Patrick Cox: ‘Hello. I’ve got a long story, which wouldn’t be very interesting to anyone but you and maybe my wife (she might be just pretending, though). I’ve been reading your investment guide (and most of your other books for that matter) for approximately my entire adult life (10+ years). You may see the influence you’ve had on my writing (all these parenthetical comments). Anyway, I recently landed a new job that increased my pay by 30% – and all but eliminated my health insurance premiums. So, relative to my old job, I was suddenly swimming in money.
‘Or rather, that’s what it felt like. I began searching for that great American indicator of middle-class club membership, the second car. Now, I’m an Alaskan, and it seemed pretty obvious to me that only a 4-wheel drive vehicle would do the trick. And I also decided that I really didn’t need a second passenger car since I didn’t even own a single van or pickup or SUV.
‘But dang. Kia has a 10-year warranty on their new cars. And they are inexpensive compared to other new cars. So before I knew it, I was taking the long route home and circling the Kia lot like some new-car-odor snorting vulture. Yes it was bad. It got to where I even got OUT of my car and actually spoke with a SALESMAN.
‘A trick of fate more than a prick of economic consciousness kept me from going in over my head. They flat out didn’t have any 2002 models. Every last one of them had gone the way of the proverbial hotcakes with Kia’s cashback rebates and 0% interest. They had some 2003 models with tiny incentives. They had some 2000 and 2001 former rental units with vastly reduced warranties (slashed in half, actually). But they didn’t have the 2002 Kia Spectra GSX that I had built and rebuilt on http://www.kia.com/.
‘So, in a fit of economic haste (the kind that burns holes in pockets), I rolled over to the GMC dealership next door. Man. They had some cool and interesting cars over there. But WHOA. Those prices cooled my pockets quick. Twenty-seven thousand dollars for a Rendevous? Ouch. But then I got flagged down by another salesman. Maybe I’m not the vulture after all. Maybe I’m a vulture in shark infested water. [Which would make Patrick one lost, wet vulture, but this is his story, not mine and I think he is telling it very well. – A.T.]
‘Well, I couldn’t please this guy until I test drove something, so I let him talk me into a used Nissan Pathfinder, factory black 4×4, most of the unnecessities. Worse yet, I recognized him from the University theater department and a local TV commercial. You don’t want to have too many points in common with a salesman. He had already noticed my all black clothing and pointed me to a factory black rig.
‘And it was pretty nice. It wasn’t like that $14,000 GMC Safari minivan. Oh, I didn’t mention that one? Yeah – 1998, 36,000 miles, lots and lots of great electronics. I went to that one early on in my economic euphoria. Again, a trick of fate: the check engine light stared at me from the dash board. I took that as, well, a warning sign. I walked.
‘But I digress. This Nissan Pathfinder was superb. The salesman DID have a background in common with me. We had both attended and resided at the local university for way too long! Isn’t that quaint? So we exchanged phone numbers, and I got out of there because his boss wanted to go home and leaned on the two of us too hard (sincere salesman voice: ‘Bottom line… what can I do to get you into that car… today.’) Me and the salesman are like buddies, and his boss is like a grim Amway distributor. So I leave with Nissan Pathfinder on the brain.
‘And I do my Internet search on Nissan Pathfinders and I find that they don’t match my needs. An unpleasantry, since I kind of liked the factory black. And out from under the buddying and bullying I discover my economic backbone. I decided to look at this need, this financial venture through the lenses of The Only Investment Guide I Have Ever Needed. [Oh, will you please stop plugging that old book! – A.T.] Namely:
1) Although I have a newer, higher paying job, I had not yet received a single paycheck therefrom.
2) My wife, recently graduated from college, is not yet employed and isn’t totally sure she wants to be. Our need for a second car was not immediate.
3) I work as the Assistant Solid Waste Manager of a municipal landfill. Every car on the road, One Day, will have it’s final resting place therein.
4) Sometime before that One Day, these cars will depreciate in value to about $1200 (if it runs in Alaska, that’s about what it’s worth).
5) This is not a linear depreciation. Newer cars lose their value much faster than cars that are broken in a bit.
6) Why should I saddle myself with $10,000 or $20,000 of depreciation?
‘So I pulled WAY back. I ended the search right there on the spot. When my buddy from the GM dealer called back to see if I was still interested . . . I wasn’t. I decided that I could wait. If I had to buy a vehicle suddenly two months from now, and that made me purchase a vehicle that was slightly less of a good deal than I could find in advance, I could always be happy that I had denied State Farm of two months of insurance payments, and the bank two months of car payments.
‘What’s that? Oh yes. I did get a car today. After giving up all desire for a car, after deciding to search and research no more, I found it. Across from the lunchtime buffet pizza joint is a little mom and pop garage. And parked in front was a little cherry car. Well, kind of a dusty tomato, really. A little red 1990 Subaru Justy GL 4WD. With 86,000 miles on it, but a new engine under the hood. It’s got 4 doors and it gets 35 miles to the gallon. How much would YOU expect to pay for a new engine in an intact 4-door hatchback with 4-wheel drive and 35 miles to the gallon?
‘Twenty-nine hundred dollars. Next month it will be completely paid off, courtesy of the Alaska Permanent Fund Dividend checks paid each October to every breathing resident of Alaska. Now THIS car fits my financial goals. Thank you for helping me define those goals, and inspiring me to attain them. I’m now driving a dusty-tomato-looking 3-banger, a car that is probably the opposite of a status symbol. I’m living within my means, helping to save our precious resources, getting much closer to being debt-free, and sleeping easier. All that AND a 4-wheel-drive vehicle with a new engine. Thanks for the car.’
☞ I try to avoid posting testimonials here – what could be tackier? – and I certainly would never take credit for the basic notions in my book. Ben Franklin and Aesop had them centuries before I passed them along (and you should have seen the clunkers they drove). But it’s always wonderful to hear from someone who has bought into these basics and discovered the joy of living beneath his/her means. Patrick wrote this so well, I couldn’t resist.
(Just before you all pick up stakes and head for Alaska and that annual dividend check – Alaska has no income tax and actually pays you – I would remind you that today is September 21. Winter in Alaska begins Monday. Plus, they have bears.)
Quote of the Day
The people who sustain the worst losses are usually the ones who overreach. And it's not necessary: steady, moderate gains will get you where you want to go.~John Train
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