Personal Car Downgrade? or Upgrade?

Hi All!

It has been awhile since the last post. We have both been trying to figure out some factors in our lives that we can improve on.

As part this process from the new year, I decided to take a serious dive into the search for a different car.

Some questions I had to ask myself:

  • How do I use my car?
  • What are must haves in a car for me?
  • Does the car I have make financial sense?

After asking myself some of those questions, I decided to venture into the search with Mr. Bzness for a “downgrade.” We started looking for a Honda Accord sedan, which would fit the need of my family and we still kept some options that I would like to have in a vehicle. (Fyi…I do consider myself a car enthusiast)

After a couple of weeks of searching, we started to check out the cars and decided on the specific vehicle we wanted. We did have a dilemma of should we trade in the car or sell it ourselves, after posting it on and craigslist we went with the trade in option due to the small difference in offers and the sales tax advantage you would get when trading in a vehicle. The tax advantage is essentially due to the price of the car you are buying is less due to the trade in and you only pay sales tax on that amount versus what you would have paid. We did decide to buy a 2-3 year old pre-owned car versus buying new, which definitely helped with the pricing of the vehicle.

After everything said and done, I had gotten rid of a 2011 BMW coupe for a 2016 Honda Accord sedan. So I asked myself, did I downgrade? After taking everything into account, I had more new features and the space I needed for the family.

Immediately after the purchase, I started to realize that this “downgrade” actually isn’t what I thought it would be.

I was pleasantly surprised to have my auto insurance policy decrease by ~$100, when I called to change the vehicle that needed to be insured (I did not change any coverage options). Then after my first week of driving to work, I only used a quarter tank of gas!!! I have been used to using 3/4 of a tank on the BMW and pumping premium gas versus now with less gas usage and pumping regular gas, I foresee more hard earned dollars staying in my pocket than in the pump!! 🙂

Another big factor that made me pull the trigger on the switch was that I was spending around 2-3 thousand dollars on maintenance for the BMW a year and it was getting to the point where we were expecting more repairs to be needed. The BMW had ~93k miles on it and the more I drove it, the more dollars I could hear I would need to keep it running.

So back to the original question…Downgrade? or Upgrade?
Let’s do some quick high overview math on this:

  • $100 less in auto insurance per 6 months = Savings of $200/year
  • 1/3 less consumption in gas w/average 10,000 miles driven a year for me, and pumping regular instead of premium gas (50 cents more per gallon). Let’s say average price regular gas is $2.00. = Savings of ~$647.50/year
    • BMW 18/27 mpg (City/Hwy) = ~555 gallons/year x$2.50 = $1,387.50
    • Honda 27/37 mpg (City/Hwy) = 370 gallons/year x$2.00 = $740
  • Maintenance – I won’t be able to break this savings down to an actual number but I think we can safely assume I will be at least be spending $1,000 less in repairs/maintenance cost a year and I truly believe that to be a conservative estimation = Savings of $1,000/year

So if only looking at the finances we are expecting a total yearly savings of $1,847.50!!!!!!!

Based on some quick math and my opinion, I think it was definitely and upgrade! Not to mention, the right financial move to make, especially since I only drove it to work and to drop off my kid to daycare. I no longer needed a vehicle that had more speed capabilities that family friendly options. The instant savings with auto insurance was definitely a nice surprise. Buying a newer vehicle used and going with Honda, I am hoping/expecting a reduction in maintenance needs/cost and the decrease in gas consumption should all add up to a decent amounting financial savings!!

There is a great podcast from ChooseFI, that breaks down the true cost of car ownership. To be honest, I was always to afraid of listening to it because of my choices in cars but I may give it a quick listen now 🙂 .

Just wanted to share what I think is definitely a WIN in my life recently! Hope this quick breakdown of a real scenario can help others visually see some of the pros and cons of different cars versus just keeping it in our head, this helps make it less abstract of a concept.

As always, please leave comments or email us if you guys have any questions or want to know a little bit more about the small wins we post!!! 🙂

Also, please feel free to share any of your small wins as well! We would love to hear about it and see what we can learn from it as well!

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