Lizzy and Lissa break down the hidden costs – financial and otherwise – of new cars. They explore everything from depreciation and financing to insurance hikes and maintenance fees, plus the emotional costs of keeping up with the latest trends. A lot of people prefer to buy used cars but others still prefer that new car smell. What do you think, are new cars worth it?
Lizzy and Lissa break down the hidden costs – financial and otherwise – of new cars. They explore everything from depreciation and financing to insurance hikes and maintenance fees, plus the emotional costs of keeping up with the latest trends. A lot of people prefer to buy used cars but others still prefer that new car smell. What do you think, are new cars worth it?
Main Topics
00:00 Introduction
01:28 Running The Numbers Segment
03:30 Our Car Purchases
09:26 Leasing vs. Buying
16:10 The Emotional and Practical Aspects of Car Ownership
19:32 Cultural and Social Implications
22:53 The Trade-Offs of Car Payments
25:46 Social Perceptions
30:10 New vs. Used Cars
34:05 The Alternatives to Owning a Car
38:04 20 Cents Segment
References for Statistics
https://www.kbb.com/car-news/average-new-car-price-down-year-over-year-for-third-straight-month/
https://www.progressive.com/answers/what-is-car-depreciation/
https://www.bankrate.com/loans/auto-loans/average-monthly-car-payment/?tpt=a
https://www.marketwatch.com/guides/insurance-services/new-vs-used-car-insurance-comparison/
https://www.cnbc.com/select/how-much-does-car-insurance-increase-after-accident/
Lizzy: All right, what's the most you would pay for your monthly car payment?
Lissa: Well, right now I pay 720, and I hate it.
Lizzy: Hoo.
Lissa: That's the most I've ever paid for a car payment.
Lizzy: Girl.
Lissa: Yeah.
Lizzy: I'm deciding if my zero car payment is worth giving up. So today we're talking about are new cars worth it?
Lissa: Let's talk about it.
Welcome to Net Net with Lizzy and Lissa where we analyze hidden costs and empower you to make your own damned decisions in life. Each episode covers a different facet of life and, at the end of each episode, we each give our takes on whether we think something is net-positive or net-negative.
Lizzy: I'm Lizzy, a strategist and consultant with almost 20 years of experience in finance and investing.
Lissa: And I'm Lissa, a personal finance expert and accredited financial counselor. We're best friends who talk about money...
Lizzy: And everything else.
Lissa: So in today's episode we are discussing automobiles and also financing them.
This episode, however, is for informational and educational purposes and should not be misconstrued as financial advice. We share these experiences to help educate, but you should consult a professional for guidance as needed.
So are new cars worth it?
Lizzy: First up, running the numbers on new cars.
Lissa: So according to Kelley Blue Book, the average new car buyer in America paid $48,247 in November of 2023 compared to an average of 26,000 for used cars.
Lizzy: Damn, that pains me. That's a lot.
Lissa: Yeah. So that's like more than 20K a month.
Lizzy: I think my frame of reference is like back in the 2000s because-
Lissa: Yeah, obviously it fluctuates depending on the timing and stuff.
Lizzy: Seems like a lot.
All right. And as part of the dollar figure for new cars, the average non-luxury car sold for $44,417.
Lissa: All right.
Lizzy: So that's not even a luxury car.
Lissa: Yeah.
Lizzy: Man, this inflation, y'all.
Lissa: Crazy. So Progressive.com says that it's hard to estimate how much a car depreciates, but they estimate that within the first year, many cars will lose up to 20% of their value. After that, they may lose about 15% more per year until about the four or five-year mark.
Lizzy: Damn.
Lissa: Yeah.
Lizzy: So five years, you barely got any value left.
Lissa: Yeah, barely any value. You got to hope that car lasts.
Lizzy: Shit.
Lissa: Man.
Lizzy: All right. According to Bankrate, the average monthly payment for a new car is higher than for a used car. In the second quarter of 2024, the average monthly payment for a used car was 525 and for a new car, it was $734.
Lissa: Spot on. That's like my-
Lizzy: Gosh.
Lissa: ... that's my car payment right there. Man.
All right. Now when it comes to insurance, MarketWatch says that it's generally slightly cheaper to insure used cars. Insurance for new cars is usually more expensive because they cost more to repair and have higher values than used cars.
Lizzy: Makes sense.
Lissa: Yeah. We all know there's more to life than numbers and statistics, so let's talk about it. Are new cars worth it?
Lizzy: Well, I think, first, there's new versus used, and then there's new versus keeping what you already have. And so for me, I'm thinking of this conversation as buy a new car, whether it's pre-owned or brand new, versus keep the car that I have that's paid off and that's perfectly functional. That's the lens I am approaching this with, but we can talk about both.
