My first car, which was purchased about 10 years ago, was purchased with about $2,000 of lifeguard money.
It was a KIA, which has always been an undervalued brand. I had bought the car at a car auction, and it turned out to be a great buy.
KIA’s are not the leader in quality (or brand image), but my KIA had a powerful engine and got amazing gas mileage.
Since I bought my first car in cash, I saved money every month. I saved money on the interest I could be paying on a car loan, and on car insurance. Taking these savings alone, I bought my second car with cash.
With my second car, the internet had bloomed into a wealth of information. When I was interested in a car, I could Google it and easily see ratings, reviews and other sale values. The blue book values were just a click away at Kelley Blue Book (KBB.com).
I spent about two months looking at dozens of different cars before I saw the car I bought. the car I decided on was a Toyota Echo. The car had amazing reviews for quality, dependability, and gas mileage.
The reviews also mentioned that it had a very unique dashboard (which proved to be unpopular), and the engine was extremely small. The engine has so little power, that when I go to the mountains I sometimes get stuck going around 30 miles an hour. The engine size however, has no impact on city traffic.
I decided these were negatives I could live with. I contacted a private car dealer who was selling the car (and had advertised on Craigslist). I met with him at his dealership, and test drove the car and it ran smoothly.
The car was priced about $2,000 below blue book value. I tried to barter the price down further, but the car dealer showed me proof that he was only charging a $200 markup as it was, and we eventually landed on a deal.
He also gave me one day to return the car if I was not happy. I used this time to have a mechanic examine the car.
I did have a mechanic check out the car immediately, and everything was in order.
The car has run great for about 4-5 years. I get about 40-44 miles per gallon, and the car is very reliable.
The money I save on gas, insurance and interest are helping me save for my next car, which will hopefully not be for another 5-10 years.
I have watched my peers buy giant SUV’s on a car loan. They do that at the cost of going to school, or buying a home. Education and home ownership are investments, cars are not. I will always invest in education and home ownership, before I ever considered buying a flashy car.
Buying cars without going into debt is one of the greatest decisions I have ever made, and a habit I will likely continue for the rest of my life.