Car Strategies to Cut your Costs in Four (or more)
Look at this amazing picture I covertly took on a walk through my neighborhood just this past weekend. It reminded me that it’s time to talk about cars again, because I love them, and because almost everyone is wasting way, way too much money on their cars. The average person’s car transportation costs ALONE ($8,000 or so per person per year) are enough to make the difference between desperate debt and comfortable riches over a number of years. This overspending is common because it’s a confusing field if you don’t come up with a good Car Strategy. So here we go.
Rule #1: You NEVER, EVER borrow money to buy a car.
Ouch, that might piss some people off, since something like 73 percent of new cars in the US are financed. But if you look at that 73 percent of buyers, you’ll see that they are usually underwater on a lot of loans, quite nervous about losing their jobs, and have a net worth of close to zero. And if you look at the average self-made millionaire, you’ll find they do not buy new cars at all and they never buy on credit. Call me old-fashioned, but I think it’s unwise to even spend all of your money on a car, let alone more than all of your money by getting a loan! If you’re starting out and desperately need your first car, save up a few paychecks, scrape together $2000, and you have a decent late ’90s compact car (from Craigslist of course) that will keep you on the road for several years. Since you won’t have a car loan, you’ll easily accumulate the $8-10k needed to get some really nice 3-years-new wheels when you’re more established, a cycle you can repeat every 10 years or so. Just for reference, even as someone with a wife, a small child, no debts and enough money to not work, I STILL consider my 2005 Scion Xa which is worth less than $7000 right now to be on the newer and fancier side of what we need.
Rule #2: Buy a car that does whatever you will use it for MOST.
If you are a US Forest Service contractor who lives in a cabin in the woods, and all of your driving is done on dirt roads with slopes greater than 20 degrees, you can have that Toyota Tacoma with raised suspension and dirt tires. If the slopes are only moderately steep and rocky, wise up and use the more efficient Subaru Forester. If you live in a city with the luxury of actual pavement, SUVs and trucks should not even be on your radar screen. And there is NO valid personal use for a new full-size pickup of any sort*. If you are a farmer and need to carry a lot of soggy manure and hay, you may use a 1991 full-size as long as you never take it off the farm. Use a car. Your car should be optimized to carry your ass and occasionally your family around, while burning the minimum possible amount of gas. You don’t need 7-passenger capacity “for those times your kids have friends over” because that doesn’t happen often enough to justify the gas-wasting you’d be doing the other 99% of the time you drive that vehicle. Remember that all your friends have cars too, so there is almost always a spare seat that will get the passengers where they need to go. You don’t need to be the one paying for it.
Rule #3: Cars are for inter-city travel, not for quick trips to the store
Many of my neighbors provide me with all-day amusement by coming and going from their driveways 5 times per day with their cars. What the fuck are they all doing? What is so time sensitive about errands #1-#4 that they could not be consolidated into errand #5 or the main trip to or from work? When I feel an urge to use my own car, I get a little excited and start scribbling a list called “Car Trip” on a piece of scrap paper. I imagine all the things I can get done with the car and after a day or two of soul-searching and trying to figure out if the trip can be postponed further, I finally step out to the garage and guiltily fire up the tiny car.
Rule #4: Cars are not for picking up your teenage kids from the high school 1 mile away
My neighbors actually do this. Our kids have not yet evolved away the ability to walk on their own legs – let’s try to preserve this ability in our species by using it. As a bonus, you’ll be able to afford to spend more time with them.
Rule #5: If you have to own two cars, pick them to cover all your needs efficiently.
When I walk through the neighborhood, all around me I see families with two SUVs, A pickup truck and an SUV, two large sedans, and various other ridiculous combinations in the driveway. Are these people deliberately trying to keep themselves in debt forever, or are they just totally clueless? It is unlikely that both people in a couple need to simultaneously scale rocky mountain roads with 7 passengers on board each. So at least one car should be an efficient commuter – a used 2004-2009 Toyota Prius available for under $10,000 is a good choice. The person who drives the most can use this one. If the second person can carpool with the first, or is close enough to work to bike or have very minimal driving, the second car can be a larger wagon (Volkswagen Jetta or Subaru Legacy perhaps, or even an older minivan). Then you get the best of both worlds – massive capacity on roadtrips and minimal gas-burning on workdays.
Rule #6: You don’t “look funny” driving a small car. This is all in your head. But you DO look funny ponying up your car payment every month.
As a newcomer to the United States, I only recently encountered the idea that some people think it is not manly for a Big Man or stylish for a Fancy Woman to be seen in certain types of cars. Some people refer fearfully to the idea of Prius ownership as “driving around in a suppository”. When newspaper articles announce new car models, the inevitable stream of grammatically-challenged reader comments is mostly about how the car looks.
Fuck off with your concerns about style! Cars are all awesome machines and even the crappiest one has been designed and built by great artists, engineers, and workers. Your job is to pick the one that enhances your life the most, and unless you are already financially independent, you’ll get a lot more enhancement from getting some cash in your ‘stash than you will from having 20″ wheels and 3 rows of leather seating.
Rule #7: Cars don’t cost you money per month, they cost you money per mile.
Because folks are financing their cars and not thinking about the long term, most people assume that once a car is in your driveway, you might as well use it with abandon. Totally wrong! When the car sits in your driveway, or even better, your locked garage, it is staying largely intact. As soon as you start using it, you are burning gas, oil, tires, wearing out each of its approximately 20,000 components, increasing your risk of a crash, and connecting a large-diameter Shop Vac hose to your Money Mustache, ripping out precious strands right from their follicles.
Here’s what happens when you use your cars sparingly: they last forever. Guess how much I have spent over the past ten years in repairs and maintenance other than oil changes (which I do myself, partly to save a few bucks, but mostly because it is fun and manly)? Guess how many sets of tires I have worn through? How many speeding tickets or accidents?
Zero.
It’s not because I am an amazing car whiz. It’s because I only drive when it’s actually necessary. For me, that adds up to about 4,000-6,000 miles per year for a family of three. After 10 years, you’ve pretty much worn out a single set of tires and nothing at all has even broken on your reliable used car.
It’s a harsh series of lessons, and admittedly there’s some repetition up there, but it is really fun to rant about this stuff. And sometimes ranting is necessary because car spending is the first and foremost thing standing between the struggling masses and Mustachian Freedom and Riches. That means YOU!
Are you still thinking it’s OK to borrow money for cars? If so, let’s hear some comments and I can present alternatives that will leave you much richer.
* Footnote on the full-size pickup truck issue: As a part-time professional carpenter who occasionally builds custom houses, I find that an older large minivan kicks the ass of a full-size pickup for cargo capacity, while costing less, handling better, and burning much less gas. Also, it does double-duty for carrying a lot of people, unlike pickups. But I would still never use this van for single-person transport. Look into it!
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Mr. Money Mustache is a family man living in the United States who retired from work, relatively wealthy, at about age 30. After several years of retirement, he noticed that his still-working peers were envious of his lifestyle. They were making more money than he ever had, yet they were somehow still broke. So he decided to write this blog to educate the world on how it is done.
Mr. Money Mustache,
You advice is almost excellent. However, I think you should consider the difference between debt for assets that are working capital and those that are simply for luxury. You should never have debt on luxury, but it can and does make sense to incur debt on working capital assets that can provide a return on capital that is above their cost (including debt charges). This concept can grow exponentially for a corporation where liability for the asset is placed on the debt loaner, especially if the investment is risky. How does this translate to car buying? Well, for personal use I agree with you. But in the case of a vehicle which has business utility, the argument to never have debt isn’t always true.
Thanks, Mr. Cube, you are of course correct and I appreciate the comment! But to fully explain the difference between good and bad debt gets into a level of economic theory that Mr. Money Mustache will have to wait a while to start discussing.
For example, it’s not smart to borrow money so you can have a new Honda Pilot to drive to work, even though that has some sort of business utility. Even Joe the Plumber would be stupid to borrow $40,000 to buy a Ford F-250 Super Duty to carry around his pipe cutters and little lengths of ABS pipe. Because he would be using the debt to justify an unnecessarily costly product. The time that debt WOULD be appropriate would be if I run an airport transit company, and my current van is always overbooked with customers, and all my company’s assets are tied up in property, plant, and equipment. In this case, it might be wise to borrow $20,000 to buy another van to immediately double the income.
