One of my children who’s been making some sound progress in his finances was faced with an urgent decision that could a significant impact on his finances. He had been engaging in financial discussions, among various other topics. He’s sucked up plenty of of Choose FI podcasts and other resources. For the blog, I’ll mostly focus on the financial aspects of the decision he faced and a couple of paths that he could have chosen.
About two years ago, he started getting interested in deer hunting. Since some of the best bonding times with friends and family was during my hunting, I fully supported and encouraged him to pursue this worthwhile endeavor. There’s really something magical about engaging with nature. Watching the woods wake up in the morning or the second awakening before dark is awe inspiring. This environment helps put perspective on things. Whether a bug among the leaves, the bird that eats the bug, or the bobcat that eats the bird. Everything on the earth is temporary, including us human beings. Everything will eventually return to the earth from where it came. There’s no escaping that inevitable eventuality. As humans, in most instances, we have the power to choose. That’s what makes us human.
My son had been making solid choices in many areas of his life for quite some time. One of those decisions was hunting. While hunting isn’t necessarily something you can put a dollar sign on to get a return on investment, It’s definitely a valuable part of our American culture. It not only provides food for your family and friends, but it provides money for wildlife and conservation of natural resources like wildlife management and general access to nature through the Pittman and Robertson Act. This act is a tax on hunting and shooting products. That money goes back to support wildlife and their habitat for all to enjoy. Whether bird watching, hiking, camping or just about any other interaction you have with wildlife, this act has a positive financial contribution to ensuring all can enjoy for many years to come.
He’s hunted with me for the last two years. While we spent lot’s of time in the woods, our successes have been minimal. But his success at his job had taken him to Florence Alabama to live. He worked about 30 minutes out of town way out of town in the middle of nowhere. On his drive to work, he sees deer almost every day. On one of those days, he didn’t see a deer…until it was too late. The deer jumped in front of his car at the last possible second. The deer jumped right in front of his paid of Chrysler 300. The unavoidable happened. He hit the deer at a pretty good speed. The deer totaled his long ago paid off car that Friday morning.
He called me that night to discuss his potential plan of action to get a car before Monday morning. Time was of the essence, because he needed to work on Monday. The option he was considering was the “easy button” plan. He had a friend in the car sales business who was offering him a good deal on a gas sipping highly reliable Honda. He had a good deal on a good car all lined up. But he also remembered how much he hated having a car payment. The feeling of being strapped with a car payment wasn’t too far in the past for him. He still remembered all too well that he didn’t like that feeling. While it was a good deal on a good car, it wasn’t a good deal for his situation. He didn’t have the $16,000 sitting around. So the only way he could do this deal was to put his emergency fund towards a down payment and finance the rest. That was the plan he was leaning to because it was easy.
When he explained his plan to me, of course I didn’t like it. He assured me that he scoured the internet, Craig’s List, and some local car dealers. Being a remote place in Alabama, there were not many little gas sipping cars like the one he needed for the long haul to work that he could afford. So, we searched together. He was right. There were no good deals on a car he could afford with his limited budget in his area. Lots of trucks were available, but not any small gas sipping cars. So we racked our brains for another option. Neither of us wanted him to get in $16,000 of debt.
So I had an idea. I live in the Dallas area and there are many small gas sipping cars all the time for sale. That’s the ticket! We could search my local area. We searched the area and found almost 40 used Hondas in the Dallas area. So we just needed to come up with a plan to buy one and get it to him in Alabama. She searched some more and agreed on the top three in his $5,000 price range. My great wife and I agreed that we’d go look at them the next morning, Saturday. The clock stops for no one.
Since my son’s finances were in good order and ours was too, my wife and I would go look at the cars and purchase a good one for about $5,000. We found one that Saturday morning and purchased it. We weren’t just buying it for him as a gift, he was to pay us back immediately. By him and us having solid financial footing, we had other options than being “stuck” with that easy button solution of signing up to a $16,000 loan! We worked together and came up with a financially smart car that he could afford. The car was paid for, in his name, and in my possession!
It was Saturday afternoon and the clock was still ticking towards his Monday morning show time for work. So we continued to work out details of getting him his car. He could fly to Dallas, but that was expensive. So, I offered up another solution. I would drive the 8.5 hours to deliver it the next day to save some time for him before he had to work on Monday morning. So that’s what I did. But since I had to work Monday morning as well, I’d have to figure out how to do that. Luckily, I work remotely, so it was easy. I would just work remotely until I can get back home. Having the flexibility to do that is one of those job benefits that isn’t wrapped up in a salary. But it is very valuable. At least to me it is very valuable.
Rather that just drop the car off and head straight back home, I decided on something different. I would stay in Florence and work remotely until Wednesday when I fly home. The plane ride would be of minimal cost because I had plenty of airline miles since I’ve been using credit card hacking to stock up on points. He was able to get to work on Monday without incident.
Instead of this turning into a stressful situation of me buying a car, driving 8.5 hours, and rushing home, it was fun. I even got in an unsuccessful deer hunt on one of those early cold mornings before I started work! This event turned into a win-win situation for us. He replaced his old almost worn out car with a newer more reliable car. Since he didn’t have an expensive long term car payment, he was able to quickly replace his emergency fund cash with what would have been going to the banks as interest payments. I was able to help my son make a sound decision. I also got to spend a couple of days visiting with him and his girlfriend. Time like that is very valuable to me.
So, what’s the nitty gritty of the financials of this deal. The $16,000 finance a almost new car option would cost him $316 per month for the next four years. Grand total of this would be that $16,000 car would cost him $17,173. The $5,000 used purchase we did cost him less than $5,000. I did put a little towards this option to keep him with at least a little emergency fund. So, he avoided over $12,000 of car expenses by going the route he did. That doesn’t even take into account that his insurance would have also increased costing him more than just the $316 per month car payment putting it closer to $350 per month obligation that he avoided.
So, while this is an end of a good ride for his old Chrysler 300 that had served him well. It was a good car with low maintenance costs. He followed that good decision with an even better decision by not going in debt again. He bought a car that will cost him less in maintenance and he’s not strapped for the next 4 years with a car payment. He has flexibility to save more money and freedom to spend more of his money that will give him the most value. I’m proud of his progress as a young adult and know he’ll continue to make good decisions.