My boss is looking to get a new 2009 Mercedes Benz and, besides being insanely jealous, it got me thinking about my car. I have a car that I have owned since 1999 and, according to the Kelley Blue Book value, is worth about $1500. I had a problem with my ignition last month and it cost me about $350 to fix; that’s 23% of the total value of my car! The auto-repair place “recommended” about $2000 in additional repairs to get the car in tip-top shape. I don’t even need to go through to the numbers to know the repairs will cost more than my car is actually worth, which brings me to my dilemma: Should I buy a new car or keep my current car until it goes kaput?

First of all, I need to evaluate my financial condition currently. Things don’t look so hot in this category. The end of 2008 took a toll on my investments, even though I fared much better overall than the S&P 500. (I think I’ll post my returns on another post.) My net worth also took a hit due to my investment losses and from paying tuition for school. I started my MBA program in 2008 and, as luck would have it, right as this financial crash happened, I brilliantly decided to go back to school. My portfolio goes down and the school takes the rest of my money!

Another thing weighing on my mind is saving for a house. A lot of these future decisions rest on graduating with my MBA. At this point, I am not sure where I am going to live since it depends on where, and if, I take a new job. I would love to leave and make more money elsewhere but in this economy the new maxim is “any job is a good job”. Hopefully this will change very quickly but I’m realistic and expect a bad job market for a while. Although getting a house is definitely on my list of goals in the next couple of years, it wouldn’t be practical to buy a house here only to move six months later. Finally, my finances are being stretched to the point that I’m considering a student loan. Consumerism Commentary had a good post a few days ago about the new lower rates on student loans starting in July which was a vote in my mind to take out a student loan. I hate debt and getting into debt for the first time in a while would be an unhappy day for me to say the least!

Back to the car dilemma: I am looking to get a 2005 Honda accord.  I saw the kbb.com value to be about $8,000. I could buy the car outright with my savings but that would completely wipe me out. I could consider financing the car but as I mentioned, I don’t really want to go into debt. Another option is just getting a new car considering there are a lot of 0% offers on new cars right now but I would still be paying more than I want to for a car right now. I might be able to qualify because I have good credit but I don’t think I really want to due to the high price tags of new cars (although it would be nice).

After weighing all of my options, I’m leaning more towards keeping my car and just shelling out the $2000 to keep it in good shape. My car got me through high school and college and although it has its issues, I’d be a little sad to see it go. There are a lot other factors up in the air right now like where I’ll be living in a year and whether or not I’ll stay at my current company. I think it just doesn’t make sense to buy a car right now, unless I have to. I’m just keeping my fingers crossed that my car will hold out until everything settles and then I can reevaluate buying a new car.

photo: Plutor