Danielle, aka The Frugal Lawyer, blogged this week, a mea culpa of sorts, about purchasing a new car.  She had hinted at her indiscretion earlier in the week, but finally confessed.  I have come to enjoy her writing while participating at Cash Commons, a new question and answer site about money problems.

Far be it from me to pick a fight with an attorney, as an Ob-Gyn I am genetically afraid of lawyers….

But, so far, the comments on her post have been all congratulatory in nature, and as she is a self-confessed recovering spend-thrift, I think I would lose points in the personal finance blogosphere, yes maybe even a little bit hypocritical, to let her get completely away with buying a new car.

So for all The Millionaire Nurse wannabe’s here is my list of reasons why buying used is better, when buying transportation:

1. Depreciation-when driving the new car off the lot, the value of your new purchase drops by 20-45%, making this a depreciating asset-it usually doesn’t pay to borrow money for something that drops that quickly in value.
2. Hidden Costs- Besides the monthly payment, and interest there are other costs involved in buying new vs used.  These include higher insurance costs-see this article in the Wall Street Journal about insurance costs.  Taxes-the taxes on buying your tags in most states is directly related to the cost of the vehicle, and new cars just cost more, therefore a higher yearly tag tax.
3. The savings she suggests from buying a more fuel-efficient vehicle are real, but most studies show at today’s gas prices, it will take 5-7 years to make up the difference in price that the new car costs.
4. Having a large amount of your net worth tied up in a vehicle, is usually not a wise move, financially, although that is probably not an issue here, but is for many people whose car is the second largest asset after their home.

So, before anyone points out my personal hypocrisy, in the spirit of true confession, I will admit that I own, (or the banks own) several investment lots on the Gulf coast, that I purchased at the height of the real-estate boom, that have now dropped significantly in value, and though I am paying them off as quickly as possible, I do admit that I made a big mistake in not purchasing them with cash or not at all.

The Frugal Lawyer also makes me a little jealous when she describes the personal pleasure she gets from driving her “new green machine” (my words not hers).  When I climb in my 10-year-old paid for truck that gets 16 miles to the gallon, I am thinking about what I am going to do that day-not how I am saving the planet.  But maybe that is because I am over 50, and  male, so I just don’t get that emotional attachment she has with her new vehicle, with my truck.  So far the truck doesn’t seem to mind my emotional detachment, but maybe I am just not listening…

So, do I want Danielle to feel guilty every day she gets in her new car?  No, just like I am trying to quit beating myself up for trying to be a real-estate baron.  We just need to continue to learn more about our relationship with our money, and try hard to be a good example in the future to those we are trying to help on their path to financial freedom.  Which is, I think, both of our goals in blogging about personal finance.