However, even then it’s not a clear cut case. How risky is it that there might be a business turnaround and you’ll be stuck with the now-idle asset and the debt? Here we get into another situation where people might slip off of the Mustache. It is possible to make more money with more risk, but Mr. Money Mustache advocates earning “Just Enough Money For You” so you can enjoy the good life and balance in lots of free time.
In the personal sphere, this translates to paying off your mortgage a little early even though you technically will average a higher return over time with the stock market. I used to think “I’ll keep my mortgage FOREVER, because the rate is so low!”. But now I like the psychological peace of no debt whatsoever, and you can still put more than enough money into stocks once your house is paid off. The grass in your back yard feels different on your bare feet when you actually OWN it ;-)
Loving your blog!
With respect to tires, however, typical lifespan of a modern tire is between 6 and 10 years, regardless of mileage.
I have had a radial tire steel belt break on me while driving, and although the tire stayed in one piece, the deformation it was so violent, the associated shock absorber failed internally and the resulting vibration created a real danger of loss of control. Thankfully it was one of the rear tires.
Anyway, just a heads up. Tires are critical and if they are older than 5 years, should be inspected carefully, frequently.
Thanks Adam! That sounds like wise advice. If you look it up, Bridgestone tires recommends 10 years as a tire lifespan as well: http://www.automotivedigest.com/content/displayArticle.aspx?a=32491
Luckily, most people will still drive more than I do so their tires will wear out faster. My car lives in a nice shady insulated garage which will definitely keep the rubber more healthy. I once left an old bike propped against a South-facing shed for two years and found that the relentless high-altitude sunshine had burned the sidewalls into a powder.
I should probably take it easy on the old 1984 Nissan pickup I still have borrowed and sitting in the front street. Its tires are a mixed litter and one of them dates back to the Cosby Show era.
Wondering if you could offer an opinion.
Deciding on getting a crappy used car or getting a 2 year old Corolla for about $13,000. I was thinking I would get the Corolla and drive it for 5 years to about 150k then offing it and getting another 2 year old. Then I’d get 6-7k for selling the car and put up another 7k into another 2 year old new one. Effectively carrying 6k or $1,200/year perpetual into a car as a carrying cost with a 6-7k overhead (sunk cost).
Does this approach make sense? I have a 2 year old boy, married, another beater car for putting around (and a dead van which I killed). I need the car for general light commuting and frequent (enough) trips out of town to visit family which run 2.5-5 hrs each way.
What do you think about my above plan?
Hey Chris!
Your strategy is kind of in the middle of the range – way better than many people because you’re buying a good efficient car somewhat used instead of an SUV or truck new. But still way newer and more expensive than I would do for myself. Your idea is like buying a 2009 car (2 years old) and selling after 5 years (like selling a 2004 car today). My own strategy would be to buy a 2005 today, and sell it after 7 more years or so (like selling a 1998 car right now). It’s all based on calculations on a cost per kilometre basis (I assume you’re talking about Canadian values in your case so I’ll use them too).
2009 Corolla: Buy for $13k with 32k on odometer
Drive for 5 years@ 23,600k/year (way above average, but just using numbers from your example)
Sell at $6000 with 150,000 km on odometer (CDN value of an unusually-high-mileage 2004 Corolla today)
Buy-sell cost: $7,000
Opportunity cost of tying up $13k permanently in the car@7%: $910/year = $4550
Total cost is $11,500 for 118,000 km – 9.7 cents/km
2005 Corolla: Buy for $7500 with 96k on odometer
Drive for 7 years at 23,600 km/year: 165,200 km
Sell at $2000 with 261k on odometer (sounds crazy but this is just 162k miles for US readers – some people already have this many racked up on their 2004 cars right now!)
Do major maintenance twice at $1000/each (timing belt, water pump, etc)
Buy-sell cost is $5500
Maintenance cost is $2000
Opportunity cost of tying up $7500 is $525/year: $3675
Total cost is $11,175 for 165,200 km = 6.76 cents/km
At 23,600km per year the difference between these two costs is almost $700 per year. After ten years of the New Corolla Strategy you are almost 10 grand behind with compounding.
If you used the older car, AND figured out a way to drive less (average in Canada is 16,000km/year), the older car would work even better since you could get away without as much maintenance. It also improves the numbers above because the savings from less opportunity cost becomes larger per km.
Good luck!
MMM
Wow, okay. I’m going to re-read this a few times and let it sink in. For starters I guess we don’t drive that much! 15,000 km would probably be plenty. I’m finding used cars (2009) at around 50,000 km on the odometer right now at $13k. You’re right, corollas will sell for 2k even with over 250km on them. They maintain value very well. I’m not seeing a lot of used ones up in the 100 km range. I do see them come up occasionally though.
So I guess the strategy is to get a 5 year old car with just over 100km on them and kill it (or maybe not kill it, but off it just before that)? I did think of this too. I just figured that in 5 years time, I probably wouldn’t want to put up with the hassle of an unreliable vehicle on those long trips. I sort of feel like I’m on a edge with my 98 chrysler cirus right now with 250km!
Right now I’m riding my bike around town and it’s great. Even to work and back. It’s great.
Awesome! I am especially glad to hear about the biking.
Also amazing to hear you squeezed 250,000km out of a 1998 Chrysler Cirrus, not known for being the most reliable car.
If you start with a 2005 Toyota Corolla, which is an infinitely better car in so many ways, it won’t FEEL old by the time you get to 250k. Good cars age well. My work truck (for my part-time contractor business) is a 1999 Honda Odyssey Van with 193,000 km. It still looks and feels like it’s absolutely brand-new! And that is despite the fact that Odyssey is actually not as good as most Hondas for reliability.
Finding a used car with reasonable mileage and price is definitely a bit of a challenge. Search online, use Craigslist and Kijiji and call/email dealers, and if you want to save a couple thousand, be a bit hardball in your negotiation – as long as you are offering a value that is somewhere in the range of blue book values. Also, put a big priority on low odometer miles, since that is the true age of a car, more than model year.
My mom was tired of her blue dodge caravan 1993. After two years and only about 150km on it, I blew the head gasket. Not doing anything crazy or driving too much, it just rotted out! My mom parted with her Chrysler Lebaron 1992 which I let go just 2 years before that! I’m a car killer, ha. And I drive what no one else is willing to drive. But now I have a 2 year old, so getting stranded (which only happened once with a wet distributor cap – until it dried out), is a bit more risk than it would be otherwise. I’ll heed your suggestion and see what I can shake out. I’m okay with your calculations on the 2009 though since my wife and I only need one good car anyway and I can put up with a beater (cirus) for inner city travel and when we absolutely need two cars. I also run a self-employed reno company with my brother as a side business so carrying hand-tools is a must. I still try to do this via bike and leave my tools on the job or in my brother’s truck.
Thanks for the advice, I appreciate it.
Dude,
Your example kicks ass!
My 2003 Corolla is sexy, gets great gas mileage and meets our needs. We expect at least 7 years out of this used car. I love it when things make sense!
Never own a truck? Live in the city much? Ever pick up a load of lumber or mulch in your scion? Must be a renter.
I really think you need to open your mind a little- I agree with most of your points, but the “never drive a full size truck if you’re not a forest ranger” is patently silly.
Good luck with those shingles…
Thanks for the comment BW. I did address the truck issue a bit more right in the article – I guess you missed that part. Here’s what it says:
* Footnote on the full-size pickup truck issue: As a part-time professional carpenter who occasionally builds custom houses, I find that an older large minivan kicks the ass of a full-size pickup for cargo capacity, while costing less, handling better, and burning much less gas. Also, it does double-duty for carrying a lot of people, unlike pickups. But I would still never use this van for single-person transport. Look into it!
Also, regarding shingles: If you get more into professional roofing jobs in the future, you’ll learn that shingles are always delivered directly from warehouse to rooftop on a belt crane truck, and the tearoff always goes directly into a rented dumpster. That cuts both transportation and labor costs.
We always pass material pick-up onto the client as well. Spending our time picking things up is such a waste of skill. For $100, why not have someone else move shit around. Installing it, is something you really want to pay for. If you just need a few things, then any old car will do.
