[Editor's Note: Today's guest post was submitted by Dr. Dimitrios Tsatiris, a psychiatrist that writes on the interface of anxiety and achievement. In this article, he discusses the value of resisting lifestyle creep in matters of cars. We have no financial relationship.]
I am a physician and drive the same car 10 years out of medical school. Here’s why.
Logistical Reasons to Keep a Rusty Car
It is Monday morning and I am on my way out the door with my coffee mug in one hand and briefcase in the other. I walk up to my car and examine the streak of rust on the door as I fumble for the keys.
I may be a physician but I still drive the same car since medical school—a 2010 Honda CRV with approximately 195,000 miles.
When I was a pre-med college student, I never imagined I would be an attending physician driving a worn-out vehicle. I had fantasies of driving a luxury car that screamed “I made it!”. Such fantasies no longer exist as I have come to terms with reality.
Financially Smart
The financial reasons for staying pat are apparent. It takes a great deal of time and money to become a physician. Upon completing college, my studies included four years of medical school followed by four years of residency training. In 2016, the median debt burden for medical school graduates was $190,000, which I have painstakingly paid off. Couple this with raising a young family, and there is no way to hide the late start in my financial life.
Psychological Reasons to Keep a Rusty Car
More importantly, there are psychological reasons that compel me to keep my rusty car. As a psychiatrist, I would like to share these insights with you.
Will a New Car Make Me Happier?
First of all, I question how much happier I would be after purchasing a new car. I am sure I would initially be happier. Who would not pick driving a Tesla or an Audi over a rusty Honda? However, would the increase in happiness be transient or sustained?
We have a tendency to look into the future and predict how we will feel. This is known as affect forecasting. Naturally, we pursue endeavors we believe will make us happier and avoid those that make us feel worse. Moreover, the better we think something will make us feel, the more we want it.
Unfortunately, we fall for a trap. In general, we are good at predicting whether something will initially make us happy. However, we are not good at predicting how much happier something will make us. We tend to overestimate the enduring impact that future events have on our emotions, a phenomenon termed impact bias.
Dr. Dimitrios Tsatiris
In other words, we overestimate how much happier a future purchase will make us. There is a hedonistic adaptation where the initial satisfaction from the purchase fades and we eventually return to a set level of happiness.
I am sure purchasing a new car would initially make me happier as I played with all its bells and whistles. It would be nice not to be greeted every morning by a streak of rust. However, my initial joy will fade away along with the new car shine and smell. It won’t be long before I notice others driving the same model vehicle or I obsess over newfound scratches. Give it a year before envy rears its ugly head as the newest model hits the streets.
Driven by Social Motives?
If a new car only leads to short-term happiness, then I have to question my motives behind such a purchase. Am I purchasing a new car for me or to impress others? Could such a purchase represent an attempt to project a successful image?
Most people do not care about the car that you drive. They are too busy dealing with their own life stressors. However, if someone wants to judge you for the car that you drive, then is their judgment not a poor reflection on them rather than you?
Sustained Happiness
Sustained happiness is not found in material possessions. This realization keeps me grounded. As a practicing psychiatrist, I have worked with many affluent people who drive luxury cars. Yet, they are suffering. You are more likely to find true happiness by fostering healthy relationships, engaging in meaningful work, and making positive contributions in the life of others.
Pursuit of Humility
The pursuit of humility is an additional psychological reason I hold onto my old, rusty car. Like many traits, humility can be developed with intentional and consistent effort.
In our fiercely competitive society, where the quest for achievement and material possessions has become the top priority, humility has taken a back seat. The growth of social media has further exacerbated this pattern. This is an arena where people glamorize their lives as they boast about their achievements and possessions. This is a shame, because we need more humility in our lives.
Humility comes with many benefits. It has a positive effect on self-awareness, self-management, social awareness, and relationship management. Humble individuals have a constant desire to improve and avoid the trap of overconfidence which clouds judgment and decision making
Perhaps my humble upbringing gravitates me to this trait. I am the son of immigrants who came from Greece with a high school diploma in their pockets. My father is a cook and my mother is a cashier at a grocery store. Money might have been tight growing up as we pinched pennies to make ends meet, but love was plentiful. The key to raising a family is not an abundance of material possessions but rather providing a loving and nurturing environment in which the child can thrive.
