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- Buy $40k car, trade in for new $40k car every 5-6 years.
- Your payment may average $450/month EVERY month
- Over 24 years that is $130,000 plus growth/opportunity cost as the money accumulates
Let’s call it $200,000. Now add in the additional costs of full coverage insurance for all 24 years (plus growth/opportunity cost). Now add in the additional property tax one will pay for 24 years (plus compounded growth/opportunity cost).
Now how much does having that constant car payment really add up to over the course of a looong period of time like 24 years? Close to $250,000? After all that money is shelled out, what are you left with? A car worth $12k?
Now how much does swapping cars every 12 years cost? Well, you pay $40k for your original car and $37k for the 2nd (original worth $3k). After 24 years you are out $77k (plus interest on the loans if taken) and you are left with a $3k car. Total expenditure: $74k for 24 years of driving.
Constantly driving the new car cost you about $175k more. Could you use that money? I think I could use it to make my life a lot less stressful than the stress I encounter over the unreliability of a 12 year old Toyota (which in all likelihood is rock solid).
Using this rough math, it’s easy to see why some frugal people take things a step further and drive ONE car for 24 years. $40k. That’s it. CHEAP. Granted, this case would take some luck, dedicated maitanence and the will power to delay gratification a long time. Plus paying for repairs (some possibly major). 15k miles/year for 24 years? Possible? Well, my aunt started driving later in life - her first car was a 1995 Corolla (bought in 94) which was nearly the base model aside from being automatic. She loved that car and took incredibly good care of it. She worked a steady buy not high paying office job and lived with her parents so she could’ve paid cash for a $300k car if she got an insane itch. THAT 23 yr old car was sold last year with 350k miles and replaced by a shiny new 2018 Corolla which will likely be the last car she ever buys. So relatively speaking, did she really suffer that much driving a 1995 Corolla? Nope, she simply wanted something to take her to work and occasionally carry passengers. Heck, I’d drive a clean well maintained 1995 Corolla NOW for 99% of my driving. Skimping out on what some claim to be necessary made the difference in her retiring relatively comfortably or just being someone working at 60-65 hoping they will scrape by on SS.
Your $40k car price is too high for somebody willing to frugally get through life on the same car for 12 years. People who are inclined to buy a $40k car are probably inclined to have nicer things in the first place. You could easily make the argument that a $100k car is just not a good investment and you would be right, but if you just want a newer, reliable car, you’re talking about half of your $40k price tag. Assuming a payment of $225 that’s only $64k for 24 years of reliable transportation.
As for retirement, where people get the idea they’re going to enjoy a multimillionaire lifestyle after living a life of frugality I have no idea. If you didn’t spend money in your youth, you’re probably not going to spend it as a retiree either. It’s getting left to your cats.
Depreciation will eat up most cost so it’s probably more important to factor depreciation than it is to worry about the actual list price. I once bought a 6 year old Corvette for $25k. I kept it 5 years sold it for $20k ($1000 total cost per year or $88 per month). That $20k got rolled into a new $37k Jeep. Financed $17K now paid off 6 years later, now worth $30K (actual cost $7k or $97 per month). I’m not actually starting all over again from scratch but I am driving a newer car and mixing it up a bit. The thought of just driving only two, worn out, old, boring cars for 24 years sounds morbidly depressing.
You’ve been lucky on getting stranded. Me not so much. I’ve been stuck on top of a bridge twice during rush hour (once an electrical failure and once a locked up front brake pad). Once during a hurricane evacuation (leaking freeze plug requiring a transmission drop to get to). Once in the middle of the night (failed water pump....and the next day the wheels were stolen). Some expensive repairs I’ve had that didn’t strand me but still needed to be fixed were an exhaust leak, a transmission rebuild, and a transmission that didn’t go into reverse. Those cars all had less than 100k miles. Sure a newer car might make it further, but somebody else can figure out exactly how far. I have kids now and take cross country trips. Having a few extra $k in the bank wouldn’t make me feel much better if I end up sitting on the side of the interstate out of state in freezing weather waiting for a tow truck.
