Scared Debtless

Richard Quinn

MONEY IS ONE OF THE most emotional issues we deal with. It can create both immense stress and moments of pleasure. I’m guessing the way each of us view money, and how we handle it, is as unique as our fingerprints.

My wife’s car of 14 years was kaput and headed for the junkyard. Fixing the wiring and computer on her 2006 Jaguar would have cost $5,000—far more than the car was worth, even though it was otherwise in very good shape. The Jaguar was my wife’s dream car, her pride and joy, so I took the Leaper off the hood and had it mounted as a memento.

My father was a car salesman, but I hate buying cars. I dislike haggling and I have little idea of what’s a good deal. Nevertheless, we shopped. Our quest was complicated, given that I insisted on every available driver-assist feature, because my wife is nearly blind in one eye after getting hit by a baseball last year.

Not surprisingly, our last stop was a Jaguar dealer. Lo and behold, we found a leftover, fully equipped 2019 model.

Here’s where it gets complicated. What to pay and how to pay? The dealer had what seemed like a good deal: You could buy any new car, with no money down and an interest-free loan for up to 72 months, plus all routine service is included for five years.

That sounded quite attractive—not so much the 72 months, but the zero interest. Despite the fact that I dislike debt even more than shopping for a car, I was seduced by the possibility of keeping cash in our bank accounts. We then learned the sale price was $2,000 more if we took the interest-free loan. Upon consulting my iPhone, I estimated we’d avoid that much in interest after just a few years, assuming the interest rate would have been 3%. This was getting complicated. Should I save money by carrying debt, even though debt isn’t a great idea for a retiree?

Now we had the price of the car. Added to that were taxes and fees, plus insurance on the wheels and tires. Hold it, I know what you’re thinking. He spent money on wheel insurance? With expensive wheels, thin tires and Northeast potholes, it isn’t a bad idea. Besides, the insurance also covers dents, dings and scratches. I’ve already collected for three tires and one wheel on my current car—far more than the cost of the insurance.

I charged an amount equal to the taxes, fees and wheel insurance to my Amex card—for the points, you know. Recall I’m frugal. Meanwhile, for the car price itself, I applied for a 48-month interest-free loan. The monthly payment equaled my wife’s monthly Social Security check, which seemed far more than a coincidence. The interest cost avoided was $2,498—for which I paid $2,000 more for the vehicle.

The car was to be delivered the next day. Only thing is, I couldn’t sleep. Why would this 76-year-old want a four-year, $40,000 car loan, even if there was no interest? Then I get a call from the dealer. I couldn’t take out the loan and have the car registered in my wife’s name. I was saved from myself. There was no way “her” car was not going to be her car. Since her sole income is half my Social Security check, a loan in her name was out.

Enough of this wrangling. I tell the dealer to cut the price by $2,000, leave the extras on my Amex and I’ll write a check for the balance. I’m ready for a peaceful nap.

Our banking is compartmentalized. I have a checking and savings account, as does my wife, and then there are also accounts used for monthly fixed costs and one for travel. The travel account is overflowing, after getting large refunds as a result of our recent cruise fiasco. Let’s face it: We won’t be going anywhere soon. A car is used for traveling, right? So a chunk of the car cost comes from the travel account and the rest from our savings accounts. We’ve borrowed from ourselves and will replenish with what would have been monthly deposits to the travel account. Have we lost interest on those accounts? Have you checked the rates paid on savings and checking accounts recently?

I suspect someone with a more sophisticated approach, as well as maybe more aggressive negotiating skills, could have done better. But these are my fingerprints. I’m happy, my wife is happy, our emergency funds are still intact, and we have no new debt. Sometimes, the path of least resistance—and sound sleep—is the way to go.

Richard Quinn blogs at Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include What IfDespite Myself and Battle Over Benefits. Follow Dick on Twitter @QuinnsComments.

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