So, straight up... I don’t like new cars. Sure, they smell great and have a giant ribbon on the front, but as you drive it out of that car yard its value drops immediately, often by thousands of dollars. It’s probably the most expensive 50 meters you will ever take.

As a society, we have been conditioned to think it’s really normal to spend lots of money on an ‘asset’ that depreciates in value. I say ‘asset’ because really, it’s a liability. A true asset should grow in value and/or provide an income. A car costs us money and reduces in value, often leaving people with a debt that is similar- if not more than the resale value. That is called negative equity and is a big reg flag in the wealth creation world.

I do, however, accept that your cute new bundle of joy needs to be carted around in something that is reliable and safe. Perhaps looking for some middle ground here, not brand new but not like my first car, affectionately pre-named Chuck Norris before he entered my life, which, despite having an automatic transmission, needed to be put into neutral at lights and revved so he didn’t stall. I don’t know much about cars, but I cannot imagine he was the safest of Corolla’s on the roads.

My suggestion is to sit down with your partner and really crunch the numbers on each of these options. Consider what income impact your household will have when the baby arrives. Look at how long it's going to take you to save back the money you would use for the car and when that would mean you could buy an apartment, property prices in most places seem to be holding if not growing, so you will likely need to factor in a higher purchase price if you are delaying for a significant amount of time.

If you are going second-hand, make sure you have a trusted mechanic check it over (if you don’t have one, ask your friends and family for a recommendation). I want you to also think about the opportunity cost of buying an expensive car, irrespective of whether you’re having a baby or not. What could that money have been used on that would have generated income for you and your goals? This can help you not get swept away into add-ons and features may end up costing you more than your budget.

So, if you’re buying a car:

🪴Take the emotion out of it. No one cares what you drive, and if they do, you shouldn’t care about what they think anyway. Be practical, what do you need it for? How often will you use it and do you have any ‘must haves’? Write a list.

🪴Consider what goals you are trading off or delaying to buy a new/fancy/larger-than-needed car. The colour of the interior lining may sound important at the time, but consider some of your longer-term goals and how that money could go to work for them instead?

🪴Don’t forget about ongoing costs. Buying a larger car can mean it costs more to run (hello petrol price increases), if it's out of warranty you want to make sure you have a financial buffer encase you find some things that need fixing. If you aren’t going to use it much, could you consider renting it out when you don’t need it? Obvs not sponsored and there are probably competitors in this space, so do your research.

🪴 Second-hand cars should always be checked by a professional before buying, not your Dad’s mate from the pub who says he knows a bit about cars (bless him, and thank you for the terrifying thrill that was Chuck Norris).

🪴Haggle! There is no shame baby in making sure you get the absolute best price. For new cars, it’s a very normal part of the process and there is generally wiggle room. For second-hand cars, look at similar recent sales or get an estimate on their value.

I say all of this proudly as someone who started my car ownership journey with a rocky start with ol’ Chuck Norris, then deciding safety was a priority I made a stupid mistake by listening to my parents and getting a brand new car at age 19, lovingly known as Baxby who I owned for more than 10 years (RIP) and now am the proud owner of a GoGet membership which suits me, my lifestyle and the abysmal parking options on my street down to a tee. Good luck!

Have a money dilemma?

Money dilemmas can be a nightmare! They can leave you up all night ruminating about what to do, have you feeling alone and isolated or just plain ol' stuck. So, we are here to help. I am going to tackle one a week and give you my unbiased, no BS general thoughts on how to tackle your conundrum. We would love for you to send yours (or someone you know) in. 

Obvs all of this is general advice only... especially important to note any and all of the comments above do not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.