How I Spent Less Than $8K on Cars in 17 Years of Commuting
This post was written by Neil, an experienced car guy. He’s got lots of great practical tips; enjoy!
What is it with America’s obsession with cars? Even the most frugal among us get swept up in the hype. I’ve owned lots of cars. If I think real hard, I can remember my first car. My momma said it could take me anywhere. (Anyone?) It was a 1988 Toyota Celica GT, 5 speed Black with black interior, with flipup headlights. Suffice to say it was a chick magnet. I purchased it in the last few months before my 16th birthday for $950.
I recently had a discussion with someone who insisted that getting a new hybrid will be such an efficient use of resources the car will basically be paying me to drive it. He didn’t know who he was talking to. Over the course of my decade and a half driving career I’ve spent $7700 to keep myself mobile. I’ve always commuted, never taken public transportation, or rode a bike for any significant time during those years. That’s forty-three bucks a month for wheels. Not bad, not great either. (Yes, of course I spent on fuel, repairs, and insurance. I also sold them later. This post focuses on buying a car. )
1988 Toyota Celica GT $950
1990 Acura Integra $3,000
1997 Ford Taurus $0 (Read the story in “Free and Broken“.)
1990 Dodge Shadow $750
2002 Ford Focus $3,000
What I don’t get is people pretending to be frugal and dropping big bucks on cars like it’s no big deal. By big bucks, I don’t mean $10,000 for a used “economy” vehicle. My car purchases for the past 17 years come to less than that! What gives? The following are unacceptable excuses for buying an expensive transportation device:
“I just want to be safe.”
All cars made from 1995 are quite safe relatively speaking. If you were really concerned with safety you would stay off the road entirely. There are few riskier things we engage in on a daily basis.
“I just want my car to be reliable.”
Price and age of car care not indicative of its reliability. Consumer reports will tell you the same.
“I don’t have time to work on a car.”
How much do you value you your time? Working extra decades to fund your car choices is a lot more time-consuming than turning the occasional wrench.
“I just want to enjoy my commute.” -and/or-
“My car makes me happy.”
Why is your commute so long that you have to buy a fancy car to enjoy it? Can you see how self-defeating that is? I’ll compound my crappy commute by spending butt loads of money on it too. Listen people, a car ain’t going to make you happy, just like any other material possession.
“Would somebody please think of the children?”
Children do just fine in any four door car or wagon with the LATCH system. (Though these are not even necessary.) No need to get a fancy minivan with built in dvd players, stow and go seating, and the whole nine yards, to accommodate a couple tiny humans.
“I gotta get better gas mileage to save money.”
This is a slippery slope. Be sure to run an ROI calculation on that. I highly doubt getting a different car will actually have a reasonable break even point. Please check out my spreadsheets detailing real-life scenarios I ran for friends: Gas Mileage vs. Vehicle Cost.
“I have to have a nice car for work.”
Most likely not the case. Do you actually cart around clients that demand to be chauffeured in a special vehicle? Or are you just telling yourself that? Could you for the rare case this is true, rent a car for that day or week?
These are all bogus excuses my fellow frugal friends! You can get a good cheap used car and not have to put much money into it. It always amazes me that people justify getting a fancy car by saying they got screwed on a used car they purchased once. How is it that for over 15 years I was able to eek loads of reliable miles out of a handful of very cheap cars? Am I just lucky? Nah. Pick wisely. More on that later.
The truth is Americans are obsessed with cars. I have taken countless negative remarks about my hoopties over the years but really, who cares? If you’re into reading these frugal blogs you’re sure to have implemented some odd frugal tips. It’s funny to me that people get so into maximizing their bulk cinnamon purchases but then completely over-justify their need for a fancy car. If you want to win with money, you must get your car spending in control. Housing and transportation are most people’s biggest expenses. It’s worth it to maximize savings here. Once you get those under control, then move on to your bulk oatmeal calculations.
How to Buy a Used Car
You want a car that has passed 100,000 miles. This is the magic number. People think that once their car passes this milestone it is worthless trash and will sell it for next to nothing. One hundred thousand used to be an achievement for a car. Today, it means nothing. All cars can double this number without major component replacement. It’s not a big deal. Look at the following graph.
