Largest Expense after Housing - Cars
TL;DR - The personal finance guys were right - keep cars longer and/or drive used.
Gather ‘round! Grandpa is telling stories!
Circumstance sort of murdered my pride around cars before it had a chance to form - and that made all the difference. More than anything (except maxing my retirement savings at the start of my career) this is what got me to FI/RE.
I’m a middle kid among three boys and we are all close in age. When my older brother started driving in 1993, my dad found an 1986 Pontiac Grand Prix for $2,000 which became the kid car. It ended-up getting taken out by a red light runner around 6 months before I would have started driving. The new kid car that we had to share would become my mom’s 1988 Oldsmobile station wagon - you know, with that fake wood sticker on the lower half of the sides. Yeah. That one.
I would eventually take over the station wagon as my older brother bought himself a new Ford Ranger with a loan from my grandfather and my younger brother bought his own 1984 Grand Prix. The ”shaggin’ wagon” was oddly appealing in that I could absolutely load it up with people and it made moving to and from college an easy trip for me. But it wasn’t even is the same zip code as cool.
What it started though was a lifetime (half of one anyway) of buying used cars from family and friends, taking care of them, and then selling them when they are worn out. Like 200,000 miles worn out.
I sat down and collected some numbers on this approach. The average age of my cars when I acquired them was 5.5 years. I would only consider this because I knew who was selling them, how they drove, and how they were maintained. The average age when I got rid of them stands at 11 years.
When I look at what I paid for the vehicles and what I got when I sold them, my total outlay for purchases was around $30,000.
$30,000 for 30 years of driving. No, that isn’t including maintenance or insurance. This is just money spent to acquire and then money returned when sold. I am assuming there is around $9,000 of value left in my current vehicle to arrive at this value.
This was not out of necessity. It was straight-up frugality. I did spend a considerable amount on motorcycles over the years, but while my coworkers were dropping bank on luxury vehicles I was driving older, undesirable cars. I had coworkers fresh out of school driving Audi TTs and Corvettes. One guy financed a new Chevy Trailblazer and a couple of snow mobiles. He got laid-off in less than a year and had to move back in with his parents. That’s probably the most dire example of what not to do.
But that’s what they did and that truly is what is “normal” in our culture. Are they “retiring” at 47? I doubt it, unless they had an equity blessing from a hot start-up or some parental cash delivery (Honestly, I think parents or family are where the Corvette and the TT came from - we did not get paid enough out of school to get those kind of cars).
All this to say: Go cheap on the cars. It makes the path to FI/RE so much more achievable. Buy a good one, pay unless you can finance it for less than 3%, take care of it, and keep it a long time. My current vehicle Is 14 years old. I’ll drive it until my nephew is old enough to drive in 2030 and give it to him. Then I’ll get something in the “look I me, I’ve made it” category - like a low mileage 2025 Toyota Camry.