Arguing For (and Against) Upgrading My Car

I drive a base model 2009 Honda Civic coupe that is in good condition and is paid off.  It does everything I need it to do adequately, it's moderately fun to drive, it sips gas no matter how fast I drive, and it's like a cockroach - it'll never break down, even in event of nuclear war.  It also completely lacks features and even though I've owned it for less than three years, I've been thinking recently that I want to upgrade my automobile.

Last Wednesday, the Wall Street Journal published an article regarding current prices for used cars that are (a) Japanese, (b) fuel-efficient, and (c) less than four years old.  Simply put, those who decided to purchase fuel-efficient small foreign cars in 2008 are now seeing historically high resale and trade-in values for these cars on the open market today.  This is due to fuel prices that are approaching 2008 levels, as well as the Japan earthquake/tsunami back in March which led to a serious kink in the supply chain.  Further, because 2008 was such a shitty year economy-wise, fewer people bought new cars then, so there happen to be fewer three-year-old cars to sell at this point in time.  Combine that with the idea that if someone plans to buy a used car, buying a three-year-old used car is optimal (based on how car values depreciate over time), and you have a perfect storm of factors combining to create these market conditions for selling or trading in my car.

The WSJ.com article cites Jesse Toprak of Truecar.com, who states (emphasis mine): "The best case scenario is that you have a trade-in that is somewhat gas efficient, and you are ready to trade for a larger vehicle."

You've heard part of my situation earlier in the post, but here's the second part: I bought the Civic when I was a second-year Ph.D. student, about three months before the idea of leaving graduate school and entering industry entered my mind.  I earned $25,000 as a graduate student in 2008, and with the idea of spending three (or four, or more) years after that as a graduate student in my head, buying an inexpensive car with low monthly payments certainly made sense to me at the time.

Without going into too much detail, entering industry has been a modestly successful financial decision for me, and I've been able to pay off the car in just under three years.  So given all of this, it may be time to upgrade my driving situation.

If I were to upgrade my driving situation, here's how I'd do it:

•  I'd consider trading in my Civic (it'd be worth something like $14,000 as a trade-in), but might also sell it privately on Craigslist (where it might be worth up to $16,000).
• I'd supplement the cash from selling the Civic with some savings I've already put toward a new car (which are about $3,000).
• With that $17,000-$19,000 in hand, I'd finance the rest.  I'd only want to spend about $30,000 on the car, which would likely be a new "entry level luxury sedan" (think something like the Acura TSX, except not an Acura TSX)...
• ...because I want to keep my monthly payments under $250/month (which is about what my monthly payments were for the Civic).

I haven't made up my mind yet.  I've told myself that I'll wait another month before I do.  That being said, here are the best arguments I can think of for why I should make the leap and upgrade my car, as well as some reasons why I shouldn't...

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Reasons Why Fred Should Upgrade His Car

1. The Market's Telling Me To: I've discussed this above in enough detail, so I'll leave it at that.
2. It's Affordable Within Our Budget: Because of the plan I outlined above, the monthly payment I'd have with the new car would be roughly the same as what I was able to afford as a graduate student.  With the increased cash flow (compared with graduate school) in my industry position, there's no reason - short of being laid off, which is unlikely because the company I work for is doing fairly well, or having multiple kids, which is unlikely because I don't want a heart attack - that I wouldn't be able to afford the car payment over the next three or four years.
3. I'm Only Young Once, and it's "Time": I do work kind of hard, and having this house has been more maintenance work than I'd originally anticipated.  Given all of this, it'd be nice not to have to drive something pedestrian home from work, or around town.  My current car doesn't have a moonroof, power seats, or even Electronic Stability Control (which is an important added safety feature, required on cars sold in the US after model year 2009).
4. Reminds Me Of My Youth: I haven't had a nice car (and I'm using the term "nice" really liberally here) since my first car, which was a ten-year-old used Nissan Maxima that went pretty fast and was really fun to drive.  Being able to purchase a car in that range of automobile, but new, would have added meaning for me because it suggests that I've actually made something of my pitiful self.
5. The Economy Could Use The Gentle Caress of My Stimulus: An argument can be made - and I suppose I am making it - that in times of economic stagnation, those who can afford it should spend rather than save.  If the market's telling me to buy, it could be that it's telling some others to buy as well, and that's how economic recoveries tend to get started (or, in this case, start back up again).

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Reasons Why Fred Should NOT Upgrade His Car

1. We Just Bought a House: We're so new in this house that we haven't had a full round of monthly bills yet.  I'm confident in my ability to budget and project future expenses, but I'm not sure if I'm ready to wager an additional monthly payment and $10,000 of debt on my ability to do this.  It might be better if I waited a couple of months, in the sense that we'd know better how much our energy bills fluctuate with the summer time, etc.  
2. We Just Bought a House, Part Deux: Also, I'm kind of worried about how it would look to others if, after having just bought a house at my age, I bought a new car with a luxury label on it a month later.  The neighborhood we live in is nice, but it's working-class for sure, and there are definitely people on the block with fixed incomes.  I like to get along with the neighbors, and first impressions count for a great deal, and I feel like the new kids on the block already have a strike against them in the first place.  I'd rather not seem a douchebag (at least until we've had more time to get settled).
3. I'm Kind of Anti-Debt: I have some small student loans, which are no big deal, but we have a mortgage now, which kind of is a big deal, and a car loan on top of that would be another layer of consumer debt that I don't care to have.  Some people don't mind carrying lots of debt, but to me it's an albatross around my neck and I feel like I have to pay it off as quickly as possible.  This is probably good for me in the long run (it certainly keeps my credit score high), but it makes decisions like this one excruciating because I know the pleasure of driving is going to be countered by the annoyance of making another monthly payment for a while.
4. Fears of Lifestyle Inflation: Simply put, if I buy this car and when the time comes to buy a new car in 2015 or something, what if our financial situation is worse than it is now?  Am I condemning myself to a lifetime of needing a nice car, and feeling inadequate if I have to go back to driving a Honda?  That would be really sad (and it would make me a very disgusting person).
5. It's Just a Car, Man: The argument here is that a car is a means of getting from Point A to Point B, and as a mode of transportation there's no reason for it to be a luxury car.  This is completely rational (and functionally incorrect) because that's not what a car is to most people - otherwise, everyone would be driving 15-year-old Civics (because those cars literally never break down).  We have emotional attachments to our cars, and many people can ground a memory based on what car they were driving at that time in their life.  So I disagree with this argument, but I'm listing it here just because I know that some do agree with it.

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So there you have it.  I'm not sure there is a correct answer to this, and I'm absolutely sure there are other arguments here that I've missed entirely.  I'm seriously wrestling with the decision (as you can tell, and even though I've spoken with a number of people about it, and most think that I should jump on the purchase).  Once I decide, people will know...