By Dr. Jim Dahle, WCI Founder
This rant started from reading an email sent to me by a doc looking for general financial advice who was several years out of residency and whose medical school was paid for by the military. I was surprised to see that he still had a negative net worth. The main reason was that his family “owned” a year-old car on which $30,000 was still owed and a brand new car on which $29,000 was owed. There was a little educational debt and some retirement and non-retirement savings, but the liabilities far outweighed the assets, despite several years of attending-level compensation and no medical school debt. As you might imagine, I recommended he spend less and save more, starting with his choice of automobiles. I had a similar conversation at about the same time with a nurse who was leasing a car that was worth about her annual salary.
You Aren't What You Drive
In The Millionaire Next Door, Stanley and Danko had an entire chapter entitled “You Aren't What You Drive.” What do rich people drive? The authors noted that only 23.5% of millionaires owned a car from the current model year and only 55% of millionaires owned a car newer than 2 years old. Half of doctors aren't even millionaires. In fact, a large percentage of doctors in their 30s still have a negative net worth. If most millionaires don't drive new cars, why should a doctor? Stanley and Danko write about what buying habits among used-car buyers reveal:
“What factors explain variation in wealth accumulation? Income is a factor. People with higher incomes are expected to have higher levels of wealth. But note again that members of this group of used-vehicle buyers have a significantly lower income than the average for the other groups of millionaires . . . Occupation is another factor. We have noted many times that entrepreneurs account for a disproportionately large share of the millionaires in America. Conversely, most of the other high-income-producing occupations contain disproportionately smaller portions of high-net worth types. These include physicians . . . dentists . . . attorneys . . .
But there are exceptions. For example, each of these non-entrepreneurial occupations is represented in the used vehicle-prone shopper group we are profiling. Used vehicle-prone shoppers are unique even among their millionaire cohorts. Note that, on average, they have the highest score values on all seven measures of frugality. Behind their frugal behavior is a strong set of beliefs. First, they believe in the benefits of being financially independent. Second, they believe that being frugal is the key to achieving independence. They inoculate themselves from heavy spending by constantly reminding themselves that many people who have high-status artifacts—such as expensive clothing, jewelry, cars, and pools—have little wealth.
Being frugal is a major reason members of the used vehicle-prone group are wealthy. Being frugal provides them with a dollar base to invest. In fact, they invest a significantly larger portion of their annual income than do any of the other types of vehicle buyers . . . the used vehicle-prone shopper group also contains the highest percentage of prodigious accumulators of wealth (those with a high net-worth-to-income ratio).
The majority of people do not have the ability to increase their incomes significantly. Yet income is a positive correlate of wealth. What then is our message? If you cannot increase your compensation significantly, become wealthy some other way. Do it defensively . . .They successfully innoculated themselves from contracting the high-consumption lifestyle that many of their neighbors adopted. More than 70% of their neighbors earn as much or more than they earn. But fewer than 50% of their neighbors have a net worth of $1 million or more.”
You can save a lot of money on automobiles in two ways.
#1 Buy a Used Car
New cars cost far more than it takes to maintain a used one.
#2 Drive an Old Car for a Long Time
Even a new car buyer can get a great value if they keep the car for 10 years. Older cars also save you money on insurance and taxes. They can even save you money on maintenance. Who needs to fix a broken electric window or fix a little dent on a car with 150,000 miles? But on your brand-new car, you'll pony up some cash to keep everything working and looking sharp.
More information here:
How Much Can You Save by Driving an Old Car?
Consider this. Physician A buys a $60,000 car. They drive it for three years and then sell it for $25,000 and repeat the process. They will also pay more in sales taxes, registration fees, insurance, possibly maintenance, and most likely finance charges. I'd estimate their cost of car ownership at $10,000 per year, not counting gas.
Physician B buys a $5,000 car. They drive it until it dies in five or 10 years. Then they buy another one. They paid cash for it, didn't fix any of the little things, and paid minimal registration fees and insurance (liability only). I'd estimate their cost of car ownership at $1,000 per year, again not counting gas.