Lissa: Right. So you're thinking of replacing the current car you already have, whereas there's the other discussion of you don't have a car, but you need one or want one, and you're deciding between new versus used.
Lizzy: Yeah, I think they're both important discussions.
Lissa: Yeah, yeah. Okay.
Lizzy: Yeah, for sure.
Lissa: Good.
Lizzy: All right. So we talked about some of the financial costs, just in general, of a new car. This is a big purchase, y'all.
I don't know why this is like so surprising to me. I've been looking at cars, but I think the fact that these are averages. Like I think my frame of reference is like, "Oh yeah, you can get a new car for like 20 grand." Apparently not.
Lissa: Because when's the last time you bought a car?
Lizzy: 10 years ago, yeah.
Lissa: Right.
Lizzy: Exactly.
Lissa: That's what I was thinking of, too, is like how ridiculous these car prices are. When Allan and I bought a new one a year ago? A year and a half, two years ago, we bought a new one, and the last time I had been in the market for a car was 10 years prior as well. So that's why I'm like, "How did everything double up?"
Lizzy: I think I remember my mom was shopping for a new car, and I remember during COVID I feel like everything really spiked. Obviously, we know inflation overall really like went crazy in 2020, 2021, and I think that like especially hit the car industry because there were all of these supply chain challenges. And so I feel like that's part of it and like once it goes up, it's never coming down.
Lissa: Yeah, which is annoying.
Lizzy: But that's wild.
Lissa: Things can appreciate, and then when we get into possession of them, they depreciate, and we can't sell it for the same thing.
Lizzy: Okay. So you bought a car within the last year or so. Tell me about that decision.
Lissa: We bought a new car. We bought a new car, and it's a Honda CRV. Love it.
Interestingly, I made the decision to get another car, even though we already had one in the household. But I felt like living in Los Angeles and Allan moved here and we have... Our schedules don't always align that just the convenience of having two cars would be great.
Lizzy: For sure.
Lissa: But not only that. My previous car, which is a 2013 Mercedes, I just feel like I don't feel safe in it in some weird way. It's just like older, it's lower and LA's gotten crazy. I feel like a lot of places have gotten crazy drivers, but Los Angeles specifically, and I wanted to be like in a little bit of a bigger car that had more space. And so that kind of led to our decision to go car shopping.
Now why we bought a new car was because at the time we were looking, there was not a huge difference between new and used. And so it was like we could buy something a couple thousand dollars cheaper, like a few thousand dollars. When I say that, like I don't know, 3 to $5,000 cheaper-
Lizzy: Three, yeah. Yeah, I remember.
Lissa: ... which already had like 10, 20,000 miles on it and was a model from like two years prior. So that was what the market was like at that particular time, which I don't think is pretty much standard.
Lizzy: Yeah, I think that's atypical. Thinking now of just other, my ex's mom, who I was helping find a car, used car, in the past few years. It was a weird time-
Lissa: It was weird.
Lizzy: ... where used cars were like especially highly prized, and I remember that same discrepancies like, "Wait, wait, wait, wait, wait. What are y'all doing here?"
But at the same time, new cars were really hard to get, like you were... Before they even hit the lot, they were sold. There was a lot of supply chain issues. So I think that through the demand for used cars, and they were able to price them that way, but I definitely think that's atypical.
Lissa: Specific to us, too, we were also deciding... We kind of wanted to get an electric car. We ended up getting a hybrid, which we love. We have to get gas, but rarely. Like it lasts very long. Like it gets a lot of mileage and so that was important to us, too. And when you're looking for something specific, like we wanted a hybrid car-
Lizzy: For sure.
Lissa: ... then it's even harder to find what you want in the used market as well, which is crazy. Because we live in such a huge market, but I guess where there's more people here, too, to compete against.
Lizzy: Yeah. And it's such a commuter city, for sure.
Lissa: Yeah, yeah.
Lizzy: I remember specifically what you described with Allan moving here, and especially because he's come from walkable cities where like a lot of his sense of independence and kind of personal power came from being able to go anywhere at any time. And I think that was like a big driver of that decision, which I fully support, and it's not something someone would typically consider.
Lissa: Yeah, absolutely. Because like I said, it's pretty... It wasn't going to be too hard for us to share a car because we both work remotely, and it just takes a little bit of communication to figure out who gets the car when.
Lizzy: For sure.
Lissa: But yeah, I think there was no question about it. It was in the middle of nice-to-have and what's the other?