Yeah! The above comment borders on complainypantsism! I know a lot of people who are constantly trying to justify their vehicle purchases. I’m kind of on my own among my friends when it comes to the vehicle debate. My friend has a limited edition Ford F150 and says he needs it for the 2 times a year he towes his jet ski!! I find this mindset very sad. Way to tell it like it is MMM! People need to wake up!
My parents live in the country and are constantly trucking around mulch, compost, straw, dogs and the like. Their 1998 Volvo station wagon is all they need and more. Most importantly they bought it at 2 years old with 0% interest so it’s been paid off for years.
We have a Hyundai Tiberon and a Dodge Caravan. Both have been adequate for picking up lumber, furniture, mattresses, flooring, shingles, and mulch. My hubby picked up all the shingles for our roof redo in his Hyundai. He just stopped by after work every day for about a week and got as many packs as would fit in his trunk.
There are work-arounds for most hauling dilemmas. A small trailer you use occasionally is a better idea than paying for more car than you need for the majority of your driving. My dad made several of these over his lifetime by picking up free or nearly free old pop-up campers that weren’t habitable and gutting them.
Spot on [Mr. Money Mustache]. My car gets about average fuel economy (aka it sucks gas), but I only drive it about 5K/year. And I paid cash for it. I turned down a “better” job that would have required me to commute 50 min by car each way. For me, time spent commuting on foot or by bike improves quality of life — driving degrades it.
Thanks Tim! Glad to have you reading.
I’m also glad to have you on the record saying a 50 minute commute is out of consideration. Very wise indeed. I remember doing some math early on in my career and figuring out each minute of car commuting requires about $1000 per year to justify it (including driving cost plus paying for my time at say $40 per hour). So even going from a 10 minute commute to a 30 minute one for a $20,000 raise would be a wash.
I’d love to see a rehash of that equation. Commuting distance vs rent/mortgage cost vs quality of life is an ongoing debate in our home.
Erm, dumb question here, but how long can you leave a car sitting in a driveway before it becomes not so good for the car? Can it sit 6 months without starting without any damage?
Man, you are showing up everywhere on this blog, Mr. Acorn! :-)
I’ve wondered that myself. The limiting factor is the storage life of gasoline. It does degrade and become dangerous to the engine and other components over time. Especially gasoline with ethanol blended in, since this mix is more unstable when exposed to oxygen – the water separates from the alcohol.
I think 6 months is getting into the danger zone, depending on how airtight the gas tank is and how full it was to begin with. My construction van usually only drives about 10 miles a week for some local projects. Since its range on a full tank is 500 miles it would take almost a year to use up a tank – or at least several month until the next camping roadtrip happened. To keep the gas fresher between roadtrips, I only buy 1/8 tank at a time for this van – so it gets used up and refreshed about once a month.
You can get gas stabilizer if its going to sit.
I’d be more concerned about the tires, from UV damage and sitting in one place.
Keep the car (or at least tires) covered, and rotate (i.e. move the car a few feet) every couple months.
In the european classic car scene it is quite common to drive the car during summer months only and hibernate during winter. (For example, in Germany you can choose a “seasonal registration” for any duration between 2 and 11 months, most common being april to october for classic cars and then october to april for the “beater” or “winter” car. You only pay taxes and insures for the registered period, meaning you can own 2 cars for the cost of 1.17. Of course, you need a garage to park the car during off season, as it is not allowed on public roads and parking spaces then).
So it is quite common for a lot of precious cars to sit idle for about 6 months a year, which usually is no problem.
Standard practice is this:
- fill up the tank (the more gas is in the tank, the less air, meaning less air moisture to condense and less water at th ebottom of the tank. Water in the gas tank can lead to corrosion both to the (metal) fuel tank and the fuel pump.) High quality gas should last 6 months without problem, if you feel unsure, use a gas stabiliser.)
- clean the car, let it try. Wax the paint.
- inflate tires to at least 3 bar, better 3.3 or the sidewall maximum. (No idea what that is in psi.
- park in dry(!) garage
- open windows a tiny bit (small enough to prevent mice etc from entering the car, big enough to allow for some air exchange, to prevent fungus)
- disconnect the battery, peferably remove it from the car and charge it from tim eto time
- if your garage is *really* dry, cover the car with some old bed sheets or the like to protect it from dust. If your garage has only slight moisture, do not cover the car, as this will impair gas exchange and might promote corrosion and fungus. (Dust contains small sand, which is harder than paint, that’s why you do not want it on your car in the first place. Do not wipe off dust, rinse it off with lots of water instead. Wiping it off might cause tiny scratches.)
I would be very reluctant to park a car “on the sidewalk” – UV radiation will bleach and crack plastic parts, temperature changes will leave air moisture condensating in hollow cavities of the body, promoting corrosion.
If your garage ist not completely dry, use silica-based air dryers and change/recover them often. Or use rice instead (but be careful, rice=food, might attract pests…)
Protecting your car against corrosion is always a good idea, if you do not own a completely dry and temperature-stable garage it’s a must. (Of course, this also applies to cars that stay on the road during winter!). Corrosion protection is so much cheaper than paying for welding and paint jobs in the future.
Renew not only underbody sealing, but cavity sealing as well (will cost 250-400€ if done by a professional, depending on the product – wax-based products are easier to use, but will dry and crack after some years, so the need yearly renewal, fat-based will last longer, but is harder to process and will probalbly leave some marks under the car for the next years. If you do it yourself, you’ll need a compressor, a spraying pistol and a cavity sond.)
There is a debate whether to chage oil before or after hibernation. Both sides use the same argument: oil does also degrade due to oxydation. Changing before hibernation removes all pollutions from the engine and leaves the engine hibernating with the best possible oil and corrosion protection, changing in spring lets you *use* the engine with fresh oil. I tend to prefer the latter.
If you plan on hibernating the car for more than six months, better change ALL fluids before hibernation – and before putting the car in use again.
I have been hibernating cars since 2003 and never have had a problem following the short procedure: fill up, wash, let dry, wax, park in garage. ;-) But then, our garage is *extremely* dry.
Awaking a hibernated car is equally easy: check tire pressure and set back to normal, pull fuel pump and ignition fuse, put back battery (or jump start), start (this will not lead to ignition, but turn the engine and therefore distribute oil in the entire engine), put back fuses, start, drive until warm, then check suspension and brakes, change all fluids and enjoy the new season.
Some good points, but I hope the ‘F’ word isn’t a regular feature here – what did it add? I’d like to feel confident in pointing family members here…
Oh, thanks very much, Mr. J!
Unfortunately, the F-bomb and all of his exciting friends do tend to make regular appearances here on Mr. Money Mustache.
What does the swearing add? Well, it adds both Hilarity and Authority to the articles. It tells readers that Mr. Money Mustache is fuckin’ serious about people getting some financial discipline and helping themselves and their world out. The world of personal finance needs far more swearing, and MMM will deliver!
I dunno, I think Hilarity and Authority could be added with the plethora of adjectives available. Really, you can only shock with those friends a limited number of times–say 3?
How about?
flat out
bloody
in toto
to the max
wholly
those are just some I like. I bet there are more.
I know this thread is come and gone, but I can’t help but comment that where I’m from the use of “bloody” is far and away more offensive than anything you might find on MMM.
I actually did a double take and had to remind myself that this is indeed an American blog and you probably find the term “quaint” or “cute”, not knowing its origins or how it might play beyond your borders.
Just a good example of why you should just use your own voice and not worry too much about what others might think, because you can’t please everyone and someone, somewhere is going to find a reason to be offended.
Ah, OK – that’s called a gimmick…
Seriously, you seem to be an intelligent guy (I came from the article you wrote at ERE) but the majority of your posts are pretty standard money-blog fare, and to me the swearing comes across as an unsuccessful attempt to differentiate yourself.
Why not put the energy into writing posts that show what’s actually different about how you do or approach things? Or deal with areas others haven’t. Etc etc.
As the Mrs. in the family, I’m going to chime in here. It’s not a gimmick. This is the real MMM, in all his glory. You either love him or you hate him. I, for one, am happy that he’s using his real voice and not toning it down for the audience. :-)
Ahh, this has turned into a very interesting side-discussion indeed! First of all, utmost respect to both of our non-cussing friends for sharing their views on the matter. It is actually quite educational to me to read things like this.
