing on the long term and the big picture. $13k a year, that’s a lot of coin for a lifestyle choice, especially for an STI which isn’t exactly a car I see worth operating for that kinda $ every month.

      And FWIW, I highly doubt he would drive his STI to 200k miles. Anyone who buys an STI new likely will rid the car before 100k just because they’ll probably want something with more power, more comfort, or they’ll have a family and grow out of it. So your “10 years and 200k miles” statement is likely null and void in his case.

      • 0 avatar
        jmo

        Focusing on the $1,100/month cost is focusing on the long term and the big picture. $13k a year, that’s a lot of coin

        True, that would have been a valid point to bring up – before he bought the car.

        But, please tell me it’s $1100 because it’s a 36 month note?

    • 0 avatar
      Spartan

      Has to be payment, fuel, and insurance. I couldn’t see myself spending that kinda $ every month for a car that’s loud, uncomfortable and gets terrible mileage.

      STI’s are great when they’re used, depreciated, and only driven on the weekend. They’re horrible daily drivers.

      • 0 avatar
        jmo

        What year are you thinking of? I test drove one and it was quite and comfortable – for a sporty car. This was back in 08′ I ended up going with a GTI but only because I couldn’t get a WRX with a sunroof and leather.

      • 0 avatar
        jmo

        What year are you thinking of? I test drove one and it was quiet and comfortable – for a sporty car. This was back in 08′ I ended up going with a GTI but only because I couldn’t get a WRX with a sunroof and leather.

      • 0 avatar
        Piste

        The STI was a fine commuter. The 2008+ generation is plenty comfortable.

        200k on an STI? No way. Maybe on a second (third?) engine.

  • avatar
    Mark MacInnis

    I have no real advice for you….except to ask the rhetorical question of how’s come your wife didn’t speak up about her plans to return to school BEFORE you signed the papers for the new school? That MIGHT have been pertinent to your decision to buy it in the first place….if she’s flighty and prone to making and unmaking important decisions, how do you know she’ll finish her MBA?

    Communication is kind of important….

    • 0 avatar
      brkriete

      You must have wings to be able to leap to that conclusion from the facts presented.

      • 0 avatar
        Mark MacInnis

        Dunno, mate. In the past when I’ve made, like, a major financial decision involving thousands of dollars, I’ve always tended to ask my wife if there is, you know, anything on her horizon which might have an impact on my ability to make the financial commitment.

        One of two possible scenarios exist: Either they didn’t really discuss it at all, and thereby by not raising the MBA issue herself at the time the Subie was bought, she gave her tacit approval to that purchase. One presumes that in most cases, just as in deciding to buy a car, deciding to pursue an MBA is one of those long-term type decisions that usually doesn’t just show up overnight. Which means, if HE didn’t ask, and she didn’t say, but it was in the back of her mind, that might tend to indicate they may have a bit of a communication problem.

        The other possibility is that she woke up one morning, shortly after the Subie was signed for and delivered, and said, “Hmmmm. Maybe I’ll go back to school and finish my MBA.” In which case, it appears she is the type to do things on a whim. In which FURTHER case, she could just as easily wake up one LATER morning and say, “Hmmmmm. You know, this whole MBA thing just isn’t working for me anymore. Think I’ll bag it.”

        So, point A, I didn’t arrive at a conclusion, I merely posed a question which, many might agree, Ryan needs to answer for himself before making any decisions on what to do tranportationally, and 2.) It really didn’t require wings, mate….just an occasionally painfully-gained understanding (more or less….usually less) of the sometimes-fickle nature of the female mind vis-a-vis decision making. Plus an ability to think from point a to point c via point b. You really oughtta try it sometime before letting your fingers run away from your brain and typing silly, condescending comments directed at people who are smarter than you…

        If Mssr. Ryan is making these decisions by GUESSING what his wife is gonna do, without, you know, ever actually ASKING her how committed she is, then he is potentially setting himself up for disappointment….