Lizzy: Need?
Lissa: Need, need.
Lizzy: Want, need?
Lissa: I don't know why I couldn't think of-
Lizzy: Must have? Want?
Lissa: Must to have, must have. Must have.
Lizzy: Must have. That's the one. Okay.
Lissa: My vocabulary is not vocabularying today.
Lizzy: Okay. You're good, you're good.
Lissa: You said atypical also, and I was trying to find the word for that. I said not so standard-
Lizzy: Not so standard. Yeah.
Lissa: ... because my vocabulary was tripping.
Lizzy: Oh, I got you. That's what I'm here for.
Okay. Have you ever leased a car?
Lissa: No, which is funny because my name's Lissa.
Lizzy: Girl.
Lissa: Sorry. No, because it's, I don't know. It's like I hear lease all the time, and people call me Liz.
Lizzy: Yeah, I call you Liz, yeah.
Lissa: Anyway, no. No, I have not. Have you?
Lizzy: I haven't, and it's something I had never really considered in the past. It just seems silly to me because I'm like a buy-and-hold kind of person when it comes to cars. Like I don't need the new model all the time, that kind of thing.
However, I will say that's actually something I've considered in the past six months or so. So I have a car that I bought brand new 10 years ago. It'll be 10 years in December. At the time, it was like my first new, new, new car that I had purchased by myself. I got like the nice package or whatever, and it's a great car. It's a Subaru Crosstrek, runs amazing. It's going to last forever, knock on wood.
But it's just kind of beat up and like, for once in my life, I've never been really mindful of that, but like the perception of it versus like having a nicer car or a luxury car and weighing that. So I'm considering buying something new in the midterm future, and I was considering leasing because I'm kind of like, "Well, why don't I just like have something fun for a year or two, right? Like a sports car or something and I don't have to like really commit to it."
But just financially, I'm like so practical. It has always just seemed like it doesn't really make sense.
Lissa: Well, interesting you said that about perception is that's the reason, I think I mentioned this on the pod in another episode, but basically I ended up buying a Mercedes in 2014. It was used and it was... I bought it in 2014. It was a 2013. It only had 7,000 miles on it so I got it like at a good rate, too. I can't even remember what the price was.
But part of the reason I got that was I was working in Beverly Hills and like I was rolling up... It wasn't even a hoopty, but I was rolling up in like my 2004 Honda Civic to work every day, parking next to these like Porsches, Lambos and I'm like... It wasn't so much like I was embarrassed, but I just felt like, "You know what? I'm making more money now. Why shouldn't I get a new car and could be a luxury one if I wanted to?"
Which is interesting because I never understood leasing, like the benefit of it, because I, too, always liked to own property. And I just think I never learned what the benefits of it were because I think it depends on what your goal is, right? If your goal is to have property and maintain some value and, even though it depreciates like later on, you know you can sell it, and you can do whatever you want to it because it's yours, like that's a goal and a value.
Whereas leasing, there's other benefits to leasing where you don't own it so you don't have to worry about it so much, but you can have a lower payment potentially for a nicer car that you don't have to fully pay off. You can get service regularly from whoever you're leasing from, right?
Lizzy: For sure.
Lissa: There's benefits like that.
Lizzy: Yeah. I think a lot of it comes down to you. If you are going to pay it off, say you have a six-year auto loan, right? How long do you expect to hold that car after you pay it off? If you're going to pay it off and then immediately get a new car, there's really very little value in paying it off, other than the trade-in value which has depreciated significantly.
Lissa: Yeah. But then you think about how much interest you had paid financing it over those six years.
Lizzy: Exactly, exactly. Versus if you pay it off sooner or hold it longer after that, you have like a longer period with no payments, where it's more of a net-positive in that regard.
Lissa: Yeah. So I think it makes sense that for you, your last car and me also my last two cars, the Honda Civic back in the day and my Mercedes, I still have a Mercedes, but like I've used them and held them for over 10 years.
I didn't know upon buying them how long I was going to have it, but I always assumed like, "Oh, I'm going to like ride it until the wheels fall off."
Lizzy: Yeah, [inaudible 00:13:50], exactly.
Lissa: Right?
Lizzy: Yeah. And then some people just aren't that way. It's either like just a different value to them, or it's more important, or they want to have something newer, and that's totally fine. It's just a difference. Yeah.
I will say, though, I've had my car for 10 years. I paid it off early. I was pretty fortunate, like I got a nice bonus and I'm like, "I'm going to get out of debt." So I paid my car off after, I think, three or four years so not having a car payment.
Lissa: It's great.