It seems that in adult society in my new homeland, we have the Swearers and the Non-Swearers. There are many millions in each camp. The Non-Swearers have somehow adopted the idea that certain words are “bad” and certain words are not “bad”. Perhaps this idea was part of their upbringing, or maybe this belief came later in adulthood.
The Swearers, on the other hand, can not identify any characteristic of the “bad” words that makes them worse than any other words. This may be difficult for a born-and-bred-Nonswearer to comprehend, because certain subcultures and religions of the US have anti-swearing components built right into them. But imagine if I visited your blog and took offense to your use of the word “Banana”. I would suggest that you speak instead of “Apples” and even “Plantains” if you were feeling frisky, but none of those offensive but delicious yellow B-Bombs were to be discussed. It might seem a bit illogical to you.
To the Swearer, each individual word is just a shape you make with your mouth as you send sound waves through it. Words are ALL good. Sentences can be bad, if they express genuine hatred and invoke wars, but plain old individual words are just fun.
Ironically, the constant pressure created by Non-Swearers to suppress the use of certain words is exactly what makes them fun to use for the Swearers. These words are given a special meaning and status, because they are not seen in conservative newspapers and magazines or on the larger US-based television channels. Using these special words allows authors to express advanced, counter-cultural sentiments amongst themselves that could never be shared by USA Today or Fox News. And they just sound so good.
So, although you might not choose to read on because of your personal beliefs, a decision which I fully respect, please understand that the special words are not meant as a gimmick or shock technique. This is the real way Swearers write, and we quite enjoy it. Every day I get emails supporting the wonderful combination of Swearing and Personal Finance.
We enjoy it not because we want to offend Non-Swearers, but because these words are part of our dialect and we just love creative use of the English language in its entirety.
I am a sociolinguist and I approve of this post. :-)
MMM you need a “like button” for comments. (FYI: I couldn’t reply to your comment so I did it here)
Exactly how I feel, they are just words, I would bet most MMM readers are adults. I’m not sure if you’re familiar with DHH, since you were in software, but check out his post:
http://www.loudthinking.com/posts/15-potty-mouths
To each his own. And down with Fox News.
There are a few additional issues. All the fluids degrade with age, not just gasoline, but also motor oil, transmission fluid, coolant, etc. The service interval for these is usually described as “X miles or Y months, whichever comes first,” and you’ll find yourself hitting the time intervals before the mileage intervals.
You need to keep the battery charged somehow. If tires sit on one position for months they can develop “flat spots.” Pests may start living in an immobile car. You can buy inexpensive products to solve these problems, but at that point it’s worth asking whether owning such a rarely-used vehicle makes sense.
Hello MMM,
So! I enjoyed this post. I am a super frugal / high saving / not quite as retired as you / married / 40 year old who reads personal finance articles to stay focused. I rarely read anything I have already thought of or implemented. That having been said, this post made me think a bit! Hooray!
Here is our situation: We have a 2008 Nissan Altima that is paid for by my husband’s company via a stipend. Being a super frugal dude that he is, his stipend is $30 more than his monthly payment. I’m sure you know about the restrictions on what cars people can buy under this kind of management, but he worked the system enough to get a great car, that is cheaper than the reimbursement on it. His insurance and company gas is paid for. It get’s 30 miles to the gallon. He has applied the extra $30 a month from the stipend to the payment and in a few months will be collecting the stipend without having a car payment. He is considering leaving his job in the next year, so we will have an essentially free car with 50k miles on it which has been maintained meticulously. I feel pretty good about how we handled this part of it. He could have gotten an even better gas mileage vehicle but a Prius or other similar wasn’t on the sanctioned list of vehicle to choose from.
However! We also have a 2000 or 2001 Nissan Frontier pick-up with 165k miles. (We bought it several years old. $2k under the KBB value). We used it for a few years to haul bark dust, gravel, lumber, concrete etc, etc. as we redid our fixer-upper. (Our home is gorgeous now!! It is also on a very steep incline that big trucks will not come up. And there is no where to dump gravel. Using the truck is the only option we had to get materials up there. The bonus – views of the Willamette River and four snow-capped mountains.) We also raft and white water canoe regularly. The truck hauls the gear associated with these sports. For instance, we hauled all of our crap up to the Broken Group Islands last September for a week long paddle through paradise. (Google it!) This weekend we are going with eight friends on a float trip. So the truck gets tons of dirty use.
So! My question: I’m considering whether or not we need the truck anymore. I use it to commute three miles to work when I don’t ride my bike. I live in Portland, OR, so it rains a lot and I get tired of riding in the rain day after day, month after month. Also, my husband will drive it to work with his bike in the bed, ride his bike home (it is a 22 mile trip) and then ride is bike back the next morning and then bring his bike home in the bed (on days he isn’t visiting customers and in the fancy car.) But the truck gets only 17 mpg. And I think we could do lots of our stuff in a more efficient vehicle.
So…sell the truck and get a more efficient vehicle that will get completely trashed with all the dirty stuff we do. Or stick with what we have which is a paid off vehicle with no mechanical issues and suits our purposes fine. (Insurance is $40 a month.)
What do you think?
(P.S. We have no debt other than our mortgage and the mentioned car payment. We also have three rental apartment buildings that operate in the black. Our 401ks and what not are loaded and managed watchfully. I think successful personal finance management is sweating the details. Can you see that I sweat the details? It’s my hobby!)
Looking forward to seeing your blog grow and evolve and expand.
Cheers!
Samantha
Hi Samantha, thanks for the inspiring tale.
Sounds like you’re already pretty set since you aren’t throwing a lot of money away on your vehicles. If you did feel the need for even more savings, you could always sell the Frontier and buy a similar aged wagon of some sort like a Subaru Legacy without actually having to fork over more money. Still not the best gas mileage but at 25 MPG combined it would still save at least a few gallons and also hold more people. And the cargo capacity with the seats folded down is similar to a small pickup.
Or, you could just relax and do nothing except pat yourself on the back for already being way ahead of the game.
nice to have you here!
MMM
“older large minivan kicks the ass of a full-size pickup for cargo capacity”
you gotta be crazy!
Take a look at the picture on my home page. No WAY you are ever going to get that much in a van (much less a mini-van)
Not convinced? how about these pictures: http://www.biodieselhauling.org/Contact.html
Whats more, with a little ecomodding and hypermiling, I’m getting 30mpg out of it – better than most people’s cars. And I paid $2000 (cash) for it.
Aside from the truck comment, I’m with you 100%
Hahaha.. very well, Mr. Kafele, I will give you full points for your excellent pickup truck because it appropriately badass looking and you’ve done some very Mustachian mods to it. 30MPG is reasonably fuel-efficient too (I can squeeze 31 out of my big Honda, but only on the highway).
I still stand by the minivan as having the largest cargo space for a housebuilder/carpenter like myself, because we need a COVERED space to protect expensive tools and materials from weather and theft overnight. Most contractors just throw a topper on the back of their full-sized pickup, but then they are stuck squatting up in the bed and trying to drag tools over top of other tools if something happens to be loaded into the cab end of the bed. With the van, you have a sliding door on each side PLUS the hatchback, PLUS the low-loading floor height, making for much more usable space.
If I need to haul as much stuff as you have in your pictures, I would have to add a $400 trailer from Harbor Freight and connect it to my van’s trailer hitch.
By the way, if you weld yourself up a nice custom roof and back rack, as I did for my previous compact pickup truck, you can increase your capacity while drastically decreasing the time you spend securing materials – more profits for your neat business!
Ah, well – if you need a covered space, you’re definitely right.
I don’t do the rack because of the added weight, cost, and wind resistance. I could secure things faster, but that won’t necessarily mean more profits, because I charge by the hour.
LOL at picture #1. It reminds me of when I used a VW Rabbit to move my stuff once. I put my bed on top and then stacked all my other furniture on top of the bed, put my windows down, and tied it all down to the roof of my car. I made a lot of people laugh as I made my way back up I95.