        Didn’t mean to go all Dear Abby on the B&B here, but Mr. brkreite seemed to need a little help finding the plot. ; )

        Jus’ sayin’….

    • 0 avatar
      Piste

      Communication is important. Poor assumptions just make you look like an ass.

  • avatar
    KixStart

    Ryan,

    When I read your note, my Inner Cheapskate was thinking, “Why do people buy cars with $1100/month operating costs?”

    If you’re worried about finances and can cut costs by dumping the Subie, go ahead and do it (will your insurance go down, too?). But getting two vehicles to replace one seems kinda crazy. Why not just buy an Elantra and put your Inner Truck Guy on hold for a few years?

    And if you can’t stuff your Inner Truck Guy into the trunk for a couple of years, they seem to be having a fire sale on those aforementioned 4 cylinger/5 speed manual Ford Rangers.

    • 0 avatar
      jmo

      “Why do people buy cars with $1100/month operating costs?”

      What else are you going to spend your money on?

      • 0 avatar
        KixStart

        You know, if I was wealthy, I’d buy a fun car. No question about it. But I’m not, so it’s transportation applicances for me.

        And “wealthy” doesn’t mean, to me, “enough current income to cover all the toy loans,” it means, “holding enough XYZ co shares to live on the dividends forever… and then some.”

      • 0 avatar
        bikegoesbaa

        You are ignoring the possibility that a fun car can also be a practical “transportation appliance”.

        What if you could have something that is both fun and practical for the same cost as an appliance, or a small cost premium?

    • 0 avatar
      Piste

      KixStart

      Right you are. My Inner Cheapskate is still fledgling in nature. I agree with your definition of wealth below.

      I think you’ll find my solution (below – soon) would earn high honors with the cheapskate alliance.

  • avatar
    Dan

    Third the 4Runner.

    But if you are used to nice cars an old one, all the more so with the straining 4 cylinder, won’t come close to cutting it. Yeah they go forever but every mile of it is cramped and noisy.

    4th gen V6 is enough of a truck to fill the hole in your garage and enough of a car to commute in.

    • 0 avatar
      zenofchaos

      Fourth on the 4th Gen 4Runner V6. I have had my 2003 for almost 3 years now, and aside from breaks (there can be some issues with seizing calipers) Just routine maintenance. I get around 15 MPG mixed driving (Hilly South-Seattle area) more then plenty power, and it’s practically unstoppable in the snow. I can haul all my band’s gear in it, and it’s easy on the eyes outside, and inside. Also, after sitting in the rear seats of my rig, and a 4 door Tacoma, your passengers (if any) will thank you.

  • avatar
    Pch101

    The biggest cost of car ownership is depreciation.

    Well, you’ve already incurred the cost — you bought the car. The loss has already been taken. Selling the car now only fixes the amount of the loss to a particular point in time and sets you up for another loss when you purchase a replacement car that will also depreciate.

    Separate the car from the debt. If you don’t like the debt, then figure out a way to pay it off more quickly. If you really hate it, go get a second job, set up a business or do something that gives you income that allows you to pay it off sooner.

    If you don’t like the car, then just admit that you don’t like it. That’s a different story.

    • 0 avatar
      TEXN3

      STIs, and many Subarus in general, keep their value rather well. He could definitely get what he owes for the car if not close to what he paid.

      • 0 avatar
        Pch101

        He could definitely get what he owes for the car if not close to what he paid.

        Without knowing how much he owes, there’s no way for us to know that.

        But in any case, that is tangential to the issue. Cars depreciate. The largest cost of ownership is depreciation. (That’s higher for some cars than others, but it’s almost always a high number.)

        He’s not talking about just selling the car, he’s talking about purchasing a replacement. That car will also depreciate and have operating and financing costs.

