Buying a Car: New vs. Used

Amy asks what things Dave recommends buying used versus brand new. Dave says it has everything to do with where you are in your financial plan.

QUESTION: Amy on Facebook asks what things Dave recommends buying used versus brand new. Dave says it has everything to do with where you are in your financial plan.

ANSWER: That has everything to do with where you are in your financial plan. You need to have at least $1 million before you buy new cars. Cars go down in value like a rock, and so you should buy a used car. In a lot of cases, you ought to still think about buying a used car.

When we were broke and digging out of debt, we did a lot of our shopping at consignment sales, especially for kids' clothes. A kid wears something three times, and then they outgrow it. It has no wear on it whatsoever. You don't want to dress them like dumpy little things, but if you watch what you're doing, I can tell you my kids dressed well.

I think sometimes people go too far on some of these things. I'm not dumpster diving. It's not happening, I'll just tell you. I'll find something to do called work and figure out a way to avoid that. Some people think that's an art form or something. I don't. I think it's gross. Used clothing is okay. I haven't bought used clothes in years, but I haven't been broke in several years, either.

As you do better, the more new things you'll buy because they become a smaller and smaller percentage of your world. But when you're broke, deeply in debt, and don't have a big income, any money you spend on anything becomes a big percentage. Eating out versus cooking at home--you just don't have room. You've got other stuff you've got to do right now. You've got to live like no one else so later you get to live like no one else.

I'm amazed at how much cool stuff you can get used and really good stuff that people just don't want anymore for whatever reason. I don't want to go too far. I don't want to be weird about it. I am sure that we just get lazy and we run down to Wal-Mart or Target and just buy stuff. For what you spent on some little cheap piece of furniture that's going to fall apart, you could've gotten on Craigslist and bought a real quality piece slightly used from somebody who's just getting a divorce and there's absolutely nothing wrong with it. Instead, you go buy cheap junk. You just have to look and think about that and be reasonable about it. You don't want to become obsessed with it. It becomes a pattern of living life frugally, and you continue to live life that way.