Lizzy: I mean, I haven't had any debt for, I want to say, six or seven years, other than, well, I guess my mortgage on my rental property technically. But God, I don't know that-
Lissa: It's nice.
Lizzy: That's the biggest thing of going back to that when I could just not. I could just keep it.
Lissa: Your car, you said it runs fine. Is there any issues with it that you...
Lizzy: Cosmetic stuff. Yeah, it's been great. I get it service regularly, oil changes regularly. I had to get the brakes changed after nine years, tires, but just normal maintenance stuff. I haven't had any engine issues or anything.
You know Subarus, they run forever. So it's really just like the... It has leather seats, they're starting to tear, they're dirty. There's dents and scratches and stuff like that. Yeah.
Lissa: What is your interface monitor in your car like?
Lizzy: Okay, so this is funny that you say that.
So I actually, now that I'm remembering, I bought it new to me. I bought it in December 2014 and all the 2015 models had come out, but I bought the 2014 because it was significantly cheaper. So it wasn't used, but it was like the old model, but that was the big difference. So it has like Bluetooth was fairly new at the time, and it has like a screen and whatever, backup camera, but it's like very rudimentary compared to what you have now.
The whole system is really annoying to deal with and definitely not like Apple CarPlay-
Lissa: Apple CarPlay.
Lizzy: ... or whatever, nothing like that. So yeah, that's kind of one of the downsides, but it doesn't have all the same perks. It has seat heaters, like it has some of the stuff for at the time was kind of high end. It's just 10 years old.
Lissa: Yeah. I kind of want to get into, I shared my experience of like why in the past I felt like... I had this great running car, Honda Civic for 10 years, but I felt the need to upgrade to a nicer car.
I see this often as a financial counselor where, yeah, people's big, one of their biggest expenses is their car payment, and it was avoidable, like at least... Some people count a car as a necessity, which I'm sure it is. You have to transport your family, you have to get to and from work, right? There's reasons to have a vehicle to get you from point A to point B.
But oftentimes there comes in that other need that we want something that we like visually, that we like how it runs, like all these extras on it, which are... It's weird because like a car, like when you're doing your budgeting and you're doing your expenses, there's needs and wants typically.
Lizzy: Yeah, for sure.
Lissa: The car payment is usually a mix of the two, right? Because if you had a base level need, you could get a hoopty, but as long as it runs safe. But the extra amount you're paying for it is like the want side of it.
Lizzy: I have a real life example of this. So during the pandemic, I was cohabitating with my ex-partner, and his car started to... He had a Camaro. It started to have problems that was like, "All right, how much money are you going to put into this?" But we lived in a very, very walkable area, and I worked from home. At the time, he also worked from home. I think maybe he went to the office once a week and, honestly, like rarely was it an issue to have one car.
So he sold his car. We went maybe six months or so with one, maybe three or four times, it was inconvenient. But he's much more of a car person than me and wanted something. And it was a lot for me to wrap my head around, just in terms of my view of finances that these things are very functional and practical and so like why would you pay if you don't need it?
And so he ended up getting a Bronco, which I loved. I loved that car so much. I enjoyed it. I drove it all the time. But I would say in like the three-ish years, two to three years that he had it while we were together, we put maybe 10 miles a week on it. It was like very, very minimal, and I barely drove. I probably drove my car once a week.
So that was like a perfect example of maybe there's some need hypothetically, way less so than in your case of needing two cars, just because of the nature of our lives and where we lived.
And it was a lot for me to wrap my head around, and I eventually had to come to the conclusion of like, that's okay. If this is how a person wants to spend their money because that's something they enjoy and they value it, there's nothing wrong with that. And my prescribing that onto them isn't fair. It was interesting, though, because later he came back around and was like, "Maybe I shouldn't have done it."
Lissa: Yeah. Well, I think I'm in two minds about it. We had a previous episode on the pod of luxury brands where we talked about like handbags and stuff.
So this is a little different. Obviously cars have, I'd say, more utility in terms of day-to-day lifestyle. I think there's some deep-rooted part of it, like the need to flex or the need to-
Lizzy: For sure, yeah.
Lissa: ... have a, you know, to show your status in society. And I do think that there is a lot of that in like my culture, I could say in my family. Not my specific family, but like I could see that in Filipino culture. I could see that in a lot of cultures, where it's one way of many ways to show that you've made it or that you can afford it-
Lizzy: For sure.
Lissa: ... or that you belong with these groups of people.
And that's why I'm in two minds about it because, one, cool, do you if that's what makes you feel good and that means something to you. But then on the other hand, if it's going to break your bank and compete with other goals like long-term wealth and you don't even notice it, then it's becomes a problem.