        Chances are pretty good that the future marginal costs of keeping the current car would be lower than the loss incurred by selling it and the costs associated with purchasing and owning its replacement. This would be true whether he owed a lot of money on the Subaru, or whether he had paid cash for it.

        Swapping one car loan for another and incurring a sales tax hit in the process (assuming that he lives in a state in which sales taxes have to be paid) may not make a lot of sense, now that he already owns the Subaru. (He may have been better off had he not bought the Subaru in the first place, but at this point, it’s a sunk cost and therefore isn’t relevant to the analysis.)

      • 0 avatar
        TEXN3

        That is fair, but as long as he doesn’t owe more than what the original MSRP is, then he would do rather well. In the northwest, I’ve seen folks with 1 to 3 year old Outback XTs, Legacy GTs, WRXs, and STIs selling their vehicles for very close to the original price they paid (within $2k). There are alot of assumptions to be made in all of this, but I would venture to guess he is not upside down and will definitely cover his note.

        Of course, I don’t have an MBA I’m just a lowly PE. I agree and understand the point of sunk costs and trading one (financial) headache for another… I was just pointing out that he chose a vehicle that will mitigate the problem a bit better than something else.

      • 0 avatar
        Pch101

        I would venture to guess he is not upside down and will definitely cover his note.

        That doesn’t change the fact that the sale of this car would result in the purchase of another, which will also burn fuel, require insurance, depreciate and carry debt.

        You’re confusing equity with gain/loss. The equity is the value that is left after the debt is paid. The gain/loss is the difference between the purchase and sales price.

        The car will almost surely have generated a loss, no matter what — he will sell it for less than he paid for it. That would be the same, no matter how much money he borrowed to purchase it.

        The equity is a function of the remaining debt. If he had no debt, he would have more equity than he would have with a car loan. But the presence of equity/ lack of a loan doesn’t increase the value of the car.

        The next car will also generate a loss. If he needs to finance it, then yet more payments will be required.

        To compare the two scenarios, one should compare the cost of getting and keeping a new car with the cost of keeping the old one. And future depreciation shouldn’t be ignored in that calculation.

      • 0 avatar
        gessvt

        @TEXN3: “I’ve seen folks with 1 to 3 year old Outback XTs, Legacy GTs, WRXs, and STIs selling their vehicles for very close to the original price they paid (within $2k).”

        My ’05 LGT has increased in private resale value lately, at least on KBB. My house doesn’t even do that…

    • 0 avatar
      bryanska

      Now this is an MBA talking! I agree. Sunk costs.

      • 0 avatar
        Pch101

        Now this is an MBA talking!

        Damn, was it that obvious?

        Speaking of MBAs, what I should have mentioned is the possibility of the wife getting low-rate Stafford student loans, and using the proceeds to pay off the car loans. Financially speaking, that’s one of the smarter things that a graduate student can do.

  • avatar
    grzydj

    Operating costs on the STI is staggeringly high due to criminally high insurance costs. I had fun with my equally expensive to insure WRX, but I’m glad I sold it… mostly due to people wanting to race me a stop lights.

    I’m in a similar predicament, but I’m thinking a Toyota Tacoma with a double cab and a short box could fill the void and be as versatile as my WRX wagon was.

    Another consideration is a Baja XT, which has a small bed, but has the zip of a WRX and cheaper insurance costs.

    • 0 avatar
      Turkina

      Or a previous generation Forester XT. They don’t look the same to insurers as an STI, and other than the wonderful DCCD… well you have a Subaru now. You know what I mean with parts swapping.

      If you need a truck, I say go with a Tacoma. Less ancientness and a bit safer. Or a Frontier.

  • avatar
    PaulVincent

    Sell it. I traded my 2008 with just under 15,000 miles on it, and I am certain that I made the correct decision. Look at it this way – you can always get another one on down the road if you desire. Besides, used STIs are bringing a premium. By the way, five months after I traded the STI, I found out that it had a bad clutch (and we babied that vehicle as much as possible). And to think that my ’78 Z28 went 181,000 miles before needing a new clutch.