After 30 years, what is the difference between spending $1,000 a year on transportation vs. $10,000? Invest the difference at 8% and you'll get a million dollars. Yes, you read that right. Is driving a new car worth $1 million to you? Most Americans retire with far less than $1 million. Multiply that by two or even three cars, and you'll quickly realize the sum of money available to the frugal driver.
The example might be a little extreme, but run your own numbers and see what you get. I'm convinced that many Americans are kept in the poorhouse simply because of their automobile choices. No consumption item, except a house, will make as much of a difference in your accumulation of wealth.
Now, I realize full well that I'm an extremist on this subject. My parents have only bought two brand new cars in their entire life, and neither was bought during the 18 years I lived at home. I rode in beaters and I drove beaters, including a true Flintstone-Mobile due to a rusted-out floor. But they raised six kids, retired a little early on a middle-class income, and even owned a small floatplane (I did grow up in Alaska, after all).
I learned early on that you're not what you drive (although I confess that, in high school, I was jealous of those guys with the jacked-up little Toyota pickups). My first car was an old Geo Prizm my parents sold to me for $3,000 as a college senior. I was just happy to get an interest-free loan from them. Before that time, I rode a bike or got a ride, so this was a huge upgrade.
I sold it after two years for $2,100, and we got another one for $6,000. I totaled that one after three years, and the insurance company gave us $5,500, which we put toward the next car.
My third car cost $8,000. It was totaled after about three years, and we got about $7,000 for it from the insurance company. Before it was wrecked, we bought a second car for $1,850, which was sold four years later for $1,500. We took the insurance money from the totaled car and added it to our savings to buy the car we really wanted, which we bought at four years old for $18,900.
When I got out of the military, I bought a car for $4,350 and drove it for six years before it died. When it died, we were rich, so we bought a brand-new car. We've bought a few other cars since—one for our daughter to drive, the infamous $800 beater, and, when it died a year or two later, a $5,000 car (I did end up buying a brand-new expensive truck in 2021 that took nearly two years to get to me).
Initially, I thought I was just saving money now so I could drive whatever I wanted later. After a few years of driving beaters, I've realized I no longer care what I drive around in as long as it runs well and is comfortable to sit in and that I can carry what I need to carry and pull what I need to pull. I do like driving a $60,000 car better than the $5,000 car but not 12 times better. I probably won't buy any more cars that cost less than $10,000 for the adults in the house to drive. We simply no longer need to, given that we're already FI and are both still working (I'm still working two jobs). We basically stopped buying cheap used cars when we had no non-mortgage debt, had a good chunk of equity in the home, had started college savings for the kids, and had a portfolio on track to allow for an early retirement.
Can you say the same? Then, what's with the Lexus or Tesla you share with the bank in your driveway? I'd much rather have the ability to walk into a Lexus dealership and pay cash for a brand-new, top-of-the-line Lexus than actually have one in the driveway.
Some complain that they can't drive an inexpensive used car because they need something reliable. I just don't buy it. I spent the vast, vast majority of my life commuting in a car with more than 100,000 miles on it. I've had to get a jump once on a cold morning after a night shift. I replaced the battery that afternoon. When the $4,350 car died, we had it towed to the mechanic (and then to the junkyard). Insurance paid for the tow. That's it. Even if you add on the cost of a AAA membership, you're still not going to get anywhere near the cost of driving new cars. Others worry about the cost of repairs on older vehicles. It's a rare car repair (not a collision) that costs more than $1,000-$2,000. Most are a few hundred dollars. It doesn't take long to pay for that when you don't have a $500 a month (or a $2,000 a month) car payment. Even if you insist on having one nice car for road trips and driving the kids around, you can still buy a cheap commuter as the other car and save thousands.
Who says your car has to be as nice as your spouse's?
More information here:
Frugal vs. Cheap – What’s the Difference? (Plus 11 Tips to Avoid Being Cheap)
10 Frugal Hacks to Automatically Save Money for Busy Professionals
Should I Buy a New or Used Car?
In the end, spend your money on what makes you happy. Do you need to drive $5,000 cars to be financially successful as a physician? Certainly not. But you do need to save and invest 20% of your income a year. If you can't do that AND buy an expensive car, then you'd best line up your habits with your true priorities. Just keep repeating “You aren't what you drive . . . you aren't what you drive” until you believe it.
