The Outback backtrack: That time 0% financing finally made sense

Subaru parkingWarning! The following post contains material that may be disturbing to some mustachians. Reader discretion is advised. 

We bought a new car.

The dream is dead for the ’98 Honda Civic to make it all the way to the automobile singularity and self-driving nirvana. It took too long… ELON.

Not only that. We financed the new car.

We sat down with a legitimate quick-talking car salesman and signed a whole bunch of official-looking papers while sitting on uncomfortable chairs the middle of an honest-to-goodness real-life new car showroom where we willingly went back into automobile debt for the pleasant aroma of that new car smell.

Yes. I feel the need to unburden myself in front of my FI family. Because, besides my real name, where I work, how much I make, net worth, who my favorite Backstreet Boy is, and a bunch of other things about who I really am, I have completely committed to being totally transparent with the financial independence community on the Crispy Cabbage blog.

And this kind of thing is a big deal in FI circles. Rightly so. Car purchases are something to be carefully considered.

But no. I am not sorry we did this. We have no regrets. I laid out the exact reasons we didn’t pull the trigger on a similar deal at a Kia dealership a mere 8 months ago. I had graphs and everything.

In that post, I made the strong case for paying straight cash for a nice used car rather than being sucked in by the siren song of 0% financing. And that’s the plan we diligently followed… until about 4:21 PM three Saturdays ago.

Yep, we veered hard right as soon as that rubber-tipped stylus scrawled the illegible loops of my signature on the shiny face of that sales guy’s tablet computer.

It felt like an out-of-body experience. The car feels like a rental. We’re still kind of shocked we did it. But we have no regrets. I’ll tell you why…

1. A great deal. On our ideal car. That we’ll own forever

We drove off the lot in a Subaru Outback and it checks all the boxes. Nothing about this vehicle feels like a compromise for us. Fuel efficiency, versatility, reliability, safety, resale value… heated seats. Right down to airy engine and ease of changing out headlamps (it’s almost impossible to get to those suckers in our 2008 Chevy without removing the front end).

And we feel like we got a great deal on top of it. It’s all that cash-back dealer-incentive gobbledygook, I suppose.

If you remember back to that Kia article, it was a feeling of compromise that crept in to help sink the deal on that car. It just felt like we would be getting a downgraded, albeit much newer, version of my wife’s current car. Nothing against Kia, that’s just how it felt for the make, model and trim we were looking at. And nothing about Kia really struck a nerve making us want to upgrade to the next trim package.

The Outback was a different story. We bought right into that feel the love feeling. There’s something about owning an Outback that makes me feel like we’re going to be master explorers now… and then save the whales after surviving a head-on collision with a freight train. Hard to pinpoint where all that comes from.

Subaru Commercial
Oh, you’re good, Draper. Very good.

2. Road trips and blind guides (YOLO)

I railed against the YOLO (You Only Live Once) mindset in one of my past articles. If I remember correctly, I was particularly hard on the YOLO being pitched by SUV car commercials (oh, the irony!). But we didn’t get a Range Rover, so it’s cool.

I’d be lying if I denied YOLO’s influence on our purchase. We want to do more family road trips, especially as my wife and I gain more independence from our 9-to-5 jobs. And my son is reaching the age where camping will be super fun. And, dammit, I just want a blind guide to lead us through all the secret wilderness paths to smell the bacon and hear all the whale noises.

The time just seemed right for a super versatile wagon like the Outback to be able to do all the things.

Maybe we won’t do any of the really cool things, but the Outback rides nice and it still gets pretty good gas mileage for my wife’s commute. It’s got great ground clearance and all-wheel-drive for all the bomb cyclones to come. And it can actually haul half sheets of plywood from The Home Depot for all my ill-advised DIY shenanigans.

Don’t say it, hard-core mustachians. I know. Bike. Fat-tire bike. Fat-tire bike with trailer. Duly noted.

Yeah, there’s a touch of YOLO. But I like to think there’s at least a tiny difference between what we’re doing and the way the masses often treats car payments. For many people, the ability to continue to pay for their car is directly tied to employment status. Maybe they’ll even continually upgrade to the next newer and better model as they move up the corporate ladder and can’t even imagine not having a car payment.

Due to the aforementioned upcoming self-driving automobile singularly nirvana, we plan on this being our very last car purchase. And our new car payment will last at most 36 months and it will in no way tether us to our jobs longer than we want.

