Baby you can drive my car
It's been a year since everything changed due to COVID-19. I originally wrote this in May 2020 as a way to document what was going on. The intent of the post is to share the financial issues that my wife and I deal with in our own lives. A look behind the curtain if you will. I want to be as helpful as possible so I am transparent and open with the facts and figures. They are most definitely not meant to be boastful or flashy. Enjoy!
I pulled the rental car away from our Upper East Side apartment building on Sunday, March 15th at 10:30 am. We were on our way south to my parents’ house in Ponte Vedra Beach, Florida or as I affectionately refer to it Del Boca Vista Phase 4 (Seinfeld fans will get this. If you don’t, watch “The Wizard” episode from Season 9). Our idea was that we’d stay for 2-3 weeks and ride out COVID-19. We made it through the Lincoln Tunnel in 15 minutes and through New Jersey in under 90 minutes. For any of you familiar with NYC area traffic, that’s unheard of and should have served as an ominous sign of things to come.
It’s now been 10+ weeks and, needless to say, life as we know it has changed. My wife and I have daily conversations about what it would look like when we returned home. Would it be safe for us and our boys? What do we do about groceries and other supplies? How could we both work from our 850 sq ft apartment? Could our nanny somehow get to our apartment to watch the boys while we work? Will the subway and bus be safe? Through these conversations we came to one conclusion, we need to buy a car.
For those of you unfamiliar with my thoughts on owning a car in NYC, I’ll give you a quick summary: it’s a waste of money. (A quick aside - Yes I am aware that some people need a car for the commute to work or school or other legitimate reasons. I am mostly talking about those where a car is not truly necessary rather it is a nice to have. End aside.) Between car payments, insurance, tolls, gas, and general maintenance the cost easily comes to over $1,000 per month. Not to mention that for parking you get up-charged if it’s a luxury brand or an SUV. I’ve run the numbers dozens of times and renting a car is more economical as you only incur the associated costs when you actually need to use the car. What my spreadsheet did not account for was a virus that threatened the health of my family.
Based on our needs, it was clear the best choice was the good ole family station wagon. Unfortunately, car manufacturers have basically have killed it off thereby immediately reducing our options down to:
Mercedes Benz E wagon
Volvo xc70, v60, or v90
Subaru Outback
Audi Allroad
Buick Regal TourX
Now it was time for my inner Excel nerd to shine! I got to work putting together a spreadsheet comparing cargo space, gas mileage, cost (new & used), and various ratings from Car and Driver, Edmunds, & Consumer Reports. I consulted with my buddy who serves as my resident “car guy” and friends who have owned each of the models. We talked about what options were “must-haves” (heated seat for my wife was a landslide #1 by the way) and what that meant for costs. After all was said and done we were down to two finalists: a new Subaru Outback or a used Volvo xc70.
We reviewed our budget searching for where we could easily cut expenses. My gym membership and haircuts were the first to go. The former mainly because the gym is in SoHo and once we get home I’m still unsure when I’ll be comfortable taking mass transit. Where the latter is more of an acceptance that my hair is no longer “thinning” rather that I am flat out balding. Next to go were the subscriptions that we rarely have a chance to properly utilize. Say goodbye to WSJ, Golf Digest, ESPN+, and Golf Magazine. A few adjustments to various other categories and we felt like the “money out” part of the equation was under control. Now it was time to focus on money coming in.
I emailed for planning work that should have been already sent (that’s a topic for another day) and put in multiple late nights / early mornings to complete others. We did the math to figure out exactly when my wife would max out social security taxes and 401(k) contributions for the year thereby increasing the rest of her paychecks. I dove deep into the CARES Act and the Payroll Protection Program to see if the loosened 401(k) distributions made sense for us (they didn’t) and if I qualified for a PPP loan (technically yes). After all, was said and done, our budget was now finely tuned and we had extra cash flow on the way.
With our choices whittled down and finances in order, we asked “Bella and D” (aka my parents) if they could watch the boys while we went to look at cars. On the drive to the Subaru dealership, we agreed that we were not buying any car today and this was strictly a fact-finding mission to see them in person. Famous last words.
After meeting with the salesman, test driving the Outback, and talking generally about what the terms of the purchase would be, we had a natural break as it was time for my wife to pump (she’s still providing breast milk for our 6-month old). We thanked the salesman for his time, told him that we still wanted to look at the other car, and would let him know of our decision later in the day.
While we enjoyed our Chick-fil-a lunch (#1 combo for the win) we continued talking about our finances and if it really made sense to buy a car. We both really liked the Outback, felt the terms were reasonable, and knew we could make the payments work. I still wanted to look at the Volvo however my wife had a “gut feeling” about the Outback and wanted to go forward with that. So back to the Subaru dealership we went to buy a car.
Once we settled on the warranty coverage (we went with the 100,000 mile extended warranty for what it’s worth) and some of the other details, the final terms of the purchase were:
$33,700 purchase price
0% APR for 63 months
No payments for 3 months
$41,784.12 total loan amount / $663.24 monthly payment
Buying a car was not in our financial plan and, frankly, something we weren’t sure how we could afford. In the end, although the monthly payments were slightly above what we wanted to pay we’re very happy with our decision. We now know that we have a safe way to transport our family.
Sometimes a little peace of mind is worth more than the dollars and cents.
Quick epilogue here - We've been back in NYC since July 2020. The car has done its job and provided a safe way to pick-up and drop-off our nanny 5 days a week. We've also used it to cruise potential new neighborhoods (that's a post for another day), visit family for the weekend, experience the Six Flags drive-thru safari, and make the quick ride across Central Park to the American Natural History Museum. Also, I can't lie. It's been nice to have for when I want to play golf.
Taking a look at the numbers, between the car payments, garage, gas, and insurance we are spending over $1,500 a month. Thanks to COVID-19 our overall expenses have been greatly reduced so the additional expense has not been too much of a strain on our cashflow. Overall, we're very happy with the purchase and glad we are fortunate enough to make the numbers work.
Our big boy and his momma enjoying an ice cream treat in the back of Billy Baru*
*Shout out to Caddyshack and Judge Smails’ lucky putter!