I have an important financial decision to make soon, and I thought I would run it by the Beards & Money readers to make sure I’m not thinking stupid. The best way to avoid costly money mistakes is to convince others why before you buy. Basically, I need to figure out whether or not I should exercise the lease buy out for our fancy newer car.
Right now, the Beard family has two cars. A nearly new 2013 sedan with 22,000 miles and an older 2006 station wagony SUV-like sorta thing with 70,000 miles. The newer car is leased with the term expiring in September. The residual is $12,500. The older car is owned outright and is worth about $6,000 on the private market.
We have decided that we are going to become a one-car family, and we have to decide which car needs to go. At first, it seemed easy. Turn in the leased car to the dealer in September and that’s that.
But, I’m on a roll with writing about this whole money expert thing. I’ve written about how the smart folks look at money issues from all kinds of directions, instead of getting stuck on one framing of the situation.
Ty at Get Rich Quick’ish recently discussed one practical application of expanding your problem framings when he questioned the bromide that paying off debt should be job number one.
It’s my turn to give you a glimpse of my Ivory Tower secret decoder ring, and show you an honest-to-goodness problem that needs solving. My problem. And how I’m trying to think like a money expert by thinking about all the possible ways to frame the problem.
Should I buy out the lease for $12,500 and sell the older car, or just turn in the leased car and rock the paid-for older car? Continue reading “Lease buy out? An exercise in problem framing.”