What do you drive? Do you feel pressure to drive a certain type of vehicle just because you are a physician?
[This updated post was originally published in 2012.]
If anyone is curious what NOT to do re: cars… check out this resident driving a Ferrari (pics on his profile too) on the WCinvestor subreddit:
https://www.reddit.com/r/whitecoatinvestor/comments/p576qg/i_want_to_start_an_early_plan_for_when_im_an/
Hopefully that $850K in attending income cleans up all those mistakes.
I love “Millionaire Next Door” – it’s a book with a lot of sense, though it did get me into a huge coupon-clipping, border-line “very cheap” mentally for a while.
I personally love the balanced conclusion of this article, which is basically saying you should most definitely buy a cheap car and drive it til the wheels fall off, but also if you’re fortunate enough to be in a position where you could buy an expensive car and still have very low expenses *and* you love and enjoy cars, by all means there’s nothing wrong with it.
Thanks for the great read!
Moderation in all things.
Driving the Tacoma, my parents gifted me in college. Currently 16 years old with 148k miles on it. No plans to replace it anytime soon!
Like another poster said, it wouldn’t be much of a life if u didn’t “live” it {within means}. Make sure that you are not so focused on one thing that u miss out on the joy of another. I agree there seem to be fewer repairs in the 40-80K range than the 90K-130K range. But I disagree that the cost of those repairs is more than the difference in price you pay at 50K vs 100K.
Thanks for sharing this great insight on how people should buy a used car and invest with the money.
Its funny how many people get this all wrong. Trying to keep up with the joneses while not realizing the joneses are also going broke.
How many articles would say that we should post each month on a business blog.
Thanks
I disagree, somewhat. Buying the right new car at the right price offers as much value as the bangernomics model. I’m based in the UK so my argument may not work as well in the US. I bought my last VW Tiguan brand new, through a car broker with a £6k discount. I’m now looking to sell that car for the price I paid for it 3 years ago. I ordered my latest car during Nov 2021 with an expected 12 month lead time. The long lead time is in fact an advantage during rising inflation, as by locking in the price (with a sizeable discount) for a down payment of just £1k, I’m effectively leveraged up on inflation. Every quarter the price of my new car is going up so effectively reducing the depreciation charge per year, when I receive it. Maybe the sweet spot is to keep the car for just 1 year, so maybe I’ll order another one when the first one arrives. I’m not saying this model works in every environment but limited supply coupled with rising inflation looks like an ideal time. Currently 1 year old models are selling for £4k more than brand new models!
The car economy, both new and used, is really weird right now.
I’ve got a truck on order and suspect I could sell it for $10K more than I paid as soon as I get it. If I don’t buy it from the dealer, they’ll happily slap a $10K premium on it and sell it off the lot in a day or two.
I agree with the comments about safety of a car being much more important to any one of us than spending an extra 20k on a car. It’s not like we can’t afford it and also save a large amount of our earnings for savings. Also, I agree with the commenters that the time you spend to fix a car more frequently than a newer car and the stress it brings to my life if it breaks down isn’t worth it. My time and energy are worth more money than spending the extra 20k so I don’t have to go to a car mechanic to fix a car as often, I just don’t want to deal with all that. For me, and hopefully other people as well, safety and health are worth way more than even a million dollars.
If you’re really hurting for that $20k, just spend $20k less on your house, there’s way less difference between a $20k cheaper house than a car.
I like your last line. That said, you can justify just about anything with the safety argument. My 2023 F-250 has all kinds of safety features Katie’s 2016 Sequoia doesn’t. But saying that Sequoia isn’t plenty safe to drive is dumb.
New cars have to go to the shop sometimes too. It’s part of car ownership. You can’t get out of it just by buying a car with 0 miles on it instead of one with 40,000 miles on it or even 140,000 miles on it. All of those cars will have to go in from time to time and yes it sucks but do you want to own a car or not? Too many people justify spending way too much of their money on cars just to hopefully have one repair fewer in a 2 year time period.