Lizzy: Yeah. Is it really worthwhile?
Lissa: Right.
Lizzy: I remember one of my last roles in house, I was an executive at a fund company in Irvine, California, which is a very, very wealthy area. And I was young, I was the youngest executive at the company, driving my Subaru and in this area where there's Lamborghinis everywhere, like not even playing, there's Lambos just cruising down the street. And that was like one of the scenarios where I would have that thought. Like we'd have events at the Ritz-Carlton or really five-star hotels, and I'd like pull up to valet and be like, "Ooh," and knowing I could afford a much nicer car, but what was it saying about me?
The funny thing is then I didn't care so much, and now I do, more than I ever have, when all my colleagues are in different states and I don't ever meet with clients locally. I'm like in New York or something and so there's... I'm not totally sure why that is, other than maybe like my mindset around money has changed in general.
Lissa: Yeah, that's like I never judge people. To me it's more I'm more curious about where it comes from-
Lizzy: For sure.
Lissa: ... like who are you trying... There's always these people, actually financial influencers, who are like, "Yeah, you're always spending money on things to impress people that you don't even like, or that you don't even care about." So that's one end of the spectrum. If you're doing that like, "Come on, let's talk about it. Let's check yourself because those people you don't care about are not important and your future finances are, like your individual goals."
But then there are those other needs where it's like, "No, I just love driving my car. If I have a long commute, driving a car that I like and I love the interior, I love the system and that's going to get-"
Lizzy: Or, "I feel like I've earned this."
Lissa: Or, "I've earned it and that's what makes me happy, then I'm going to do it."
Lizzy: Yeah, no, I totally get it. But I also think it's important to think about the trade-off.
If you're not in a situation where you need a new car, which is a very common and valid thing, so 750 bucks a month or more, definitely depending on the car, what could you use that on instead? Especially if the car is a nice-to-have, you know?
And I think that's the thing that gets me of like even just saving that or investing that or that's a trip.
Lissa: I know.
Lizzy: You know? So it's interesting when you weigh it out that way.
I think we assign certain values to different categories and we don't always compare them, right? So like $700 for rent, super cheap. $700 for a car seems expensive and its relative value. But when you put it into like, "Oh, that's fun money or that's a dining-out budget," or any other possible use-
Lissa: Too much of that is your emergency fund, your starter emergency fund.
Lizzy: Yeah, college fund for your kids. Like there's all these different ways that you could reallocate that that make it really interesting.
Lissa: Yeah. So you're in this position of like, "Do I go from zero car payment to what, 500 or 700 or..."
Lizzy: See, this is the interesting thing. I kind of feel like if I'm going to do it, go big or go home.
Lissa: Really?
Lizzy: Yeah.
Lissa: You can't go somewhere in the middle?
Lizzy: Well, if I'm going to do it before I need to, right?
If I just need a car because my car's not functional anymore, then sure. But if I'm just doing it because I want to, then I'm going to get a car I fucking want, like that's nice as hell, right? That's kind of my mindset about it right now. So when I'm looking, I'm looking at like nice ass cars because why not? I've never done that. And if I feel like I have it, I'm going to. Spoiler alert, I'm not going to, in the very near future, but it's in my mind.
Lissa: Yeah, she said midterm.
Lizzy: Midterm.
Lissa: Yeah, medium term.
Lizzy: Medium term. And that doesn't make any sense, except it makes sense in my head.
Lissa: Which is fine. Which is fair.
Also because I know you would never like put yourself into like dire financial circumstances over it.
Lizzy: Right. And you also know my history of being like-
Lissa: Frugal?
Lizzy: ... crazy frugal. So the fact that I would consider it, I'm kind of like, let myself have this for a little while.
Lissa: Yeah. So anytime Liz wants to like buy some nice jewelry or is like a nicer car, I'm like, "Yeah, of course."
Lizzy: Exactly. Because it's out of character for me.
Lissa: Yeah. Whereas other times, I have clients who like want the nicest car and I'm like, "But we got to just get your emergency fund together first." Then it's like you're weighing different priorities.
Lizzy: Yeah. It's a trade-off. It's a trade-off, for sure.
Lissa: So obviously, the obvious financial cost of getting a car, whether you're replacing your car or just deciding between what level of car, super expensive or not expensive, that's a financial cost. But what are other costs associated with getting a new car?
Lizzy: I think we've alluded to the social costs and benefits, I guess you could say, just the perception and what it communicates about you and how that can affect you positively or negatively.