Señor Dinero Bigote,
My car was totaled in a hit-and-run a few weeks ago, and I just got accepted to my dream job a few states away. I need to get a car in the next two weeks, but between insurance payoff and help from my parents I have maybe $2000 to spend on a car. Until I read this article I had been planning on taking out a small loan (in the $4000 range) to go ahead and get a reliable late 90′s car with great gas mileage (maybe a VW or Mercedes diesel) instead of an old clunker. What do you think?
Thanks,
Señor Awesome
Hola señor awesome.
Congratulations on the new Job! It sounds like you are in a unique situation of not even having $4000 around right at the time of opportunity. Maybe you just graduated and all your money went to schooling until this moment. If you are sure you can pay the car loan off within your first few paychecks, $4k is certainly a nice low amount to spend on a car. Just don’t be one of those suckers who takes years to pay it off.. No beer until you own your own car! ;-)
My understanding is that safety ratings are based on a cars class size. In other words, they don’t do crash tests between a Prius and an Escalade. I live in Ohio and about 5 out of 10 cars in my area are closer to Escalade size than Prius. Do I drive my two kids around in the Prius or the big American metal?
To me, the risk of transporting my kids in a small car is not worth it. Small cars don’t weigh enough to stand a chance against an Escalade in a crash. I have considered a used volvo. Still, in a crash, I’d want my kids in a big hunk of American made metal. To me, it’s simply protecting my most important possession. Right now I’m rolling in my ’96 Jeep Cherokee and my ’04 GMC Envoy. My wife frequently drives on the interstate to and from work. Do I really want her commuting amongst the suburbans and semi’s in a Prius that weighs nothing? Um, no. Again, the safety of my family is worth the additional cost.
Now, if the recession means that people in my area start driving all small cars… I’ll change my stance. I just haven’t seen that happen where I am yet.
I suppose that the advantage I have is that even a 30k suv is not a large percentage of my liquid net worth. It would suck to have to skimp on something I consider a safety issue. Car accidents kill somewhere around 40,000 Americans every year.
All this being said, I would support a federal mandate requiring non-commercial vehicles to be below a certain weight (say the weight of a mid size car).
Hi JJ,
You might want to do a little bit of real research before making that old assumption about safety. According to the Insurance Institute for Highway Safety, SUVs were statistically more dangerous than cars up until about 2005, when most models finally had electronic stability control added. Your ’96 Jeep Grand Cherokee is still a Death Trap, because the handling is awful for accident avoidance and there is also a high rollover risk. The 2004 Envoy did have stability control as an option – if you have that option, you are back to car-level safety. If not, it’s also probably more dangerous.
see here
http://www.thecarconnection.com/news/1061304_its-official-suvs-are-safer-than-cars-well-mostly
and especially here
http://www.iihs.org/externaldata/srdata/docs/sr4605.pdf
With careful shopping, there are still plenty of non-stupid vehicles that are statistically very safe. For example, the Honda Accord is several times safer than the Cadillac Escalade. CR-V is a good SUV that does not get overly shitty gas mileage as well.
Finally, if you really do care about safety, then take advanced driver training, cut your driving down to nearly zero, and don’t take kids around in cars unless absolutely necessary, especially on winter days. The “Safety Conscious” consumer who drives an SUV because they believe it is safer, then shows up at the shopping mall with the kids for some Retail Therapy is a rolling contradiction! My own priorities are – healthy life while I’m alive, healthy earth, saving money, then low-probability safety issues like fatal car crashes below that.
Again, I’ll take my chances in my SUV if/when a Prius crashes into me. Also, I drive well below the speed limit to save on gas so there is little risk of me inadvertently rolling it.
You do have me thinking tho. We’ve been considering getting rid of the Jeep. We’ll have to make sure we upgrade to something with stability control. This might be a challenge since we want a mini-van rather than another SUV. As I understand it, stability control hasn’t necessarily been added to all mini-vans yet.
There is an extremely important factor that the government, the insurance institute, and manufactures all seem to forget: the likelyhood of getting into a crash in the first place.
Lets say you have a 25% better chance of surviving a crash in a heavy car.
Lets say you have a 400% better chance of avoiding an accident in a light car.
These are random made up numbers, but in this case you are more than twice as safe in the small car.
Consider:
1) momentum is directly proportional to vehicle weight.
In other words, a car that is twice as heavy takes twice as long to stop (all other things being equal)
That means heavy car slams into the back of the truck ahead of it, while small car stops before hitting it.
2) when a crash does occur, extra mass is only advantageous in a head-on collision. Extra mass has little to no affect on rear and side impacts and may be a liability in roll-overs (esp. if the weight is high). Rear, side, and roll over collisions make up a greater proportion of accidents than head-on.
3)The single greatest factor in both chances of getting into an accident, and of surviving it if you do is vehicle speed. While mass has a linear (direct) relationship to impact force, speed has a exponential relationship. In other words, twice the speed equals 4 times the impact.
What this means is you are actually safer traveling at 45mph in a small car than you are traveling 75 in a heavy car.
And saving gas and money at the same time.
I’ll not debate random and made up numbers. You are free to believe what you will. :o)
Fair enough.
I was just meaning to illustrate a point, but just for you (because I care about your safety) I spent some time and found some real life statistics.
This is from a 2000 NHTSA study.
Type avg lbs fatalities per bil. miles
Small 4-door cars 2,469 11.37
Mid-size 4-door cars 3,061 9.46
Small 4-door SUVs 3,147 10.47
Compact pickup trucks 3,339 11.74
Large 4-door cars 3,596 7.12
Mid-size 4-door SUVs 4,022 13.68
Large pickup trucks 4,458 9.56
Large 4-door SUVs 5,141 10.03
Note how the death rate does not go down linearly with increases in weight.
Mat, that is hard to read when the comment editor takes out all the formatting. lets try…
First column is average weight of a class of vehicles.
Second column is the recorded average. driver and passenger fatalities per billion miles:
2,469……..11.37
3,061……..9.46
3,147……..10.47
3,339……..11.74
3,596……..7.12
4,022……..13.68
4,458……..9.56
5,141……..10.03
All other things aside you may want to check into this gas tank fire issue with your Jeep if you haven’t already:
http://wheels.blogs.nytimes.com/2009/10/03/asserting-risk-of-jeep-fires-safety-group-urges-recall/
“Grand Cherokees from the 1993 through 2004 model years have “a fatal crash-fire occurrence rate that is about four times higher than S.U.V.’s made by other companies”
Thanks, I will. We’re thinking of getting rid of the Jeep anyway. Looking at Odyssey mini-vans.
How will all the Prius drivers feel when they get in a wreck with an Escalade. Will they be pleased with their choice? It’s an honest question. Is driving a Prius worth the risk when so many have chosen SUVs, pickups and mini-vans?
To me, the weight difference is too risky.
I would support a government mandate on max vehicle weight. Then I’d be comfortable going with a Prius like car when transporting my family.
Common sense would say that heavier cars are safer in collisions, but actually the engineering that goes into structural engineering, crumple zones, airbags, etc., is more important than sheer mass. To demonstrate this the IIHS filmed a head-on collision between a 1959 Chevy RWD land yacht and a 2009 Chevy FWD midsize sedan:
http://www.iihs.org/50th/default.html
Watch the video, especially the end that shows what happened to the crash test dummies. Extra mass doesn’t equate to extra safety.
The safest car is probably the one that costs you the least to own: http://www.mrmoneymustache.com/2012/06/07/safety-is-an-expensive-illusion/
Great article.
Before I started my FI journey 2.5 years ago my current car died and I suckered myself into buying a late model used car. I wanted something reliable with good fuel economy and ended up with a 2006 Scion xB. It’s been a great car so far, and you’d be surprised at the large items I’ve fit in the back: washer/dryer(not both at the same time, though), large steel desk, large propane grill, etc. I was suckered in on the loan though and still have around 7k to pay. Should have it finished in less than a year and other than the mortgage that will be our last piece of debt.
My wife has a 2000 Camry (manual transmission) with 90k miles. We’re hoping between the two we’ll be covered for many many years of transportation.
Where I live, I mapped out the city (big hills run north and south) to figure out the most efficient way to get around. After a bit of planning and getting back into shape, I am able to ride my bike pretty much anywhere, but I still have to have a car for monthly-ish long distance travel.
The thing that frustrates me is that, even if I could store the car away from the elements (I have no garage) and never drive it for months on end, I would still be paying yearly licensing and monthly insurance fees. For me, insurance is about 50$/month (still a college kid), and yearly registration is about 200$, so I have a *minimum* 65$/month bill.
