I’ve been thinking a lot about financial goals. It’s only recently I’ve started to write mine down. In the past, I let them marinate in the back of my mind until they happened, or they didn’t. Sometimes, they have been conservative: goals I knew I’d eventually reach, if I simply continued doing what I was doing. But drawing inspiration from other financial bloggers, I have a feeling I can accomplish more if I try. And I’ve decided that not buying something can be a financial goal in and of itself. Here’s how I avoid buying things I don’t need: in this case, a new car.
I decided not to buy a car this year. Marketing forces immerse us in messages to buy things, whether we need them or not. And I don’t need a car yet. Strategically not buying something can be a goal in service of bigger, badder goals. This is a post about how not to buy things you don’t need. Here is my process on how not to buy a car, as an example.
I drive a blemished 2009 Mazda 3 hatchback. It’s not a glamorous car, and likely never was. As I opened the moon roof a few months ago, I heard a tree branch or something cracking; it turned out to be plastic parts of the retractable roof snapping apart. Sometimes when I drive, the broken pieces rattle. It’s not that big of a deal, but it’s not charming either. Repair would cost a couple thousand dollars, a good portion of what the car is worth.
In 2010, my car was a pretty hot commodity, with its cruise control, CD changer, and Bose speaker system. It’s got a great turning radius, and my gas mileage is respectable. I love the smell of the aging leather, and the history we share. Together, the Mazda and I traversed four Rhode Island winters. The car has driven cross- country, and seen much of the California coast. Crevices contain grains of sand, reminding me of days at the beach. Remnants of road trip coffee coat the console. There’s a warm familiarity built on ten years of friendship.
One challenge I face, though, as I roll into the doctors’ parking lot, is seeing a host of other vehicles, most of which are nicer than mine. I get vehicular FOMO, fear of missing out. There are beautiful luxury cars, like Maseratis and Porsches. There are some my practical side covets, like the Honda Hybrids and Teslas. I’m confronted by the contrast between these cars and mine. It’s a common consumer dilemma. Yet in reality, I live so close to the hospital, I could ride my bike to work. I don’t need a new car, let alone a fancy one.
The next car I buy will be an electric or plug-in hybrid. Not only are there tax credits for purchasing them, but we have solar panels to help with charging. But electric vehicles aren’t cheap. Even in California, the monthly cost of gas still comes nowhere near the cost of a car payment. In the meantime, I can save, putting myself in a position to buy a car in cash when the time comes.
Since I paid my car off 8 years ago, I’ve had no monthly payment. Anchoring is a term referring to biases we hold, based on some initial information, like an “original price.” The anchor guides our future decisions. In this example, my monthly anchor for owning a car is zero dollars per month, since aside from occasional repairs, the monthly cost of ownership is zero. On the other hand, if I was used to paying $1000 per month for a vehicle, that would serve as the anchor, making a $500 monthly payment seem like a deal.
I have financial goals that I don’t want to sabotage with unnecessary spending. As a rental property owner, I want to keep a cushion available to pay for the next repair or improvement on my property. One day, I will expand the lower unit of our duplex into the adjacent storage space, making it more spacious. Spending in this way will increase my property value. It will benefit my tenant, and eventually, make us more money in the form of higher rent. This is in contrast to spending on a car, a depreciating asset. That’s why I manage my mind around my old car.
Practicing gratitude helps me not buy things I don’t need. For example, when I was a tween, my whole family in the Czech Republic shared a 20 year old clunker. On a road trip with my dad, it broke down, stranding us for the day. The memory makes me grateful to have reliable transportation. As a teen, I learned to drive using my step-dad’s car. I was thrilled just to loop around a nearby housing development. The Accord lasted through high school, college, medical school, and internship, until finally, I had to pass it on.
On the other hand, since I’m not a huge car person, the happiness boost I’d get from a new ride isn’t likely to be commensurate with the cost. The way I think about it, it’s the opposite of diminishing returns (the next pizza slice doesn’t taste as good as the last). I’ll call it the principle of augmenting returns. The longer I wait to get a new car, the more awesome it’ll be when I do!
In the next year or two, I’ll spring for a car when I need it, or when I’m prepared to buy with cash. It’s possible for a financial goal to be not purchasing something. Maybe you’re like me- you have what you need, but you dream of something newer. Or maybe there’s a different object of desire you could look at in this way. It helps to differentiate what you want from what you need. For me, thinking about my car has been an exercise in (not) spending intentionally.
Can the idea of not buying get closer to your financial goals this year?
What are you not buying right now?
The path can be riddled with failures, even if you're doing it right. In this recording, I share some of my gaffes with you.