5 Lessons My Swagger Wagon Taught Me

Approximately 5 years ago, just before my first son Samuel was born, Jess and I took the plunge into minivan land. Yes, we did it.

In those moments when the kids are screaming, crushed Cheerios are all over the floor, the dog is whining and we feel like we have lost every ounce of cool we once had, I like to imagine that I am the dad in the Toyota Swagger Wagon video. I know I’m not, but please, don’t burst my bubble.

“It’s the Swagger Wagon. I got the pride in my ride.”


Sam and I in front of our new Swagger Wagon (Oct, 2016)

Anyways, I have to admit that minivans are pretty awesome. Lots of cargo space, easy in and easy out and yes, very comfy indeed. In fact, Episode 356 of the Radical Personal Finance podcast dedicated a whole episode to why everyone should consider a minivan, regardless of having kids. You should check it out. His analysis is very detailed and entertaining.

If you have been following this blog, you know by now that the sliding door on my 2005 Honda Odyssey fell off this summer. I wrote about this in an article talking about whether or not you should save an emergency fund within a Roth IRA. My friend Jonny helped save the day, but nonetheless, it was time for Jess and I to look for a new Swagger Wagon.

After much searching, we landed on a 2009 Honda Odyssey EX-L. It is pretty sweet. The DVD player has surround sound that will make any kid hush for an hour or two if you keep them happy with some snacks along the way. The leather seating is smooth, the rear lift gate is clutch when you are trying to hold a kid and get groceries out of the back and the seats are extra comfy. It has some Swagger. For real.

As I reflect back on this purchase, there are 5 lessons about buying and owning a car that were reinforced for me throughout this buying process. Here they are.


Lesson #1 – Cash is king.

If you have ever paid cash for a car, you will know what I am talking about here. It is a rush. I don’t know what the rush of smoking cigarettes feels like, but I’m sure that those same dopamine reward pathways were activated for me when I bought that car. Walking away from a car dealership without a car payment is an amazing feeling. There are two main reasons I think cash is king when it comes to buying a used car. First, Jess and I have done this three times now and it certainly has given us a leg up in the negotiation process with the dealer. Second, while interest rates on new cars continue to be historically low, those low interest rates don’t carry over to a used car. According to current rates listed by Bankrate, used car interest rates can be upwards of 5% with good credit.


Lesson #2 – Patience pays off (literally).

Jess and I had been talking about buying a new minivan for over a year after we had a couple issues here and there with our old 2005 Odyssey. Despite some well-intended heckling from our family about the old minivan, the issues were not mechanical and were not urgent. Therefore, we kept piling away the cash so we could wait to find the best value instead of having to prematurely react in the moment when it would became urgent. The result was searching for months and finally finding the van with the best deal for the mileage and amenities.

When you are not in an urgent situation to buy, it is easy to say no when the dealer is not willing to negotiate down to the price you want. You are in the driver’s seat. By not rushing, I estimate we saved at least $1,000 – $2,000.


Lesson #3 – An educated offer makes the negotiation easy.

Negotiating with a used car dealer is about as painful as it gets. There is no doubt that it is a game you have to play if you want a good price on a used car.

When I bought our newest minivan, Jess and I had looked at every Honda Odyssey in our price range within a 100-mile radius of where we live. In addition, we had the Kelley Blue Book values ready and had purchased the Car Fax report. Based on this information, we had completed our own analysis of what we thought the car was worth and what we were willing to pay.

I started the negotiation with that in mind and after clearly communicating that price and how I arrived to that number, it took almost all of the back and forth negotiations out of the game. They tried to counter and I said ‘no thanks’ based on the price we had in mind. I let them know we weren’t in a rush to buy and if it worked out, great, if not, that was okay too.

I got a call back the next day accepting our original offer.


Lesson #4 – A Used Car is Superior

We all know that new cars are a bad investment that depreciate in value the second you drive them off the lot. It is wise to be putting money in assets that grow in value (investments, real estate, etc.) rather than those that lose value (e.g., cars). On the other hand, it is so hard to say no to a new car. There are few things like the smell and feel of a new car.

If you can have the discipline to say no to the new car, it will pay off.

Car Fax estimates that a car loses approximately 10% of its value the minute you drive it off the lot. Within the first 5 years, that car will lose approximately 60% of its value. Why not let someone else do the driving that loses the value and you can pick up from there?

Here are some examples of price differences between new (base MSRP price) and good (reliable and safe) used cars at the time of writing this article:


Example 1 (Honda Odyssey)

New 2016 Honda Odyssey EX-L = $36,200

Used 2014 Honda Odyssey EX-L with 38,000 miles = $19,995

Price difference = $16,205 for 2 years and 38,000 miles (44% savings)


Example 2 (Nissan Altima)

New 2017 Nissan Altima 2.5 S = $22,900

Used 2014 Nissan Altima 2.5 S with 35,000 miles = $12,300

Price difference = $10,600 for 3 years and 35,000 miles (46% savings)


Example 3 (Ford Fusion)

New 2017 Ford Fusion SE = $23,365

Used 2014 Ford Fusion SE with 47,000 miles = $10,900

Price difference = $12,465 for 3 years and 47,000 miles (53% savings)


Lesson #5 – Do the Math (Leasing vs. Owning)

Lease deals can seem very attractive if you are only looking at the monthly payment. With few exceptions, I would argue a good used car is a better deal in the long run. If you are willing to drive something used, give up a little bit of style and swag, hold onto it for the long run, deal with some repairs here and there and have an emergency fund in place to cover those repairs, the used car generally wins.

So, how do you know which is better? Purchasing a used car or leasing a new car?

Do the math on what you will pay for a leased car per month plus the initial down payment and compare that to your total purchase price for a used car. For the leased new car, it probably isn’t a bad idea to include a little bit extra for those fees you may have to pay when turning in the car for some dings or overage on miles. For the used car, it probably isn’t a bad idea to include some extra money for a few repairs you may have to take care of along the way.

Let’s look at a lease example for a Honda Odyssey based on their current offers. They are offering a 2016 Honda Odyssey LX for $259/month for 36 months with $3,199 due at signing. This rate is for those that qualify based on a good credit score. Others may have a higher rate without good credit. Total payments at the end of 36 months would equal $12,523 ($3,199 due at signing plus 36 months of payments at $259/month). This of course assumes no additional money due when turning the car in for dings and no overage on the 12,000 miles allowed per year.

Instead of this lease, a quick search on www.cars.com reveals that you could buy a 2011 Honda Odyssey EX (a model up from the LX) with 60,000 miles for approximately $12,000. So, yes, you are giving up the features and feeling of a new car but for the same total investment, you own the vehicle when it all said and done. After 36 months, it might appear to be a financial wash but it is far from it because you own the car and could turn around and sell it or hold onto it without making any monthly car payments. This is where the savings comes in! Every month that goes by after 36 months without a car payment is winning! Even after factoring in some cash for repairs here and there, it is a better deal.


Your Financial Homework:

So, there it is. My lessons learned from purchasing my second Swagger Wagon. According to Experian, the average car payment on a new vehicle in the US is $493 per month for those that own and $412 per month for those that lease.   If you are trying to make progress on saving for retirement, paying off debt, saving for an emergency fund or buying a house, a big car payment can be a significant barrier in the way of you making progress on one or more of those goals.

Is it time to make a switch to a good, reliable used car? If so, start a monthly savings plan within your current budget to save up enough to pay cash for that car. Once you go used with cash, you won’t go back.



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