Many people in the developed world today are "car poor". They have most of their net
worth wrapped up in a vehicle that is rapidly depreciating, and spend far too much of
their income on transportation costs. The purpose of this node is to provide a handy
guide that will allow you to save a literal fortune in automotive costs over the course
of your lifetime.
First we must look at a few reasons why people so often feel that they have to
continually drive brand new cars, continually trade them in, upgrade them, and otherwise
toss all their money at them.
The reason I hear most often is that the person needs a "reliable" car. This is a
great excuse, it is easy to say, and I think a lot of people even believe it. I have
heard this excuse used for everything from trading in a perfectly functional older
vehicle for a newer one with more miles on it, to buying a brand new SUV for a
stay at home mother who already had a perfectly functional vehicle.
The reason for new cars I hear next most often is that the person cannot afford to
make repairs on an old car. I hear this one an awful lot, and once again it is usually
used to justify all sorts of purchases.
From time to time I will hear that the person wanted to buy something nice, and that
they deserve it. That little comment is a lead up (and highly related) to what is one of
the most common unspoken reasons for driving new cars, and that is because you
want to impress people.
Finally there is the employment related purchase. This one is a little less common
than others, but we will examine this one as well. These can run the gamut to perfectly
justified to absolutely ridiculous.
Now that we have heard the reasons people feel they just have to have a new car (even
if they can't really afford it), we can begin to see why many of them are faulty logic
and do not actually bring about the results that the person was actually looking for. Let
me give you a little nugget of wisdom here, if you have to make payments on something,
then you cannot afford the item. You do not actually have the resources to purchase the
item, therefor you cannot afford to purchase the item. Now with that said, let's move on
to examine the myth of the reliable car.
The myth of the reliable car.
Let us start out by realizing something, and that something is that this is no longer
1955 and most cars do not break down all the time. The reliability of cars made from the
1980s onward is incredible compared to older models. A few memes got started a long time
ago and unfortunately persist to this day, even though they are no longer true for modern
vehicles. The first is that older cars break down all the time, and the second is that
cars are pretty much finished at 100,000 miles.
But how reliable is reliable you might ask? Well, right now millions of people are
driving cars 15 years old or more with scads of miles on them, and honestly those people
do just fine. I myself have been driving older cars pretty much my entire life, and yes
they do need repairs from time to time, but they do not just leave you stranded all the
time. In almost 14 years of driving I have only been stuck on the side of the road one
time, and that was in a late-model Honda. In general I have found about once a
year I will have a vehicle that is disabled in some way. Usually this will be an unable
to start situation when the vehicle is in front of my dwelling. About once more per year
I will have something in need of immediate repair, but that will still be able to be
limped home, or to the repair shop.
Being mildly put out twice a year might be worth $5000 in extra payments, insurance,
and taxes to some people, but not to me. Yes I might have to be someplace, I could
possibly even be late due to a horrible breakdown. But, once again this isn't 1955
anymore, cellular phones have reached almost full population saturation and a tow truck,
taxi or friend is only minutes away. In practice I have been late to work because of a
car problem perhaps twice in 14 years, and one of those car problems was because the car
wasn't there when I went out to get in it. Also, one must remember that new cars can also
break down as well.
Now, there do exist in the world cars that truly do break down all the time, most of
these cars are continually failing due to the same exact problem that is never truly
repaired. This was a lot more common back in the days before everything was using fuel
injection. Now if you have a car like that then you have to either get rid of it, or have
the problem actually repaired. A car with a carburetor in need of a rebuild cannot be
faulted just because you can manage to get it started most of the time with starting
fluid, curse words, and elbow grease. Most cars that do break down all the time do so
because of a single (or multiple) problem that is not actually being repaired. Vehicles
are not very likely to break down twice a week with continually unrelated problems. A
vehicle only has so many components that can malfunction.
The myth of expensive repairs.
Auto repairs usually are not free, they cost money, and usually you will be the one
paying for them. But statistically speaking, repairs over any longer period of time
cannot even begin to match the costs of driving a newer vehicle. You would have to be
daily driving a pre-war exotic like a 1937 Cord 810 to even begin to have longterm
repair bills that would rival the costs of payments on a new car.
A lot of people do get bitten with repair bills they have trouble paying at one point
or another and then get eternally scared away from older cars. Having talked to a lot of
these people I have found two very common threads amongst these stories. The most common
one involves people who finance a vehicle that is honestly too old and too high mileage
to even consider making a monthly payment on. Very often they will be financing a vehicle
with 80,000 miles (or much more), and then have a terrible time being able to pay for
routine repairs because they could barely afford the payment in the first place. Even
worse they will often be stuck in situations where they must make very high dollar
repairs like replacing a transmission, or rebuilding an engine because they still owe
thousands of dollars on the vehicle. That transmission or engine is going to come at a
premium price as well, since the vehicle will likely still be far too new to simply be
able to source a $125 used transmission or $500 used engine, instead you will be stuck
with a $2000 repair bill.