  • avatar
    krhodes1

    If you are comfortable turning a wrench, car repairs are not particularly expensive, baring actually blowing something up. Having owned almost nothing but well-used European cars my entire 25 year driving life, the constant refrain of “they will bankrupt you” amuses me greatly.

    Sounds to me like he is in decent financial shape. Live a little, buy what you want! Just don’t go nuts – there is a happy medium in there. My advise is buy whatever truck floats your boat, and a low-spec e46 BMW 325i to commute in. They are nice to drive, get quite good gas mileage, and are actually pretty reliable and cheap to fix when they do need fixing. 5spd is a better bet than an autotragic.

    Join one of the multitudinous forums and learn what the issues are, and deal with them BEFORE they become issues. Yes, it is true, the cooling system IS a wear part on these cars. Oh, well, better than driving an appliance.

    • 0 avatar
      windnsea00

      I actually just bought an E46 325i sedan 5-spd with 75k miles for a DD. I had a pretty modded Z3 M Coupe that I was able to get $20k for, the car actually appreciated $3k over my 4 year ownership.

      The $10k and lower BMW market is pretty crappy, high miles and rough models out here in so.cal but I was able to find this gem that was ordered by the customer and came with every maintenance record/key/tool, etc.

      It has an interesting package combo of sport, bi-xenon, manual leatherette seats, moonroof, folding rear seats and OBC and in bright japanrot (electric red)! Already changed most of the fluids and got rid of the very annoying CDV.

    • 0 avatar
      DC Bruce

      Ummm. I have an ’01 Z3; only 63K miles, which I have owned for 8 years. The thermostat is stuck partly open — not a problem in the summer, but a problem now that temperatures have fallen into the 50s. The #1 BMW shop will fix all of the BMW cooling system parts that can — and reportedly do — fail catastrophically on these engines for $2,000. That would be the radiator with the plastic tank, the water pump with the plastic impeller, the thermostat with the plastic housing and the plastic expansion tank and (I assume) all of the hoses. I priced this out myself on the Internet, looking for non-plastic versions of everything (except for the expansion tank, which seems to be available only from BMW . . . still in plastic). The total came to just under $700. So, I could spend an afternoon (hopefully) replacing all of this stuff.

      But then there’s the fact that the CEL is on and my code reader is reading codes that suggest a vacuum leak (lean conditions; misfires). The cheap fix for this already has been done (a $300 charge to replace the two $20 plastic pipes between the MAF and the throttle body which had split with age); so now I’m looking to my mechanic to troubleshoot what may be a more expensive fix.

      Up to this point, the car has been reliable and not needed anything above routine maintenance, but now . . .

      That said, from the trade in offers that I am getting, the car has lost a little more than half of what I paid for it when I bought it as a CPO in 2003. That’s about $1700/yr. in depreciation.

    • 0 avatar
      FromaBuick6

      Yes, it is true, the cooling system IS a wear part on these cars. Oh, well, better than driving an appliance.

      I will never, ever understand European car owners. All but one of my cars have been appliances with “autotragics,” but miraculously my life isn’t a soulless, pathetic tragedy. I have, however, spent a lot less time and money at the dealership replacing “wear items.”

      • 0 avatar
        burgersandbeer

        Not everyone looks at a car as a means to get from A to B as cheaply as possible. Some consider the extra expense worth it. Personally, I don’t think the extra expense is as absurd as many make it out to be. The cost of owning an out-of-warranty European car is often overblown because so many owners think the car is so special that only a dealership can properly service it. Just don’t go to a dealer for repairs.

        As far as BMW goes, if you want a manual transmission and RWD in a practical package, you don’t have many alternatives. This is especially true if you are shopping on a $10k or less budget.