Maybe people think that because they claim rights to one of the excuses above, then the depreciation curve doesn’t apply to them. No one escapes the depreciation curve, no one! Notice how the graph flattens out after 100000 miles or about 9 years. This is the time to buy a used car. Refuse depreciation. Ideally you’d be like this guy who doesn’t pay anything to drive, but he’s got some extraordinary skills.
The next most important thing is that the car was reasonably maintained. At 100,000 miles you want to see the car has had its timing belt changed. You want to check the front end for clunks. Check for leaking fluids. Open the hood. Check the oil. Look at the coolant. Maybe I’ll do some follow-up posts of what to look for with each of these. If you’re not knowledgeable about cars, get an third-party mechanic to check it over for you.
Take the car for a test drive. A hard test drive. If it’s an automatic, floor it. Yes, floor it. Make sure it shifts where it’s supposed to and doesn’t grind its gears. If it’s a manual, see if you can check the clutch adjustment. Get it up to highway speeds. Get it all the way to operating temperature. Check for leaks.
Look at Edmunds car reviews for common problems for the particular model you are looking at. Determine in a worst case scenario if that issue were to happen would the car still be a good deal. Consumer Reports used car ratings are okay but not nearly as good as Edmunds. Consumer Reports will have you rule out several years of a make and model because of a transmission issue. However, one could avoid that issue by getting the other type of transmission (manual vs. auto for example).
Buy American. Seriously. Yes, Japanese cars used to be a lot better; that’s not true anymore. American cars can hold their own in the reliability department. You want to buy American because American cars lose value much faster than Japanese. This is a GOOD thing. You want to find a car that’s value drops like a rock. You are buying way out on the depreciation curve that way. You will minimize its affects. Korean cars are also a good value.
Also, American cars have cheaper parts. Go onto a car parts website and compare a few common replacement parts (exhaust, ball joint, radiator) for a Ford and a Honda. No comparison. Both of these cars will go 200,000, probably more. Japanese cars just don’t command the premium price that goes with them anymore.
Use Kelly Blue Book as a starting point for negotiations. You want to buy a car from a private party at the private party price or below. Deals too good to be true in used cars usually are. I have no problem paying private party KBB if the car is well maintained.
Where are you on the car purchase spectrum? How could you work your way down?
33 Responses to “How I Spent Less Than $8K on Cars in 17 Years of Commuting”
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You’ve definitely had some cooler first vehicles than myself (especially the Celica & Acura). My first car was a ’88 Honda Accord 2-door with the flip-up lights. It was fun, handled South Dakota winters surprisingly well, and got awesome gas mileage.
I highly recommend Edmunds as well. We bought a used family vehicle in the spring and used that site (plus Consumer Reports) to do our research.
I had a lot of this mindset early on in my career, and all it left me with were heavy car payments. No thanks. Not anymore. It’s just needs to get me from point A to point B, and I do prefer a radio. 🙂
You’ve done an incredible job of lowering the cost of cars for yourself and that is great motivation! That said, everyone has an area or two they are willing to spend more money on including cars, food, vacations, etc. For us, we managed our cars the exact same as you for the first 10 years after graduating college (until just recently buying our new car). My wife was driving a salvaged title car and I was driving a 2000 Camry. It was very cost effective for us to keep those cars and helped lead us toward the path of FIRE we are currently on. Thanks for the post!
I’m gonna come back and reference this article when we buy our next car in St Louis in a couple months. Would love to have that guide on what to look for in a used car out before then. I have been thinking that the Korean cars are where it’s at right now. Kia and Hyundai got a lot of awards for defect free models at the recent car shows I think. I’ve had so many problems with my chevy Im never going to be able to buy American again I’m afraid. Another thing I learned was never get a sunroof. Mine leaked and cost me hundreds of dollars at least.
You’re absolutely right about the sunroof. Avoid purchasing older cars with sunroofs if possible. If not, though, I’ve discovered that clear gorilla tape (5 bucks a roll, I believe) takes care of that leaking problem quite nicely — you’re just never going to open that pointless sunroof ever again 😉
(currently driving a 16 year old Saab)
Wow this is a pretty awesome post. I love how you took each objection and responded to it in a reasonable, logical, and understandable way. I also really love your “sweet spot” chart. I drive really far for work and I wasn’t quite as frugal as you, but I did buy what I thought gave me the most bang for my buck: a used Kia Spectra. It’s pretty incredible how much brand comes into play with new and used cars. I’ll take whatever brand gives me the best value!
Good thinking David… Always look for that sweet spot!