No kidding. Don't forget the 4-wheelers, motorcycles, extra project car, etc.
I can't really believe what I am reading on this forum because it's so far out there that I can't even believe it.
You are so correct on that this forum is way out there. What i don’t understand is why do people even care what others drive it seems to me certain people just have to be nosy all the time and worry about other people’s lives to much. These type of people remind me of old gossiping women that always talked about what someone else has or did. People today are just dam materialistic these days and have to put their 2 cents in about what others have or drive.
Wow. This is crazy. Do you guys really believe this crap?
I have met guys who believe things like this, but I’m sure these guys on here are too smart to do so. (You would have loved my late FIL!) I’m sure they’re just messing with you...although there was that one comment about the millionaire having all his money liquid and not tied up in stocks, bonds, or any other asset that gave me pause.
Anyway, I’ve never paid anywhere near $40k or even $30k for a car, so who knows. I buy cars new, then keep up with maintenance, keep them clean and in the garage when I am not driving. My 2009 looks pretty good. I am hoping to get at least five more years out of it. It has only 65k miles, so I am not anticipating a problem. I drive even fewer miles since retiring in 2014.
I find this to be the case as well. Most famalies I know, including mine, the husband drives the crappy beater and the wife drives the nice car. My wife even works from home yet drives the nicer car.
I think it has more to do with men typically understanding the value of a dollar while women do not and think money is a renewable resource. I'm not saying all women are like that but quite a few are. So the husband does everything he can to save money because the wife does everything she can to spend it .
Naw not really, we keep a new fresh car for hurricane evacuations, my job involves a nasty commute so we bang up the old vehicle till it falls apart instead of beating up the newer vehicle.
Your $40k car price is too high for somebody willing to frugally get through life on the same car for 12 years. People who are inclined to buy a $40k car are probably inclined to have nicer things in the first place. You could easily make the argument that a $100k car is just not a good investment and you would be right, but if you just want a newer, reliable car, you’re talking about half of your $40k price tag. Assuming a payment of $225 that’s only $64k for 24 years of reliable transportation.
As for retirement, where people get the idea they’re going to enjoy a multimillionaire lifestyle after living a life of frugality I have no idea. If you didn’t spend money in your youth, you’re probably not going to spend it as a retiree either. It’s getting left to your cats.
Depreciation will eat up most cost so it’s probably more important to factor depreciation than it is to worry about the actual list price. I once bought a 6 year old Corvette for $25k. I kept it 5 years sold it for $20k ($1000 total cost per year or $88 per month). That $20k got rolled into a new $37k Jeep. Financed $17K now paid off 6 years later, now worth $30K (actual cost $7k or $97 per month). I’m not actually starting all over again from scratch but I am driving a newer car and mixing it up a bit. The thought of just driving only two, worn out, old, boring cars for 24 years sounds morbidly depressing.
I am frugal with cars because they are not important to me except for their utility. I spend comparatively little time in them. I care that they run well and are clean and comfortable. You like more variety. We tend to spend more money on things that are important to us and that varies from person to person. I spend a lot more money on my house because I spend most of my time there. My money isn’t going to cats! If there is any left, my sons will get it.
This was pointed out to me during a conversation about how being "Mr.Fixit" is not as appealing to women as it was for previous generations like the old saying "if she don't find you handsome at least she can find you handy", anyway it was pointed out that most women drive new cars that Joe Shadetree can't work on beyond minor stuff. Well I actually thought about women I know, women I've dated(who had cars) and I starting just paying attention when I'm out driving or Cycling to the women driving or getting in and out of cars.
Well that guy was right for the most part, on average most women I see out and about are in cars no older than 2010ish, you see an 86 escort driving by 9 times out of 10 it's gonna be a guy driving it.
And while it seems the most high end cars are driven by men so are the vast majority of beaterz(2X4 as a bumper, coat hanger as a car antenna etc etc). Even lower income women(service workers, like fast food or waitress types) seem to have newer cars or they get rides to work but not much in between.