        Relevant to the thread, someone with strong DIY skills (such as the OP) is an excellent candidate for using an older BMW (E36, E46, 6-cylinder E39, maybe even E36 M3) as a commuter car. There is a strong community with a lot of repair information available, and no shortage of sources for sometimes heavily discounted parts.

        Ryan said he likes trucks, so I suggested commuting in a truck further down in this thread. If he is considering other options, the above recommended E46 is definitely not a bad idea.

      • 0 avatar
        FromaBuick6

        @ burgersandbeer: To each his own. Personally, I’d rather own a “boring” car with a lower cost of ownership. I love cars, but I have other, higher-ranking priorities. I could buy a nice E46 outright if I really wanted to. I could even afford the maintenance! They’re nice cars, but I just don’t feel the need to have something like that.

        I mostly just resent the “it’s better than driving an appliance” remark. The constant whining about boring cars, automatic transmissions, etc, is getting really old. We’re all car people here, but some of us drive boring slushbox econocars out of convenience or necessity. Anybody who mouths off about how that’s beneath them is an insufferable fool.

      • 0 avatar
        krhodes1

        @Fromabuick6

        I have never spent any time at a dealership replacing “wear items”. You would have to be borderline mentally incompetent to pay dealer rates on a car out of warranty. If you are capable of reading and turning a screwdriver, you can replace the entire cooling system in an e46 in a short afternoon for ~$6-700. Once every 100K miles should suffice.

        But ultimately I fail to see how you can call yourself a car person. If you genuinely love cars and driving, why would you not drive something interesting? Interesting does not necessarily mean expensive either. The first year depreciation on an Impala would buy my 225K Volvo 965 outright. The second year depreciation would pay for the maintenance for a decade.

        I travel for work 35+ trips a year, anywhere from a couple days to a week at a time. I drive A LOT of rented biege-mobiles. And every time I come home and get behind the wheel of one of my own fleet of interesting cars, I know that much more that I really would rather walk than own a Camry, Impala, or Altima. The last of which I have had as a rental 8 times in the last two months. I could have bought TWO Altimas for what I spent on my BMW, but it brings me 100X the enjoyment so I consider it money well spent. Realistically, the difference in cost per month between an Altima and my 328i Touring is ~$300. A lot less once it is paid for. Call it a couple fancy coffees a day that I don’t drink.

        The constant whining of the hairshirt brigade around here gets on my nerves too. People, lighten up and live a little!

      • 0 avatar
        FromaBuick6

        But ultimately I fail to see how you can call yourself a car person. If you genuinely love cars and driving, why would you not drive something interesting?

        Thanks for completely validating my point. Look, jerk, just because I don’t have a $500 car payment on the Ultimate Driving Machine or spend hours wrenching on an old, broken down “interesting” bomb doesn’t make me any less of a car guy than you are. The arrogance of that statement is absolutely stunning.

        And every time I come home and get behind the wheel of one of my own fleet of interesting cars, I know that much more that I really would rather walk than own a Camry, Impala, or Altima.

        I bet you’re a lot of fun at parties.

        I could have bought TWO Altimas for what I spent on my BMW, but it brings me 100X the enjoyment so I consider it money well spent.

        I had a Mustang GT for awhile. It was a lot of fun. Sold it when my priorities changed. Shockingly, my existence is not less enjoyable. Turns out I don’t have any insecurities or, uh, anatomical shortcomings I need to compensate for by driving an “interesting” car I can boast about on the internet.

  • avatar
    Zackman

    Buy a used Impala – comfortable, good mileage, pretty reliable. Then, after your wife graduates, you can sell/trade it and buy your heart’s desire! Done.

  • avatar
    johnhowington

    “Cash for one vehicle, maybe a loan for the other. ”

    stop lying to yourself, there is no inner cheapsake, just a confused soul who needs to sell the STI and drive a shitbox so his wife can finish school. Suck it up.

    • 0 avatar
      Piste

      Rough, to the point, and partially true.

