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5 Tips For Buying A Car That Will Hold Value

5 Tips For Buying A Car That Will Hold Value

Buying a car is something that you only do every few years. However, when it comes time to purchase a vehicle, the investment is substantial enough that you want to make a smart choice. If you’re currently in the market for your next vehicle – or will be in the next few months – then you’ll want to heed the following tips.

1. Safety is a Big Priority

“The last decade and a half has seen some significant safety improvements with new technologies and systems designed to help prevent collisions,” says John R. Quain of VehicleHistory.com. “Many of these important safety features will be mandatory on new cars in the future—but they can already be found in used cars on the market.”

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When you purchase a vehicle, there are two primary points of value you should consider: (1) The features that are valuable to you at this very point in your life, and (2) The features that will be valuable in three, five, or ten years when you decide to sell the vehicle.

We’re only at the cusp of vehicle safety right now. In a few years, many of today’s optional safety features – such as rearview cameras, adaptive cruise control, and side impact airbags – will be required. If your vehicle is going to retain value, it should have these features now.

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2. Never Buy New

Everyone loves that new car smell. And there’s nothing like knowing you’re the first one to own a vehicle. However, common sense says that you should never buy a new vehicle. The moment you drive a vehicle off the lot, it loses roughly 11 percent of its total value. On a $30,000 vehicle, this means you’re losing $3,300 the second you drive home. After five years of ownership, the car is worth only 37 percent of what you paid for it.

Are you willing to eat this cost?  By purchasing a used car – even one that’s only two or three years old – you can save thousands of dollars. There’s really no reason to buy a brand new car.

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3. Purchase Proven Brands

The marketplace is flooded with lots of different car brands. While there’s nothing wrong with purchasing from an up-and-coming brand, it’s much more sensible to buy a known brand name. You can’t go wrong with brands like Toyota and Honda. These names are synonymous with quality and reliability. Not only does this (hopefully) mean you’ll have fewer problems with maintenance, but it’ll help when you when you decide to sell in the future.

4. Don’t Get Caught Up in Superfluous Details

What do you think is going to add more long-term value to a vehicle: an upgraded engine or heated seats? While the latter feature may be more noticeable on the front end, a superior engine is obviously going to give a car more value in the long run. Don’t get caught up in superfluous details when purchasing a car.

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5. Put Your Needs First

Finally, here’s one tip that you won’t hear anywhere else: put your needs first. While you may be purchasing with the intention of selling in five years and recouping a sizeable portion of your investment, you have to focus on your immediate needs. This is the only way to buy a car that has any value, and thereby meets someone else’s needs in the future.

Be a Smart Shopper

It takes very little effort to shop for a vehicle. You can always find some dealership or corner lot that will sell you a vehicle for little or no money down. However, it does take some time and effort to be a smart shopper.

Just remember: What you get on the back end of the transaction – safety, reliability, satisfaction, higher future resale value, etc. – makes all of the upfront work worth it.

Featured photo credit: John Lloyd via flic.kr

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Larry Alton

Business Consultant

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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