My buddy bought a 2 year old Jeep and I have to admit, it was a lot of fun. After seeing his experience, I would never buy a Jeep. However, I’m always happy to let others pay for my good time. Of course, I returned the favor by helping clean or upgrade the Jeep.
Disclaimer: I’m not against jeeps. The feeling of freedom they provide and the sense of comradeship between owners is intense. However, I do feel they are insanely over priced vehicles, and a never-ending sinkhole for your money. Read below for more detail.
My roommate (James) actually sold his Jeep after owning it for just over a year. When asked why, he always had a few excuses up his sleeve.
“I sunk it in a river once.” (This probably happens to every used Jeep)
“I always buy a new car every year or two.” (Say what?! Read this)
“I’m tired of paying $500 a month for the car.”
“I want to start saving for a house.”
I agree with the last two points, although I wished he had thought about this sooner. I always found it insane that he paid $500 a month for that car – once again, I’m grateful someone else paid for my enjoyment.
Not only was he paying $500 a month, but he constantly modified the thing. At one point, he told me he put $2,500 on a credit card for tires and a 3.5” lift. Another $200 for seat covers, $150 for LED lights, a $300 radio unit.. the upgrades quickly added up. The fact that we were able to run the electrics for the LED and radio/backup camera saved him another couple of hundred in installation costs.
It was like a game to him.
If any of you are familiar with tiered upgrades in video games, the Jeep modifications seemed much like that. In the first tier, upgrades usually cost less than $800. To max out Tier 1, you’d expect to spend $5k-$6k. This is the point James reached. He explained that Tier 2 upgrades each cost at least $1,000 and luckily he had the sense not to strive for that.
All tolled, James said he probably put $6,000 into the jeep after purchase. Not including interest, taxes, registration, or any other fees he probably paid $35,000 for the Jeep. A year later, he sold it for $26,000. That’s a $9,000 loss in just a year!
After that, I hoped he would learn a little about budgeting. But within a few months, he was looking at purchasing a truck in the low-mid $20s.
I suppose he did give up a $500 note for a $300 note. I tried reasoning with him and explaining why this was a bad idea. CNN advises readers to budget 10%-15% of their monthly salary to a car note – I still think that’s high. He responded saying he knew it was logically and financially a bad idea, but that it’s who he is and he didn’t expect it to change.
So what are your thoughts? Do you know someone in a similar situation? How did you handle it?