By Dr. Tyler Scott, WCI ColumnistThe average American spends about half a million dollars purchasing cars during their lifetime. That’s an average across all income levels. Based on the data from my clients who are predominately early and mid-career physicians and dentists that plan to have, on average, two cars that they keep for ~6-8 years and spend ~$40,00-$60,000 per car (after trade-in/resale), the average is more like $700,000-$1 million in their “post-training” lifetime.
I just turned 40 years old, and I have spent $19,241 on all the cars I have ever owned. I don’t mean gas, maintenance, registration, etc. I mean the total amount our household has spent to purchase all past and present vehicles is less than $20,000 since I started driving 24 years ago.
I am not here to bully you into joining me on my (statistically) extremist end of the car-buying spectrum. I am here to invite you to drive just a little bit in that direction.
Prophylactic disclaimer premedicating against ragey commenters personally offended by levity, satire, and/or literary tone: This entire column is meant as a casual read, a piece of entertainment, a general lark. I do mean to create thoughtful reflection about how you personally—and how we as a society—view buying cars while also telling a few personal stories and poking at our “car culture” in a good-natured way. I am, at my core, a hopelessly nice guy and mean no harm. If something below irks or irritates, no such impact was intended.
Prophylactic disclaimer premedicating against ragey commenters personally offended by the notion of automotive frugality: OK, let’s put disclaimer No. 1 to the test. If you love cars and you spend lavishly on them because they bring you joy; I see you, I honor you, I mean you and your torque and your towing capacity and your slip differential and your horsepower no harm. This column just isn’t for you. Please keep spending whatever you want on those girthy camshafts, hard drivetrains, and thick tires that leave you feeling like the million bucks you will ultimately spend. As Dr. Jim Dahle often says, “The goal is to live the good life, not to be the richest man in the graveyard.”
The Three Big Rocks
When I begin a new comprehensive financial plan with a client, we always start by talking about their goals. These goals vary from person to person, but one thread that ties them together is “wealth.” In one way or another, every client wants to maximize, optimize, strategize, or organize their wealth now and in the future.
If you ask my 7-year-old what wealth is, she will say something like, “Having enough money to buy everything I want forever.” In other words, our first human impulse as it relates to wealth is about having stuff.
Tangible things = wealth, and one of the easiest and most commonly observed metrics of wealth is, “What do they drive?”
Interestingly and ironically, this baseline belief that how much we have is synonymous with how wealthy we are couldn’t be further from the truth. In the words of one wealthy financially literate EM doc blogger/podcaster with a new F-250 here in Sandy, Utah, “Wealth is the accumulation of all the things you didn’t buy but could have.”
Therefore, any conversation about building our wealth must center on our spending. This is why the next thing I talk about with clients immediately after they share their wealth-related goals is the “Three Big Rocks” of personal spending. These three rocks are so big that if we don’t have a thoughtful approach to each of them, any one of them can sink our financial plan. They are:
- Housing
- Cars
- Education (your own education (student loans) and your kids’ education (K -12 public vs. private school and college costs))
There is a lot of content on this site about how much house you can reasonably afford, the destructive reality of living in California, the power of geographic arbitrage (especially Puerto Rico), the significant financial impact of private K-12 schooling, saving for college using 529s, and managing your student loans.
There are also several posts about cars but not nearly as many as there are about the other two big rocks, and the ones that do exist are often controversial. My intention here is not to stir up controversy (though I fear that is unavoidable), but it's to refresh the car conversation and examine some of the narratives I often hear from clients when it comes to justifying their goal-defying relationship with cars.
What I mean by goal-defying is that I rarely hear a financial planning goal that sounds like this: “I’d like to blindly accept and immediately adopt the consumeristic expectations placed on me by our capitalistic society as it relates to transportation for doctors.”
But I do hear a lot of goals like this: “I’d like to have the option to cut back or drop call ASAP, travel more, spend my time with my kids while they are little, and increase our savings so I have the option to retire early.”
In other words, there is a disconnect between people’s stated values and what their spending actually reveals that they value. This can apply to any area of spending; the stakes are just a lot more mathematically impactful when it relates to a $70,000 car than a $7 latte.
More information here:
Here’s How Much We Make, Save, and Spend as ‘Moderate Earners’
4 Cars, 24 Years, $19,241
By way of context and disclosure, I offer a brief personal history of my relationship with cars.
My first car was a gift from my mom after my sophomore year of high school in the summer of 2000. It was a 1986 Honda Accord with 150,000+ miles, and I was stoked. I think she paid about $700 for it, and it was in pristine mid-'80s shape until I was rear-ended a couple of years later by a Yukon-driving mom digging goldfish crackers out of her purse for her demanding 3-year-old backseat driver. The Accord was totaled.
Total cost to 16-year-old me for the Accord = $0
The ”totaled” car actually ran just fine, so I duct-taped the mashed trunk together and got another year out of it before eventually using the insurance company payout, the $200 resale value, and the applied value of ~25 hours of laying sod for my neighbor who owned the car dealership to upgrade to a slightly used 2004 Suzuki Forenza. It may as well have been a Porsche. Only 30,000 miles, glossy black, a trunk that opened . . . it was a dream.
Total cost to 19-year-old me for the Forenza = $0 (sod-laying notwithstanding)
In 1997, when I was 13, one of my mom’s ex-husbands (who was a professional Santa Claus and one of the worst people I have ever met) had a fatal heart attack. We learned he had failed to change the beneficiary designations on his life insurance after the divorce. This unexpected windfall was used to buy me a Macintosh desktop (with a mouse!) and my mom the sweetest mid-sized Japanese sedan ever made: the 1997 Toyota Camry XLE complete with moonroof, CD player, leather seats, V6, power windows, AND power seats. Even to this day, the cassette deck works.