I love parking my Honda between the Mercedes and Teslas in the physician parking lot. It’s a great reminder of the car payment I don’t want to have.
Is a five year old Honda or Toyota that much less safe than a 2024 model ?
Anyway in residency my APD (and richest of the Academic attendings ) liked to say “drive the cheapest car your ego can live with”
See gov website for more info:
https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/811572
This compares 2000 and 2008 and in no way answers my question
I drive a 2016 BMW 3 series AWD. Bought it when it was a year old and had 11K miles. Price was less than 75% of a new model. Now over 160K miles and super reliable. Maybe one non routine repair in 7 yrs.
Wife driving a 2022 Kia SUV. Bought new so payment is painful. (Could have paid cash but with interest in low 4’s, I’d rather invest the funds) She drove her last 2 vehicles (both Toyota Minivans) for 10 yrs and 225-250K miles EACH.
Finally, took several shots at buying sub $10K cars for teen/young adult kids. Most complete disasters. When your daughter calls crying because she is stranded yet again, hard to put a price on that. And, yes, got cars independently inspected ahead of time and took other steps to minimize risk.
I actually like it when my kids call stranded. The most recent one (at least a year ago) was about a mile drive for me and I had to pull her car about 4 feet out of the snowbank she had slid into. Yes, there were a few tears but a very important lesson learned. Worth the tears IMHO. Kids generally aren’t driving all that far and going to help them out is sufficiently rare that’s hardly a reason to put your kid in a $30K car instead of a $10K car.
I had to laugh that you say the payment is painful but you didn’t have to have it. Must not be that painful for you.
For many of your long term readers with 10-15 + years in practice, driving a beater is more about symbolism rather than necessity. If you have 1-2 million in net worth the difference between a $60k car and a $5k car is insignificant, assuming kept for 10 years.
Your comments do apply to residents and first year or two in practice, though.
Also this post from 10 years ago is interesting for showing how hard to project our future selves desires “ . I probably won’t buy any more cars that cost less than $10,000 for the adults in the house to drive” — and yet you bought a $90k truck 10-12 years later. 🙂
I should hope none of my long term readers NEED to drive a beater 10 years into practice.
I’m not sure you read that last sentence right. I basically said we no longer need to drive beaters and we don’t.
I drove a 1999 Acura until 2023 when itate the big one. In all honesty, I was late in getting rid of it and replacing the car. Multiple repairs towards the end.
And by that time, the used car market had gone to extreme lengths in price gouging. Tried to get a used car and even a Honda Civic that was used was $25,000 and I finished by saying, screw it and buying a new car which was a much better value and I don’t regret it.
Finding a car for 3000 and $5000 these days is extremely difficult and almost certainly something bound for the junkyard.
This is such a tricky thing to know when to kill off the beater. Those last 6 months of life, whether a car or a person, are super expensive and so hard to identify in advance. But all cars are bound for the junkyard eventually. You still need/want one.
Wish you would have updated the article with what new/used cars and repairs cost in 2024. I do still agree with what you wrote.
I, of course, looked up prices before we re-ran this post. It’s still very possible to buy a $5,000 used car. For cars made this century, even.
What’s probably not possible any more, which was when this post was first written, was to get a $2,000 car that while not even close to flashy, was reliable to get you to work for a couple of years. I think you’ve got to go to $5K to do that now and I certainly don’t think it’s crazy to go into the $5-10K range even if you have to borrow the entire cost of the car. But I still see no reason for anyone to have a five figure car loan.
I wrote a post on this blog a couple years ago (“The Cheapest Way to Own a Car”) that presented the evidence I found while doing research before buying a car, and the evidence suggested that owning a fairly new used car is cheaper overall than owning an old car. The evidence was publicly available and transparent how it was acquired, and even though a single study like that can’t be definitive, it was pretty convincing to me (in spite of the fact that it wasn’t at all the conclusion I expected, especially because I too believed in the conventional frugality wisdom of owning a “beater” and proudly drove one). So I’m still surprised when that conflicting information isn’t addressed or even acknowledged in posts like this, especially because, if my study’s findings are in fact correct, it makes the advice to drive a beater bad advice from a financial perspective.