If you use the car that infrequently, it might be more economical to sell what you have, and just rent one when you need it.
Depending on the options in your city, you might pay 1/2 what you are paying now.
I’ve always thought renting a car was crazy expensive, but I did a little internetting and some armchair math and came up with these numbers:
My average car expenses (fuel and maintenance, taken from my most recent records): 1200$/year
Average weekend rental cost (other areas may differ, seasonal or special events may change pricing of course): 30$/day
So then, I could rent a car for 40 days (1200/30) per year (slightly less than once per week) and it would cost the same. Of course, there’s all the hidden costs in car ownership that make owning one more expensive, and I bet if you rented a car that frequently you could get a membership deal type thing to reduce renting costs.
One problem may be: My understanding is that you either need your own insurance, or you have to pay extra for the rentals insurance. If I have to maintain my own vehicle insurance, it would be as cost effective to own a car, and then you’d have the convenience factor.
Yeah – I have rented many cars while on vacation, and I am always amazed at how cheap they are, especially when you book them online.
You should try calling your insurance company – see if they will drastically drop your rate if you do un-insure your car (and thus they would still be covering you for those rare times you rent a car).
Also, everyone probably already knows this, but always say NO to all forms of optional rental insurance when renting a car – your own insurance covers most things, and most good credit cards will provide all the leftover collision/comprehensive coverage you might need on a rental car.
Car rentals are amazingly cheap, but all the optional things are amazingly expensive. I remember a few years ago they were pushing GPS rentals at $10/day. Since the $15,000 Corolla I was renting was costing me $30/day, that implies the GPS was worth about $5000. Since it was actually worth about $100, that implies this rental option was about 50 times overpriced. So we can assume their insurance option is of similarly dubious value.
One final trick you could try – make a deal with a friend who lives nearby, where you pay him to borrow his car occasionally. You will both profit, and you’re building up the “sharing stuff among friends” community spirit which makes life more fun.
Good point about the “sharing with friends”! I occasionally need to borrow a truck/van for carrying larger items, and my friends are usually quite willing to let me borrow them because I always give them a little extra for their troubles. Renting might then be a backup option.
I’ll call my insurance company and chat with them about insurance costs if I don’t have a vehicle. I should think it would be much lower, but…
Loving your blog! I decided to read from the beginning and find myself nodding and laughing at most of your posts. Thanks!
The posts about cars are spot on. We’re a family of 4, lead a middle class life in the city and don’t own a car. Since most of our needs (kids school, their activities, library, grocery etc) are within 1-3 miles of our house, bikes get us where we need to go most of the time.
For occasional trips we can’t do on bikes, we have a Zipcar membership.
Car sharing, if available in your city, is a great option for occasional use.
Zipcar rentals include insurance and gas and can be used for 1 hour or 24 (I think the max rental period is 4 days and for those situations renting a car through a rental car company is a better deal)
Since the 24 hour rental is the same price as a 5 hour rental, we typically save up our list of “car errands”, reserve the Zipcar for 24 hours and get all of them done in one day.
We don’t have to deal with car maintenance or pay for insurance on a car that would sit in our driveway most of the time. Plus the cars are new (2-3 years old at most) and the models varied so there is a car for pretty much any need we may have.
Car sharing among friends is tricky because of the insurance issue. CA recently passed a car sharing law (AB817) that will allow individuals to share personal vehicles and have insurance coverage. I think OR is working on one as well. Hopefully other states will follow.
The insurance company we used when we owned a vehicle does not offer coverage unless you own a vehicle. The insurance goes with the car, not the individual. For now, we’re covered through Zipcar and when we rent a car through a rental car company, we’ll just rely on the coverage through our credit card.
If you had to maintain your own insurance, but you didn’t have a car, that insurance would be a whole lot less. Also, it depends how much extra the rental insurance cost (I think its typically $10).
If you add in the cost of insurance and registration, as well as the upfront cost of the car divided by its life, owning the car costs more like $2500 a year minimum (depending how much your car cost)
So, with the optional $10 insurance, you could rent a car 5 times a month and still come out ahead.
The only possible problem is that some rental places want you to be at least 25 before they rent to you.
I figure if you were as concerned with the convenience factor as most people, you would be driving a lot more than once a month!
Loving your blog! I’m a 38 yr old nurse, husband and father of two young children in a single income family. You have some great advice here that makes sense to me, but I have yet to practice it. I am also a home brewer and bicycle fanatic who is obsessed with Velomobiles and commuting by human power. These “velomobiles” can be very expensive though. I am interested in your thoughts on these ultra efficient bicycles as daily commuters.
Cheers,
Daniel Runyan
I don’t think I agree about never financing a car.
I bought (financed) a car two years ago (after driving my prior one for a decade).
The dealership was running a promotion of 1% annual interest for the 5-year term (and no, there were no financing charges or other random up front junk fees).
That’s less than inflation and way less than I’d expect to make in the market. So, the dealer’s financing arm was *paying* me to finance the car. I’d do that deal again in a heartbeat.
It’s true – if a new car is what you actually need, and the interest rate is near-zero and there are no incentives for paying cash, then that’s a reasonable way to go.
The main reason I recommend against it is that the new car depreciates rapidly, so you end up paying a higher cost per mile driven than a series of used cars if you work it out over any ownership period. Especially if you drive a low annual amount, as the rest of this blog suggests. It’s more efficient to buy cars that are 3-10 years old (newer for taxi drivers and people with crazy commutes, older for people like me who just do 1,000-4,000 mile road trips a couple times a year with zero commuting). Also, financing tricks people who don’t even HAVE enough cash or net worth available to buy a $10k or more car, into buying one.
Hi MMM,
I’ve been really enjoying your posts on vehicles, however I haven’t seen you discuss the cost of car insurance (or at least haven’t come across it yet).
While driving your vehicle infrequently saves lots of money on gas, car maintenance, etc, the cost of my car insurance is the same regardless of how much I drive it in a month. I pay $90/month to insure my car that I drive only a few days a month. I always resent that even though I use my car sparingly, I still have to pay as much as someone who commutes by car to work and drives it every day.
Have you ever come across car insurance, in either the US or Canada, that lets you insure a vehicle on a per use basis, or for x number of days a month?
It would be nice to see my insurance reflect my driving usage!
Thanks!
Hmm.. my own insurance is lower when I drive less. Specifically, there are categories for “pleasure only (non-commuting)” and “under 6,000 miles per year”, which I get to use for my own car use. Also, buying the minimum required insurance (get good liability protection, but no comprehensive/collision coverage on your own car) is a good gamble if you are a safe driver who does low annual mileage. All-told, my own car insurance is only in the $20-30 range per month – for two drivers with two vehicles. Your location is a big factor in this: big cities can cost several times more, and I live in a small city where traffic (and therefore crashes) are light.
Erin,
My wife and I do just that. We have insurance through State Farm and have a reduced mileage credit. As long as we drive less than 7500 miles per year we qualify. I have a 1996 jeep with 165000miles on it, I pay about 19bucks a month for it. My wife just got a 2006 chrysler (which, by the way, we financed at 2.1% interest. Secured the financing with the bank BEFORE we looked at cars. They said I was qualified to borrow up to 50,000DOLLARS, oh good gosh… Bought it used at a dealer, traded in her useless old car and bought the new one for 8300 bucks, it has 80,000miles on it and is in pristine condition, should last atleast another 100,000 miles. Her old car was costing too much in upkeep, things kept breaking on it, it had 192,000 miles on it)
anyway since we financed it we have to pay for comprehensive insurance on it, but it comes out to 42 bucks a month for her car. she drives it to work everyday ((laziness if you ask me, but I didn’t say it)) but she should still keep it under 7500 miles per year.
My jeep gets horrible gas mileage so there is more incentive to bike to work even when the weather is crappy…. also we are accident free. Being careful, just like being healthy, is one of the best investments when it comes to working on your car. No added hours, since you are in the car anyway, just make sure you don’t damage the car. nuff said….