Influence on My Children
This leads me to the final reason I refuse to let go of my old car. I am mindful of how my actions and lifestyle choices could influence my children. None of us live in a bubble. Any action that we take has ripple effects on others.
If I drive a luxury car and live in a mansion, what message am I sending to my children? Is there a possibility that my children will become accustomed to the lavish lifestyle and expect more of the same when they are adults? Could they feel inadequate if they fail to sustain such a lifestyle in their adulthood?
I draw inner strength when I reflect on challenges that I have previously faced. They remind me that I am resilient and will find a way to overcome current obstacles. I do not want to deprive my children of this gift by making their lives too comfortable.
Wrap-Up
There is nothing inherently wrong with purchasing the car or house of your dreams. Such purchases do not preclude you from being an outstanding parent, raising a wonderful family, and making positive contributions in the lives of others. However, it is important to be mindful of any potential traps that come with lifestyle inflation.
Have you chosen to drive a “rusty car”? How has fighting lifestyle inflation helped you psychologically? Are you happier because of it? Comment below!
Good piece. The caveats in the last paragraph are important. I read pieces like this often on a financial blog, and I think it’s important to point out that personal finance is personal. Yes, there are studies that show that experiences produced more happiness than material items. That does not mean it applies to everyone, and too often I see “financially woke” people who look down on others for their material purchases (to be clear, not what the author here is doing, just a general statement).
The sports car I purchased after paying off my student loans and building up my net worth has undoubtedly added to my happiness, and in a sustained way. I however, do not have children and have chosen to rent a very low cost apartment and live in a moderately low cost living of area. The impact on my finances has been negligible, but the impact on my happiness substantial. I personally enjoy the car more than I would a trip to Europe, but I’m in the minority where traveling holds no special appeal.
Important for newbies to keep in mind – you have to know yourself when mapping out your journey to FI. It’s always been said that you should enjoy the journey along the way. If you are truly a car person, and you know it will bring you more happiness than other items that you can save money on, then there’s nothing wrong with driving a nice car as long as the rest of your financial ducks are in a row.
You make a great point. You don’t have to spend on nothing but you can’t spend on everything. I spend a ton on my children’s education (private religious school) because this is a huge value for me and my wife. So I have a modest car and house. No kids and renting a small house? Go nuts on your favorite car as long as your other finances are good. When they’re out of school I plan to upgrade my car too!
Amen to your last paragraph. Know yourself and what makes you happy. A car adds little to my happiness, but a boat (with perhaps the worst possible reputation in personal finance circles) has brought me many good times.
I had my Toyota 4Runner for nearly 300,000 miles before I gave it to my nephew. Still running today. But I wanted a new car after having no payments for more than a decade. I buy and hold my cars, including my “toy” roadster. I love cars and they do make me happier in ways, but I fully believe in the point the author has in bold under Sustained Happiness. That is worth having in bold font.
This article is everything! We are proud drivers of a 2008 Honda Odyssey and 2011 Subaru Outback, parents of 3 teenagers with a paid off house.
Reached FI in our early 40’s and loving life. Great article!
This article speaks volumes…I myself still drive a 2008 Dodge Ram 2500 that the dealer couldn’t get off the lot fast enough back then after the housing disaster. Needless to say I got a ridiculous deal, which was my only excuse for buying a new vehicle in the first place. Three months after I bought it brand new, I was visiting my niece in Tucson and while roller blading in broad daylight someone tried to steal it, and it still bears the dents from this attempt. The ONE fancy feature in the truck is that special key, preventing the perpetrator to start it up and drive away. So yes, there went my brand new truck. After the initial heartbreak, it was almost a relief to no longer have that shiny new metal to worry about. Today I can boast that it still only has 98,000 miles on it because I pedal 6 miles to work 6 months a year, rain or shine, to a very fulfilling job and can brag about my infantile deisel that requires no additive and is still a baby some say. I hope to have it for many more years, dents be proud!