I had the Forenza, and it was awesome. I’d probably still be driving it now if it weren’t for Al Gore. In 2006, my mom watched An Inconvenient Truth and realized the only way to save the polar bears was to buy a Prius. With the new hybrid silently prowling the neighborhood, her 1997 Camry became dispensable so she offered it to newly married me and I saw a chance for automotive arbitrage. Megan and I didn’t need two cars, so we sold the Forenza and upgraded to the Camry. I say “upgraded,” because this Camry was blingin’.
That’s right, thanks to my bacon-loving former stepdad and a woulda/coulda/shoulda presidential nominee, I still drive this sweet ride today. It's got 228,000+ miles, and she just won’t quit. I have zero doubt that my 7-year-old will be driving this car to high school in 2033 with Creedence Clearwater Revival blaring from the tape deck.
Total cost to 22-year-old me for the Camry = +$5,000 from the sale of the Forenza.
The Camry still bringing me joy and safely home from the grocery store today.
The fourth car in our story came into the family in 2012, the year I graduated from dental school. We had just welcomed our first child into the world, and we were no longer living the life of a poverty-stricken dental student. We were outrageously rich owners of an FQHC public health contract promising to pay $108,000 over the next 12 months! We “needed” a new family car that was “safe for the baby,” so we went big.
We bought a 2008 Acura MDX with literally every feature that the model offered. That included the entertainment package with its rear-seat DVD player, power liftgate, running boards, premium rims, roof-rack cross bars, and Bose speakers. I was a doctor now, baby!
The Acura cost $23,500, but the net cost was $18,500—thanks to the $5,000 saved from the Forenza. However, the true purchase expenses didn’t end there because we financed most of the vehicle. It wasn’t until ~9 months later that I found The White Coat Investor and got my financial act together. I immediately paid off the car loan, but $741 of interest had already been paid.
Total cost of the Acura to 29-year-old me = $19,241
My tired 40-year-old body just got out of the Acura a few hours ago after getting home from some skiing. It has 259,000 miles, and she just won’t quit.
It’s amazing how long a modern car will run if it is maintained according to manufacturer recommendations. My dad has always told me when it comes to keeping cars on the road that you only need to remember two things: “belts and fluids.” Sure enough, almost 600,000 combined miles into the Toyota and the Acura, keeping up with belts and fluids have them as functional today as they were when they set sail from Japan.
The MDX at the bottom of Canyonlands National Park, looking up at Dead Horse Point—family road trip Oct 2022
Why Aren’t Americans Keeping Their Cars for 20+ Years?
At this point, readers may be thinking I am some lean FIRE cultist who has adopted an extremist view on car longevity and/or personal frugality. That is not the case (though I do have warning signs). If I am a cultist for anything, it is being ruthlessly pragmatic and evidence-based in nearly every area of my life.
The facts are that modern cars are built to last 200,000-300,000 miles or 15-22 years.
So, why aren’t we keeping them that long and getting the maximum value out of these expensive depreciating assets? Why aren’t we willing to get the most out of our cars which would allow us to reach our other financial goals more rapidly and more readily?
The answers I most commonly hear are:
- Safety
- Functionality
- Maintenance concerns
- Fuel efficiency
The answers I most commonly observe which are not spoken out loud due to social mores are:
- Status
- Self-esteem
- Perceived value
- Exclusivity
We’ll have to save the latter list and an examination of how being a hapless pawn on the chessboard of consumerism, advertising, and social pressures represents an insidious erosion of our self-worth (let alone our net worth) for another day. For now, let’s see if we can unravel the logic that undergirds the motivations of the former list.
Safety
When we had a new baby, a significant motivator in buying “a big fancy car” was safety. I hear from clients all the time that “our current family sedan is running great but with baby No. 2 (or a teenager driver) on the way, we need something bigger and safer at this point.”
As the indomitable Mr. Money Mustache showed us back in 2012, safety is an expensive illusion.
Please take a moment to follow that link and experience Pete’s cutting logic about fear and safety firsthand. In case you don’t, I will attempt to recreate his argument here using more current data which only further strengthens his point.
The National Highway Traffic Safety Administration (NHTSA) puts out data every year about traffic accidents, injuries, property damage, and fatalities. It accounts for myriad variables, including age, sex, time of day, alcohol, urban/rural, number of lanes, and vehicle type among many others. This data has aided car manufacturers in improving safety features to the point that fatalities have decreased from 18.65 per 100 million miles driven in 1923 to ~1 per 100 million miles driven today. That’s a 95% decrease over 100 years of data.
Now, let’s looker closer at fatalities as relates to vehicle type. Does our cultural narrative that “bigger = safer” hold any water?
The answer is yes, bigger cars do have a lower fatality rate than smaller cars. A win for the gearheads and a death blow to my argument, right? Well, not really. Let’s quantify the difference.
A mid-size SUV is indeed about (10.26/7.10) 44% safer than a mid-size car. Let’s put that in the context of a lifetime of driving at today’s very safe rates of 1 fatality per 100 million miles driven.
If I drive 10,000 miles a year, I have a 10,000/100,000,000 chance of dying, which means I have a 99.98% chance of surviving on the road in a given year.
At age 40, let’s say I have 50 years of driving left ahead of me (hopefully). Thus, I have a 99.98%^50 = 99% chance of lifetime survival. In other words, driving 10,000 miles a year reduces my expected lifespan by 1%. One percent of 50 years is six months.
If I increase my chance of dying by 44% in my Camry compared to my MDX, I reduce my life expectancy by (6 months x 44%) ~2.6 months. MONTHS!
Before switching out of a lifetime plan to drive affordable, gas-efficient, low-maintenance sedans in favor of big, expensive, gas-guzzling SUVs or trucks in the name of safety, we may want to pause and ask ourselves this. How many of my financial goals am I willing to delay or give up on so that I can gain 2.6 months of average extended life expectancy?
The answer for me is none. I am not willing to compromise on maximum travel, earliest possible retirement, or experiences with my family in the form of more concerts, comedy shows, sporting events, Broadway shows, etc., so that I can eke out a few more statistically insignificant months from a lifetime of driving “safer” cars.
Safety when it comes to vehicle type is indeed an expensive illusion.