      There was no danger not being able to pay for the wifey’s schooling. The problem was a lack of “progress” towards financial independence.

  • avatar
    TEXN3

    I think it’d be good to know what your wife drives…is it good for long trips and such?

    I’d sell the STI, buy yourself a pickup like others have suggested and be done with it. Two vehicles will end up costing just as much in terms of fuel and insurance, as well as maintenance. Get the 4 door Tacoma.

    As a side note, when my wife and I got married we had my 07 Outback and her 84 760 Turbo. The Volvo didn’t last much longer, and I was forced to purchase something quickly. I really didn’t want to spend much on something that I would only use for around town (medium sized Boise) and every other day commuting.
    I found my 98 3.2TL for $4500 and planned on just using it to get by. After a couple years and 15k miles put on it, it has been flawless. It now has 138k miles and the only repairs has been new tires, fluids, and a couple hoses. You can really find a nicely kept car for a decent price if you look, and if a major repair comes up…you can fix it or walk away.

    But I absolutely love the car, I think I’d replace the Outback before the Acura.

    Our 07 Outback (2.5i, MT) is the family workhorse (I call it Billy, as in a billygoat) as it hauls the kiddos around, pulls a small trailer when needed, gets us into the mountains with it’s Geolanders, cruises quietly on the interstate at 80…a bit noisy under hard acceleration. It’s slow but sure-footed like a goat.

    Okay, get the 4 door Tacoma or an Outback!

  • avatar
    jonnyguitar

    It may seem obvious, but think about the STI in terms of how much you owe, and that by not doing anything, you are essentially buying it for that price. Most likely, that will make it seem obvious you’re getting the best deal by keeping it.

  • avatar
    FuzzyPlushroom

    “…more comfortable than the STI, get around 30 MPG, have four doors and possibly be all wheel drive (for ski trips).”

    Call me an outlier or a freak if you must, but have you considered a 3800-powered Buick? It would most likely fit all of those categories: plush ride and interior, 30 MPG on the highway, almost certainly four doors, and a damned good winter beater with reasonable tires. Big trunk, too. All that and a bag of chips can be had well under ten grand.

    Perhaps you can resolve any perceived soullessness with tunes and exhaust.

  • avatar
    alan996

    As the song goes: “Love the one your with”

  • avatar
    Lokki

    One data point that affects your calculations isn’t clearly stated but can be presumed: your wife isn’t working while she’s in school.

    There seems to be an assumption that the minute she gets her Masters she’s going to immediately get a job and one paying more than she used to make. Is there a solid reason for this belief?

    I think prudent planning assumes that your income stays where it is until she is actualy working and has brought home her new check for three or four months. Not all new jobs work out.

    Just sayin’

  • avatar
    SunnyvaleCA

    It looks like you are worried about liquidity, not solvency. i.e.: you have a positive net value and (just barely) enough cash coming in, but you’re worried you will have that value tied up long-term and won’t be able to pay unexpected near-term bills. Additionally, when you wife graduates, she’ll (hopefully) be getting a job; so, your liquidity problem is probably only going to last a few years.

    So… get a home equity line of credit (HELOC). My credit union gives ‘em out for free and you can lock in a rate for 2 years or a better rate for a shorter amount of time. Read the fine print (of course); you want a no-fee HELOC and don’t want to be required to use it. That way it’s a free, guaranteed backup cash solution.

    Refinancing is another option. 3.875% interest rate for 30 years is mighty low; you can extract cash during the process. Given the “real” inflation rate (shadowstats.com), it’s a big money give away from taxpayers to debtors. You might as well be a debtor!

