Mark
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06:07:42 am on February 13, 2009 |
Ultimate Driving Machine
Photo credit: wadan
I agree with Mark, it appears that 7m7y is the new hangout for BMWphiles (and, the occasional pickup truck owner). My wife thinks like Mark: she went for the ‘green experience’ with a hybrid Lexus SUV …
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It is apparent that we have a bunch of BMW fans here! Looks like BMW did its job on producing great products and a strong branding effort. They did create the entry level luxury car market.
About my particular ride, it is a 2002 BMW 325i. This car was purchased back in 2005 – I did not buy brand new. In fact, I haven’t bought a brand new car yet. This was actually an interesting purchase. I was about to graduate with a Masters degree after toiling for 3 years on a part time basis. I just feel that I need to reward myself with something nice 🙂
The trouble was that I don’t have much time to go look at vehicles and I want to get the car right after I graduate. During that time eBay started eBay motors and I decided to browse around and found that cars are actually cheaper compared to local used car dealers! And yes, I bought my car on eBay, back in 2005. The process is quite simple, I don’t have a chance to kick the tires but did hire an independent inspector – he definitely did a better job than I would have. The savings from buying on eBay covers the cost of transporting the car and also a 4-year warranty ( haven’t got to use it yet).
The car was purchased at $16,500 back in 2002 where it already clocked about 75,000 miles. It is now almost 4 years later and accordingly to Edmunds , it has 3 values:
Trade in: $7,500
Private Party: $8,800
Dealer: $10,200
I’m using the Private Party value in my net worth calculation.
At that time, I did finance the whole cost, including transportation and the warranty. It was a $18,000 5-year loan at 6.75% but I did pay it off early last year in 2008 using a HELOC which lowers my cash flow requirement and also at a lower interest rate.
I’ve no immediate plans for my next vehicle but it is hard to step down. Maybe a “green” vehicle can offset the driving experience.
7m7y.wordpress.com 
Jeff 11:53 am on February 13, 2009 | #
Mark,
It warms my heart to find another Ebay Motors customer. I’ve purchased two cars that way. One successfully and one was a disaster.
My wife has officially banned me from buying on Ebay motors again. I think the place is ripe with bargain automobiles and your approach of using a third party inspector makes a lot of sense. I didn’t think to do that in my experiences. I guess it’s really not that much different than getting a home inspection.
How much did you have to pay for the inspector?
Josh 2:37 pm on February 13, 2009 | #
Mark, I know what you mean about stepping down. During college I owned a 2002, 330xi. Needless to say, I really liked it, but soon after college I sold it to pay off most of my student loans.
The good thing about the e46 generation 3-series are the straight six engines are basically indestructible.
How many miles do you have on the car now?
Mark 4:21 pm on February 13, 2009 | #
@Jeff – The inspector cost me $100 but it saves me some money in negotiation with the seller. Yes, you can still negotiate the price after the bid ends. I’ve called and spoken to the seller prior to the bid and he is open to negotiation. The inspector used a paint sensor and discover some paint thickness which indicates some repair. It is minor and not recorded in vehicle history obtained via Carfax. I think I negotiated an additional $500. I’ve friends who have used eBay Motors. One of them actually bought a Porsche 911 Turbo.
@Josh – I hope I made the right choice 🙂 Actually the 2002 model is better than some later model. They actually overcompensated the power steering in one of the later models. However, the power windows for 2002 are quite unreliable, I’ve replaced 3 out of the the 4 window actuators (not the motor). I’ve clocked additional 50,000 miles since. It is now at 126,000 miles.
Adrian 5:56 pm on February 13, 2009 | #
@ Mark – You will want to get that conversation in writing, otherwise the Seller could decide to get nasty and complain to eBay (who will ‘pull’ your account) … otherwise, a great idea: lock in the sale => have the vehicle inspected => renegotiate the price!
Assuming that you have NO other assets, you are the first of the 7MITs to actually meet the 5% Rule. Congrats!
Just don’t go out and celebrate by buying a new(er) car 😉
PS If my wife’s Lexus SUV Hybrid is any indication, the gas savings are WAY more than offset by the cost of the vehicle 🙂
Jeff 10:20 pm on February 14, 2009 | #
Where are all these rules coming from? Did I miss a bunch of information in the brochure?
If I understand correctly, we have the 20% rule for home equity vs. net worth, 25% rule for mortgage vs. income, and now the 5% rule for cars.
I may need a pointer (link) to where that one was discussed. It seems like all you’d need to do is wait a bit and eventually your car will depreciate enough to be under 5%.
Does anyone really count their cars as part of their net worth? I view them more as a disposable item and not something that I try and calculate my net worth with.
Thoughts?…Jeff
Adrian 4:45 am on February 15, 2009 | #
@ Jeff – Yes, the ‘brochure’ is my blog (7million7years.com) 😉
The basic idea is to have AT LEAST 75% of your assets invested (i.e. NOT in your home/car/stuff/etc.) at all times.
I have found that 4/5 of what’s left (i.e. 20%) is a very good number to have in your house (at most) leaving 1/5 of what’s left (i.e. 5%) for everything else, including your car:
Jeff 6:21 am on February 15, 2009 | #
Thanks Adrian.
Mark 10:21 am on February 16, 2009 | #
@Adrian – The 5% rule is definitely quite strict on what we can buy. The car is definitely one of the big ticket item. How about other items of value – jewelry, electronics, furniture? I tend to think my Wii and PS3 is of some value 😉
@Jeff – Actually in both Quicken and NetworthIQ, cars are part of the asset column. But if we follow Robert Kiyosaki’s notion of asset then both our cars and primary residence are not.
Adrian 3:31 pm on February 16, 2009 | #
@ Mark – the 5% Rule is for ALL of your ‘stuff’: car/s, jewelry, electronics, furniture … yes, and those ‘valuable’ Wii’s and PS3’s. Together with the 20% Rule, it’s designed to keep 75% of your assets in real investments at all times.
BUT … the nature of true assets (appreciates) and ‘stuff’ (depreciates) actually allows us to SPEND more on ‘stuff’ every so often than you may at first realize. Life is meant to be rewarding AND fun 🙂
@ Jeff – the difference b/w what NWiQ and Robert Kiyosaki class as ‘Net Worth’ is best explained in this post:
… again, our 20% and 5% Rules help you manage the differences b/w the two; that’s their power/simplicity/and (yes) beauty.
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