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Really?! You Can’t Fix Stupid.

As Ron White says, you can’t fix stupid.  I know that is harsh, but seriously…read on.

Backstory

So my husband comes home from work today and tells me about a conversation he had earlier in the day with a fellow teacher.  Here is her backstory.  Her daily commute is about 120 miles or more roundtrip.  She drives a fuel efficient car that isn’t paid off yet.  That car is about 2-3 years old and has 70,000 miles on it.  She wants to trade it in for a newer model of the same type of car.  My husband asked why and these are the reasons she listed off:

1.  This car has too many miles on it.
2.  She’s hoping to not need a car in 3 years.
3.  So when she sells her car in 3 years, one with less miles would sell for more.

Do you see a problem with this logic?  Mr. BFS did…he said he sat there with his mouth open for a few seconds not knowing how to respond.

Why I am Being Judgy

In case you aren’t following along, this person would like to sell her current car, that is working great, to buy a newer model of the same car, so she can turn around and sell the newer car in 3 years for more than the current one would be worth at that time.  She thinks that is the best deal for her and her money.  Really?!

Guesstimates Based on the Car

Current car was $25,000 or more.  Currently worth $16,000 or less.  Owes at least $12,000 (probably way more, but I will be extra optimistic).  She has paid at least $16,000 including interest.  If she sells this car, she will pocket at best $4000 and have paid a total of $12,000 and I am being very generous with my guesstimates.

If she keeps this car, in 3 more years it will be paid off (probably $30,000 or more total with interest) and be worth about $10,000.  That means she would have probably paid a total of $20,000.

A new model of this car is $25,000 or more.  Will be worth about $16,000 in 3 years.  She will already be in it for $16,000 again.  It will still have about $12,000 left.  So she sells it and yet again is in the hole for about $12,000.

Her Options

Option A – Keep the car, pay it off, sell it in 3 years, and spend a total of around $20,000
Option B – Keep the car, pay it off faster, sell it in 3 years and spend less than $20,000
Option C – Keep the car, pay it off faster, get stuck here, keep car, and spend less than $30,000
Option D – Sell the car, buy a new one, sell it in 3 years, and be down at least $24,000
Option E – Sell the car, buy a new one, get stuck here, keep car, and be out at least $32,000

In no scenario will selling her current car and buying a new one be in her favor monetarily.  It just doesn’t work like that.  If you could make money by buying new cars, selling them, and buying another new car, no one would ever drive a car older than 2 years.  Cars are the definition of a depreciating asset and she wants to load up.  Oy.

What do you think?  Am I missing something?

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38 comments to Really?! You Can’t Fix Stupid.

  • I don’t think you’re missing anything. But I don’t understand the woman’s logic in purchasing this car in the first place. If she knew she had a long commute, why would she buy a car that wouldn’t hold up, even if it’s fuel efficient? Also, she wants to make a trade up because she HOPES she won’t need a car in 3 years?

    Maybe I’m stupid because I don’t get it.

  • Wow her logic doesn’t make any sense to me.

  • I hate to say it, but I don’t understand how someone can be so dumb… It all seems to start with financing a car. If you don’t finance a car, you aren’t put in a difficult position like this.

  • Nope, you’re not missing anything. I think it’s time to explain to this lady what leasing is – she’ll do way better.

  • No you are not missing anything, but maybe this lady just needs to be educated? She may not know any better. Did your husband who understands the logic and reasoning behind depreciating assets attempt to explain? She is probably ignoring the fact that she can sell her current car and failing to take into account the added costs of getting a new car. She probably doesn’t do story problems in math very well. Unfortunately, life is a story problem.

    Also, the extra mileage charges on leases would kill her. Leasing is almost never a better option than purchasing. At least I have never been able to come up with a scenario where that was true.

  • She’ll never be rich, that’s for sure.

    For today’s cars, 70,000 miles is just breaking in. Sheesh!

    I know millionaires and they drive their cars to the ground.

  • This reminds me of a friend who was so proud of herself for cleaning up her credit enough to 100% finance a brand new vehicle. I felt bad for her but didn’t want to burst her bubble. I congratulated her on cleaning up her credit but couldn’t broach the topic of her car.

    The woman in your example is missing some education. Her logic does not make sense at all.

  • Some people just don’t think the way you and I do ; )

    But oh man oh man oh man, I would like to smack some sense into her

  • You can never tell what people are going to do – just be thankful shes spending her own money and not yours. And as a person who did drive that much, why does she think she’s going to not need to drive in 2 years?

