I probably should resist the urge to stimulate myself...

With the new stimulus bill including a write-off for sales tax for cars bought in 2009, I started to think that maybe I should buy a new truck this year. After all, car companies are practically giving them away, and buying one this year would also give me the tax break. I've been thinking that I would buy a new vehicle in the next 2 or 3 years, but maybe I should buy it this year.

So I started looking around and running some numbers. A local Hummer dealer had a couple leftover 2008 Hummer H3's in stock. Original sticker was ~$36k, but it had a $6500 manufacturer's rebate on it. Edmunds' True Market Value claimed that I'd be able to get them to haggle the price down to invoice, giving it a TMV after rebates of ~$27K. Edmunds claims that my current vehicle, a 2006 Ford Ranger, has a trade-in value of around ~$11k. So I would only be paying/financing $16k or so.

It's tempting, but I don't think I can justify it. My current truck is paid off, and only has 37,000 miles on it. It's been pretty solid so far (knock on wood). Furthermore, I've taken most of the hit in depreciation already - it will probably only depreciate a few thousand more if I keep it for a couple more years. Plus did I mention it's paid off? That means I'm only paying for gas, insurance, and maintenance, which means more cash in my pocket as long as I can keep it.

Buying a new vehicle would mean either financing it, meaning another monthly payment, or paying in cash, which would kill off a large chunk of my cash reserves and keep me from doing something else I was planning on doing this year - paying off my student loans.

Whatever I do will probably be the wrong move, market-wise. If I buy a car now, prices will drop even further and incentives from the government and manufacturers will get more generous. If I don't, prices will rise by the time I need to buy. Keep in mind that I have horrible timing - I graduated with an IS degree right after the dot.com bubble and bought a house in 2006, at the top of the market.

Still, buying a car I don't need now doesn't make much financial sense to me. I figure I'm better off paying off the student loans, and saving up money so when I do buy I can get exactly what I want and pay for it mostly in cash. I've also considered buying a used vehicle for my next one, which would let me get something higher-end (I've got a completely irrational love for Cadillac Escalades and Porsche Cayennes) - which would not get me a tax break.