  • avatar
    fred schumacher

    $1,100 a month? My goodness, what a frivolous waste of money. For two monthly outlays you can buy a 10 year-old Mopar minivan with the 3.3 that will commute you in comfort at 24 mpg and haul stuff like a truck. Just last month I towed 4,000 pounds while hauling 2,000 pounds inside the van (ridiculously overloaded) but the gets-no-respect 3.3 and van managed it without any trouble. And if you want to take it down logging roads like a Wrangler, go ahead, it can handle it. That rig will go to 300,000 miles without costing an arm and a leg (and no timing belts to replace).

    • 0 avatar
      bikegoesbaa

      What in the original question would make you think that this guy would be interested in a two-thousand-dollar decade-old Caravan?

      Recommendations are only helpful if they’re something that the guy would actually do.

      He could also save a lot of money by commuting on a Vespa or taking the bus. I suspect that’s about as likely as him switching from a new STI to a beater minivan.

      I’m sure I could save $600+ a month by ditching my fun cars and getting an old van, too. I have absolutely no interest in doing that, and would instead aggressively economize in other areas of my life if I wanted to free up some cash.

      People have different priorities. Unless these priorities are self-destructive, it’s no good judging them. This guy seems like he has his life together. No point in admonishing an adult for his “frivolous waste of money”.

  • avatar
    ajla

    I say search out an old Mercedes-Benz diesel. Maybe a Saab, Volvo, or Infiniti G20 if you want something newer. You also might be able to squeeze 26MPG hwy out of a Jeep Liberty CRD.

    And, you should have bought an EVO.

  • avatar
    Piste

    S&S: thanks for posting my question.

    Great responses guys. I replied to a few of them above.

    Some of you were very insightful and realized this wasn’t a bankruptcy problem, rather it was an inner conflict with previous lifestyle choices. We weren’t making progress towards financial independence and I was unhappy about it. To make matters worse I couldn’t put my finger on the root cause.

    We ended up choosing super secret option D:

    Last week I sold the STI, took the cash (yes there was equity) and purchased a 1995 Land Cruiser with a little bit of extra money in. The super secret part will be executed sometime between now and shortly after the wife graduates in May: Move!

    We came to realize that we live much too far away from work. I have a 35 mile commute, the wife has a 25 mile commute. Commuting this far is terribly expensive and this is the root of the problem.

    So now the plan is to move to an area that is close enough so that I can bike to work. This area would also cut my wife’s commute down to about 5 miles. Additionally we plan on cutting our other monthly expenses 40% or more.

    This will allow us to grow our savings and investments at a much higher rate. Heck, hopefully a few years from now work will be optional and I will be able to comfortably pay cash for that mid nineties Porsche 993 I have always lusted after.

    Now do I get to claim to have an Inner Cheapskate?

  • avatar
    burgersandbeer

    If the idea is to cut expenses only until his wife finishes her MBA in a year, keep the STI. I don’t think it is worth the scramble to find a buyer for the STI as well as an acceptable replacement.

    If this is more of a long-term lifestyle change meant to reduce automotive expenses, and Ryan is not upside down on the STI, sell and commute in a Taco or Ranger. If you like driving trucks anyway, I don’t see any reason to get an extra car for commuting. Are Tacos/Rangers that uncomfortable?

    I like the Outback suggestion too. I’m not sure what it is about a truck that Ryan likes, but an Outback would have most of the utility of a compact truck while being more comfortable with better road manners.

    The link to the spreadsheet didn’t work for me, so I have no comment about what’s already on Ryan’s list.

  • avatar
    DC Bruce

    Unless you’re just looking for an excuse to own a different vehicle, you haven’t given us enough info to give you much advice. $1,000 a month cash out to operate a car sounds pretty steep. But you should do a breakdown of what makes up that $1,000 and then analyze where you will save by trading it on a different vehicle.

    With your mileage, fuel expenses are significant. So, if you want to save on that, you need to buy something less thirsty, which rules out a truck or SUV.

