Category Archives: Autos

Who Should Get The New Car: Husband Or Wife?

I got a text message from a friend asking for advice on an interesting situation. The husband and wife have one newish car and one oldish car.

The husband only needs to drive about 10-15 miles a day, while the wife drives 60 miles a day to and from work.

Which car should they use for each of their commutes?

First, we have to make a few assumptions:

  • The old car only has at most, another 45,000 miles on it. You never know when a car will die, but the expectation is that it won’t live longer than that.
  • The husband is in medical school and once he graduates in 3-4 years, their income will increase.

Drive The Older Car Long Distances

If they drive the older car 60 miles a day, or around 15,000 miles, year, they would likely need to replace the car in the next few years.

Their plan is to drive their cars into the ground until they become unreasonable to maintain. They’ll put in some money for basic maintenance if it means keeping the vehicles up and running, but significant maintenance would force them to discuss whether it’s worth it to pay to have it fixed (and hope that it lasts long enough for the repair to be worth it) or to sell it for whatever it’s worth and buy a new (or more likely, a used car).

One pro of going this route is that if the old car dies in the next few years, they’d be able to get a new car, which everyone likes the feeling of.

Drive The Newer Car Long Distances

By driving the newer car 60 miles a day, the couple can ensure that they won’t need to replace the older car for the next several years. In fact, by only driving it 15 miles a day, it would last through medical school and then some (depending on how the husband’s commute changes over the years).

However, the downside here is that the new car will quickly become not that new of a car. You’ll have one old car and one car with normal use that will by that time, be outside of its warranty period.

Calculating Total Worth

One way of looking at this is from a purely mathematical standpoint. Let’s say the new car is worth $15,000 and the old car is worth $5,000 right now.

If the new car gets driven 45,000 more miles over the next 3 years, it would be worth about $8,000, while the older car would be worth maybe $3,500, so the total loss of value would be $8,500 over 3 years.

If the old car gets driven 45,000 miles over the next 3 years, it would be nearly worth maybe $1,000. If the new one drove the short commute, it would be worth $13,000 after the same time period. The total loss of value in this situation is $6,000.

From this standpoint, it makes more sense to drive the old car first because driving 45,000 on the old car reduces the total value of the cars less than putting 45,000 on the newer car would.

Their Solution

I recommended that for their situation, they should drive the new car more because they’ll be in a significantly better financial situation once the husband graduates medical school and having to shell out thousands of dollars for a new or used car won’t affect their finances as much as if they had to replace a car in the next few years.

Ultimately, they made the same decision. Whether it’s because of the argument I made or because the wife was the one with the long commute and wanted her way, we’ll never know.

What would you do in this situation?

How Reducing Coverage Saved Us $600 Per Year On Our Car Insurance

We’ve all seen the car insurance commercials that promise to save us hundreds of dollars if we switch to their company. I’ve never actually met someone who was overpaying their car insurance by so much that simply switching companies (and keeping the same coverage) resulted in a saving of several hundred dollars.

Sure, you can get quotes from a company that is $400 higher than what you’re paying, but I don’t count that as actually saving $400. It’s simply not paying $400 more for the same product. It’s absolutely the right financial decision, but it’s not saving.

Our Old Car Insurance Coverage

For the past two years, we’ve had approximately the same coverage. We have been paying around $775 for a 6 month period. We switched from Progressive to GEICO when we realized we could save $86 per year.

Recently, I decided to look into how much car insurance we really need instead of simply looking at how much we were paying. I discovered that we were probably paying for coverage that we didn’t need.

The three portions of the policy I investigated were Medical Payments, Collision, and Comprehensive Coverage.

Our New Car Insurance Coverage

The first thing we did was drop medical coverage. We were paying well almost $100 per year just for medical coverage that we likely would never be able to use. The reason it was unlikely this policy could ever kick in is that we are already covered by our health insurance. This was the easiest decision, so we removed this from our policy without much discussion.

Next was the comprehensive coverage. This coverage pays for loss or damage caused by “fire, theft, vandalism, hail, windstorm, riot, falling objects, flood, collision with an animal.” While these are unlikely to happen to us, it was under $100 per year, so we kept it on there. However, paying $100 per year doesn’t make sense when there is a $1,000 deductible. If something was to happen to one of our cars, we’d still have to pay the first $1,000 in damage. Well, our cars are not new and not worth all that much, so by the time we pay $1,000 we might as well start looking at getting a new (or used) car.