And something we haven't specifically keyed in on is like I think sometimes if you get a new car, especially like a nicer one, people are like, "Oh, they got it like that," right? And maybe make assumptions about you or expect things from you.
Or like this is a real-life example that I've experienced of someone got a new car, but owed me money. And I know why they got a new car, and it actually wasn't an issue, but that can be a real thing, right? It was like, if you need it, yeah, I get it. But that's an interesting dynamic.
Lissa: Yeah, that's true because unlike many things that you... Like let's say someone owes you money and we don't know what they're doing on their day-to-day, what grocery store they're going to, what expenses they're doing. But when it's stuff you can see like a car or stuff they're flaunting on social media-
Lizzy: Exactly.
Lissa: ... then it becomes like, "Hold up."
Lizzy: Yeah, hold up.
Lissa: "Don't you owe me some money?"
Lizzy: Yeah. Or like, "Oh, you couldn't pay for that for your kid?" Or I don't know, making stuff up, right? But-
Lissa: Yeah, because judgments can arise.
Lizzy: Exactly. And it can seem like disproportionate to the rest of your financial situation, which again, no one knows your financial situation, but you, and it's not always their business, but that's a cost.
Lissa: There are signals that tell people, that give people signs, and they can make assumptions and sometimes those affect you, sometimes they don't.
Something I thought of about getting a new car is, for a long time I always thought like, "One day I want like a yellow Lamborghini," or like, "I want something cool that stands out, that is going to be fun to drive, but also stands out."
I don't know what it is in my later years, in my 30s-
Lizzy: You've mellowed.
Lissa: ... now that I'm in my 30s like, I don't want to be noticed. I want to have a car that like fits in because I don't know like for safety issues, or I just don't want to stand out.
Lizzy: That's a whole other thing that we've talked about that's been a journey for you, of being quieter with your presence. So I definitely see that in other ways, too. I think there's a lot. There's a lot there to unpack. Yeah.
Lissa: There's a lot to unpack, yeah. This is not the episode.
Lizzy: Yeah. But another thing that that made me think of that really applies for me, because you know how I am, I've talked about it on other episodes, you saw me trip when I was walking up to the chair right before we started recording, I am hard on stuff. I break stuff, I scratch stuff, I ruin stuff without trying. It's just the nature of myself.
And so if something new, it's like, damn, the disappointment of the first scratch. You're like, "Oh." You have to like have kid gloves. Whereas my car right now, I beat that thing up. It is functional. I've had like 12-foot turf crammed into it. It has been through some stuff, which is great in a totally different way.
Lissa: That's funny. There's this one curb kind of near my house that it's just like a weird turn. So like in my older car, the Mercedes, this 10, 12, 10-year-old car, if I like hit the curb a little bit on the turn... It's a weird turn, like you have to really be focused and make your turn wide as fuck so that you don't like just-
Lizzy: Clip it? Yeah.
Lissa: ... clip it with the tire. And so like when it's the Mercedes I'm like, "Oh, oops," right? And the very first time I did it with the new car, I was like, "No."
Lizzy: No. Right.
Lissa: Like, "Oh my God, did I mess up the turn?"
Lizzy: For real. And then let alone if someone else like backs into you or something, and then it's out of your control and it's like, "Oh, my God. My perfect car is ruined."
Lissa: Yeah. So there's emotional ties-
Lizzy: There's emotional ties, yeah.
Lissa: ... with like, yeah, with... The more tied you are to your car, especially when it's new and you're spending more money on it-
Lizzy: For sure.
Lissa: ... so it's all intertwined, right?
Lizzy: It's all intertwined, yeah.
Lissa: The more you spend on it, the newer it is, the more you are connected to it, then the higher the emotional toll if something negative happens around it.
Lizzy: Yeah, absolutely. And the stress of just having the payment, making the payment, the insurance potentially going up, there's like a lot of emotional factors.
Lissa: So on the opposite end, so on the new-versus-used scenario, I remember this was during the pandemic, an ex, someone I was dating, they ordered a car like online. Like I don't know why he thought it was like, I don't know. He just thought like they're fine, like they do all the checks or whatever.
So he ordered a new car and like he was just thinking of getting a car. And then like, literally, in two days a car got delivered and it was like, "Okay." But like the back seats, it was like a SUV, but the back seats, they were not like connected to the car or something. It was like, I don't even think these seats matched to the car.
Lizzy: Matched the car.
Lissa: So I was like, okay. In a scenario like that, like I don't care how much you saved getting a used car over a new car. I would prefer the new car because I know where it's been. I know-
Lizzy: For sure.
