Have You Noticed Used Car Prices Coming Down?

One of the tenants of many personal finance bloggers is to always buy cars used.  Since a car typically loses the biggest chunk of its value the first year (or really, the first day) after being driven off the lot, the advice is to let someone else take that financial hit.

With the average age of the current car on the road being almost eleven years (really?) people have definitely been taking this to heart.

I’ve noticed it over the past few years.  Our two cars, a 2006 Pontiac G6 and a 2007 Buick Rainier, have held value very well.  I track their estimated value through Kelley Blue Book, and in some months, the values actually increased.  Lately, though, the value of both cars has been dropping month over month.

CNBC reports that the average value of a used car is now falling, around 2% from a year go.  This is apparently the first time in a while this has happened, and is a byproduct of the fact that Americans are buying more new cars than they have for the past few years.  As they do this, more used cars become available, thus dropping the price as the inventory increases.

If you’re selling a used car, this isn’t great news.  But, if you’re buying one, this could save you a bit of extra money.

We’re not in the market to make any changes with our cars, so this has no effect on us for the moment.  It would probably be a neutral thing if we did, considering our likely scenario would be that we’d sell one of our used cars (getting less than we would have a year ago) and buying a newer used car (and paying a little less).

What do you think?  Are you seeing used car prices drop?  Would this make you more or less inclined to buy a used car for your next purchase?

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How Our Second Car Seat Will Pay For Itself

A few weeks ago, Target had their ‘Baby Sale’ where baby related items were on sale.  We had been looking into a second car seat and found one that we really liked and had pretty good ratings.

Our primary car seat is in my wife’s car along with a base for the baby carrier.  The car seat holds our 2-year old son, and the baby goes in the carrier.

Until recently, there wasn’t really a need for a car seat in my car, as my wife took the kids places most of the time and the kids were together.  On top of that, most places we went involved a stroller.  The single stroller we have barely fits in my car, and the double stroller does not fit at all.

Lately, though, we’re finding that our behaviors are a bit different.  We’re splitting up the kids more often, or we’re going places where we can get by without a stroller.  In this case, we figured that more trips in my car would be achievable.  My wife drives a Buick SUV and I drive a Pontiac sedan, so the big difference here:

Better mileage in the Pontiac.

My car averages around 25 MPG and my wife’s car averages around 16 MPG.

If gas averages $3.50, this means that the cost per mile in gas is as follows:

Pontiac: $0.14
Buick: $0.21875

This means that on a 50 mile round trip, we’re saving $3.9375 in gas.  That’s a pretty huge difference.

The all-in price of the car seat was $105.72.

This means that it would take 1,342 miles switched to my car before the car seat completely pays for itself.

With our driving habits, this is certainly something I think we’ll cross without much effort.  Trips to my in-laws are around 45 miles round trip and since we see them once or twice a month, that will add up pretty quickly.  We recently had a couple of birthday parties, each around 50 miles round trip.  Neither of these required a stroller, so it was off in my car.  Even trips to my parents house, who live much closer (about 15 miles around trip) still save a small amount, and will add up.

Eventually we’ll have to get a second seat for my wife’s car when the baby can no longer fit into the carrier.  At that point we would have to decide whether to look into a second seat for my car as well (we certainly could move seats back and forth but this isn’t practical).  We’ll probably see how our habits play out and whether it makes sense.

You always hear about things that pay for themselves.  In the case of this car seat, I believe it will completely pay for itself before it’s all said and done.

Have you ever had an item that has proven to pay for itself over time?

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The Kidney Stone Of Automobiles

Recently, my wife called me at work one day saying that there was something wrong with her car.  We had just driven in it the day before, and everything was fine.  Now, it was making a terrible grinding noise.

I only work a few minutes from home so I went home during lunch to see what was going on.  It didn’t take long to find that the problem was coming from the driver’s side right wheel area.  Something was grinding somewhere as an awful squeal was present any time the tire turned.

I called my father-in-law as he’s pretty handy with cars.  I narrowed it down to either: Something was wrong with the brakes / wheels or something had gotten lodged somewhere.  I asked him about whether I should: Use the jack and such to remove the wheel or take it to the nearest tire shop.

He had some stuff to bring over anyways (at least that’s what he said, I think he just wanted to come visit his grandkids whom he hadn’t seen in a while *lol*) so he volunteered to come by that evening.  He has a hydraulic lift and an electric air wrench, so he was able to get the tire off in less than a minute.

After looking around, we found that something indeed had gotten lodged between the rotor and the backing plate.

It was a pebble.  A pebble about the size of the head of a pin.  In other words, tiny.

Yet the sound that this little pebble made was enough to think that the entire wheel was going to fall off.  It was that loud.

The first thing I thought of was that it was like a kidney stone.  Really tiny yet really able to pack a punch (and produce wailing sounds as well *lol*).

It still boggles my mind as to how this got in there and was able to lodge itself there, especially since the drive before had given no indication of it’s presence. All I know is that I was happy that this didn’t turn out to be an expensive repair.  The biggest ‘cost’ was that our two-year old son was disappointed because the trip my wife was going was to take him to his weekly story time at the library, which we felt bad about, but he got over pretty quickly (as two year olds are able to do!)

Have you ever had something that made it sound like a lot more was wrong than really was?

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One Auto Company Practice That Needs Re-Thinking

I’ve been a pretty big supporter of the American auto companies, but one practice that they go through infuriates me, and I wouldn’t be surprised to see it go away.

What is it, you ask?

It’s the buyout packages that they give people to leave.

Depending on how long you’ve been there, someone can get a buyout package, on average, of $75,000 plus a $25,000 voucher for a new car.

While I appreciate the fact that they’re just not throwing people out on the street, I don’t agree with this practice for a couple of reasons:

  1. Very few, if any industries outside of the auto companies, offer such buyouts – A former co-worker at an old job recently got let go, and he got 10 weeks of severance. Nowhere near the amount, and he’d been with the company for quite some time. I think ‘industry standard’ of one week per year, plus maybe a couple of weeks, is fair.
  2. Now is not the time – The auto industry is already under enough scrutiny. I fear of an AIG type reaction if this became a major issue, and the American industry does not need any backlash or negative press.
  3. I feel it’s counterproductive – Quite honestly, the people most likely to take this type of offer, at least at first, are those who can more quickly find another job quickly. So, you lose the most talented people and you over-pay to do so.

I’m not heartless and I don’t ever want to see people lose their jobs, nor do I want to see people struggle. But, in the times of unprecedented struggles with the auto companies, I think that the strategy to reduce headcount has to be simple:

Find the people that are rated lowest, give them a decent severence, and move on. This keeps your better people who are more likely to lead a turnaround, as well as reducing the cost to downsize.

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