    Insurance is probably pretty steep on your current ride, since it’s a “performance car.” But SUVs are often more expensive than you would think because of what people do with them. Pickup trucks have the worst safety record of anything, so I would imagine they’re not cheap to insure either. (Just try a panic stop in the rain from 70 mph in an empty pickup and you’ll know what I mean.)

    I assume part of the $1,000 is your car payment. Depending upon how old the loan is, a significant part of that payment could be reducing the outstanding principal balance. In effect, you’re just moving money from one pocket to another. Obviously, a smaller or no car loan will reduce your monthly cash out.

    Most vehicle’s depreciation curves flatten out after the first couple of years, so the hidden cost of buying a new car will be substantial . . . but you’re just talking cash flow, so depreciation isn’t part of your analysis. In any event, if you’re considering substituting a cheaper used vehicle for a more expensive one, then your non-cash depreciation costs will fall.

    The final issue is repairs. Some vehicles are expensive to repair (BMW); some vehicles need more repairs and just about anything over 5 years old will need more repairs than something newer, excepting, perhaps some extraordinarily unreliable new vehicles and some extraordinarily reliable old ones.

    But I suggest you break down the components of your monthly expense and see how any proposed change will affect each of those components, before you make a financially-based decision.

    OTOH, if you car priorities have changed such that the Subaru’s virtues are no longer important to you and its vices are more annoying than they used to be, then that’s perhaps a good reason to change.

  • avatar
    FromaBuick6

    I faced a similar dilemma with my Mustang GT. After a job transfer and a cross-country move, I found myself with a smaller paycheck, a higher cost of living, and a dramatically longer commute. I already had a cheap, paid-for commuter, and the Mustang, suddenly didn’t make a lot of sense, so I sold it. Saves me about $450 a month in payments and insurance, plus the higher fuel costs whenever I drove it.

    $1100 a month in operating costs? Holy crap. I know $300-400 of that is probably fuel, but still. Unless you’re completely upside down, get rid of it…right now. Don’t make another payment. It sounds like you’re kinda bored with the car now, anyway. You could finance 100% of a perfectly nice new or used $15-20k car and still come out hundreds of dollars ahead each month (provided its STI that jacked up your insurance rates and not a terrible driving record).

    Get another 4×4 SUV if that’s what will make you happy. Get something decent so that you’ll actually want to keep it even after your wife is done with school (if you’re an old Land Cruiser guy, I can’t recommend the 4th gen 4Runner strongly enough). DO NOT buy a second car. Even with how much you drive, it’ll save you maybe a thousand bucks a year in gas. You’ll never recoup the purchase price, extra insurance and maintenance costs.

    • 0 avatar
      burgersandbeer

      The $1100 a month has to include payment, insurance and fuel.

      It sounds like the car was bought new, and STIs start with an MSRP of around $34k. I don’t know how heavily discounted they are, but my guess is the car cost at least $32k. That puts the monthly well over $500 even on a 5-year loan.

      Insurance on an STI is pretty much as bad as it gets – only an EVO can give it a run for its money.

      Lastly, gas mileage is not good. EPA highway is 23mpg, and my understanding is this is not a car that routinely exceeds that rating. Maybe you can squeeze 25mpg out of it if you are really disciplined.

      Combine these factors with the mileage this guy puts on it and I can easily see $1100 per month. It’s a shocking number because Subaru is not a premium brand, but STIs are not cheap to run. Besides, I bet most people only look at the monthly payment when they think of monthly car costs. Anyone still paying off their car would probably be horrified if they added insurance and gas to the monthly cost.

  • avatar
    mkirk

    If you are a cruiser head at heart then get another one. However if I did 20k a year on the highway and was concerned about maint. costs I’d get a 100 series. Any 80 you get is going to need some attention somewhere (nothing is cheap for them as you probably know) and get you 12mpg on a good day. Go with the handy and enjoy the better brakes, v8, gas mileage, etc on the highway and enjoy your weekends NOT rebuilding the front axle like you know you will be doing soon if you get a 13 year old 80.


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