  • This makes no financial sense. I’ve heard people say before that cars have big dropoffs in value after 100,000 miles. Is this something that could be in her thought process? Either way, it’s a myth and holding on for the car as long as possible is pretty much always going to be the best financial option (assuming there aren’t huge repairs needed)

  • I think you spoke to my wife. She says that to me all the time. Really? You think you look cute? Really? You had to take the shoes off in the middle of the floor? Really? Do you need that much oxygen?

    As crazy as it sounds it needs to be pointed out to her. People sometimes can’t see the page in front of their face. Have you ever watched a Jerry Springer show? Neither have I but I have heard that every so often a guest watches their behavior and becomes alarmed by what they see and ultimately leads to them changing it.

    I say point it out…

  • That was a pretty good one! Some people have a hard time with (hillbilly accent) “that-there fuzzy math”. LOL

  • The real problem is, especially for a teacher, very few people understand basic math, let alone complex things like interest rates and ROI ;)

  • You can’t save stupid! You can give her the advice, but she probably won’t listen. It many ways it is like try to help ana ddicted person, you can’t until they are ready to change.

  • The only think I can think of is that maybe the car needs a lot of work soon? At 70,000 miles, I wouldn’t think so, but I guess it’s possible. In any case, I think her reasoning is naive.

  • I had to re-read it actually two times to believe what I was reading. Is she insane? Unless the car is falling apart and losing its parts while on a road, the whole thing does not make any sense. The sad part, she won’t even understand it if you tell her that.

  • Did your husband help her see her financial mistake?

  • Nope. You’re not missing anything. She’s buying a new car no matter what you or Mr. BIFS says or does. My guess is her backstory is an excuse. She’s “bored” with her current car and wants a new one. But she probably actually believes what she’s saying to some extent, too. Sad.

  • I think my mouth hit the floor reading that. On what planet does her plan make financial sense to her? It is scary to think she is a teacher. I get that she probably doesn’t teach finance, but teachers are very influential on their students in more than just the subject they teach. Has she even done the math on it properly?

  • To the ones who asked, Mr. BFS asked a few follow-up questions to try to point her in the right direction, but she was holding fast and isn’t someone who takes suggestions well apparently, so he let it drop. She isn’t a math teacher thankfully.

    @Jana, oh, it’s worse. The car is holding up fine and has never had any issues. I’m not supposed to mention the model, but it is the same car my husband drives.

    @Jeff, she is hoping to move in 3 years to a metro area that she can walk or use public transportation in…

    @Christa, to the lady’s knowledge, her car is working great.

    @Aloysa, nope, the car is great! My husband drives the same type and it simply is not known for any big issues (well, unless the breaks stick open but that’s never happened to either of them).

    @Jenna, he asked a few directing questions but let it go since the woman can get…ummm…cantankerous.

    @Nick, yep, exactly.

    @Kylie, and people ask me why we don’t have kids…they wouldn’t stand a chance or I’d need to send them to private school…

  • It doesn’t make sense unless she thinks that the money to buy the new car will fall from the sky. ;)

  • I think she just wants a new car and is making up excuses to justify it!

  • Wow. I cannot follow her logic at all – maybe it’s opposite day? Lol..

  • I also don’t understand the logic. If she’s putting that many miles on her car and it’s running fine, I’d say drive it into the ground. She is also saying she wants to move to a place where she won’t need a car as much; again – sounds like she should just hold on to the car she has for now. Maybe she doesn’t realize cars depreciate in value?

  • I don’t get it. If she wants to move to an area where she would not need a car, why would she put herself in more debt? I would try to get that loan paid ASAP.

  • Wow… I bought my truck used, right at 70,000 miles. That was more than 10 years ago. 120 miles a day is a hefty commute. Maybe this person could use a thought shift change and be better off by looking for work closer to home.

  • ODWO

    We thought about getting a “nicer car” for my wife …. but she says that the one she has still runs great, is paid for, get 25mpg (she drives 7 mi. to work at that).

    People I work with can’t seem to help themselves from dropping $60K on a new pickup truck. With the 5.7 gas guzzler motor. And then wonder why it’s in the shop every other month (week?), and the gas station every other day. (I guess there’s some Bubba jokes somewhere in there…)

    But, like, those newer [models] are just prettier. Ya’ know? (wink)

  • Im so confused. What is going on here? Lack of common sense is an epidemic.

  • This woman is confused and shouldn’t buy a new car. Why not just use the old car for the 3 years left. It’s a no brainer.

  • Haha. It’s amazing how some people think. Even before you shared the numbers, I was thinking, “How would that even make sense?” Poor lady, I hope she doesn’t waste too much money. :-(

  • I just don’t get on my she would get a new car when her current one is working just fine!! Its not going to help her financial, hopefully she’ll realize this before its too late!

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