In January 2013 TheFrugalDoctor bought their very ever first car for $23800. I paid cash for it. I delayed the buying of the car by a whole year. During internship I used to be get around by public transport or get lifts from my colleagues. When the internship rotations were over, I had to travel to the next country town. I used buses, trains, or taxis. I carried all my possessions in an extra large suitcase. Fortunately once at the next hospital intern accommodation was not too far from the hospital.
I knew not to buy a car new. However, having delayed gratification, I figured I could get exactly what I wanted. At that time, I liked that the new Corolla had reverse cameras, touch screen, Bluetooth and was more fuel efficient. I had said to myself I was not going to buy another car until I had ran it down. I bought a brand new black Toyota Corolla, hatchback, sports transmission, with tinted windows. Was $23800 a frugal purchase? I haggled my way at the car dealer shop. At the end of the negations, the car dealer asked if I worked in sales. He also thought I should consider a job in sales. The invoice contained the following:
| Sale price of motor vehicle | $ 22 990 |
| Administration fee | $0 |
| Floor mats (front & back) | $0 |
| Window Film coat | $200 |
| Vehicle colour ink | $425 |
| Dealer charges | $1995 |
| Dealer discount | – $3239.82 |
| Price before registration | $ 22 370.18 |
| Stamp Duty | $ 672 |
| Registration fee | $ 757.82 |
| Total cost | $23 800 |
TheFrugalDoctor had a smile on their face when they saw the dealer discount. I do not like paying full price. The $23800 spent in 2013 is equivalent to $30912 in 2023. This is according to the official inflation numbers from the Reserve Bank of Australia. It is 2025 and I still own that same Toyota Corolla. At the last insurance renewal in 2024 it is insured for an agreed value of $16000. 2013 was also the year I started investing in the stock market. Unfortunately I did not know about ETFs or index funds. I was investing in individual companies on the Australian Stock Exchange at that time. If instead I had taken the $23800 and invested in Exchange Traded Funds (ETFs) or Index Funds it would be worth the following assuming dividends are re-invested :
* iShares S&P 50o ETF (IVV) = $159 900
* Vanguard US Total Market Shares Index ETF (VTS) = $153 800
* Vanguard International Shares Index Fund = $80 900
* Vanguard Australian Shares Index ETF (VAS) = $39 800
Fortunately buying the car new did not set me back financially. I was also able to focus on my other goals of investing, saving for a house deposit and travel. I knew the car was a depreciating liability, it was a necessary evil. Twelve years later, I have stayed true to my word. I still own that same car. It has traveled 134,000 km. There is no plan to update it anytime soon. If I had invested the $23,800 in IVV, I would have an extra $159,900 in my share portfolio. I could have bought a second hand car for less. Who knows if I had done so I would have probably needed to upgrade the car by now. At the end of the day it is all what ifs. There will always be trade-offs and opportunity costs.