Cars & Effect (part 1)

First, for those readers who do not hail from Eastern Massachusetts, I should explain that the headline should be pronounced the way a townie from one of Boston’s neighborhoods would: cahs and effect.  It’s a pun, you see.  I know, I know, a very small pun.

I’ve been thinking a lot about cars and their effect on people’s financial plans. All this thinking was triggered by the unexpected demise of my late lamented BMW 325i.  It was a ’95 automatic in Boston Green.  I got it with 31,000 miles on the clock, and drove it until the odometer read just over 288,000 miles.  Along the way I upgraded to 17-inch wheels and tires, Bilstein Heavy Duty shocks, and a few other subtle changes that made the car more fun to drive.

As time went by, the 325i worked its way into my financial seminars. I have always preached the virtue of maintaining a car to maximize its lifespan, because repair costs on a well-maintained car are usually much less expensive than monthly payments on a new car.

I also used to tell the audience a story, a sort of parable that helped investors come to grips with the realities of stock market volatility. It’s too long to reproduce here, but it was about getting rescued from a bad situation by someone driving a car whose color you didn’t like. The punch line was “volatility is the green car.”  I’d tell the story, get a chuckle and a few nods of understanding, and move on. At the end of the evening, a few seminar attendees who’d stayed around to ask questions always accompanied me to my car as I packed up my gear. That’s when they saw my green 325i with the vanity plate: VLTLTY. Volatility really was the green car. They’d laugh all over again.

All good things must come to an end. While this car still handled nicely, it was getting a bit long in the tooth. After thirteen years as my daily driver, the once gorgeous paint was faded, and the clear coat was peeling. There were some rust spots popping up in various places, and the carpet was worn through in the driver’s foot well. Since the car was a garden variety 325i, I didn’t deem it worth the expense of a full restoration. To top it all off, I felt the automatic transmission beginning to slip. I wasn’t sure I wanted to pay for a transmission transplant in this old car.

Enter a helpful driver I’ll call “Bob.” He made up my mind for me. I had parked on a main street in nearby Lexington while I went to do some banking. When I got out of the bank, I found my car had been sideswiped. The left rear wheel was bent, and the tire flattened. The wheel was angled sharply inward, as if the car had suddenly developed four-wheel steering.  There was a deep gouge up the entire left side of the car. The left side mirror was lying in the road ten feet in front of the vehicle. Fortunately, I had been hit by an honest man. Bob left a note on my windshield with his contact information.

The insurance company declared it a total loss and cut me a check.  Unfortunately, it was a check for just $2,400 or so.  After all, the car had 288,000 miles, faded paint, and some rust.  I resigned myself to having to lay out a big pile of cash to secure a replacement vehicle.  Ah, but sometimes the Lord works in mysterious ways. That’s next in part two.