Enjoying your blog a lot so far – you talk a lot about cars & bikes, a topic I’ve been thinking about a lot over the past few months. I am taking steps on the bike front, but I have a question on the car front…
If you already owned one of those unnecessarily large mid-size vehicles that doesn’t perform well as transportation to work (100% paid for), would you sell it at a loss (less than you paid) and put in the time investment to buy a tiny used commuter? I hesitate because I am not sure it’s worth it, and I don’t ever get numbers as clear as your examples when I try and calculate it out for myself.
Any advise you might offer would be greatly appreciated!
YES! I would definitely sell an inefficient car/truck in order to get an efficient one, regardless of its payment status (paid for, loan still outstanding, loan underwater, whatever).
The current status of the vehicle doesn’t affect the calculations at all. The only things that matter are: price of the new vs. old vehicle, and ongoing operating cost of the new vs. old one.
If you want to send in your vehicle type and pertinent numbers (make/model, odometer mileage, annual driving distance), maybe it can become a future example.
Thanks – I guess my biggest hurdle is the hassle of completing two vehicle transactions… but I know it would be worth the savings. I also have fears about checking the mechanical aspects of an older used car – any advise regarding this?
I own a 2006 Toyota Highlander ~70,000 miles. I drive approximately 10,000 miles per year (at least half highway), I am 12 miles from work.
I’ve thought about honda/toyota sedans, volvo wagon, etc.
Just found the blog and going through the archives…love it so far. I have a tendency to get bored with cars quickly, so I usually find good ideas for ones from http://www.beaterreview.com Some of their posts are dated, but I’ve had a good quarter of the cars on the list for some time or another. A couple years ago, I bought a 97 saturn sedan for $1900 with about 130k miles on it. It broke down maybe 3 times over the course of my ownership, costing me about $100 in parts each time. I sold it 2 years and 73k miles later for $1500. If you have heavy usage, that’s exactly the time you want to buy a beater. Why put high miles on a 3 year old car?
I live in the DC area, so being stranded is not really a horrible/dangerous thing. I think putting reliability so high on your list does you a disservice, almost like buying extra insurance. First of all most problems show up before the car is unusable. Hear a new whir under the hood that wasn’t there? Fix it or take it to your mechanic. Very few serious problems happen out of the blue. And if it does break down on the road, how hard is it to get to the side of the road and use your cell phone to call a tow? It’s also cheap…you can take a day off of work, have it towed to your house and fix it, if you know what’s going on. If not, have it towed to your mechanic, and rent a $30 car from Enterprise for the day or 2 it’s in the shop. And this happens rarely.
My current car has 250k miles on it and runs fine. I had a new radiator put in 2 years ago because I noticed a pool of antifreeze on the driveway under it. Last year, I did get stranded because the water pump went. It took me an extra 1.5 hours to get home after calling the tow truck, and I used our rarely used minivan to get to work the next day while it’s in the shop.
Loved your post!
On the topic of cars… my husband and I just recently paid off both of our cars (two 2003 coupes), and at the moment we really only use one- we both work at the same place and are able to carpool, and rarely do our plans deviate on the weekends; I can’t remember the last time we took both our cars out at the same time.
Is it smarter to sell one of the cars to reallocate the value of the car and the cost of the insurance toward our debts, or do we keep the car since it’s paid off? Both cars have around 90,000 miles on them, and I’ve always liked the security of knowing that we have a “backup car” just in case. We do carry student loan debt and a mortgage, so I’m not sure where our priorities should lie.
After re-reading what I wrote, it seems pretty clear what your answer will be, but I figure I’ll still let you spell it out anyways. :)
Absolutely no possible way it makes sense in your situation to keep both cars.
“Because it is paid off” is no reason to keep something which is holding money you could use to pay off debt hostage which you rarely if ever even use. Imagine if by some lapse of reason you went out and bought 10 cars. Would you keep them all sitting in a garage just because there were no loan payments on them? That would just be silly! Even though it would provide a back-up back-up car to your back-up car…
Your back-up car should be a bicycle and/or the bus, or worse case scenario a rental car.
Mister Mustache, do you make any exceptions for those of us who express ourselves and our passions through our automobiles?
I work “smart” for many reasons, but one of them is SO THAT I can drive whatever I want.
I buy new… I drive for pleasure with no destination in mind… and I drive a turbocharged Land Rover SUV -> on pavement ;)
I do not go easy on the vehicle, enjoying the power and exhaust notes of 3,500+ RPM.
Ah yes, this is fun for me ;)
I’m interested to hear your thoughts,
Pat
Well Pat, I guess I can’t argue with what you claim to love! As long as you’re happy with your rate of wealth accumulation, your physical fitness, and your conscience is clear regarding the environmental consequences of driving, then go for it! On the other hand, if at some point in your life you do ever wish you were richer or more muscular, you know the first place to look: ditch the driving habit and learn to ride a bike.
You just might not enjoy this blog very much, because your priorities are so much different from mine.
It’s not that I don’t love cars, power and speed – I do. Less than 4 years ago I still had a ridiculously fast motorcycle. Before that, I came very close to paying a friend who is a Subaru mechanic to supercharge my Impreza’s 2.5 liter engine to get it close to 300HP.
I’ve just learned about other things that are even more fun since then.
Very good, MMM!, and I do indeed enjoy your blog (since finding it recently).
Our priorities aren’t much different- you save on driving, so you can invest into more rewarding activities- and I do the same.
I think the lesson here is that “passion” is always relative and subjective. Some people are going to draw immense personal value out of things that may sound goofy to us: collecting art, traveling to world wonders, maintaining a lawn of grass, etc. Our duties as good friends (and as you eluded to: stewards) is to help each other explore our actions to make sure they’re really valuable, and not substitutes for a potentially more richer life.
At age 26, I own my own businesses, and earn an income in the mid six figures with less than an hour per day of input. I’m happily married, and we’ve got a baby on the way. My pleasures in life are spending time with my wife on trails, on the beach. We walk over 5 miles each day, and I go to the gym 3 days per week for a more intense physical challenge. We cook together, and enjoy 3 organic meals every day.
I enjoy coffee… the occasional tobacco pipe… online gaming… reading… and yes: driving. Next year, I will buy a new Mercedes G55 AMG – but I don’t think about the future much, except when in contemplative prayer at mass. I am alive today, and so I will be grateful and happy.
Life is what we make of it, and your blog is helping people make a lot of their lives. I consider you a very good steward for that reason. Just remember, please my friend, that not everyone with an SUV in their driveway is a disconnected jerk ;)
-Pat
Loving this blog MMM!
I bought my first car (1992 2WD pickup) on credit. Since I was fresh out of college, had very little money, and got a job which required me to have my own vehicle. The 5-month contract didn’t allow me to pay off the truck – but my next job did! I’m really happy I bought the thing as I wouldn’t have been able to get my feet under myself when I did if I hadn’t.
Now, to the next post!
I love your articles, but I think saying NEVER pay for a car loan is bad advice. I got a 2.25% car loan and I intend paying the minimum for the life of it. I’m taking the money I’d otherwise pour into paying off the car into the stock market, where on average I’ll make money. Heck, even if I put the saved money into I-bonds it would pretty much match the interest I was paying, except all that money would be liquid and readily available to me.
You should never pay a car loan if it’s above a certain percentage, perhaps. But hell, I’ll take free money–money that more or less just keeps pace with inflation–any day.
Hey Danny – you might not have reached this article on exactly that subject yet:
http://www.mrmoneymustache.com/2011/11/28/new-cars-and-auto-financing-stupid-or-sensible/
The key question is: how expensive is your car? Is owning such an expensive car an optimal solution, in the bigger picture – how long will it take you to use up all of the 200,000+ miles of reliable inventory that come with a new car? And what if you could live closer to work so you hardly need to drive? What if a $5,000 car could last you 20 years because you hardly need to drive it? That’s the bigger picture.
I’m not arguing with you that low-interest rate money can be flipped to higher yields for profit. The issue is purely in how much money to allocate to the depreciating liability of automotive inventory in the first place.
Tip #1 I received years ago from an older colleague: your car will last longer if you park in covered parking. Where I worked then (and now at another university) covered parking was available for free, but required about 5 more minutes of walking to the garage. When he saw me parking my much loved first car (Toyota corolla-which lasted 14 years) in the open lot, he told me the paint, tires, and upholstery would last much longer parked out of the sun. I’m amazed at how many of my neighbors have garages and carports and don’t bother to use them because it might involve cleaning out the stuff stashed there or walking a few more feet.