Love it. That 2500 is golden. We are clising in on retirement at the end of this year and have kept our cars at least 10 years each. Done we have driven for 12 years. We bought a Benz a couple of years ago that might just be my last car ( gave the current Benz to my ENT resident son with over 200k miles on it). That Ram will last for decades. Cummins makes a great diesel.
Nice. I’m still driving a 2007 F-350 diesel with over 500,000 miles on the odometer. Hauls and tows everything I need it to. Doesn’t take diesel exhaust fluid, gets great fuel economy (for a large truck), cheap to insure (cuz I only carry liability now) and I don’t care if it gets a dent or scratch. I still get compliments all the time on it because I keep it nice. Nobody ever believes it has a half million miles. If I was worth a hundred million I would have a hard time justifying buying the same truck new to replace it. I hate parting with my money the older I get; and I think my new vehicle buying days are over. My parents retired very early on my father’s middle-class income. Made wise investments in real-estate and they were very good at not wasting money.
Some people get a lot out of cars, others do not. I found out early in my career that I do not care about cars and the only reason I wanted a fancy sports car as a teenager was to impress my peers. I drove my last car for nearly 15 years before it died, and I’m hoping to get a full 20 years out of my current one. There’s great peace of mind driving a relatively old, plain car; you never have to worry about it getting dented or stolen. It’s a tool, and it does the job. I have shaved years off my working career by avoiding the expensive attending car; that time is priceless.
I love love LOVE this post so much!! While my “rusty car” isn’t quite SO rusty ie still looks quite nice in my opinion (a 2010 Mazda 3 black sedan), it’s certainly outlived its ideal proverbial doctor lifestyle years (haha). Meaning I got it in residency around 8 years ago. I never really gave it too much thought (perhaps this simple upbringing thing isn’t such a bad idea 😉), but then one of my colleagues made a comment over a conversation about my car and said “woah, it’s time for a grown up car.” Not being a jerk but it did make me think. Reasons why I (still) haven’t replaced this car: 1. It’s SO cost-effective, bought and paid for. 2. My QoL is so much more improved by my favorite (and really primary hobby) – travel. And needless to say, travel can be an expensive hobby. With that said, I would choose travel a million times over replacing my highly functional, still attractive (why I picked it in the first place doh) beloved “Froggy 2” (car nickname). 3. I don’t REALLY care what people think about my car, that much. 4. I’m really the only one ever in it (except my COVID fur-baby now too). 5…drumroll… I’ve NEVER (never!) had to take it for a SINGLE repair. Outside of usual oil changes, tire rotations etc. Go Mazda! Needless to say, while I’ve been considering a new car for the past year for some functional reasons such as basics of a defroster etc that would make my getting around a bit easier, rusty car definitely stays too!
Great post but I don’t get the part about rust. The last two cars we turned over were 18 and 20 years old. Neither had any rust.
You must not live in a place where they salt the roads to melt the snow/ice in winter. Road salt hitting the undercarriage of your car at freeway speeds is a killer.
Lol… Rust is the ONLY problem with our 2008 Honda Van and 2011 Outback. We live in the Northeast.
A newer car keeps me happier for 2 reasons.
1. The newer technology allows me to listen to podcasts during my commutes.
2. I do not have to worry as much about the possibility of my car breaking down.
I have bought and owned new cars (up to 6 years old) for the last 12 + years, and have never had my car break down. That is huge in my book. Also, I do not purchase ridiculously expensive luxury brand cars either. The cars that I have owned that I bought new are: Toyota Corolla, Honda CR-V, and now Subaru Crosstrek. And my wife has driven a Nissan Rogue and now a Toyota Highlander, also bought new. Between all of these, never a single issue on the road (except for when someone backed up into my Crosstrek in the parking lot last year)…
Aside from safety advances (ESC is mandatory as of model year 2012 and is the biggest safety innovation since seat belts per IIHS I believe. Blind spot monitoring, rear auto brake, rear cross traffic alert, automatic headlights, etc), a used car doesn’t even save that much more over a new car of the same model.