The only main exception I've noticed is older retired women.
Why do you guys think this is?
OP, you said you saw most women driving cars that were 8-9 years old, or less. A lot of those were bought used. I don't see how your observation supports a conclusion that women buy new cars. I just bought a 2010 used car months ago. But that wouldn't count in your book, as a used car?? Please explain.
I just went out and leased my wife a new 2018 vehicle yesterday big deal and if anyone asks me why I’ll tell them it’s none of their business. And if i ever did tell them i would say because i could and i did. I like keeping people guessing.
Your $40k car price is too high for somebody willing to frugally get through life on the same car for 12 years. People who are inclined to buy a $40k car are probably inclined to have nicer things in the first place. You could easily make the argument that a $100k car is just not a good investment and you would be right, but if you just want a newer, reliable car, you’re talking about half of your $40k price tag. Assuming a payment of $225 that’s only $64k for 24 years of reliable transportation.
As for retirement, where people get the idea they’re going to enjoy a multimillionaire lifestyle after living a life of frugality I have no idea. If you didn’t spend money in your youth, you’re probably not going to spend it as a retiree either. It’s getting left to your cats.
Depreciation will eat up most cost so it’s probably more important to factor depreciation than it is to worry about the actual list price. I once bought a 6 year old Corvette for $25k. I kept it 5 years sold it for $20k ($1000 total cost per year or $88 per month). That $20k got rolled into a new $37k Jeep. Financed $17K now paid off 6 years later, now worth $30K (actual cost $7k or $97 per month). I’m not actually starting all over again from scratch but I am driving a newer car and mixing it up a bit. The thought of just driving only two, worn out, old, boring cars for 24 years sounds morbidly depressing.
You’ve been lucky on getting stranded. Me not so much. I’ve been stuck on top of a bridge twice during rush hour (once an electrical failure and once a locked up front brake pad). Once during a hurricane evacuation (leaking freeze plug requiring a transmission drop to get to). Once in the middle of the night (failed water pump....and the next day the wheels were stolen). Some expensive repairs I’ve had that didn’t strand me but still needed to be fixed were an exhaust leak, a transmission rebuild, and a transmission that didn’t go into reverse. Those cars all had less than 100k miles. Sure a newer car might make it further, but somebody else can figure out exactly how far. I have kids now and take cross country trips. Having a few extra $k in the bank wouldn’t make me feel much better if I end up sitting on the side of the interstate out of state in freezing weather waiting for a tow truck.
LOL. You’re saying that people with $40k on hand AND who live frugally wouldn’t be willing to drive a $40k vehicle for 12 years? That’s crazy. Plenty of comfortable people still buy based on value. You’ll see tons of comfortable people driving something like a 2007 CRV with 130k miles. Sure they could’ve kept a newer car or bought a $80k SUV but why? When it comes to people moving appliances $40k is about where you top out on value and return for your dollar (leather, reliable, good power, tons of safety features, etc). A handyman I used for example was a retired engineering CEO and lived in a million+ home - what did he drive? A 2007ish Kia Minivan and his wife drove a 2010ish Accord. My aunt is worth many millions and drove a 1999 Avalon up until a few months ago...bought a 2015 or 2016 Traverse. I myself could afford an expensive luxury car, but I drive a car worth less than $10k. It saves me money and does what I need.
Your situation and whatever you paid is a single data point. The fact is most 5-6 year old $40k cars will trade in for far less than $20k. Therefore the high payments never stop. Since when is a 12 yr old car worn out, old and boring? If it’s boring it’s that way because you bought a boring car on day 1. If you’re morbidly depressed because you drive a 12 year old car - get therapy. Who says 12 years is old for a car? I don’t think anything of seeing a person driving say a 2006 or 2007 Accord. I certainly wouldn’t assume they suffering from their impoverishment. A 12 year old car would likely have 130-180k miles so why is it some extremely unreliable hunk of junk? Are you saying modern cars can’t be driven more than 100k miles without worrying the crap out of you? You aren’t living in reality.