Lissa: ... oh, it's been nowhere. It's been straight from the manufacturer. So those are like costs to weigh between new and used.
Lizzy: Absolutely. I think that's improved. There's been a lot more transparency with like Carfax and logging services and stuff. But still, you don't necessarily know if that's accurate, if everything is reflected, if the service history is all there. Yeah, those are big considerations.
Lissa: If someone were to give you a used car at like half the market value because someone had died in it, would you buy it?
Lizzy: Probably. Oh, that stuff doesn't bother me. Yeah, I'm not worried about that.
Lissa: Dang, I can't ask you any hypotheticals.
Lizzy: I know. I'm not afraid of stuff.
Lissa: You're just like, "Yeah, of course."
Lizzy: Yeah, sure. Why not? Whatever.
Lissa: Boring. Boring.
Lizzy: Oh, it's funny. Gosh, that made... I had a thought and I lost it.
Lissa: So cars, throughout my life, it's interesting, I've only, literally, bought three cars. By only, I mean like I've been driving for over 20 years so-
Lizzy: Yeah, they've been long-lasting.
Lissa: Yeah, so they've been long-lasting. I'm not the kind who like switches it out all the time.
My sister, on the other hand, I swear every time I go to visit they got a new car. I should actually ask her like what the reasoning is behind it.
Lizzy: Sure.
Lissa: Sometimes it's because they're like, "Oh, we need a bigger car for the kids. Like, we'll get a van." But then sometimes it's like, "Oh, well, that van like didn't have good monitors for like long road trips for the kids to watch TV in the back," right? There's like so many-
Lizzy: Yeah, and some people are that way. They're like, "I don't like it. I'm going to swap it out. Let's go."
Lissa: Yeah. So in that sense there's less emotional ties, but that makes it where you're more flexible to like, if you want something new, if you see something new-
Lizzy: That you like?
Lissa: Yeah.
Lizzy: Yeah. Yeah, for sure. And everyone's different.
My old, old boss was the first person that kind of brought me into the lease awareness because he would always lease a car. So usually I think he'd do like a two-year lease, but yeah, he'd swap them right out. And at first, it was like luxury cars and then it was, he kind of downgraded, but to like an higher-end, non-luxury car.
But I was like, "Oh, interesting." That just didn't matter to me. I think it was more of a commitment issue, but-
Lissa: Yeah, probably.
Lizzy: ... it's kind of funny.
Lissa: But the reason I'm the opposite is I think because like growing up, my parents, like our cars were like our family cars, our house, like we didn't switch them out all the time. It was like when they finally were able to save to get a car that was going to be the car forever.
Lizzy: Yeah, I had that, for sure, growing up. And I think that's a little bit of a scarcity mindset from growing up with not a lot of money, and I think that tends to go two different ways. One is like you kind of maintain that and you're buy and hold, and the other is like, "I don't have to do that no more, so I'm going to swap it out."
Lissa: Yeah. So what are alternatives to getting a new car? Let's assume that obviously people have to need transportation and some cities don't have great public transportation.
Lizzy: I think the big thing, it depends on where you're located and what your lifestyle is, like where you need to go. Speaking from living in Los Angeles, it is such a car culture. But I have actually had several friends and some that you know as well get rid of their car and go like all Uber or public transportation, probably less so just given the way it works in this city. But that has opened up a lot of flexibility in a environment where people would not have thought that possible. It's so big.
Lissa: Yeah. Actually one of the homies, I remember he gave up his car for a couple years and said he Ubered everywhere. And when he told me that and like I couldn't believe it because I would never imagine that for me in LA, I like did some math, some quick math and saw that it was actually more affordable than what I'm paying. Because you take your car payment, if you have one, your insurance-
Lizzy: Insurance, maintenance.
Lissa: ... sometimes you'll have to pay for parking-
Lizzy: Gas.
Lissa: ... yeah, all those things add up, like you could easily cut your budget down, your transportation budget in half in some instances by just doing ride-share.
Lizzy: Right. And especially if you don't go into the office every day or maybe your office is walkable or like the everyday transportation is minimal. So then it's like just occasionally, that's a big, big difference.
And then now, I had thought about that, but my family live 40 miles outside of the city and I was going there regularly, so that's tricky and that's like a big Uber. Or if you want to like do a road trip or something.
But now there's things like Turo where you can rent a car for a day pretty conveniently. So there's just way more options for that. And then obviously like bikes and scooters and all kinds of stuff. That's living in a big city, even if it's not a super great public transportation city. In small cities, that can get challenging just because the availability of Ubers, which we kind of talked about on a prior episode, but...