What does matter when it comes to safety, according to the data, is avoiding the following:
- Being male between the ages of 21-24
- Driving between midnight-3am
- Driving with a blood alcohol level of .08 or higher
- Driving 55 mph and over
- Driving on a motorcycle . . . ever
Functionality
Let’s say that you buy the argument that safety is an illusion but you “need” a truck or big SUV for utility purposes—pulling a boat, hauling gear for road trips, transporting stuff in the truck bed, etc.
That very well may be true and completely rational in many cases. However, of the top 10 most popular vehicles sold in 2023, one was a sedan. ONE!
Five of the top 10 most popular vehicles were trucks, including the top three. Are we sure that two-thirds of us “need” a truck and that 90% “need” something other than a mid-size sedan for our lives to be functional?
Has cattle ranching exploded as a hobby, and I am just missing the trend? Has HVAC installation become the new can’t miss hustle? What are all these trucks for exactly?
When truck owners are evaluated for how many miles driven per year that the design of the truck was the only way the task could be accomplished, it is less than 2%. It turns out that not many of us are pulling the boat or moving hay from the field to the feedlot very often.
When we look at ways that affordable sedans can be efficiently turned into higher capacity/greater utility vehicles, we see that the actual need for 99% of us for a truck is essentially 0%. And for those few rare times such a vehicle is needed, we can rent one or borrow one (God knows your neighbor has one) for orders of magnitude less money than it costs us to own and maintain one for 50+ years.
In short, the rates of truck and SUV ownership cannot credibly be made on necessity. They aren’t actually serving a need, but they are costing us a ton of money. And they are killing us at higher and higher rates.
Trucks are the whole life insurance of the automotive world. They have 98% functionality that you don’t need, and they are the most expensive possible version of the only thing you actually do need. They are made to be sold, not bought, and the people doing the selling don’t have your best interest in mind.
Maintenance Concerns
Let’s say that you buy the argument that safety is an illusion and that the sales pitch from “Big Truck” is as credible as the Northwestern Mutual agent pitching infinite banking. You are happy to roll through life with a mid-size sedan, but it has 150,000 miles on it and it’s time for some costly repairs/maintenance. You may be the person saying, “I love my car and am happy to keep it, but the repairs are more than the car is worth, so the only rational thing to do is replace it.”
I have heard this logic for years and, for the life of me, I can’t understand it. If the repairs are $6,000 and the car is worth $5,000, what exactly does that ratio have to do with the decision to spend $50,000 on a new car? On the one hand, you can spend $6,000 and keep driving your newly repaired car for another ~10 years, and on the other hand, you can spend ~10x that on a new car THAT WILL STILL NEED MAINTENANCE!
Buying a new car does not come with immunity against future maintenance costs. If anything, a new car increases the likelihood that you spend more on it going forward because you want to preserve that “new car energy” for as long as possible.
One of the greatest parts of owning our two cars is that we don’t care at all what happens to them. A 6-year-old at dance pick-up slams their adjacent door into my car leaving a notable ding . . . no problem. An 87-year-old patient backs her Dodge Ram trailer hitch into my bumper after her root canal . . . no problem. My wife backs into a bright yellow cement post for the third time in two years . . . no problem. (These examples may or may not be based on true stories depending largely on if Megan reads this column before it posts. Love you, Meg!)
Old cars = cheap insurance, routine maintenance, negligible stress, and zero non-essential repairs. Sure, we have put some money into our cars over the years, but nothing outside the ordinary: on-time oil changes, tire rotations/replacements, timing belts, spark plugs, brake pads, oil valves, etc.
The idea that repair costs as a function of car value should be a meaningful part of the decision to buy a new car is, at best, overstated in my opinion. The decision is not, “How much are the repairs relative to the current market value?” The decision is, “How much are the repairs relative to the alternative cost of reliable transportation (aka a new-to-me car)?”
Fuel Efficiency
The other justification I hear a lot these days with the increasing availability of electric vehicles and the government subsidies to purchase them is, “My current car is running just fine, but I feel like it makes sense to get an EV. And with these government credits and the savings on gas, I should break even pretty soon.”
If you want to get an EV to save the sea turtles, Al Gore and I totally support you. If you want to get an EV to save on gas, I totally support you in the same way I support you if you want a truck so that you can help move your sister’s fridge when she asks four summers from now. It is a reasonable idea, albeit one that is not always fully thought out from a mathematical perspective.
Personally, I like the idea of an EV if for no other reason than I hate getting gas in the Utah winter. But to do it now while I have reliable transportation in the name of saving money on gasoline is neither mathematically nor environmentally sound (ditching a car years before its useful life is complete is terrible for the environment in the same way that throwing our perfectly good clothes in the landfill is environmentally problematic).
Depending on where you look, the average new EV costs ~$60,000. With gas averaging $3.40/gallon at the time of this writing and with our MDX and Camry averaging ~23 miles to the gallon, I can drive another 405,882 miles before I would break even on a new EV—and that’s not counting what I would need to pay to install the right electric plugs in my garage ($1,000-$2,500) or what the charging costs would be on my electrical bill ($60-$100 per month).
In other words, you can buy a lot of gas for $60,000 + $2,500 + $100 per month. Suffice it to say that it may not make sense to jump from an internal combustion car with many years left in it to an EV simply in the name of saving money.
More information here:
Should I Buy A Nice Car Or Save My Money?
The Math
If I had followed the “normal” doctor track of car purchasing up to this time in my life, we would be on our family’s third and fourth ~$50,000 car by now. Factoring in some trade-in value and some financing costs (sadly, car loans are widely accepted as “normal”), we’d be in the ~$200,000 lifetime total car costs range, which is right in line with the average upper-middle class American trajectory.
Given we have spent just under $20,000 to this point, what has our “sacrifice” yielded us?
For the sake of simplicity, we will spread out that $180,000 savings evenly over the 12 years since I graduated from dental school. During that time, the Vanguard Target Retirement 2050 Fund has had an average annualized return of 11.13%. So, that $15,000 that we have saved each year for 12 years by driving “luxury beaters” accounts for ~$381,000 of our net worth today.