Here is a 2021 Toyota Camry XLE V6 which is a high-end Camry costing $38,547 to purchase and has an Edmunds 5 year true cost to own of $46,479.
https://www.edmunds.com/toyota/camry/2021/cost-to-own/?style=401871900
Edmunds compiles mass data for car operating cost; you may get a 10 year old Camry with 150,000 miles and use it for 5 years, 80k miles without repairs in those 5 years but you’re likely to have to spend a lot on repairs. Used cars just break down a lot more often than newer ones.
https://www.edmunds.com/toyota/camry/2021/cost-to-own/?style=401871900
The 2018 Camry XLE V6 costs $28,318 to purchase and $40,295 to operate over 5 years.
https://www.edmunds.com/toyota/camry/2018/cost-to-own/?style=401720476
That’s 6,184 over 5 years or 1,236 in annual savings operating the 3 year old Camry. You’re *not* saving ~10,000 which is the purchase price difference due to higher repair costs and maintenance of the used car.
A 2015 XLE V6 Camry costs ~37k to operate over 5 years or ~9k saved over the 2021 version.
Point is that saving 1-2k a year in car costs and having a less reliable, less safe car is not worth it, in my opinion, for professionals making 170-300k net a year. I personally live on about 50k a year as a youngish attending and save 72% of my net income which is a bit below average doctor income. In residency I maxed out my roth ira and 401k making ~55k gross a year. My car is a lower end value “luxury car” that costs about as much to operate as a new, higher-trim Camry.
I agree that doctors can get in trouble with car costs but if you’re getting an Acura ILX, Buick Regal, or other reasonable cars it’s worlds away from having three 80k cars that cost 20k each a year to operate. Moderation in everything. You can get a lot of car safety and features for an extra 1-2k a year over most normal cars. Just avoid the 10k quarterly European trips and 1 million dollar McMansion and you’ll be fine.
1. You can buy a bluetooth speaker.
2. New cars break down too. A little less often, but it certainly happens.
Drive what you want of course (so long as you can afford it), but I wouldn’t necessarily use those two reasons to justify it.
I listen to podcasts daily in my 2002 Oldsmobile Alero. Just have it on my phone or iPad, goes to my headphones. Can also install a new stereo for CHEAP that has Bluetooth capability.
I have also NEVER been stranded by a vehicle breaking down, even though all I have ever driven is junkers.
Previous car was a ’96honda civic with over 200K miles, never a problem (sold it and bought a bicycle) and I bought it for $1K, sold it for $800. Ended up needing a car again a few years later and bought my current ’02 Oldsmobile Alero for $1.3K 6 years ago. Never had to do more than basic maintenance (battery, brake pads, tires, oils changes). Never been broken down on the side of the road in the 10 years of driving those 2 vehicles. ’91 Jeep Cherokee, worked great, never an issue. ’85 Toyota pickup, reliably got me from A to B in high school.
Drive your new cars for whatever reason you’d like, but the reasons you gave were pretty weak. You can just say “I drive new cars because I like it!”
People make it sound like “being stranded” is some terrible thing. I got “stranded” a couple months ago on a Saturday when my fan came detached from the engine and entered the radiator. I called my insurer, a tow truck picked it up 45 minutes later, and my sister ran me home. If she hadn’t been available, I’d have called Uber. The mechanic fixed the car Monday morning and we picked it up Monday afternoon.
Inconvenient? Sure. Something I’d spent another $5K a year on cars to hopefully avoid happening once every few years? Probably not.
Now there are places I go where being stranded would be a much bigger deal, but most people don’t go places like that.
I love cars and have been from about 5 years old. I could not afford a car till I started my internship. My first car was a Chevy Impala 1972 with the powerful 400 cubic inch engine. I loved that car. I am retired Anesthesiologist and enjoying life.
I have had fancy cars throughout my carrier. Porsche 928 with dual Callaway turbos , The first BMW 733 I in 1978 , BMW 335 I AWD and now a BMW X 3 M 40. My next car is going to be an EV. I have set my eyes on the Mercedes Benz EQS.
Financially I have done very well. My investments have paid me dividends quite handsomely. I can very well afford to pay for a fancy expensive car. I am not selfish. I donate to lot of charities here in the US and around the world. I think at this stage of my life I am ready to splurge a little bit.
Norman
This is all well and good, but I think you’re underestimating the incredible safety advances of newer models. One serious accident could ruin your life or those of your family members. Keeping everyone as safe as possible takes precedence IMO.
