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. )
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?