If we keep up some more moderate version of this car relationship for the rest of our lives, we are on pace to come out nearly {FV(5%,40,-381000,-5000,0)} $3.3 million dollars ahead compared to where we would otherwise be if we had chosen to accept the commonly held beliefs about cars in America. Not a bad return on investment for driving and maintaining cars that we have come to love and appreciate.
There is a lot of talk on this site about side hustles, passive income, and increasing our rates of return, all of which are worthwhile to consider and can produce meaningful results. But in the words of Jim Dahle, “The best side gig is just spending less.”
If you are looking for a surefire way to boost your nest egg and reach your goals faster, I invite you to consider keeping one of your three big rocks small by reimagining your relationship with cars.
Possible takeaways:
- Keep in mind this was meant to be a little bit thoughtful and a lot bit of fun. If your blood pressure is higher than your oil pressure, go for a drive in your sick ride, and remember that I honor your choice to live the life you want.
- You don’t owe it to anyone to compromise your financial goals to live up to any cultural pressures about what you drive.
- Check your internal beliefs about cars, their longevity, and their safety against the evidence and basic logic before making the big financial decision to replace your current vehicle.
- Don’t watch environmental documentaries without a Time Value of Money calculator in hand.
- Keep your life insurance beneficiary designations current.
- Don’t feed your toddlers while you are driving.
- Mall Santas are at risk of being just as creepy as you always feared.
- Save a penguin, ride a Civic.
- Please let me borrow your truck.
How much do you figure you've spent on vehicles in your life? Do you prefer to drive a car into the ground, or do you upgrade your vehicle to the newest model every few years? What else is there to debate about buying cars?
Yup, my “girl” is now 23 years old. No big issues; last year oil and minor things cost less than $100. I did need a new radiator and the neighborhood kid replaced that for less than $400 including parts and labor. Two years before that I did pay about $1,400 for a new timing belt, water pump and replacing some gaskets which had dry rotted. It helps to have an honest mechanic.
I did splurge this year and paid another neighborhood kid $100 for detailing her. She looks great, rides great.
I’ve tried to keep my car for a decade at least and have always fallen for one of these “more mpg, safer, need the new belts and whistles for the family”, but this time I mean business! 9 months with my paid off Toyota Highlander, looking to keep it for 15 yrs. Wish me luck!
Some of this might be generational. I’m old and like my friends, we find all the bells and whistles on new vehicles at best a distraction, but often a hazard. As long as it’s clean and works, that’s fine.
My rule of thumb for when to buy a new vehicle is if the repairs cost more than one year’s car payment (though I would pay cash) .
The other advantage of an older vehicle is that every ding and scratch isn’t upsetting. When it comes to things like this, I am reminded of these wise words:
“Never keep up with the Joneses. Drag them down to your level. It’s cheaper.” ― Quentin Crisp
Wow, great post. You’ve convinced me to hold on to my ‘doctor cars’ for 10+ years!
The only car I’ve ever owned and used is now 52 years old. It still starts right up, purrs like a kitten, but does need a little cosmetic “work”. Your philosophy worked for me. I lived close enough that I could walk to work, bought a solid well-built car (Mercedes), kept it maintained and garaged. I don’t drive anymore and find there’s not much demand for a car that old, even if still drivable. But it doesn’t owe me a thing.
52 wow!
I acknowledge my privilege that the 10 yo pickup truck I own is a 3rd vehicle I only drive for hauling or towing. Many of our neighbors have indeed been contractors who presumably needed a diesel truck to get 4 guys to the job site and perhaps haul or tow even on a daily basis. Or maybe it’s just uncool not to drive a pickup for most males in the South. Their wives often drive an SUV.
I put about 1500 miles a year on it when we lived rurally and I drove it weekly or less. I used 4 WD monthly then and only in ice storms now. Here in town with less distance to cover but a plethora of gardening bulk items to collect (and a new garden to kit out) I am putting 4-5000 a year on it and driving it twice a week for that plus another 1-2 trips per week when we have simultaneous but disparate errands*. I do wish the 10 year old truck had the fancy GPS screen of all the other cars we’ve owned since but delight in a non diesel 8’ truck bed and know I’ll never find another one new, so I plan and hope to have this truck until I leave this earth. Sadly I couldn’t get a stick shift truck even then (or at least not in the size and color I wanted).
Now I’m older- less willing to pitchfork muck more than an hour a day- and have less driveway space I sold my 10′ trailer this year.
*Our second vehicle is a beautiful sports car which spouse rarely drives because it might get dirty or stolen. It’s no longer worth more than he paid for it but someday we’ll probably make one of our grandchildren very happy indeed if he doesn’t decide that he needs to have the newest version instead ot a 20-year-old one. My spouse really skews our vehicle costs and I budget his vehicles and boats as his chosen spending.
My favorite comment by white coat investor regarding expensive cars is that it is important to avoid them in your accumulation years, but if you save invest and make a physicians income, by the time you’re in your 50s, it shouldn’t matter how much you spend on a car.
To the three big rocks I would also add “marriage”. While marriage is not necessarily a “purchase”, it is definitely a lifelong investment in which 50% of first time investors go bust at 20 years. Having spent more than 20 years in the military, I had witnessed first hand where young troops get incentivized to marry young and buy a flashy new truck after getting their first paycheck or completing their first deployment (with ample spare cash in the bank). Neither decisions end well in many cases, despite preemptive and often mandatory premarital or financial counseling. YOLO, but you can make young and dumb decisions many times.
Interesting point of view, thank you! While I agree with you that you can drive an old car and be fine, you also need to look at some other factors that you missed IMHO:
1. Safety – yes, you address part of it. However, most people get injured and not killed in car accidents. These injuries are substantial and many new cars can prevent them. It is not about dying, it is about living well after the crash. You totally ignored this.