Here’s the link to that post. It’s a good one. https://www.whitecoatinvestor.com/the-cheapest-way-to-own-a-car/
Would have been a good post to link to from this post, and while I agree your methods were transparent, I’m not sure I agreed with your entire conclusion in that post because I’m not sure I agreed with all the assumptions. It’s been a while though, so I can’t say for sure.
At any rate, I think EVERYONE agrees that the real key to keeping costs down when it comes to a car is keeping it a long time, whether bought brand new, close to new, or a decade old. Buy new for 20 years. Buy 4 years old and keep for 16 years. Buy 10 years old and keep for 10 years. All probably works out pretty similarly. The complicated factor with this discussion, of course, is that I hope within 10 years WCIers can just drive whatever they want and not have to care about this issue. I’m certainly not driving the “smartest” vehicle right now from an economic perspective. But I don’t have to anymore, in part because I did back in the day.
I appreciate the responses. I’ll probably re-do the analysis sometime in the next few years, it would be good to revisit my assumptions and see how the data have changed since then. I’m not interested in proving the prior analysis correct–really I’d just like to know how to minimize my transportation costs! Although, to your point, I’ll probably care less and less about that over the years.
Glad you reposted this article. Kids finally want to talk about finances and I was going to start with talking about biggest part of making a good budget work is controlling housing and automotive costs. Like the good example and will use this article with them. While I think there is risk in buying used we have generally had good luck buying cars about 5 years old and running them into the ground. Recently though I have learned to dump them before they are totally in the ground. For the last 2 cars I replaced (at 230-260k miles each), we dumped about 1k into repairs less than 6 months prior to them having something big enough not to replace (ie blown head gaskets with water pump failure and large “sudden” radiator leak that burnt up the engine – quotes b/c I am sure the kid had warning before the big event but ignored it).
I don’t disagree with this article but we have bought new cars since our late 20s and are high seven digit net worth today. And we don’t make attending money. We buy intentional on the very few things we like and cheap out on the rest.
Why do we enjoy new cars so much?
1) We see drivng the car as a long-term experience. The more comfortable seats, the better sound system, the better saftey features (although this has a limited shelf life as newer, cheaper cars eventually get even better stuff), styling and ride are like mini experience each time there is a long commute or road trip. Over our car’s lifespan, there are thousands of these experiences. Altough many rides are just transportation, the long solo commutes and family road trips do gain extra experiential enjoyment with a nicer car (even when it’s a bit older).
2) Buying new gets you the exact car style, color and options you want. The premium paid for new gets you exactly what you want and the comfort that it was yours and only yours and well cared for. We like the feeling of being the first and only to own our car.
With the new cars I did buy …
1) We always paid in cash. I think financing a car is irresponsible and we saved up in advance to pay for each car
2) We kept our cars for 15+ years. So lifetime spending on the cars was not ridiculous
3) I didn’t overspend relative to my budget. Until I was six figure positive net worth, I bought used just like this article suggests. But even this first new car (Rio Red Mustang), I bought the cheaper V6, cloth seat, basic package with no power windows or power locks. I did spend the extra for anti-lock brakes. I cared most about styling and color (my then girlfriend and now wife really liked this car). I bought what she liked and cheaped out on the rest.
4) Our latest new car bought this year (Volvo SUV) is a bit nicer but still not top-of-the-line. I’m OK spending for this since we can afford it. Occasionally, our daily portfolio change in net worth (mostly index funds) can move up or down the total cost of our new car so my mindset is that we should enjoy some of our profits a little more.
Totally agree that rich people can drive whatever they want and it’s possible to drive nice cars and still get rich if you keep your other expenses down or have high income.
You got the main things right IMHO-paying cash and keeping them a long time. That minimizes the cost of new/newish so much to do those two things.
I bought a $3500 manual transmission Mazda 2 (130K miles) at an auction. Replaced the tires and shocks myself ($350) and the the car is surprisingly fun to drive. Will be selling my Porsche because it isn’t 20 times better than the Mazda (especially with the maintenance costs). I’m in the mid seven digits in net worth. Read “The Millionaire Next Door” after dental school and the lessons have stuck with me over my 20 years post doc. Thanks for reinforcing my frugal financial philosophy.