Plus, I had my Honda for 18 years. I get at least some mustache credit for that right?

3. Still on track with our plan

We have more than 18 months of financial runway right now, even with the car payment added in. That means, if both my wife and I left our jobs today, we’d be able to support our current lifestyle for about 18 and a half months.

If we hadn’t financed the Outback and spent the $15,000 we had set aside on a used car instead, our runway would be more like 19 months. Three years from now, I estimate we might lose 3-4 months off our total future runway because we bought a new car. Something like 48 months versus 52. We decided to make that trade.

That’s without factoring in any spending habit tweaks. And that doesn’t factor in all the intangibles of being the only owner of the exact car we want with all the peace of mind and warranties that go with it.

48 months is still well within the upper part of the 2-5 year range we were shooting for when we started the 7-Year plan to a Runway Retirement. And after years of thinking it through, I believe 2 years of runway might even be overkill for us.

There’s no doubt about it, though. If we were going for full FI, buying this car right now would be stupid. Frankly, even buying a $15,000 used car would be incredibly dumb. Any used car, for that matter.

But our life plan is quite a bit different. It doesn’t live and die by the 4% rule alone. It involves some kind of lifestyle business or recurring income or ideal job income or any combination of those things to supplement the cash flow from our investments for the rest of the productive part of our lives. That makes financing a brand new car at 0% only slightly ridiculous for us.

4. Escaping scarcity

Frankly, I was getting too addicted to the idea of an ever-growing cash pile for our runway retirement, anyways. I was locked into scarcity and clinging too tight to the exact numbers. This made me afraid of large purchases that I knew could add a lot of value to our lives right now.

I was also starting to worry too much about our plan getting knocked off track by all the little things we can’t control. Weirdly, this caused me to overspend on a whole bunch of smaller, lazy-inducing comfort crutches (more on that later… Beer).

I was starting to lose perspective on why we were even growing a big cash pile to begin with… to have enough time and headspace away from a paycheck-to-paycheck existence to truly focus all our energy on building our ideal life… to have the option of taking an extended mini-retirement. 

If I look through the lens of abundance instead of scarcity, our cash pile is already big enough to get us well on the path to our ultimate goal. And for all the reasons I’ve already talked about, I believe the Subaru Outback is actually a key piece to our ideal life.

5. A financial slap in the face

Now, I don’t usually recommend going into tens of thousands of dollars worth of debt in one area of the budget to straighten out spending habits in other spots, but my wife and I needed a little slap in the financial face… At least I did.

By pre-spending on something we believe will make our lives significantly better right now, we’ve renewed our focus on aggressively cutting all the fluff that doesn’t add value.

I’ll admit, as our cash pile has grown, I have gotten sloppy with my spending. $16 Apple Music here, $45 Hulu Live there, an extra $50 eating out, probably more beer than necessary…

Real money was starting to seep out the sides with no accountability. And most of that money was funneling right back to fatten my fanny and prop up a lazy lifestyle.

It may seem backwards, but buying the Subaru Outback is forcing some extra discipline upon us. If we want to keep up with car payments and our minimum (still aggressive) savings goals, we have no choice but to cut the fat.

No. We can’t cut our way to fully offset our monthly car payment. But our overall financial plan stays comfortably within the margin of error.

What? No graphs? What are you hiding, Cabbage?

Nope. No charts and graphs. Just a bunch of touchy-feely feelings in this one. With a few of the random numbers sprinkled in that support whatever point I’m trying to make.

Truth is, I’m just lazy. Or maybe I don’t want to see the hard numbers prove how much of a mistake this was, because we love the car so much.

It’s all moot anyways. We’ve already bought the car. I’ve made my confession. I’ve clearly worked really hard to justify this to myself and my loyal reader… What do you think, Cubert?

And, if I end up being completely wrong and my family’s entire life plan goes to hell and our finances spiral all out of whack all because of this one crazy purchase, you can all come over and laugh and point at us and tell us, We told you so!

We’ll be living in Yosemite on our new car… Literally. On top of it.f973ed6c-eeb5-4b10-862d-1e5524bf8657

… Just a few more thousand dollars for the gear… and the rear bumper guard… probably need the tow package…

Now, a word from our sponsor to help pay for all the exploring gear we’ll need…My app! Half Hour Hank. It’s the productivity app you didn’t know you needed, but soon won’t be able to live without. Click the button below to begin the journey…

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