Doing Business With Family: A Life Lesson
Dave Ramsey always talks about the dangers of doing business with family. He always cautions people to treat financial matters with family just like financial matters with a stranger. He says that if you don’t something bad will happen. He talks about how it will make Thanksgiving dinner taste different. It always seemed a bit extreme.
It doesn’t seem so extreme anymore.
A few months ago, my wife and I needed to purchase a car. I did incredible amounts of research and made up my mind. I wanted a 2002-2005 BMW 3 Series. This body style had excellent reviews. I often saw them on the road (a good sign for an older car). BMW’s last for forever, I would enjoy driving it, and they are moderately priced. I had made up my mind and the hunt was on.
While hunting, I mentioned my target to a few members of my immediate family. As luck would have it, they had a ’02 3 Series that fit the bill. After a day of deliberation, they offered to sell it to me. They had intended on upgrading cars next year, but since they had a potential buyer (me), they offered to sell me the car. In the grand scheme of things, it was a Win-Win deal. They would be able to sell their car for more than ‘trade-in value’ and I would be able to purchase it at less than ‘retail value’. We decided on a value – the Kelley Blue Book private party value. They thought the car was in ‘excellent’ condition. I didn’t agree, but the price difference wasn’t significant, so along we went. They deal was done.
As my wife drove me to pick up the car, she asked, “Are you SO excited about finally having a car?” My pessimistic realistic response, “If this was anyone other than my Mom, I would have a mechanic look over the car. But I’m sure if there are any problems, it will be okay.”
I drove the car for 6 weeks before it died. Unfortunately, it wasn’t a quick death. It was a slow, expensive death. I took the car in for an oil change, the first maintenance performed since the car had changed hands. A little oil leak led to replacing a gasket. The gasket replacement uncovered an engine full of sludge. The service adviser called with the news, “We think we can save your car.” – not the news you expect from a routine oil change. The sludge led to hours of removal. The removal process loosened chunks of sludge that would later destroy the engine. After 2 months of chasing the carrot on a string (a fixed car), we sold the car for salvage value. It needed a new engine and a new engine would cost more than the car’s value. The death blow. I have always given my cars nicknames and I didn’t even have this car long enough to give it a nickname. So sad.
They say hindsight is 20/20. After the first signs of trouble with my new car (still no nickname), I requested and researched the maintenance records for the car. The oil had not been changed from mile 30,000 to mile 60,000. That’s 30k miles without an oil change. Unanimously selected by every mechanic I spoke with as the cause of the engine sludge. My folks took the ‘buyer beware’ stance. They offered to half the loses with me, but the other half of this financial land mine fell upon me. After 6 weeks and 2,300 miles, we lost $5,000 on a car that we purchased for $7,500. That sucks.
I should have known better. I really should have. Dave Ramsey warned me. I should have listened. Heck, I am the author of a moderately successful personal finance blog. I should have practiced what I preach.
Now the car has a nickname. I call it ‘The Bottle Rocket’. It’s glory was short-lived and underwhelming. It then went up in flames.