2. Where you live will define the type of car you probably want to drive. In Texas, we drive a lot, and a huge number of cars are big trucks. And you also drive a lot (my grocery store is 10 miles away. Anything is 10 miles+ away). So I drive 17-20k per year easily. So you want a better car that will support this. Can a 20-year car do this – yes, but not well in most cases.
3. Fun – yes, driving a good car is fun. Driving an EV is fun. Fun costs money. But if you enjoy it and can afford it – why not?
4. And the latest point – I agree with you that buying a used car is what “money-smart” people should do – especially EVs. I think that the best return for your money is to buy 3 years 3-year-old hybrid and stay with it for another 5 years. IMHO.
Great points. Thanks for reading and commenting.
Regarding Safety – The idea that a newer car with safety advances would result in less harm obviously makes sense. It is very difficult to get good data on exactly what the harm reduction is and what you have to pay to get it.
What I have read and understand from the NHSTA is that the features that matter most are seatbelts, airbags, ABS/Electronic stability control, and blind spot warning. My 27 year old car has 3/4 of those and I’m pretty faithful in checking my blind spots.
So the question becomes what would buying blind spot warning cost me versus what are the chances the blind spot warning results in less harm to me in an accident or prevents an accident? That is hard to know but what I do absolutely know is that I will travel 14 weeks this year. Where does the money come from to take off that much work and travel wherever I want?
In large part it comes from saving a ton of money on cars. That I know. It’s quantifiable and the lived experience is amazing. So yes, consistently replacing cars with newer technology MAY reduce future harm but I KNOW it will cost me many weeks of travel each year. I’m not willing to make that trade. I understand why others would be.
Regarding where you live being a factor – I’m not persuaded. I totally disagree that your new car can get to your distant Texas grocery store any better or any more reliably than my Camry. Living in Alaska may be a different story, those folks probably don’t want to drive 20 miles at night to the grocery store in January in my Camry. I can see why they would want a 4 wheel drive vehicle to do that job reliably.
Regarding Fun – I one million percent agree. If you find joy in cars, spend money on cars. I went out of my way at least twice to make that point in the post because I believe in its truth so deeply.
Thank you for your reply. Agree with your points, just wanted to clarify that “where you live is a factor” I meant to say in Texas we drive a lot, and you have a huge number of large trucks on the road. So you feel very small and fragile around these trucks, so you want a bigger car 🙂
As for my last point, and this alone can save a lot of money in most of the cases, buy used, not new. Unless you have a crazy incentive (like for EV in CO, you can get up to 25k from the government).
What good is a safer car if you’re just using it to drive to more mountains to fall off of? If people REALLY want to reduce the risk of car wreck injuring them, they should move closer to school/work.
And your Camry would have been fine to get to the grocery store in Alaska. As long as you had studded snow tires on it. Most Alaskans don’t live 20 miles from the grocery store anyway. 20 miles is all the way across Anchorage, passing like a dozen grocery stores.
One safety issue that’s come to light lately is the lack of pretensioning seatbelts and force limiters in the back seats of many cars. This can lead to smaller back seat travelers (i.e. our kids) coming out of the seatbelt in some front end crashes. Pretensioners have been required in the front seats for years now, but not the back seats. Minivans are some of the many cars that don’t have them, which is pretty shocking considering they’re marketed to families. Interestingly, many of the higher end luxury cars do have them. This isn’t an issue when kids are in a 5 point harness since the carseat is fixed to the seat and the harness keeps them secure, but once they go to a booster seat using only the seatbelt, they are in jeopardy of serious injury. Food for thought for families and we will certainly be replacing our cars for this reason once our kids go to boosters, which will happen to be around the 10 year old mark for both cars.
Right on – I totally agree with you! My 2005 Honda Accord will be 20 years old next year and I also look forward to its 25th birthday down the road. Besides lower insurance costs and the other benefits that you mention, I also save considerable money every year on my personal property taxes that are based on car valuations in my state.
I didn’t retire particularly early (age 57), but people are generally confused how I could retire at that point even though I could only “afford” a 20-year old car. Of course, that is exactly the point. I retired because I direct my money towards areas that I value, that just doesn’t happen to include vehicles and many other shiny new man toys.
Love the post. Long term readers know I’m a huge fan of saving money in this area, paying cash for things like cars etc. The reason many Americans are poor is sitting in their driveway.
That said, I view it a little like living like a resident, in that it is designed to be temporary, not permanent. Hopefully by mid career most docs are buying new cars with cash and still meeting all their financial goals. I hope most WCIers get to the point where they can afford to just buy “what is best” rather than “what is the best value” all the time.
So while there is a nearly brand new Super Duty in my garage, there is also a 2009 Civic whose bumper cover we just reattached.
That was a fun read! I think my favorite part was the dead Santa windfall.
There is an in-between option. If you can find a 2-3 year old Lexus SUV or sedan, Toyota Highlander or Tacoma or similar value-holding vehicle, you can keep it through it’s “near-new” years until it’s 8-10 years old. Some of these vehicles only lose about $2k in residual value per year, drastically reducing your lifetime vehicle expenses while keeping you in new-ish vehicles from a safety and reliability standpoint.
And as others have said, safety isn’t just about fatality statistics. It’s about avoiding less than lethal incidents also. Some of today’s crash avoidance technology can really help with that. Automatic braking technologies that can completely stop your vehicle at 30 mph, or can reduce a higher speed collision by that figure are really game changers in the injury reduction field.
It’s not the cost of maintenence that is the problem- it is the annoyance factor. I will get fired if I can’t show up to my shifts on time. Getting fired is expensive. If my car won’t start at 9pm as I’m preparing for an overnight, I can’t get to work. My spouse is probably working too, so I have no good way to get there on time. Sure, it might only cost 500 bucks to fix, but the chance of me not showing up to work on time has a cost too. I don’t have a stay at home spouse who can just drop me off to work.
Yeah, if I really would get fired for being late for one shift, the notion of a car suddenly not starting one day would be anxiety provoking for me too. That makes sense.
I would just Uber to work that day and get my car fixed for $500 the next day rather than buy a new $50,000 car but others can understandably feel differently.
