Cars are expensive. They are probably the largest depreciating asset people spend money on in their lives. If you spend $500 on car payments every month from the time you are 20 till when you are 70, you spend a total of $300,000 on car payments alone (not to include, gas, insurance, repairs). That is a lot of years worth of work (unless you’re making $300,000 a yr).
As of 2006, the average life of a car is between 6.8 yrs and 9.2 yrs. If you take care of your car, you can surpass this lifespan quite easily I think. I am 30 and only just got the second car of my life 9 months ago. And only did that because my first got stolen and totaled.
Any amount of time you drive a car past the time when it is paid off you will be driving it for free (without a car payment). So to the extent you are trying to live modestly, you ought to try and drive your car as long as possible. The more yrs you can drive your car without having to make payments, the lower that $300,000 number I quoted above will be. And money that isn’t being spent on a depreciating car, is money that can be spent on more important stuff (retirement savings, kids’ college, mortgage payments, etc).
10 things to do to help minimize the lifetime costs of car ownership:
- Don’t buy a new car. New cars depreciate the most in the first few yrs. I purchased my car 3 yrs old for 50% off the new price and it only had 35,000 miles on it. I saved $15,000 that way.
- Don’t keep trading out cars. A lot of people want to be driving a new car every couple yrs. Doing this is expensive. It prevents you from ever driving for free without a car payment. And you just don’t need a new car every couple yrs. You just don’t.
- Don’t buy more car then you need. If there are only two of you, you don’t need an SUV that has seating for seven. More car costs more dollars. And not only more dollars to buy, but more to insure and repair as well. So you’ll be hurting yourself much worse than you think.
- Don’t push your car. Use the A/C if it’s a hot day. That’s fine, but don’t drive it like you’re Mario Andretti. Like anything else, if you try to make a car do what its not built to do, it will break. And fixing cars is expensive. I live in a regular city, drive a regular car (not BMW) and the rates to have work done on a car here are $85 an hr. And that is not including parts. Car work is expensive and a pain in the butt. Try and avoid it.
- Change the oil as often as you should. My Father drove 2 Ford Ranger pickup trucks to 200,000 miles in the 1980’s before they died. He believes that the reason he was able to do this was because he changed the oil every 3,000 miles. I use expensive oil in my car and only have to change it once a yr. It has worked well for me. My last car had 180,000 miles on it before it was stolen/totaled and I never needed any major repairs on it the entire 12 yrs I owned it. I would still be driving it today if not for those hoodlums stealing it.
- Don’t put modifications on your car. They negate warranties, cost a lot, and your car wasn’t meant function with them (otherwise the car would have came with those mods on it). Spending $6,000 doesn’t make any sense. I have no clue why people do it. And putting computer chips or afterburners in your car stresses the engine like it wasn’t meant to be stressed, thus shortening the life of the engine/car, thus raising your lifetime costs of car ownership. And if something goes wrong in your engine after you’ve altered it, you probably can’t take it back to Ford and say, “Why won’t you fix it, its still on warranty?”
- If you can do a fix on your car yourself, do it. It is good for you, you’ll learn something and save money in the course of doing so. Any guy out there can change his own oil. It is very simple (I will detail the steps tomorrow). Any guy can rotate tires, change plugs, change wiper blades, change a battery, change a headlight, etc. Another positive side effect of doing these things, it will help you be a man (and girls will like that).
- Don’t put overly expensive gas in your car. Unless specifically stated, your car doesn’t need premium gas. This will increase the cost of your gas upwards of 10%. That could amount to $300 a yr. If you do it for your whole life, that’s $15,000.
- Do all the recommended maintenance. I know Honda/Toyota are big on changing the timing belts every so often (I think around 100,000 miles for their recent cars). So pony up the $500 every 8 yrs to help ensure you don’t have to pony up $20,000 for a new car sooner than needed.
- Drive careful, pay attention, don’t be stupid. Drive in a manner which will minimize your insurance premiums. Don’t put on your makeup while driving in rush hour traffic. Don’t feed your baby while you’re going 55 mph. Don’t be on a conference call on your cell phone while driving to lunch. Don’t get speeding tickets. All of these hugely increase the chance of getting in an accident. And accidents are expensive. If it’s your fault, insurance will cover the value of your car, but the cost of insurance will increase by a hefty sum because now your insurance company knows that they have to insure someone who is a bad driver. And you’ll be swapping out cars, which was discussed in (2).
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Just want to point out that buying “new” isn’t always a bad idea. It depends on the car you’re looking for. I almost bought a used civic instead of a new one, but then realized it was actually the same cost to get a used or new civic (cause the new one had daytime running lights, which saved a ton on insurance), and civics lose very little value over the years. For most cases, I agree, buying used makes more sense, but it’s not always true.
I second the recommendation for being sure to get that timing belt serviced. It’s often recommended to do the water pump at the same time since a lot of the work overlaps. In most modern cars a snapped timing belt is catastrophic for the engine.