Like ripping off a band-aid to get the pain over quickly, I’m just going to say it.
I spent nearly $50,000 on my last car
Add in the 6% sales tax in Maryland, and you’re looking at almost $53k. Ouch – that hurt just saying it. It’s a 2013 VW Touareg TDI which is a diesel SUV. More on the diesel part shortly. Just to set the record straight, I wasn’t a total idiot. I did not finance this vehicle. I received a modest amount on my trade-in and I had some stock options that turned out to be quite valuable.
Why Did I Get This?
Why would anyone spend $50,000 on a vehicle? Good question. I’ll try to give you a few lame reasons on why I did.
My previous car was too small for a family of four (including two growing teenage sons) plus a dog. Mrs. Need2Save affectionately referred to it as the ‘go kart’. As I was fast approaching my 40’s, it was time to get a family vehicle. Mrs. Need2Save had a sedan and neither of us wanted to return to the minivan life we had when our sons were younger.
I wanted something that we could comfortably take on long road trips. We like to bike, so it was also nice to easily throw three bikes onto the hitch mount bike rack. We sometimes get a decent amount of snow in the winter, so having all-wheel drive is also good to have. And who doesn’t like heated leather seats and walnut trim?
Enough of that BS, let’s get to the real reasons. It was mostly lifestyle creep. I was feeling successful in my career and a recent round of stock options ‘hit the jackpot’. I had also been saving up money for a new vehicle, as I knew the go kart wasn’t the right car for our family. Also keep in mind that this was our pre-FIRE days.
I’ve always been a car enthusiast. I started working at age 14 for the sole purpose of saving for a car. Looking through old car magazines, I dreamed of getting a 67 Mustang Fastback, but an 83 Toyota Celica would have to do. I got that car before I even turned 16 and would just practice ‘catching the clutch’ in the driveway. Some guys like cars and I’m one of them. I also blame the engineer in me. I truly appreciate the engineering that goes into a well made vehicle.
Let’s Try A Diesel
One last thing I was looking for was a diesel. Being an engineering nerd, I knew about the benefits of a diesel engine over a gasoline engine. One of the most significant benefits is improved fuel economy. Most of my driving is in suburbia and I routinely get 23+ MPG. Although that’s not fantastic overall, a comparable gasoline VW Touareg get around 17 MPG. So that’s around a 35% improvement. Diesel engines are typically more reliable and last longer than gasoline engines. My intent was to keep this car for the long haul, so I wanted to get at least 15 trouble-free years out of it.
Although diesel cars typically aren’t fast (the top speeds aren’t that high), they have tremendous low end torque (I told you I’m a geeky engineer). So you end up with great acceleration. All that torque also allows you to tow things easily – although I haven’t had to tow anything yet. A downside of diesel engines is that they typically cost more than gasoline engines.
And then there was VW’s ‘clean diesel’ technology. Their claim was that these new modern diesel engines were better for the environment as compared to gasoline engines. We would all be responsible citizens and caretakers of the planet if we embraced these cars. I’m not exactly a tree hugger, but if I can easily do something to cut down on pollution, then why not? It did make me feel a little better paying extra to get the diesel.
If you haven’t heard by now, VW lied and cheated about their clean diesel technology. They have admitted to blatantly altering the emissions control system to respond in a different way when the vehicle is undergoing an emissions test. When the vehicle is not under an emissions tests, it emits nitrogen oxides up to 40 times the standard. This Consumer Reports article summarizes the issue well.
What the hell were these guys thinking!
Most of the vehicles affected were cars like the Jetta, Golf, and Passat that have a smaller 2.0L four cylinder engine. VW also admitted to cheating on the larger 3.0L six cylinder engines that are in my car. When you add up all the vehicles impacted (around 630,000 cars in the United States), the total settlement is around $15.9 billion. The settlement is a mix of buybacks, restitution payments, and for some vehicles (including mine) repairs.
So how much am I getting out of that $15.9 billion? So far this is my “I’m sorry we screwed you package”:
- An initial ‘Goodwill’ payment. This included a $500 dealer card that I used for maintenance and a $500 Visa card. I used the $500 Visa card to buy motorcycle gear.
- They say they can fix my car, although a fix has not been approved yet. If a fix is not approved, then they have to buy my car back at the NADA clean trade-in value at the time the scandal broke (September 2015).
- A restitution payment of $7,364. I received the first half of that recently. I get the rest after the repair is made.
- Bosch is also involved in this settlement as they provided the emissions software. I don’t exactly recall what that settlement amount is for, but it’s somewhere between $1,000 and $1,500.
What If I Had Made A More Reasonable Car Purchase?
Let’s say I would have been more reasonable and spent $25,000 on a car. That could have bought a pretty nice used car that met our needs. It wouldn’t have to be as large and powerful as my current car. And it certainly wouldn’t need to be as luxurious as my current car.
Given that this purchase was near the end of 2012, I looked up broad US stock market returns from 2013 through today. Except for 2015 with a measly 1.38% return, the other years were great. Had I purchased a $25,000 car and invested the other $25,000, that investment would have resulted in around $47,000 today!
Put another way, that’s almost a years worth of expected living expenses as we discussed in our Numbers Game – Part One post.
I really do enjoy this car for all the reasons I mentioned in the beginning. It’s comfortable, provides good utility, and the a dynamically steered Xenon headlights sure are cool. Mrs. Need2Save never complains when we trade cars.
However, I seriously doubt I would have bought this car if we were in FIRE mode back in 2012. Seeing that we potentially could have been able to leave the 9-to-5 world a year sooner, makes this purchase sting a bit. The whole Dieselgate issue makes it even more sour. Although VW says they will have a fix, part of me wants them to fail at getting this fix approved so that they will have to buy my car back. Although I plan on keeping this car until we retire, I would like to get some money for it. Right now I’m not sure I could sell it even if I wanted to.
Have you spent too much $$$ on a large purchase?