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# Is It Time To Upgrade?

QUESTION: Lane in California wants to know when to quit fixing a car and buy a new one. Dave says it depends on the car’s worth.

ANSWER: Yes, move on up in car because your beater died. One of the things about beaters is that they are disposable cars. A hoopty is disposable. When you are driving a \$1,000 car and a \$2,500 transmission goes out, that car goes to the junkyard and you get \$500
out of it. It’s a throwaway–that’s what it’s for.

If you are driving a \$5,000 car, you have to stop and think about whether to put a transmission in that and whether that makes sense. Overall, mathematically, until you get down to that level of car, if your car keeps breaking down, you can mathematically fix a car forever until you get down to \$1,000 value. You can mathematically fix a car for cheaper than you can buy another one.

If you have a \$10,000 car that always breaks and upgrade to a \$20,000 car, that’s \$10,000 worth of repairs you could have done. How long can you keep something running for \$10,000? Forever! If you have a \$5,000 car that’s breaking down all the time and you buy a \$10,000 car, that’s a \$5,000 difference. How long can you work on a \$5,000 car with \$5,000 cash? A long time!

Repairs, mathematically, almost never drive the decision until you’re down to a \$1,000 car. You really can’t mathematically make the decision to sell a car because the repairs are eating you up. It never works out.

What does happen is you reach a point where you’ve got the money, and the hassle factor of being broken down starts to reach a point where you say the heck with it, I’m getting another car. That’s valid and I’m all right with that. But you really can’t mathematically justify it based on the repairs. Just like you can’t mathematically justify buying a \$30,000 Prius while you are driving an \$8,000 gas guzzler. Where are you driving this thing, to the moon and back?

There’s no way you can make that up on gas mileage. A \$20,000 difference? Give me a break! Not a chance!

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