Lissa: It's interesting to think because like, yeah, if you think about the entirety of the United States, it varies so much. Like some cities, things are spread out. Some places everything is easy to get to. And then some places have public transport, some don't.
So it really just depends. And that's why there's not really a straight answer of like should you be paying these $40,000-plus amounts for cars? Like it's hard because it feels like a necessity.
Lizzy: Yeah, for sure. And to kind of key back on that public transportation note, I think it's something that like a lot of people in our generation kind of knock, depending on the environment, right? Like maybe in New York City, Chicago, not so much. Here in LA, for sure.
I remember when I started dating my ex, he took the bus to work every day and it was like, literally, the first person I'd ever met, young person I met in LA that took the bus. I was like stunned by that, but it was like, why not? It was a straight shot. It costs a dollar.
And so I think people overlook those options or even like ride-sharing, carpooling. There's a lot of kind of less sexy options for getting where you need to go than buying a very expensive new car if that's your priority.
Lissa: Yeah. I mean, oh, this is really... Honestly, I don't know which way 20 Cents is going to go for us, but I think this is just one of those topics that like there really is no clear answer because it really depends on you.
Lizzy: It depends on you, your lifestyle, where you're going, what you want, what your budget's like, very individual.
All right, let's do it.
Lissa: 20 Cents?
Lizzy: 20 Cents.
Lissa: 20 Cents is the segment of the show where both Lizzy and myself, Lissa, each get 60 seconds to give our 2 cents on today's topic, whether or not new cars are worth it. We each will give you a net-positive or a net-negative. Where does 20 Cents come from?
Lizzy: You get the opinion of two dimes.
Lissa: Two?
Lizzy: Two of them.
Lissa: All right. Liz, you're up first. Are new cars worth it for you?
Lizzy: Hoo. Starting this episode, I didn't know what I was going to say. I, a few months ago, was like deep in research. This is kind of a hyper-focused thing, but deep in research on like, "Oh, what car would I get" and kind of planning that out.
But I think for me right now, not worth it. Thinking about the ways I could spend my money and the things I want to do in the next few years, I'm going to ride the wave a little longer. And I'm kind of thinking of it as proportion of my income. So if I get to a point where that extra like 800 bucks or whatever is like even, even, even more disposable where not that I won't notice it, but it's not really affecting me in the same way, then I might make that move. But for now, net-negative.
Lissa: Net-negative on new cars, on a new car.
Lizzy: On a new car for myself.
Lissa: For yourself.
Lizzy: Yeah.
Lissa: All right.
Lizzy: All right. What about you, Liz?
Lissa: So for me, I was actually looking at this topic more like new versus used. But now that you said that, I could see it as like, would I get a new car to replace my current car?
For me, easy net-negative, partially I just bought a new car and now we have two cars in the household. So even if something happened to one of them, we have the other to get by.
So I think similar to my last trend, where each car that I had I kept for like 10 years and drove it before thinking about getting a new one, I hope the same for this one that we just bought is like 10-plus years. Because like Honda's are great. They last a really long time.
So I don't foresee any reason that I would need a new car, unless similar to you, my income just shoots all the way up and because I can-
Lizzy: Right? Fall out.
Lissa: ... then I might sell the Mercedes and then get a different second car.
Lizzy: Got it.
Lissa: That might be it. Yeah, yeah.
Lizzy: All right. All right.
Lissa: But for now, at this moment, hopefully in the next couple of years there's no need for me. So net-negative.
Lizzy: Okay, real quick. New versus used.
Lissa: I will have to see what the prices are like at that time because I always was going to... I liked used cars. My first two cars were used. I wanted it, a used one when I was looking again last year. But the prices were so close to each other, it didn't make sense.
Lizzy: Yep. Yep, absolutely.
Lissa: It just made sense to get a new one.
Lizzy: I'm probably in the same boat. Yeah.
Lissa: Well, remember this is what we think right now, at this moment in time, but no one can make that decision, but you. What do you think? Are new car worth it? Is getting a new car worth it?
Lizzy: Hit us up. Let us know what you think. DM us on Instagram @netnetpodcast, or email us at hi@netnetpodcast.com. And if you want to follow us individually, here's where you can find us.
Lissa: I'm @WealthforWomenofColor on YouTube, TikTok, and Instagram.
Lizzy: And I'm @Live_Well_Lizzy on Instagram and TikTok.
Lissa: All references, statistics and resources mentioned can be found in our show notes. This podcast is for educational, informational and entertainment purposes only, and should not be constituted as financial advice.
Remember to always do your own research, consult a professional as needed, and feel empowered to make your own damned decisions.
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