It’s a Jeep Thing…

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My neighbor recently bought a beautiful 2016 Jeep Wrangler Unlimited.  I can’t help but ogle at it every time I see it sitting in his driveway.  Anytime my neighbor is outside, I’m hopeful for an opportunity to admire it more closely. It’s that amazing.  He has no idea that he owns my dream car. 

 

My Love for Jeeps

dream carSince I started driving at 16, I’ve always wanted a Jeep Wrangler.  Unfortunately, my minimum wage lifeguard position in the summer did not pay me well enough to afford one, but I got the next best thing.  This isn’t to disparage my first car.  I loved it, and it treated me well until I went to college.  But when when I was 16, I wanted to be the cool kid driving the Wrangler.

 

Now that I am older, I am fortunate to be in a position to be the cool kid again and buy a Jeep Wrangler Unlimited.  However, with a MSRP of $27,695 it gives me pause.  I have never spent more than $10,000 on a car.  Whether it was my general disinterest in cars or a defense mechanism built up from high school, I have always looked at a car as something to get me from point A to point B.  Over the years, I’ve been fortunate to drive cars I like, but I’ve held off on splurging on a dream car because I convinced myself that I had higher priorities such as purchasing a house, being debt-free and even traveling.  

 

My Car Reality

When I first bought my house at 23 years old, I had to find three roommates in order to help pay the bills.  The rent that I charged the roommates was very reasonable in that they were able to save and spend as they pleased.  They ended up spending much more than they saved as each one of my roommates indulged and drove brand new cars that were much nicer than mine.  At the time, I envied their position.  They did try repeatedly to have me upgrade my 15-year-old car, though.  

 


dream-carThe closest I got to treating myself was a few years back when my Mazda MX-6 engine blew up.  I talked myself into pursuing a Jeep Wrangler or a Honda S2000.  But of course, I chickened out because I didn’t want to spend more than $10,000.  Lame, I know.  I ended up paying $8,000 for a ten-year-old 2001 Honda Prelude that I thought was a reasonable compromise.  My now wife thought that car was a terrible purchase though.  She told me it looked like a weird spaceship.  Thankfully she looked past it while we were dating.  Needless to say, I sold the car shortly after we got married.

 

Goal Priorities

Since getting married, I have been fortunate to have been able to check off many goals (being debt-free, traveling) with my wife.  But, for some reason, getting a nicer car hasn’t moved to the top of my list.  I guess having kids will often times do that to people.

 

The Numbers

dream-carOne of my new goals is in five years, I would like to move into a new home, ideally with access to a pool.  Recently, I was playing around with a mortgage calculator.  If in five years mortgage rates have creeped up to 4%, the total amount of interest paid on a $300,000 mortgage will be $215,000+.  If I can apply the purchase of a Jeep, $27,695, towards the $300,000 mortgage, I will be able to reduce the amount of interest on the loan to $195,000.  That’s $20,000 of interest saved over the 30-year mortgage.  So I have to ask myself, is the Jeep really worth closer to $47,000, which is almost double the MSRP?

 

Additionally, if I were to invest the $27,695 in the S&P 500 for the next five years and receive the average return of 10% (a big if), I would have over $44,000 available to apply towards a mortgage, which would further reduce the amount of interest I would pay by $12,000.  This, in turn, would mean that the Jeep’s cost to me was actually $59,000.  I don’t know about you, but I think I could find better ways to spend $59,000 than on a Jeep.

 

Years ago, I wasn’t experienced enough to do an analysis like I did above.  I certainly didn’t have the foresight to share this information with my roommates.  But, looking back, I wonder how much their dream cars ended up costing them.  Each one of them continues to rent homes, and I know that they desire to one day be homeowners.  I do wonder if they delayed the purchase of their dream cars to a later date, if they would have been able to reach their other desired goals sooner.

 
Do you ever regret instant gratification?  Do you ever look back and wish you had indulged on something which didn’t seem financially prudent?  What are some instant vs. delayed goals that you are trying to reach?

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11 Comments

  1. I’ve only one – my wife. But it’s the only way I can spend some money or else feeling not contributing to the society.

    It’s easy to get rid of a car, but much harder a wife.

  2. Very informative! What are your thoughts regarding owning vs. leasing a vehicle?

  3. This post hits home with me. Specifically because I’m in a very similar situation. I bought my first home two years ago at 23, and had two buddies move in. Not out of necessity but because it was financially smart – and I didn’t want to be alone!

    One of those buddies buys a new car every year. Last year he bought a 2015 Jeep Wrangler and I was hooked. I went so far as to make an offer on one or two. Lucky for me the sellers didn’t negotiate! I ended up buying an ’06 4Runner for $10k and by roommate has since sold his Jeep. I don’t regret it at all – I even wrote a post relating to it: http://centsofknowledge.com/2016/10/19/buddy-buys-a-jeep-let-others-pay-for-your-good-time/

    • Thanks for sharing CentsofKnowledge!!! I am a huge fan of Jeeps but I was riding in one the other day and I thought this is fun but I’m not sure this is $30k fun 🙂

      Now a $10k ’05 4Runner sounds like an amazing deal. Thanks for sharing!!!

    • I live in the neighborhood of nice decked out Jeeps. It hurts. Especially seeing my child’s HS parking lot filled with them. I would love a decked out Rubicon. I even went as far to price one with AEV conversions so I can dream of rallying it in the women’s Morocco race. But I cannot imagine spending the amount for that price tag. Funny thing is, I would really be happy with an old used Jeep. but the lack of gas mileage would kill my gas budget (it would be have of what I get now).

      Now a 4Runner is a nice contender (easy to sleep in). I wouldn’t mind searching for an 80 Toyota landcruiser. Of course, the 4Runner would seem to have a better track record in terms of buying it used and getting at least another 10 years out of it. Nice buy on your part.

      • Thanks for sharing The One In Debt!!! I would be happy driving any of those cars 🙂 I think having an off-road vehicle would be super fun to have although I’m not sure I’d get enough usage of it at this time 🙁

  4. Thanks for sharing your story with us. It was interesting while I was reading. I also want to buy my dream car. But it will take time, hope so that time come soon in my life 😀 By the way thanks once again.
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  5. I agree to disagree with this article. While your thinking is financially savvy, I believe in the commonly used phrase “you only live once.” Time and time again I have friends and family around me who are frugal and only spend on necessities. They defer a huge percent of their income into retirement accounts and what not. Everyone is always saying, save save save for later. Well what if later never comes? What if (knock on wood) you walk out of your house and get hit by a car or drop dead of a heart attack? Do you think you can take all that saved money to the grave with you? Also, who wants to be 55 years old and driving a dream car? I’d rather be 20 or 30 in my dream car and save the hoopties for when I’m old and grey. Live in the moment a little. You may lose some money in the end but who cares.

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