Cars are definitely a place where you can realize some significant savings by buying used. We wasted a good deal of money buying newer cars for several years.
We currently have a Hyundai Sonata and love it. We plan to stick with either a Kia or Hyundai from here on out when we need cars – it seems they make decent, reliable cars that can be purchased at a reasonable price.
Korean cars depreciate even faster than american cars! They’re dependable too!
I hope someday I can write a post entitled “How I Spend $0 on Cars.” It’s really starting to drive (pun intended) me nuts that my family and I live in a small community and still have two vehicles. But that’s another topic for another day 🙂 I have been thinking a lot of how to get down to one vehicle, so I’d be curious if you had any thoughts on how to effectively sell a car. Is it best to just sell “as is” or are there certain tune-ups that go a long way in helping one get their asking price? Perhaps something you could write about in the future 🙂
My advice on selling would be to never sell to someone you know, do basic sprucing (vacuum, dust, wash), then get it on Craigslist. Don’t sell below Kelley Blue Book.
Great tips and information here! We always buy American, but it was to satisfy my husband’s patriotism in the past. Now, we have more reason not to buy foreign cars.
We plan to purchase a van in the near future, as all three kids do not fit in either one of our vehicle. Fortunately, we’ve been able to put this off for a long time because my father-in-law has a big car that fits everyone, he rarely uses it, and he’s three houses down from us. It works for the rare occasion that all five of us go out somewhere, so we’ll push it as long as possible . . . probably until we have a fourth child (hopefully next year).
I once purchased a car over 100,000 miles and that car (my sweet, Impaletra) lasted me 9 years. I was sad when it was time to let her go:( I seriously want my Impala back!
My husband bought a 1988 Toyota Celica too – in 1988. It was one of those purchases he now regrets. The monthly payments would have covered the rent for an apartment. Very helpful to know that 9 years is the sweet spot. We’re due to replace our 17-year-old van whenever it bites the dust (who knows when?), and we’re not sure whether we’ll go used or new. The only thing we’re sure of is that we’ll go cash. I’m going to get my husband to read this!
I used to buy used cars but my last 2 have been new. I did drive the first new car into the ground (kept it for 13 years). I am still driving the second.
Recently we bought our son a 2006 Hyundai Sonata. Wow, what a nice car! It drives really nice. Much more comfortable than my compact. We bought it off a co-worker and it had been well maintained. Got it checked out by my mechanic and it got a thumbs up.
Driving my son’s car around I got to thinking that I bought new cars for many of the reasons/excuses mentioned in your post. The car we bought for less than $3000 is actually more comfortable than my 5 year-old car. I decided that it’s used cars for me from now on. Of course I am hoping to get quite a few more years out of my current car.
Yeah, Korean cars are a good value, when well used. Amazing depreciation on them.
Well, so far I’ve spent $0 on cars (I don’t have a car, I use public transport). With my wife’s car, she had a 1991 Toyota Corolla and now has a (second hand) 2007 Mazda 3. We’re looking to hold onto it for 10-20 years, should do us just great 🙂
Out of curiosity, how much would you say you’ve spent on repairs during that time?
This is so good. I wish I had your words when I tried to explain this to my wife. Don’t mind me tweeting it.
I appreciate that. Spread the word!
I love seeing the numbers on driving old cars versus new or newer ones! I let people think we’re crazy or destitute for it, but even with maintenance (and so far only one surprise repair), even considering we have to pay someone else to work on our cars, we spend way less on both than we would financing just one used car.
I would love to see a follow up or “part 2” post! I have a great mechanic (who also is a frugal guy and buys old cars private party) but I won’t always be living in this town and would love to know more about car maintenance.
Yeah, there is a misconception that cars >100k miles are junkers. Oh well, the more people who think that, the more sweet used cars there will be for people like us!
I love this post! You are so right that Americans are obsessed with cars. I know someone who recently bought a $40,000 car because he “needed a safe car for his hour long commute.” You don’t have to spend that much to get a decent car! It’s just crazy how people justify it.
I own a 14-year old Honda bought new and being driven to the ground. I’m that “rare” person mentioned in your graph. I also own a 10-year old Mitsubishi, bought used this year. I’m definitely a proponent of buying used and not spending a lot on cars.
I enjoyed the tips in this article, but I think the arguments could be responded to better. Some arguments are valid to a large degree. Here are my responses to them:
1. “I just want to be safe.” “I just want my car to be reliable.”