Most vehicles have an absolutely terrible period where their value, mileage, age and
service requirements all interact in an awful fashion to make them true money pits. This
varies quite a bit from car to car, but an example might be a car that is 8 years old,
has 90,000 miles on it, but that is still easily worth four to five thousand dollars
USD on the dealer's lot. That particular vehicle will likely be financed by the
purchaser, will plummet in value faster than the payments are made, and require as many
repairs (at a higher cost), than a car five years older with many more miles. In fact
such vehicles often need more repairs than something older because they are exactly at
the point in their lives where stuff that has been wearing out for years starts going.
That is all fine and good if the car is paid for, you have owned it for years and you
know you kept the maintenance up, but it can be a disaster if you are still making
payments on it. Unfortunately the first car that many young people finance are often one
The second common thread is people who simply have no idea when to choose their
battles when it comes to automotive repairs. They will spend $2000 sinking a brand new
transmission into a $1500 car because it was shifting hard into 3rd, and that was the
only way to fix it. I have had cars that had problems like that, problems that got no
better and no worse for years, cars that took unrepaired $2000 problems like that all the
way to the junkyard when they died of a different illness. When you own a car, or
anything that depreciates and will eventually grace a landfill you have to evaluate what
is worth fixing, and what isn't worth fixing. You don't want to plow $1200 worth of front
suspension work into a 15 year old compact that would be acceptable with a set of ball
joints and a front end alignment. You don't want to spent $2500 doing bodywork on a $900 car that
someone ran into, and actually what I would do in a case like that was continue to drive
the car if it was still drivable, and then junk it as soon as it needed another repair or
the tags ran out.
The myth of impressing people.
Many people buy new cars in the hopes of impressing people, keeping up with the
Joneses, or so they can have something "nice". Well I can promise you that you get used
to the newness and the "niceness" very quickly, but you still continue to pay for it for
People are simply not going to be impressed by your new car once you get past the age
of 19 or so. Sure, you can impress your peers when you are very young, but after that you
aren't impressing anybody. If your new car says anything at all it says that you have the
ability to sign paperwork and why in the world would anybody be impressed with that.
Sure, you might have a brand new Lincoln, but I saw six of them just like it on the way
over, I wasn't impressed with those either.
Let me tell you a little story about one of my cars (yes I have more than one car, but
you aren't impressed with that because any fool can spend money). I drive a 19 year old
Chevrolet Suburban. I am continually patching the sheet metal in the thing as new rust
holes form, and the whole thing is painted camouflage, because multiple colors of flat
paint hide all the do it yourself sheet metal work on it. That car actually impresses
people in ways that a brand new Suburban never could. No, I didn't say it impressed
adults, you aren't going to impress adults with a new car. My Suburban impresses
children. I see it all the time, they point it out to each other, they wave, they come
over and look at it when it is parked, they ask me questions about it as I am getting
out. Where was I going with that is here, if you want to impress people with a car, then
you are never going to do it with a new one. If you want to impress actual adults then
you will actually have to buy a very nice one that is pretty darn old. No one cares about
your 2007 Honda Accord, but a 1967 Honda S2000 would be something that might actually
impress a few people. Children are much easier to please though, with them it just has to
be something cool.
Now onto keeping up with the Joneses. You simply have to have a new car because not
having one means you are poor and are not as well off as other people. The funny reality
of that thinking is that buying to feel well-off financially actually puts you into a
much worse position than you started at. There are thousands of things you could do with
that new car money that could make you actually be well-off instead of just
fooling yourself with it. It doesn't even take all that many years of banking that car
money instead of wasting it to pay for a college education or even a house, or you could
try to have what the people next door have.
The myth of the employment related vehicle purchase.
There are a few situations where a person's career will simply require them to have a
newer car. This is not most people. You don't have to have a Lexus just because everyone
in the office has one. But if the taxi-cab commission requires all taxis entering service
to be less than 3 years old then you have no choice but to buy one that new if you want
to drive a taxi. Equally the real estate firm you work for may require all their agents
to own newer vehicles for the purposes of impressing clients. If it isn't a requirement,
then you don't need it.
One situation in which you never want to buy a new vehicle for employment reasons is
when it isn't required and the job means you are going to be doing extreme mileage. I
have worked at places where it wasn't all that strange to put 50,000 miles a year on your
vehicle due to the job, and then watched guys eat up a brand new vehicle every 3 or 4
years (or worse, finance one that already has 100,000 miles on it), and then need a
replacement vehicle, while still owing $10,000 or more on the worn out one. Meanwhile I
would buy something for $1000, limp it along for the 2 years my registration was good for
(or until it died), and not fix a thing on it that wasn't absolutely required, and then
get rid of it and start over with another one.
In closing, think about it really hard before you buy another new car, think about why
you are doing it, what your motivations are, and if you might be happier and better off spending your