Retired doc here.
Multi-millionaire.
I could afford just about any production car I want and pay cash.
Put 4 kids through college (including Ivy League and U Mich), 1 med school and now 1 in law school.
3 cars I own now, all paid for in cash:
1. 2001 Suburban, bought new, has 218k miles but gets only 12 mpg, so only drive to Costco and HD or when carrying big groups. Moderate windshield crack!
2. 2019 Chevy Impala Premier, bought new, cost $31k minus gm points rewards of $15k= net $16k, 32k miles, wife’s car.
3. 2001 Toyota Avalon, bought 10 years ago had 100k miles, $9k, had to replace engine 8 years ago for $3.5k, now with 220k miles. The car I drive the most as it gets 21 mpg, regular gas, small windshield crack!
Most of my neighbors drive new or late model BMWs, MBs and Porsches and 1 Bentley SUV. Ask me if I care! Only 1 neighbor has remarked and said “I have never heard of such a thing and certainly not in our neighborhood”. Ask me if I care!
My friend and I are both accountants and have had this dispute for the past 30 years ago. he purchased new cars and drove them until they were getting too expensive to repair. I would buy a 3-5 year old car and drive it until it had a major issue.
After 20+ years, we both agreed that teh longer you kept the new car, any difference in costs was minimal. He was paying a little more in acquisition costs than I was buying the used. However, I paid a lot more in repairs.
In 2007, i purchased a new Toyota Corolla for $13,995 and have been driving it for 17 years and 205k miles. In those years, my vehicle started EVERY time and i have NEVER broken down. The ONLY call I have made to AAA was due to a flat tire in my garage (appointment was scheduled to replace the tires the day after). Also, I drive through a lot of deserts in Arizona, Nevada, and Utah. I also five cross country at least once a year with no incident.
If I posted my log of expenses over the past 17 years, some would argue that it is a waste of money to do all of the preventative maintenance at the dealership or that I could do the repairs myself (that would be a tragic error).
As for safety, all the safety features in the past 20 years add minimally to the safety of vehicles. And they certainly DO NOT replace an ALERT, NON-DISTRACTED, and SOBER driver.
Hi Jim, I have really enjoyed WCI blog and site over the years. However, regarding your philosophy and history on cars, I have to ask, how come so many “totaled” cars? I would assume your car insurance premiums would have skyrocketed regardless of the type of car you were driving with so many accidents (even regardless of fault). Also, regards to buying a so-called beater for you and your loved one’s, are you concerned at all about safety? While more recent cars have newer and better safety technologies, I have never really heard you talk about buying a safe car for all. Unfortunately it does cost more to get some of the better safety tech optioned cars. I would think that it would be important to you, given the numerous totaled vehicles you have owned. However, it is possible that when you say totaled it refers to the insurance company’s designation that the repairs cost more than the value of the car and thus they call it totaled in order for them to pay out less than the cost of repairs. Thank you.
# 1 Your rates don’t go up when it’s not your fault.
# 2 Most people think they’re an above average driver. I’m one of the few I know that doesn’t. So I probably wreck more cars because I suck at driving. Don’t pay enough attention. Drive too fast. Whatever.
# 3 Remember this post is many years old and I encourage people to do things like drive inexpensive cars so they can get rich. The goal isn’t for a typical WCIer to drive a beater forever.
# 4 It doesn’t take much to total a beater. Yes, that’s the definition of totaled. I’ve totaled several cars, but nobody has ever been hurt in one of those wrecks. I think you’ve envisioning a semi smashing into a wrong way driver and collapsing the passenger compartment or something. Just smashing up the front end, radiator, and battery will total most cars that aren’t brand new expensive cars. You can do that in a 15 mile an hour fender bender.
# 5 You can justify anything with a safety argument. You’re probably not driving the 2024 version of the safest car on the market (it’s a Genesis by the way). Why not? It’s because you’ve decided what you’ve got is “safe enough” and has a good “safety to value” ratio. Same with me. Personally, I’m far more likely to get hurt doing something besides driving that it really puts risk into perspective in my book. For example, putting up a big fuss about having the safest car ever and then climbing the face of Half Dome for fun seems kind of silly, no?