Also, the possibility of my car not starting one morning is much more likely due to my 7 year old not closing the back door firmly after dance class last night, not because my 27 year old car spontaneously bit the dust over night. The Camry has started every time for 27 years in a row so I just don’t find it likely I’m going to get fired as a result of its “startablility”.
My point is that when we choose to live based on non-evidence based and/or statistically unlikely fear, it costs us something. I totally support those who buy a new car because otherwise they can’t sleep at night at thought of their car not starting and getting fired. I would just want that person to understand the considerable financial trade off they are making to obtain that peace of mind.
If the trade off is quantified and elected knowingly, that is all anyone can hope for when making a large financial decision.
If a loved one ever has a stemi or a brain bleed etc at 3 am and need help immediately, I really hope your cardiologist or neurosurgeon isn’t still driving a freebie car they got 20 years ago.
It’s not that I’d get fired after 1 late shift, it’s that this is medicine- I can’t just not be there. This is true for lots of specialties. An anesthesiologist can’t just be late and hold up the OR room for an hour. An ob can’t just not make it in for a while during a problematic delivery. We don’t all have the kind of job where we can just reschedule our morning cases while we get the car figured out. Many of us have spouses in medicine and have no nearby family or stay at home spouse that can drive us to work during a car breakdown.
I’m EM. If some new hire in my group wants to FIRE and live like a resident and drive a piece of junk, and they are late replacing me due to car problems- I won’t look kindly on that and it might effect whether I vote them in as partner. Being prepared for anything, even rare stuff. Showing up on time is important. I know what we pay new hires- I know they can get a reliable car.
EM docs have been stuck at work, unable to leave, for things like their kid being a leveled trauma at nearby hospital, their mom dying mid shift, etc. If I can’t leave my shift during these types of emergencies, I sure don’t look kindly on somebody being late due to car problems. Sure, car problems happen, even on new cars. But if it is an older car and a pattern, it is not good.
Yeah, 100%, for the 5th time….I agree with you. Twice in my post and twice in my comment and again right now, I invite you to have ears to hear me when I say “Yes, if you feel you MUST have a constant cycle of new cars for pleasure or function, god bless, go for it, I support you.”
What I do not support is general applications to specific circumstances. When you hear hoof beats, think horses, not zebras.
Follow the number of “ifs” in the follow scenario you are describing.
If you are a physician, if your speciality is one where urgency matters, if your spouse also works in medicine, if you live in an area without access to Uber/Lyft, if you have no nearby family or helpful neighbors, if your partners won’t/can’t cover for you on occasion, if your aging car has a pattern of not starting, and/or if you feel your singular tardiness may cost you getting voted in as a partner……then yeah, keep as many new cars in the driveway as you need to sleep well at night.
I think we can agree that combination of circumstances is not generally applicable to the American car culture. Thus, 99,99% of people can benefit from considering a different relationship with car ownership that may bring them a greater level of wealth and a higher level of happiness.
I imagine you fly on airplanes even though it is possible that if take off from an area with surrounding meadowlands, and if your plane encounters a bird strike, and if both engines fail, and if Captain Sully Sullenberger is not your pilot, and if there is no nearby river…..you could crash. That is statistically possible. However, you weigh the statistical probability of that outcome against the benefit of the alternative (i.e. train or automobile) and you get on the plane anyway. Other people would not. Some have such a fear of flying, they, at great cost, choose a different alternative.
I hear you choosing a different alternative to keeping your car a long time. For the 6th time, I totally support that. For you.
Please please please keep buying as many new cars as you need to keep showing up for our family members with stemis. I am so grateful for those like you that do that work. It is a tremendous service and an under appreciated skill in our society.
I hope you can likewise support those who invite others to apply principles that may not be specifically true for your specific circumstances. As Jim often says here, “Take what works for you and leave the rest.”
This is a great reply, Tyler. The hypothetical scenarios are so convoluted and predicated on being completely isolated from the rest of the world (rideshare? neighbor? co-worker? friend? public transportation? literally anyone who lives in your town?) Also I’d like to know which hospital they work at where no doc is ever late for an appointment/consult!
Ok, I concede, I’ve learned i probably get irrationally mad when my car won’t start. Maybe some sort of deep rooted childhood incidents with my parents having unreliable cars. Overall, your column has good points and is appreciated.
The nice thing about being a WCIer is that you likely have a high enough income that driving nice cars might slow you down a bit reaching your financial goals, but it is unlikely to keep you from getting there if you do the rest mostly right.
I think this worry is dramatically overblown and frequently used as a justifying excuse to buy an unneeded want. If my car died en route to my shift, it would be unlikely that I was more than 15 minutes late even if I had to hitch a ride and none of my partners are going to vote me off the island for 15 minutes. Who would want to be in a partnership that did?
Our OBs showed up too late twice for deliveries. It happens.
STEMIs often sit on the table waiting for the cardiologist to get there for many reasons. Trust me, I see it all the time.
If you REALLY, TRULY can never be a few minutes late, you need to live within a short jog of the hospital because even new cars break down.
And if there’s “a pattern” fix or get rid of the car. But once every 3 years isn’t a pattern.
I am an EM doc myself driving a 24 year old car. Never been late to shift but I’d definitely be disappointed to be part of a group where being late to shift once by 15 minutes would eliminate my chance of partnership. Says a lot more about your level of burnout and group culture than the colleague driving the old car.
I have been forced to stay late more than once however due to senior members of my group sleeping through their alarm, missing a shift on the schedule etc. Things happen, have some grace with your colleagues. I could get in an accident on the way to work just like you could.
Your representation of medicine is inaccurate, I think, and sounds more like a justification for purchasing a new car because you want to for some other reason. Which, to Tyler’s point, is totally fine. You should just be honest about that with yourself
Yes, probably a bit of exaggeration/hyperbole on my part. Overall, your point of cars being expensive pillar of life is correct.
