Serving Bread

I can’t stress enough that our cars are not investments but liabilities. An investment is something that has potential to increase in value over time. The overwhelming majority of cars will not increase in value over time. I imagine that over 95% of cars will depreciate in value. A car is an expense and a liability. It is an asset that can be sold for cash if needed, but every year, the value of your vehicle will go down in price.

There are too many people who tell me how they are investing in a new car. They speak of the car on the same par as buying a home. It’s true that cars and homes are expensive. Both often need down-payments and loans to finance the purchase. However, a home has potential to increase in value whereas a car is guaranteed to lose value. (In fact, some estimate that a car loses 15% of its value the minute the consumer drives it off the lot) A car is a lot like a home-computer. Once you buy the newest model, it will ride on a path to become obsolete and worthless in just a few years.

Living in Los Angeles, in my particular context, makes it very difficult to not own a car. I admire people who use transportation modes other than cars who are in the same stage of life as me. For those of us who need a car, there are some important principles to follow in thinking about purchasing and being faithful owners of cars:

• Buy what you need. A few years ago, my wife and I bought a family station wagon. We anticipated owning the car for at least ten years. We knew that we would want to have kids within those ten years, so it made sense to buy a car that would serve that life-stage. Also, many people may find themselves buying a show-off-to-friends vehicle. All this will create is a vicious cycle of keeping up with the Joneses.
• Buy used. Because of the depreciation of a car is so steep, it is more financially feasible to buy used rather than buy new. I did an unscientific test comparing the purchase of a new car and several used cars of the same make and model. I compared six cars in total. The car that was five years old cost the least over a five year period. Using numbers from Edmunds.com, a 2003 Honda Accord would cost the owner $33,410 over a five year period (which includes maintenance, taxes, insurance, repairs and depreciation). A brand new 2007 Honda Accord would cost the owner $54,850 after five years. The difference in price is over $20,000. This does not include the additional money you may have to fork over for interest if you were to finance the car.
• Recognize your temperament. I am not the kind of person who can find the deals through the classified section of the newspaper. But what I can do is purchase used at a car dealership. I also think I would live with more peace purchasing a car that is still under the original warranty (3 years or 36,000 miles for most vehicles). Rather than risk buying a lemon, I’d rather pay a little more for a peace of mind.

This post is far from being a comprehensive guide to buying your next car, but I hope that some of the principles would help guide your steps when you are in the market for a new car.

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For the past year, I’ve had a frustrating experience with my AT&T Internet. The line is inconsistent and drops often. I have called technical support numerous times, spending hours on the phone, going through the same motions time after time, and yet my issue never got resolved.  I have even had technicians come out to my house three times, but the internet was still acting up.

I was fed up. On Wednesday night, I called yet again and I told the technician that nothing she suggests ever works, and in a moment of lost judgment, I asked her to cancel my account. Now, I’m not sure if I really meant it because cancellation would have meant new email addresses all around—not something I wanted to do.

But instead of transferring me to the cancellation department, she transferred me to the customer retention department. I was no longer talking with an anonymous person in Bangalore, India. But now, I was talking with Cindy who lives locally. Cindy tells me, “Eddy, my number one concern is to keep you as a customer because you’ve been a valued customer since 1996.” (I don’t even know that I was a valued customer for over 10 years)

Long story short, she sent me a special DSL technician (usually costs $200) for free. He came out the next day and replaced/upgraded my modem for free. In addition, she took $10 off my internet bill for the next six months.

Most businesses know that they are in fierce competition for customers. But customers may often be aloof to that. I’ve been living with bad internet for a year, and I could have easily switched to a different company. The same goes with our wireless provider, our car insurance, our credit card companies, etc…. The lesson here is that we should make businesses earn our business.

Shop around for a better deal, threaten to take your business elsewhere, and don’t settle for anything less than excellence.

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The media has been painting a gloomy picture of the US economy. There is a credit crunch (people who need credit can’t get credit), a housing slump (people who need to sell their homes can’t), and consumers are holding back in spending their money during the holiday season.

Friday was black Friday—the traditional start of the holiday shopping season. Statistics say that about 25% of retailers’ sales comes in the month before Christmas. Black Friday was dubbed that to indicate that Friday is usually when retailers start seeing their accounts in the black (rather than red).

I’m not an economist nor an expert in capitalism. It seems that the best measures of an economy is how well people spend their money. Shortly after 9/11 President Bush urged Americans to go shopping and spend their money to show the terrorists that they will not break us. It was shortly after 9/11, that car manufacturers began offering 0% interest on their cars as way of enticing buyers. In other words, the more materialistic and consumeristic we are, the stronger our economy.

Scripture speaks clearly against the pursuit of things and materialism in general. Jesus illustrates the futile pursuit of things in Luke 12 with the parable of the rich fool. I’m not sure if most Christians find it disturbing that our society (and us as Christians) are so ingrained in a culture of consumerism and materialism. We will soon the American church utter trite slogans that “Jesus is the reason for the season” yet there will be a mismatch between the words out of our mouth and our actions.

I’ve mentioned in previous posts that we need to have limited budgets on how to spend our money during this holiday season and it seems that it would be better to have new statistics to measure the strength of our economy. How about if we base our economic strength on the saving rate of our consumers? How about if the strength of our economy was measured not by how much people spend but how much they didn’t spend? What if we measured our economic strength by how much people give away? What if generosity, rather than consumerism were the measure of an economy?

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