“As safe as possible” can be carried to rather extreme levels. Probably safer to move closer to work than upgrade to a brand new car every 2 years. Certainly I’ve got a lot of hobbies that are far more dangerous than driving a 10 year old car.
Moving your entire house may be a very difficult task and comes with many transactions costs…and may be impossible for some, especially with both spouses working. Driving a safer car is a worthwhile investment.
You’re using the word investment in a way that I do not. Consume your money however you see fit.
Newer vehicles are dramatically safer than older. Your not insignificant risk of dying in an automobile accident can be dropped dramatically by upgrading even by 5 years from the aforementioned 2010. And the NNT and impact of that change is respectively smaller and larger than most of the pills we Rx on the daily. “Newer” doesn’t mean a new car every 2 years, straw man.
Excellent article!
Re: ‘Influence on Children’ – given that we have 3 young children and both my
wife and I come from middle class backgrounds, I often ponder how to balance between my desire to give my children ‘the best’ vs how to foster the hunger/drive to work hard. I know that these are not always mutually exclusive but often seems to me that achieving one may come at the expense of the other.
Jim and others – thank you for the wonderful content!
I worry a lot about that too. The likelihood of our children making anywhere near as much as we do is very, very low.
Controlling car costs is huge, very much like controlling housing costs. But the sweet spot where you still enjoy your life versus making do with something totally inadequate is different for each of us. If it wasn’t, you and I would be living in a 300 sq ft RV down by the river that also served as our only car. I was lucky and my work provided me with free cars and the LCOL area we live in had very affordable housing. Now that I’m financially independent with multiples of what we need to fund our lives we do drive nicer cars. My wife just got a brand new baby Bronco, a Bronco Sport for $40K. I got a three year old Infiniti sports car last year for $25,000. We love both vehicles and as car guys the fun of a better than basic set of wheels makes up happy for pretty much the entire life of a car. My wife loved the last new car she got, a 2006 Nissan SUV for the entire 15 years she drove it. But we draw the line around 200,000 miles because we don’t need the friction in our lives that potentially unreliable cars bring. Plus its really small money at this stage of life.
Steveark,
I would be THRILLED if my 2008 Honda Van gets 200K, we are at 154+K. It literally has not had one major repair!!! I LOVE this van! Our 2011 Outback is at 86,600 but goes through break pads and rotors like crazy. My husband flies a giant Airbus for a living and LOVES cars and transportation. He’s waiting to go all EV. He’s got his eye on the VW Electric Van or a Tesla , the Ford EV Charger or the Rivien. Don’t get me wrong, he would love and could buy a Porsche now but we are currently paying the first of 3 kids college tuition. Enjoy your new rides!
Your Honda van will probably make it with room to spare. We bought ours used just before bringing our twins home from the hospital. It made trips to countless sports and scout outings. Just before it was to become the teenagers’ “band bus” it was totaled in a shopping mall parking lot. The kids were very sad at the loss of their potential wheels. They bought junker cars to get themselves through school and college. I’d buy another Odyssey in a heartbeat if I had anyone other than myself and the dog to drive around now.
Great article! I wish more articles re: home renovation. Its even more expensive and not necessary luxury. My house is in a beautiful neighborhood, good shape with an original 20+ yo kitchen and bathrooms. To do what I want would cost around 150 k… ! I am fighting the desire to spend a lot of money for my outdated house i would love someone to share their thoughts and experience about it.
Like this post?:
https://www.whitecoatinvestor.com/principles-to-consider-when-doing-home-renovations/
I read that post before and love it. I wish to see more posts about houses and home renovations. I don’t think too many women are crazy about fancy cars but home improvement is a deferent story.
We are overseas in Okinawa currently (husband is military) and driving my 2007 Toyota minivan has really given me some perspective on this topic. I now KNOW that I don’t need a nice car to make me happy. Everyone here has an “Oki car” that is beat to hell by the salt in the air and the kids on base 😂. I like not worrying about dents, dings, and pricy insurance.