When will we see a WCI post on “My tiny shack home will make me a multimillionaire”. WCI people as so obsessed with car expenses. Housing is the #1 expense though, right? Sure real estate doesn’t depreciate like cars, but you could retire a lot sooner if you save money living in the housing equivalent of a 300k mileage Camry and instead invested that savings in revenue generating real estate or other investments.
Absolutely. Housing is the biggest of the three rocks. Keeping housing costs low and investing those savings makes a profound difference over time. My next post coming out in a few months talks in part about the math of keeping housing costs low.
I think this post helps illustrate why those who are deeply engaged with personal finance are, as you say, “obsessed with car expenses”. Having $3.3 million more dollars in my nest egg over my life by extending the life of my cars is a number that I, and others, find worthy of “obsession”.
Most finance enthusiasts, let alone most average Americans, do not have a quantifiable value in how much lifetime wealth they are trading by turning over their cars well before their useful life is exhausted. As you correctly point out, the same can be said of housing.
Good post idea!
At least houses generally appreciate over time. Cars rarely do. But the same general principles apply. The less you spend, the more you have to invest toward your financial goals.
Great post! Thanks for sharing the answers you most commonly hear for “needing” a new vehicle. I am a big fan of buying practical cars and driving them as long as possible. I have a 15 year old car with 170,000 miles and a 2014 Honda Civic. My 15 year old car has been overheating this past week. My wife was ready to purchase a new car since it is so old and having this issue. Long story short, I problem solved the coolant system issue which was causing the car to overheat. The cost was $38 for the parts and about 6 hours of my time. It was very rewarding to fix it and to pay only $38 vs the cost of a newer car. I am guessing many people would of likely rationalized buying a new car, unlike me. By the way, I am not a mechanic 🙂
I forgot to share this video from the moneyguys who recently did a video about big purchases like cars. They share some great stats about car purchases and provide a great example of the impact cars have on one’s portfolio. They talk about house purchases too in the video, but if your only interest in the impact of car purchases just watch the first part. Here is the link:https://m.youtube.com/watch?v=vxAfJwFUPPQ&embeds_referring_euri=https%3A%2F%2Fmoneyguy.com%2F&embeds_referring_origin=https%3A%2F%2Fmoneyguy.com&source_ve_path=Mjg2NjY
The car purchase stats and example starts at 10 minutes and 40 seconds in the above moneyguy video.
The timing of this article has certainly made me rethink some things… My 2018 Pacifica has been having more issues than ideal for only 74k miles. It won’t start and turns out to be a large issue that could cost between 8-14k to fix. Initially, I fell into the immediate thought of getting a new car because this feels awfully close to what the car is even worth. It is also frustrating to think this 6 year old car is having such large problems (which unfortunately isn’t the first issue – just the most expensive). Is there a number for maintenance/fixing problems that your thought does change regarding this? At present, I am leaning towards fixing the car and trying to get a few more years out of this at least vs be forced to buy another.
Great post!
Yuck, I’m sorry you are in this position. Sounds like you might have a crappy car. A car that is only 6 years old with 74,000 miles should have had no problems to this point and only very routine maintenance for quite a bit longer. Sure, some of that routine maintenance can be very low four figures for timing belt/water pump or high labor maintenance but not $8,000 – 14,000 in addition to what you have already spent.
I bought our Acura for $24,000 with 90,000 miles on it and it has made it to 259,000 and I’ve never spent anywhere close to $8000 – 14,000 for an individual repair.
As other commenters have mentioned, one of the risks with newer cars is more tech that leads to more malfunctions that leads to more frequent and more costly repairs. This may be a case of too much tech or maybe just a lemon. I certainly wouldn’t judge you for moving on to something this is more simple/predictable.
If you have negative equity in the car and you are going to roll that negative equity to a new financed car, that is a bit harder to swallow.
Buying cars with cash has so many benefits. Getting out from under a clunker is one of those benefits.
That really stinks to be having any issues at all at 74K miles. Sorry to hear that. I think of 74K as still pretty much new. 14K is also a heck of a fix. I’d think you could get a new engine and a new transmission for that.
It does feel like we have been cursed at this point. The 14k is essentially if they have to replace the engine. But the car was paid for with cash and subsequently have no car payment. This is partly why I’m thinking of making this fix (which will come with a warranty by itself) instead of buying another. A new van would easily be 50k and I don’t have the liquid cash for that entire cost.
Got you beat: age 40 and I’ve spent $15,000 in my lifetime. Long live my Corolla lol. The PA my same age works across from me in my office bought her new car this weekend. I now have the oldest car of my group haha.
amazing post Tyler! love how you quantified the monetary and also the life happiness value of being frugal on cars. Do you subscribe to the adage that used Honda’s and Toyota’s would be the most optimized cars to last as long as possible and save the most money? do you add Acura to that list based on your last car purchase? Or does it not matter and you can buy any brand just as long as you change the belts and fluids?
also, what about buying a used hybrid and driving that forever? do you think the best purchase would be a 3 year old hybrid so depreciation is fully maxed would be the most optimal purchase? or do hybrid not depreciate as much as a gas car given hybrid engine don’t wear down as much?
Thanks Rikki!
I appreciate you always reading and asking engaging follow up questions.
I don’t know anything about cars. I am the furthest thing ever from a car guy so I can’t speak intelligently to your questions. From my limited conversations with mechanics in Oregon and now in Utah when I have taken the Camry and the MDX in for maintenance, they consistently sing the praises of Toyota and Honda….and by extension Lexus and Acura. That seems to also be true for my clients who drive these 4 makes of vehicles.
I am very much an 80/20 optimizer. 80% of the value comes from 20% of the work. I don’t know if a 3 year hybrid is the optimal time on the depreciation scale and I’ll never know. I’ll certainly never care. Figuring that sounds like a lot of work for almost no return. I know that buying a used car with cash and keeping it 20 years is a good idea. That’s 20% of the work that gives me 80% of the benefit, that’s good enough for me.
I don’t tax los harvest, I don’t small value tilt, I don’t invest in real estate, I don’t care about asset location, I don’t move my high yield savings to money market funds, I don’t mess around on the margins. I’m not willing to triple my work, hassle, and headache to eke out the last drop of value.