Tip #2 My daughter just turned 16 and became a licensed driver. I was happy to find out that the $195 week-end course I made her take (in avoiding accidents through better car handling) resulted in $50 off every 6 months premium for her. I made her take the class to be a safer driver, but this was a nice surprise.
I’m 50, FI, have a CRV with Thule bike rack emanating from the trailer hitch. We use the CRV for everything. Wife wants a fun sporty convertible (in addition to the CRV)…we might spend 15K on it, insurance will probably run $500 per year. I’m struggling with the idea of going to two cars. I work 1.5 miles away from home and can walk or ride my bike. Any ideas or suggestions? Buy the convertible so the wife is happy, or trade in the CRV for a Jeep convertible with a trailer hitch…..just don’t know.
If you are able to start driving your car less remember to check with your insurance carrier to see if you get a better rate. With my carrier, if I drive less than 7,500 miles a year I get a discount. I just called my broker and let them know.
I save money by always buying used. I buy used and reliable. My prior car was a 1990 lexus ls400 that I bought for $2500. Drove it for 6yrs. Put 80k miles and probably spent $3000 in maintenance in that 6yrs. Drove it across the country, from the midwest to West Coast, and to Florida. Sold it for $2500. My current car is a lexus ls430. Bought used, had for almost 2 yrs. Spent $300 once on maintenance. People think it costs so much, it doesn’t. I see lots of people driving newer economy cars who are still spending more on car payments than me! Yet, they think I paid $50k more on my car than they did there. Outside of Lexus, I won’t touch another car, reliability is very very pick on my list. I hate my mechanic, I do be happy never to see his face in life ever again, that would mean my car is running without issue.
I only discovered this website about a week ago and have since devoured a couple dozen articles. This is life changing stuff. I’m pumped to transform my life. So thanks for that.
Looking over last year’s finances I was appalled by how much money our paid for cars cost us. There is no way we can really grow our ‘stache if we are hemorrhaging money like that. We had to replace a transmission, get new tires, bearings and dozens of other minor fixes. All the repairs plus fuel/oil cost us over $9k last year alone! We have a ’92 Ford Explorer and a ’95 Civic. The former has 170k miles at the latter has over 200k.
My question is should we replace the car that costs us the most money, even though it’s only driven a couple times a week, or replace the one with more miles, that gets driven everyday, but has been cheaper to maintain?
Our newly sprouted ‘stache needs serious help.
Rand McNalley – Get rid of the explorer, it’s less reliable, and bad on gas. It’s not about how many miles a car has on it, but how many miles it has left on it!
Regarding the small car vs pickup, and optimising one’s transport to carry one’s ass and little else, what is the mustachian view on motorcycles as a primary transport?
I currently scoot around on an 81 Yamaha, slightly less efficient than I’d like, mostly due to maintenance (and something I’m dead keen on sorting out)- which I picked up for the very (I think) mustachian price of 1800 aud. Poor old girl needs a new set of rings, but that’s something to happen in a little while to come.
I commute around half an hour each way, more than desirable, but due to a debt I’ve got, buying a place isn’t an option yet, and the rent on this place well and truly makes up for the difference, to the tune of over 120 a week.
My girlfriend is close to getting her licence, and we have a 95 ford laser for her to run around in, though we’re trying to land her in a job that she can get herself to by push bike.
Unfortunately, both car and bike are carby driven, and the cars an auto, so we have a little way to go before we’re going to get our car-stache on properly.
Motorbikes are great, especially the old low-cost type as you have (although I must express my sympathies – here in the US you could get a solid model year 2000 bike for $1800, and an ’81 would be something you find discarded by the side of the road for $0!).
Anyway, if the insurance and registration fees are lower as they are here, the motorcycle can be an excellent solution for a long commute. Tires and chains are a bit expensive and they wear out much more quickly than the car equivalents, but you make up for it in lower vehicle/gas/tax costs. And FUN!
I never spent more than $1000 on a car (hubs is a mechanic), but I also never had a car last more than 2 years. I am very good at crashing them.
I’m a new reader and am very much enjoying reading through all of your posts (started from the beginning). I await the day when we live where we can bike more and I have in the past when my situation has been different. With all the talk of biking and less car driving I was feeling very guilty about our two cars (I tired to figure out how to sell one of them last year, but our logistics just wouldn’t allow it) but as I read, I felt less guilty, and simultaneously amused at how well our situation was described. We have two paid for cars, a 1999 Subaru Outback and a 2002 Subaru Forester, my husband and I live at the top of a mountain pass in the Cascades, he works for the Forest Service, I am a ski patroller. :) And up until very recently we were able to walk across the street to work in the winter and we only drove the 45 min to town once or twice a week for groceries and social interactions. Living that far from town is also a good way to avoid spending.
Mustachians, assemble! I need your advice:
I have a 2000 Mercury Cougar with, to be exact, 130,826 miles on it. Stick shift. Bought it four years ago for about $1,300, a great deal because it came from a family friend. Since then, I’ve put in about $1,500 of repairs (including a new clutch).
Here’s the dilemma: it recently broke down. The cost to repair it would be $1,800, which, you know, is MORE THAN WHAT I ORIGINALLY PAID. I recognize it was ridiculously cheap in the first place, but it still gives me pause.
I live in New York City, but only keep it here about half the time–otherwise I can keep it at my parent’s house in Massachusetts. I take the subway to work, so I’m only using the car when I feel like going on a weekend trip, need something from Ikea–oh, and I have to move it to the other stupid side of the street every morning. Street parking can take a long walk off a short pier.
Likely, I will not get another car for a long time if I scrap this one. Seems silly to pay $5,000+ for a new car when I live in a city and can get most places by subway. The car’s clunky, but it serves its purpose. It’s convenient when I need it, and saves some hassle when I have to move things (yes, I could rent a moving truck, but that’s not fun).
Could I live without a car in NYC? Yes. Do I want to not have a car? No. I plan to move out of the city in 5 years, but not having a car at all is scary to me.
What do y’all think? Pay the $1,800 on a slowly deteriorating but much-loved car, or go carless and strand myself? Any and all suggestions appreciated, as it’s currently in the shop, waiting to see if I give it the death penalty.
To recap:
-In 2009, bought a 2000 Mercury Cougar for $1,300
-Now has 130,826 miles
-Have put in about $1,500 of repairs
-Recently broke down, $1,800 to fix
-Live in NYC, don’t use car a TON, but do occasionally go on weekend trips, or to Ikea.
-Kill it? Keep it on its legs a little longer?
Help me Mr. Money Mustache, you’re my only hope.
To make the $1800 repair worthwhile, you’ll want car to perform for another 18,000 miles after that (since 10 cents/mile is a nice, cheap figure for car depreciation).
With your existing mileage relatively low for that kind of car, and the car not being too much of a gas-guzzler, I’d gamble that it is probably worthwhile.
But since you are in NYC, consider your insurance and registration fees. How much is that car costing you per mile when you factor that in? Now check out ZipCar and other car-sharing services, which are readily available out there.
The equation in the Eastern US is vastly different than it is here in Colorado, where registration on my construction van is $70/year and insurance for both of my vehicles and 2 drivers is around $360/year. (!!!). In my area, owning an old car or two costs almost zero except when you are actively driving, but in NY, it is huge.
You could easily end up saving thousands per year, all while getting to drive newer cars, by ditching the car and using Zipcar when needed.
Great article!
It’ll certainly take some extra stash-tective work when looking for a good used car here in Atlantic Canada. All that extra salt is a killer. Yet another good reason to keep the car off the road as much as possible eh?
Great site – found it via Raptidude (which I found via Ran Prieur).
Just on not spending anything on tires in 10 years:
They do actually have a use-by date. This may or may not be the actual date that’s calculated by looking at the numbers on the sidewall… yours will probably be good for much longer than usual, given that you garage your car.
I bought some used tires last year and put them on my car. Heaps of tread left. No abnormal wear patterns. Nice and cheap. Yet, when push came to shove, they didn’t grip when braking in the wet, due to the fact that the rubber compound had gone “off” due to age and exposure to the elements.
You can guess what happened next…