Good arguments for newer car is not much costlier, might be safer. However if we buy new then keep longer, with proper maintenance, there’s no need to replace every year or two or even every 5-6 years. Only drawback if you have no spare car is having to get the new car with minimal notice when the first or most annoying repair is needed after 6,8, or 12 years and it’s time in your financial and convenience scenario to save the effort by replacing it. Now buying a used car is a riskier proposition and I no longer do it (Lotus and Mazda when in England for only 4 years excepted).
Buying a new car and driving it for a long time is probably the second or at least third cheapest way to do car ownership. I think repeat $5K cars is probably the cheapest, with buying 2-3 years old and driving forever second. The key is really in reducing turnover and the costs of depreciation.
I’ve been driving the same car since 2005 at 190k miles. It keeps going she why get rid of it.
I bought a brand new Acura RSX Type S straight out of college back in 2004. At the time, it was a bad idea because I really couldn’t afford it, but I drove that car for 11 years and put 261k miles on it. No repairs needed, only routine maintenance. Ultimately turned out to be a great financial decision. Upgraded to a certified Accord in 2015 and have been driving it ever since.
I’m a big proponent of getting a car you like, taking care of it, and driving the wheels off of it. It’s nice not having a car payment and, as you stated, it sets an example for our daughter that we don’t have to hold a note like everyone else does, and we don’t have to get a new car every few years like everyone else.
Great piece. The one thing to think about is safety. Driving a car may be the single riskiest thing we all do on a daily basis so anything to make it safer is worthwhile. The safety improvements in cars in the last decade has been profound. (Not to mention the inherent higher risk of a car issue at 195,000 miles.) So while one does not need a luxury car, a newer car may still be worth it. We earn money not to have the biggest brokerage account but rather to invest that money in the things that matter. Few things matter more than the safety of our family. Food for thought.
Friday I leaped 8 feet across a 35 foot deep pothole and then rappelled 200 feet off a stick wedged into a slot canyon. Driving certainly is not the riskiest thing I do. But if it is the riskiest thing you do, then sure, buy a car with a 5 point safety harness and wear a helmet while driving. 🙂
Just kidding you mostly, but the “safety argument” can be used to justify anything and can easily be carried to an extreme.
Apples/oranges. Let’s say for twice the money you currently spend on that hobby you could halve your risk of serious injury or death. Would you? I would.
I do not doubt you would. Heck, you’d probably buy a new car to reduce your risk of death by 0.01% per year.
Per the NHTSA, you are 71% less likely to die in a new car vs a 20 year old one. Impressive relative risk reduction, but probably not a very impressive absolute risk reduction given the likelihood of dying in a car accident in your entire life is less than 1%. So at best, you’re reducing your risk by 0.7% over your lifetime. Divide it by 100 years and it’s 0.007% per year absolute risk reduction. I’m not going to buy a new car every 3 years to get that, sorry.
But you can carry this line of thinking to ridiculous extremes. For example, I’ll bet your car isn’t the very safest model on the road, is it? And maybe you’re better off not getting on the road at all. Having groceries and restaurants delivered probably reduces your absolute risk by a greater amount than getting a new car. And a shorter commute would dramatically reduce your risk. Or retiring completely. And certainly avoiding road trips. But then you have to ask yourself what you’re living for, because no matter what you drive, you’re not getting out of life alive.
When you take risks in your hobby activities, you have considerable control over the level of risk (perhaps not completely, given the vagaries of Mother Nature). When you’re on the road, your risk is very much outside your control depending on the crazy/drunk/high/texting/dozing drivers you encounter. I’m sure as an ER doc you have first-hand knowledge of how devastating serious auto accidents can be. And yes, it’s possible to overemphasize risk (e.g., never leaving the house). But that’s not what we’re talking about here. You don’t have to buy a brand-new or super-expensive car to take advantage of the remarkable safety features of newer vehicles. (If you aren’t sure what those are, Google is your friend.). Why buy umbrella insurance or disability insurance since those risks are reasonably low? It’s because you want to insure against catastrophic events that could ruin your life or those of your loved ones. Same thing here.
The risk of disability from all causes is at least one if not two orders of magnitude above the risk of death in a car accident. But you can equate them if you like.
Likewise for umbrella insurance. It costs $200 a year. Always driving new cars might cost $10K more a year. Can’t really equate them.