I can win the game of money by crushing the basics. I aspire to be the Bill Belichick of personal finance – nothing flashy, nothing spectacular, just a ruthless pursuit of excelling at the fundamentals. As Michelangelo said to the Pope when asked about how he created The David, “It was easy. I removed everything that wasn’t David. Perfection is not adding until it is complete, perfection is removing everything that is not necessary.”
Nice dude! I myself also am an 80/20 optimizer . . . why do you think I just asked you instead of looking it up myself 🙂
“But to do it now while I have reliable transportation in the name of saving money on gasoline is … [not] environmentally sound (ditching a car years before its useful life is complete is terrible for the environment in the same way that throwing our perfectly good clothes in the landfill is environmentally problematic).”
I thought a lot about this before upgrading my 200,000+ mile Prius to my Ioniq 5. Decided to upgrade because 1) the old car can still be used by the new owner, so may not go to landfill, 2) I plan to drive the EV until it dies (the battery should last >300k miles with good battery practices) and all the environmental impact is front-loaded on an EV (living in CA majority of charging will be with zero emissions-generated electricity). 3) The ICE car emissions overtake a brand new EV pretty quickly unless the EV is solely running on coal-generated electricity, in which case it still does better than a Corolla (https://www.reuters.com/graphics/ELECTRIC-VEHICLES/EMISSIONS/rlgpdrmjmpo/chart.png). All that said, agreed that it definitely wasn’t cheaper than keeping the old car!
Loved the article. I’m going to reread this every time I’m tempted to “upgrade” my car.
As a point of clarification, no gear head would ever want a “slip differential“. When one tire has no traction, the slippery wheel would uselessly spin indefinitely while the other not spin at all. Perhaps you were thinking about a “limited-slip differential“ which would be much more useful for an off roader.
Anyway, I doubt you actually care, but just felt the need to set the record straight. Ha!
I “got sold” a pickup years back. Well, actually I sold it to myself by convincing myself I really needed it. I used the bed 2-3 times a month at best. Biggest lemon vehicle I ever had. I’m now seven years into its replacement and hoping to get another 10 to 20 years out of it. If you can teach yourself how to do belts and fluids (yes, you absolutely can), you will save another fortune on maintenance.
Cheers!
Lol! Great edit, thank you! My ignorance and indifference about car terminology was bound to reveal itself somewhere, I’m grateful to be slightly less ignorant and will henceforth use limited slip differential more accurately .
I think everything I learned about slip differential came from Marissa Tomei’s character in My Cousin Vinny during her tour de force testimony in that Alabama court room. I look forward to rewatching that scene with the new knowledge you have provided.
Thanks for reading and thanks for the comment.
You make a good point, but it boils down to the argument that if you spend less you can save more. Once you get out of your live like a resident years, spend money on what you enjoy. Most people view their car like an appliance, and if a 20+ year old camry gets the job done and you’d rather save your money to go heliskiing, good for you. If the sound of a v8 cold start puts a smile on your face and taking the long way to work to drive fast through the twisties is the favorite part of your day, I dont see the problem in spending on an expensive car if you can afford it and pay cash. Modern cars are so much nicer than they they were even a few years ago. Spending a few thousand extra a year on luxury cars adds to my quality of life so much more than spending the equivalent amount on an incrementally nicer vacation, clothes, home renovation project, etc. I like driving. I like knowing my wife is driving something she enjoys and is proud of, that my young kids are being driven in a safe vehicle, and that every time I open my garage door makes me smile. Sure this is an excess that is costing money that will add up to hundreds of thousands or millions over my lifetime, but I view this as money well spent and the same could be said for eating out, buying fancy clothes, vacations, etc.
Yes, absolutely, I couldn’t agree more. I love the intentionality you describe here.
In my opinion and observation, money and happiness most often coexist alongside organization and intention. When we know where all our dollars are going and we feel we are making intentional choices about when and why they are going there, that feels good, regardless of how many dollars we have.
Articulating the trade offs between different uses of money is so important for happiness. You did a great job of that in this comment. You find a lot of happiness in cars and the cars your family drives, you find less happiness in nicer vacations. I am just the opposite. Both are correct as both are intentional.
If one knows what are they are giving up in Area A in order to spend “lavishly/unnecessarily” in Area B and that tradeoff is made on purpose, that is all we can hope for one another. That level of intentionality is very uncommon when it comes to houses, cars, and education. I’m glad it’s not uncommon for you.
You should try a McLaren on the twisties. Very fun.
Via email:
Great article, My previous next door neighbor had a BMW and Land Rover and complained about the cost of owning and maintaining ther. I am driving a 10 year old Camry which I bought when it was three years old with 12000 miles. I only have 54000 miles on it and plan to keep it a long time. A car is a depreciating asset and I want an inexpensive car that is comfortable and low maintenance. My youngest son needed a truck so he rented it from Home Depot for about two hours for just under $40.
You mentioned cars coming from Japan. Your Camry was probably built in Kentucky and your Honda in Ohio with a high percentage of American parts. If you were to buy a Buick Envision it would have been made in China.
The SUVs are safer for the people in them, but more dangerous for everyone else especially pedestrians.
I didn’t know that the insurance company lets you keep your totaled car once they’ve made a payment for it to you. They took my totaled 10 yr. Toyota 4Runner with 145k miles on it and gave me $20k for it… I bought it new for $37k…and I know-inflation and the used cars’ price increases lately, but still…
They usually will let you buy it back if you want after they pay you.
But then you’ll need a salvage title, correct? That’s if you can repair it. And from what I understand, it will be hard to insure this car.
Yes. I had a salvage title car once though and had no trouble insuring it. It did get repaired of course.
It’s nice to have options. Most of the time I think people just let it go and take the cash. My dad bought his pick up back after it was totaled (just a dent or two but it was very old) and just used it to haul and store gas a few hundred miles a year. Sometimes it makes sense to buy it back.