I have met guys who believe things like this, but I’m sure these guys on here are too smart to do so. (You would have loved my late FIL!) I’m sure they’re just messing with you...although there was that one comment about the millionaire having all his money liquid and not tied up in stocks, bonds, or any other asset that gave me pause.
Anyway, I’ve never paid anywhere near $40k or even $30k for a car, so who knows. I buy cars new, then keep up with maintenance, keep them clean and in the garage when I am not driving. My 2009 looks pretty good. I am hoping to get at least five more years out of it. It has only 65k miles, so I am not anticipating a problem. I drive even fewer miles since retiring in 2014.
According to some you will be morbidly depressed (if you aren’t already) driving a 2009 vehicle past 2020. You should be looking at your 3rd car loan by now.
LOL. You’re saying that people with $40k on hand AND who live frugally wouldn’t be willing to drive a $40k vehicle for 12 years? That’s crazy. Plenty of comfortable people still buy based on value. You’ll see tons of comfortable people driving something like a 2007 CRV with 130k miles. Sure they could’ve kept a newer car or bought a $80k SUV but why? When it comes to people moving appliances $40k is about where you top out on value and return for your dollar (leather, reliable, good power, tons of safety features, etc). A handyman I used for example was a retired engineering CEO and lived in a million+ home - what did he drive? A 2007ish Kia Minivan and his wife drove a 2010ish Accord. My aunt is worth many millions and drove a 1999 Avalon up until a few months ago...bought a 2015 or 2016 Traverse. I myself could afford an expensive luxury car, but I drive a car worth less than $10k. It saves me money and does what I need.
Your situation and whatever you paid is a single data point. The fact is most 5-6 year old $40k cars will trade in for far less than $20k. Therefore the high payments never stop. Since when is a 12 yr old car worn out, old and boring? If it’s boring it’s that way because you bought a boring car on day 1. If you’re morbidly depressed because you drive a 12 year old car - get therapy. Who says 12 years is old for a car? I don’t think anything of seeing a person driving say a 2006 or 2007 Accord. I certainly wouldn’t assume they suffering from their impoverishment. A 12 year old car would likely have 130-180k miles so why is it some extremely unreliable hunk of junk? Are you saying modern cars can’t be driven more than 100k miles without worrying the crap out of you? You aren’t living in reality.
Calm down there buddy. Yes I’m saying all those things. Unlike you, I’m a bit of a car guy. Picking out just two more cars for the next 24 years is a depressing thought. I mean, it’s a great investment strategy if you want to live forever. I’m sure in the next life you can have a nicer car.
Yes, I’ll see tons of comfortable people driving some boring POS 12 year old Kia, but maybe they spend their money on burbon and hookers. I don’t know and don’t care, but it’s obvious they just see their car as an appliance. I also see very comfortable people leasing brand new Mercedes and BMW’s and saving money on hookers and burbon. Whatever. At least they can get to work in the BMW.
Yes after 100k miles (or in some cases before that) your car could have an expensive failure at anytime. Especially now that design requirements are based more on emissions and fuel efficiency and less on longevity. The manufacturer isn’t in the market for selling you used cars, they’ll only promise their design up until the warranty ends then you’re on your own.
My goal in life isn’t to be a retired engineering CEO that works as a handyman driving a 10 year old Kia minivan. That actually sounds pretty dreadful. I’m sure his cats will be happy when he goes though.
We’ve been over this before, but a car payment is perpetual even if you pay it off and drive it forever. It doesn’t matter if you’re driving a Ferrari or an old Kia, it will eventually need to be replaced unless it’s a collectors car you plan to keep in the garage and take to car shows.
How much you plan to spend to replace it is a matter of your own finances, priorities, and personal taste.
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I just bought a 2010 used car months ago. But that wouldn't count in your book, as a used car?? Please explain.
You should be looking at your 3rd car loan by now.