Buying a Mercedes vs. 'Bad debt'

iVillage Member
Registered: 03-27-2003
Buying a Mercedes vs. 'Bad debt'
13
Tue, 08-31-2004 - 7:36pm
Okay, despite all the joking in the discussion regarding good vs. bad debt, why *not* buy a Mercedes-Benz and put the whole question to rest?

We just bought a 1984 Mercedes on ebay (through a reputable seller) for right around a grand. The thing has about 200k on it, but it's a diesel engine which should run at least 4 or 500k. It's in good condition though obviously twenty years old. It looks classy, drives great, will last forever, and best of all, has no car payment!!

Okay, so there will be repairs along the way (though none immediately necessary), but we already set aside money for that every month, and it's still better than a car payment. And if we ever get into trouble again, we might not have a working car, but we also won't have a loan threatening to go into default.

And if we ever sell the car, we'll probably get as much out of it as we spent on it. We love the whole thing so much (and love driving a classy car so much!), we're thinking of selling our 2001 Outback (which is thankfully worth more than we owe on it) and taking the little bit of money we'll get out of it to buy another car-payment-free Mercedes (or possibly a little diesel pick-up if we can ever find one).

The other thing about diesel is, it gets better gas mileage than the equivalent gasoline car, and the fuel is cheaper. Oh, and we plan to convert to bio-diesel (can you say, 37 cents a gallon?), but that's a whole other post in itself.

So, I ask again, why not buy a Mercedes??

(Maybe I shouldn't have said anything--I don't want there to be a run on all the old diesel Mercedes! I might want to buy another one for around a grand, so don't run the prices up!)

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iVillage Member
Registered: 03-31-2003
Wed, 09-01-2004 - 9:19am
Hi Heather,

Congratulations on your new/old Mercedes! la ti taaaa!!! ;-))

The bio-diesel thing is interesting. Is that where you use the old fryer fat from restaurants? I thought that was amazing when I read about it. Since I'm stuck on Saturn, I'm hoping they'll have one in five years or so.

Farfugnugen!!!

Lee Ann

Lee Ann

www.werenotafraid.com

Avatar for zaboz
iVillage Member
Registered: 03-26-2003
Wed, 09-01-2004 - 10:04am
I'm the one who mentioned buying a Mercedes and the point I was trying to make was that if you're going to make car payments on a new car, why not buy a Mercedes or another type that holds it's value well? That would make it less of a "bad debt".

Actually now that I think about, it came from this story someone told me about a wealthy casino owner (Don Laughlin, who founded Laughlin, Nevada). He couldn't stand to LOSE money on a car so he bought a Rolls Royce, practically guaranteed to GAIN in value, not depreciate like most cars. But he is also so thrifty he will drive across the street to save money at the cheapest gas station. He's extremely wealthy for both of those reasons!

I think the reason we were joking is that buying a new Mercedes is really expensive, not typically thought of as a money saving move. I guess when I was saying it jokingly, I was thinking about a decked out new one and "justifying" it as a good investment. Most of us couldn't afford a new one anyway which is why it seemed so funny! But buying an older one like you did is smart, as long as it's worth what or more than you paid, and is in good enough shape not to nickel and dime you to death. It it sounds like a great car!




Edited 9/1/2004 10:26 am ET ET by zaboz

iVillage Member
Registered: 03-27-2003
Wed, 09-01-2004 - 11:33am
I didn't mean to criticize your comment about the Mercedes. I actually knew exactly what you meant, and thought it was funny too. It just struck me to interpret it the way I did because we had just finished purchasing our new old Mercedes, especially because the Mercedes idea seemed to have taken hold in the discussion. :)

As an aside, when I called to get our insurance adjusted to cover the Mercedes (it still feels weird to me to be calling one of our vehicles "the Mercedes"! LOL), the lady congratulated me on the purchase as though I had just announced I'd purchased a brand-spanking Lamborghini or something. I just had to laugh and tell her how much we paid for it. Later she made a mistake and said it was a 2004 and when I corrected her she said, "I bet you *wish* it were a 2004." And I replied that actually, I liked my payments better on the 1984. Oh, and it felt so good to answer the question about who it was financed through with, "We paid cash."

Anyway, it's funny that a Mercedes has a certain cache even when it's worth less than three grand (I think retail our thousand dollar vehicle is worth a little under two grand). I *do* hope it doesn't nickle and dime us to death, but I hope that even repairs will cost less than the $300+ a month car payment on our 2001 Subaru.

Anyway, just wanted you to know that I didn't mean to cast aspersions. I found the entire conversation interesting, helpful, and also in places amusing. I completely understand what you mean about incurring debt only on items that will increase in value, thus returning money on your investment (especially if they increase faster than the interest you're paying on the loan). Don't we all wish we could buy a Rolls? And maybe we all will some day as long as we keep making smart decisions now.