1. survivorship bias. everytime someone drives an used car a long time, it’s a good deal. everyone that has an old car go wrong multiple times, swears them off and buys new next time. New car oil changes are no more than old car oil changes. spark plugs easily last 3-4 years. air filters are the same price regardless of age. new tires are worth investing in.
2. is learning to wrench, ie fix, something that is worthwhile to people? it is a skill and attitude that can be applied to multiple expensive breakable things in life, such as your home, computers, etc. however it takes time, effort, tools, etc. that in theory can be better utilized elsewhere. labor costs at most dealers, which you should never go to for repairs, are about 200+/hr. parts breaking is not irregular considering the average american drive 14k miles.
3. think about the time you spend in your vehicle. most of us have a 30 min commute each way + 15 min daily errand. that’s 1.5 hrs of waking time spent in the car. if you are working 9 hour shifts, thats 25% of the time. someone might find that a reasonable expenditure just like someone might find figs scrubs a reasonable expenditure considering time spent…or an up to date iphone…or headphones…or an expensive gym membership. nicer cars can have features such as cooled seats/heated seats, lane keep, blind spot, adaptive cruise that make the time spent in the vehicle more tolerable. decreased cabin noise can decrease stress levels. something such as tinted windows can minimize eye fatigue. 4 wheel drive can help during inclement weather.
i don’t disagree with the general idea of the points made. A relatively inexpensive used vehicle is a better expenditure than an ultra-premium brand. however, i can also make a counter-argument for the time spent in a vehicle. these same points can be made about most consumables in our lives…houses, furniture, etc. if you’re a radiologist and sit in front a pc all day long, i don’t think anyone can criticize you for having a 1k steelcase chair and a 1k monitor. Thats a 9x cost vs the basics that is needed. i feel like people just need to consider their needs and make a reasonable choice. it seems that you repeatedly are emphasizing driving a beater….and its such a personal use example, much like a house. I mean if the whole idea is to FI, then you might as well post articles about getting rid of housekeepers, nannies, lawn service, and accountants.
We drove our Lexus SUV for 17 years and then the engine melted with more than 275,000 miles on it. When? In the midst of the pandemic when finding a reasonably priced car was very difficult and used cars were over-priced. So we bought a new Toyota Highlander for cash with the expectation that it would last for at least 250,000 miles. Not until the deal was done did we realize that we were charged $2,000 more because we paid cash. Furious.
Yes, the car dealership really doesn’t want you to pay cash. They make money if you “finance” via the dealership. I bought a new care about 1.5 years ago, plan to drive it until it spontaneously combusts…first new car I’ve ever had and I’m in my mid 40’s. I heard that one can get a better deal with dealer financing versus cash purchase. So I did the finance deal and then paid the entire car off a few weeks later…
Depends on the salespeople and what they’re currently being incentivized to do. But your experience is certainly a common one.
I’m still driving my 2005 Toyota avalon with 180,000 miles on it that I purchased in 2016. I would love a Rivian R1T truck but I’ll probably hold off on upgrading for another 2-4 years and try to save up the cash. Deferred gratification is a powerful tool!
Agree for most but don’t forget to look at how to get benefits from your ride. On active duty the fanciest cars were always junior enlisted while my PA and I drove 10yr old beaters, W2, SoCal, metro, made sense. Now? Nope, new and trade under 100k miles. Finance promo ~0%, last year model on lot kickback, government promo (hybrid, EV, clunker trade), I’m 1099, have a ranch and SELRES = Vehicles are also a write off that pay for themselves when done right. Sitting on an old rig when you can depreciate a new one at break even or better with more reliability and ever increasing vehicle safety only makes sense.
Also: do you want your 16yo driving a geo prism or do you want her in a newer car? Remember, when we were teenagers 55mph was the max speed. Physics matter too. I’ll pay extra for safety. Great gouge as always though.
The article is from June 2024 and the comments from 2012…:)
Yep, that’s why we note at the bottom of the post:
[This updated post was originally published in 2012.]