Finally, we got to collision coverage. This was the hardest decision to make, but it was by far the most expensive as we were paying over $500 per year for this coverage. This coverage pays for accidental damage to your vehicle caused by collision with another vehicle or stationary object. Obviously if someone else is at fault, they are responsible for the damage and will pay it. If I am responsible, I will have to pay the first $1,000 in damage to my car as a deductible, plus the $500 per year just for the right to use it. Again, our cars aren’t worth that much and if we get into an accident that requires that much repairs, we will consider getting a new car.

How Much We Saved By Reducing Our Coverage

In all, our savings totaled $617 per year of $308.50 every 6 month term. That’s a lot of money we were able to save just by reducing our coverage. I encourage everyone to look at their car insurance coverage to make sure they need them. Paying hundreds of dollars for something you won’t (and in some cases, can’t) use is silly, so if it makes sense in your situation, consider dropping those extra coverage options.

I Got Sideswiped On The Highway: How To Handle Car Accidents

How To Handle Car Accidents

On my way home from work, I was driving in the left lane of a 2-lane highway moving on a curve to the right (I was the outside car). Another car came from behind me in the right lane and as he passed me, crossed over the lane line and swiped my car.

It was very surprising and felt a lot of contact on the passenger side of the car. I swerved to the left, got close to t he median, but avoided it. I honked and then followed him to the nearest turn-off.

We got out of our cars and checked out the damage to our cars. For how much contact we had, the damage was actually pretty minimal. It was mostly paint transfer (his paint on my car) and two light dents. I expected it to be much worse, and his car actually had a bigger dent than mine did.

Exchange Insurance Information And Take Pictures Of The Accident

We exchanged our insurance information, took pictures, and went on our way. Neither of us admitted fault, but since the damage wasn’t so bad, I assumed it would be easiest not to go through our car insurance companies. I have a $1,000 deductible, and I don’t care enough about the damage to pay the first $1,000 in fixes.

We emailed back and forth a few times, until he said that his damages would take $1,600 to fix and that, “Unfortunately, since you were at fault…” I stopped reading there and called my insurance. I was most definitely not at fault and told him that. I was not interested in playing games, and since the damage to my car wasn’t bad, I figured I was doing him a favor by not going to our insurance companies immediately.

I reported what happened to my insurance company and gave a recorded statement of what happened. They got in touch with his insurance, and at that point, it was out of our hands. Our insurance companies would decide who was at fault and whose insurance would pay for damages on the cars.

Who Pays For Repairs And What Happens To Insurance Rates

There were a few ways this could have turned out:

  • Our insurance companies agree that he was fault and his insurance company would pay for our damages. I would not have to pay my deductible and my rates would not increase since I would be 100% not at fault.
  • Our insurance companies agree that I was at fault and my insurance company would pay for his damages. To get my car fixed, I would have to pay deductible and my rates would increase since I would be 100% at fault.
  • Our insurance companies could not agree based on the evidence that either one of us was at fault. We would each have to pay our deductibles to get our respective cars fixed. My insurance rates would not increase since I would not be found at fault.

Based on my statement to my insurance company, I figured there was no way that they would find me at fault. And since the damages weren’t so bad and I didn’t care to get them fixed, it wouldn’t cost me anything.

Realistically, my worst-case scenario was option number 3. And I didn’t expect options number 1 to happen because he was obviously going to give his insurance company a story about how I was at fault.

I have no doubt that the other driver was at fault. He crossed the line and since he was behind me, had I crossed into his lane, he would have hit the back of my car. I don’t see how a slower car on the outside can sideswipe a faster car on a bend to the right, I would expect the damage to be in a different place.

The Decision From Our Insurance Companies

Our insurance companies only took 2 days to make a decision. As expected, my insurance company found me 100% not at fault. As a result, my insurance rates wouldn’t rise. Also as expected, his insurance company found him 100% not at fault and would not be paying for my repairs.

I am responsible for the first $1,000 in repairs, after which point, my insurance would pay for the rest of the damages. As stated earlier, the damages are minimal and I have no interest in paying a few hundred dollars to get our some small dents in the passenger side of the car.

In all, this was all just a bit stressful and it stinks that someone can come into my lane and do damage to my car and leave me paying for damages to my car. But, all in all, this was not a big accident, damage was minimal, and nobody got hurt. I think that for an accident, this was a best case scenario and I’m glad I can put it behind me.

Readers, have you ever got into an accident? Is the stress of having to deal with insurance worse than the damage itself?