Blessings,

Heather

iVillage Member
Registered: 03-27-2003
Wed, 09-01-2004 - 11:39am
Hi,

Yes, the bio-diesel is made from used veggie oil (usually obtained free from restaurants). It's pretty cool. The equipment to set up costs about $500, which we plan to go in on with two or three other families that are also purchasing (or already have) diesel vehicles. The fuel causes almost no pollution and has the benefit of not relying on foreign fossil fuel imports. Even once you've switched over, you can still use petroleum diesel so that if you're taking a long trip you don't have to carry the fuel with you (or if you just plain run out, you're not stranded).

There's lots out there about it. But I gotta go get my kids who are raising havoc downstairs.

Blessings,

Heather

Avatar for zaboz
iVillage Member
Registered: 03-26-2003
Wed, 09-01-2004 - 2:07pm
I didn't take it as a criticism and I hope I wasn't making an idiot out of myself trying to explain it!

Congratulations on your Mercedes!! ;)

iVillage Member
Registered: 11-21-2003
Thu, 09-02-2004 - 5:32pm
Hello Heather,

first of all: Congrats to your new car.

I like the bio-diesel idea - in most German towns you already find it at gas stations!

One word of caution, though: I know that a few older cars should not be run with bio-diesel unless you exchange the fule leading pipes first. Ten to twenty years ago, they used different types of plastic to make them, which might get - slowly but surely - disintegrated chemically by the fatty acids in what more or less is simply vegetable oil running through them. That is why we cannot use bio-diesel with out VW, not until we made that change.

Maybe the car retailer you bought your mercedes from can tell you if Mercedes Benz offically cautioned against the use of bio-diesel, or not. Or, of you would like to and simply post the type you bought I could ask for you, if it is easier to get that info here in Germany.

Greetings, Jordis

ivy_jordis

iVillage Member
Registered: 06-09-2004
Thu, 09-02-2004 - 7:33pm

I think your

~Mrs. Kringle

iVillage Member
Registered: 11-21-2003
Fri, 09-03-2004 - 8:45am
Hi there,

I believe at the core of this whole thing lies a truth that is not easy to swallow:

There is a reason why, when you start out affluent, it is easier to stay that way and even get wealthy sometimes than getting affluent when you start out with less money. No matter how good you are at penny saving and budgeting, if you do not have much money, you scarcely have the choice to invest - you have to buy what you need, and replace when you need it.

My favorite example to illustrate is what a friend of mine calls the 'boot theory of economics 101': Imagine a man who needs a pair of boots. He will walk in them each day, they will get wet and dirty, and they have to fit. There are two basic choices for that man: One is to go and buy a pair of cheap boots, and hope they'll last for a year or two. When they fall apart, there most probably will be no chance to mend them, for the low price was literally bought by accepting low quality materials, glue instead of sewing. Two years from the day the man bought the first pair of boots, he probably will have to spend the same amount of money for the next. And so on, every other year, as long as he needs boots.

The other choice is to buy a non-fashion pair of boots, made of good leather, sewn to the sole instead of glued, maybe even fit to his feet. If he takes care with these boots, they may need a shoemaker's hands in fivbe to ten years, but in the long run - they will last a lifetime. Such a pair of boots will cost about five times as much as the cheaper boots. So after ten years, the expensive boots become the cheaper alternative...

Ever since I heard that very simple yet convincing example, made a few calculations and found it to be treu (at leats for most things), I rather spend a bit more for something that will last longer, or even a lifetime, than go for the cheapest bargain - even if that means having to plan ahead for months to get that money together, a thing I am not very good at :-)

Greetings,

Jordis

ivy_jordis

iVillage Member
Registered: 06-09-2004
Fri, 09-03-2004 - 11:58am

Excellent illustration!

~Mrs. Kringle

Avatar for zaboz
iVillage Member
Registered: 03-26-2003
Fri, 09-03-2004 - 1:06pm
You are SO right. Just the other day I was looking at our cheap kitchen garbage can

(stupid example but it's the same principle), wishing I had waited for a bit longer to get the nicer model that would last longer and work better.

But instead we'll probably get tired of struggling with the cheap model or it will break,

and then we'll have to buy yet another one. So, while I patted myself on the back, for

"making do" with the cheap version, now I realize it was probably a bad decision.

It's really true and it's a lesson I've been trying to learn too.

WAIT and buy quality when you can afford it instead of buying something cheap today. That goes for clothes (cheap clothes never last), household goods, cars, everything really.

I guess where I get caught up is telling the difference between quality and extravagence. I think I'm being thrifty where sometimes all I'm being is cheap!

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