All modern cars are safe when bought new. However, used cars are not necessarily safe and this is a valid concern. Cars that shut off while idling at red lights, cars that overheat, or cars that won’t start when it’s time to go to work or pick up the kids from day care are not safe or reliable or worth the money or headache.
This year my 14-year old Honda became somewhat unsafe. It started overheating on the highway. So, I gave it to my mother who only drives locally and at low speeds. Glad I didn’t sell it to someone last year before it started overheating. They would have bought themselves a ticking timebomb.
Safety and relibability are valid concerns. In that case, a $10,000 pre-owned certified car that you pay cash for is what you need.
2. “I don’t have time to work on a car.”
I agree. I don’t have time to work on a car, either. For me to change a spark plug or the oil would take a few hours of learning how to do it first. Shoot, even to change a fuse, I have to research first to refresh my memory each time. It’s a better use of my money and time to pay someone else to do it, get it done, then move on to things I’m good at.
If you have a used car, you just need a good mechanic.
3. “I just want to enjoy my commute.” “My car makes me happy.”
My commute is 30 minutes long. Not long at all. But twice a day five days a week – I want to enjoy it. Fortunately, I do. As long as it’s comfortable, clean, has heat and air, has a charger for my cell so I can play music from my phone, and doesn’t make loud noises (so I can hear my music).
Liking your car is a valid, though less essential, argument. The response is that in order to manage money wisely, you need to have an honest assessment of what you really need to make you “happy” during your commute.
4. “Would somebody please think of the children?”
I agree with your response here. Chilidren do fine with four doors and 4 wheels. They only suffer if you make them THINK they need videos, food, toys, etc on every trip.
5. “I gotta get better gas mileage to save money.”
I agree with your response here. Cars nowadays have pretty good mileage. If you want better mileage, get a smaller car.
6. “I have to have a nice car for work.”
I highly doubt that.
Definitively, a salvage title car is the least expensive option, specially if you have a good mechanic, or you are not afraid of getting your hands dirty. The secret is to inspect it very well before buying, so you are pretty much aware of what you’re going to spend in parts and repairs, buy it the cheapest possible and make a good repair.
I own several salvage title cars, and my current daily driver is a 2012 Land Rover that everybody loves, and when i tell the people is a salvage title, no one can believe it. I have a 1997 BMW 328i convertible which is the first salvage car a bought more than 10 years ago, and recently a friend purchased a mercedes that the only thing that needed is tires and recharge the A/C.
Sounds like you’ve gotten some great deals that way! Thanks for the tip.
A high-priced car means high-cost car insurance, keeping a clean driving record qualifies many drivers for a big discount
That is definitely the sweet spot. 7 to 10 years old and more than 100,000 miles on them. That’s when people start to get afraid of maintenance costs
Exactly. We haven’t gone wrong with this approach yet.
I just found your blog through the Our Next Life. I really like this fresh perspective on cars. I drive an ’02 Toyota Echo (made in Japan) with 238,000 miles, and I agree with everything that you said – except the preference for American-made vehicles. My parents only purchased American-made vehicles, and they had so many problems. My first vehicle was a ’92 Dodge Dakota, and pretty much everything that could go wrong did (all before 150K miles).
Japan has a a very different manufacturing culture, and Japanese brands set the standard for reliability in many areas. The reliability of Honda ATVs and motorcycles, Yamaha snowmobiles, and Toyota automobiles is rarely disputed. This is something I’ve learned (at some point in my early 30s), not something I’ve been taught. Although magazines, like Consumer Reports, state that all cars are becoming more reliable, their own list of top ten most reliable cars includes 6 Toyota or Lexus models. Further, take a look at the mileage of vehicles that are being sold on Craigslist. You’ll notice that Toyota vehicles regularly last more than 250,000 miles – and the seller typically states that nothing needs to be fixed. I personally will never buy another brand.
I appreciate this cool site, and I just wanted to share my thoughts.
Thank you for your thoughts on vehicles. We are not brand-loyal to American cars and now own two Toyotas, but we had good luck with the American cars we owned. They did not last as long as a Honda or Toyota, but for the price we paid, they served us very well. Our 1990 Dodge Shadow was still going until 2018! After much reading and test-driving before buying our first minivan, we decided we wanted a Toyota, and purchased a 2006. Since then we also bought a Prius, and hopefully these both last a long time!