I can’t see the difference between used and new approaching 10k a year unless you’re talking about very expensive cars to begin with (driving a used S-class won’t win you any frugal points regardless of relative savings).
Just for fun, a cursory analysis:
2021 rav4 with 0 miles costs 25k (no haggle price) with 0 miles.
2015 rav4 with 85k miles costs 16k.
A 2010 rav4 with 150k miles costs about 10k.
A 2005 rav4 with 200k miles costs about 4k.
And presumably largely worthless at ~250-300k miles, if it hasn’t already broken down completely.
So the depreciation per year seems to be about :
1,500 a year for first 6 years
1,200 a year for next 5 years
1,200 a year for next 5 years
~750 a year for final 5 years.
If you don’t buy, Leases appear to be the most expensive option: 4K a year over 3 years. Perhaps avoiding leasing is the most important take-home message.
Of course you also might end up buying the 2010 rav4 with 150k miles and having a total loss after 5 years (at a reasonable 200-225k miles) meaning it would be the MOST expensive option.
Even if we assume repair costs are identical buying new just isn’t THAT much more expensive.
To your point about safety. If you value your life at 10M a year (what governments often consider to be about right), you presumably would trade 100k for a 1% chance of dying. That’s fairly conservative IMO, for doctors. Regardless, if we value life at 10M, then 0.7% absolute lifetime mortality reduction translates to a ~70k benefit. Then you have reduction in disability odds, or reduction in severity of disability (unknown degree, but plausibly similar magnitude).
So if anything after going through the numbers you have convinced me to buy a newer car. The ~900 dollars a year in safety benefit + benefit of warranty + gas savings make buying a new car (or relatively new car) an absolute no-brainer over a junker – regardless of financial considerations or even considering that a newer car will be generally a more pleasant experience to drive.
Maybe Toyota just depreciates less, but since they’re the #1 brand (I think?) I used their most popular vehicle (base rav4) and at least in that instance buying a 15+ year old rav4 seems like a downright terrible idea. Sales tax (in states that have it) will also shift things in favor of 5 year old over new, but in any case these are trivial amounts of money, ~1,000 a year without factoring in gas savings/safety/warranty at which point it’s technically cheaper.
Really it’s about avoiding expensive (>50k) cars, or leasing cars. Buying mainstream new (or lightly used) cars and using them for 5-6 years is pretty cheap too.
I agree. To get to $10K a year you’d have to compare a used beater to a new fancy pants car.
Don’t forget costs of insurance too, it’s not JUST depreciation.
Completely agree that safety is critical. However, it takes millions of miles of real world application to know which features deliver of that goal. Buying cars a few years old will get you all the safety gear that has been shown to be effective. Then it is a matter of keeping up and replacing the car if a new feature comes along that yours does not have and has been shown to contribute significantly to safety.
Although safety innovation is constant, it does not always work.
Avoiding expensive cars and new cuts the dollar value of depreciation dramatically.
We drive nothing but Honda vehicles because of the performance, reliability and the cost. We replaced our Honda Odyssey van with a Honda Ridgeline. Great truck! We buy all vehicles new and drive the wheels off them. Honda has two electric vehicles rolling off the line in 2024.
But, what does his wife drive?
Not a doc, but a “high income pro” we are both driving 2012 cars – highlander and accord. No plan to quit anytime soon. Actually thought we would since the kid will be driving next year. Its looking like a used car purchase. Maybe a prius? She is worried about gas prices.
Hello fellow psychiatrist! I enjoyed the article and can relate. My 2003 Honda Accord has 157K miles and works well enough. I enjoy the ‘stealth wealth’ factor and predictability of my current ride.
That being said I do have some worries about how long it will truly last every time I have to put money in for moderate repairs.
Since starting my own practice during the pandemic, I had the itch to get a nice USED car as a business expense just for GPS and USB ports as ‘luxury amenities.’ The few trips to dealerships was such a turnoff. What is your contingency plan when your CRV finally breaks down?
Consider using CarMax or Carvana if you don’t like visiting dealerships. Life’s too short not to enjoy a few pleasures. Assuming your financial ducks are in a row and you can meet your goals what’s the harm in spending $25-35k on an excellent used car with the features you want? Especially if you drive a lot you’ll be far more comfortable.