Every day I drive to work and I’m surrounded by people who show their vehicles as status symbols. The car brands of choice in my neighborhood seem to be BMWs, Mercedes, and Tesla. Sprinkle in a few more exotic choices, such as fancy brand names like Porsche, Maserati, and Bentley then there’s a massive amount of cash (or debt) sitting inside people’s garages. On my evening run I am constantly amazed by the small houses that are torn down and the replacement comes with a four, five, or six car garage! Just how many vehicles do you need? I’m sorry folks, your car is a tool and not a status symbol.
Your car serves a purpose: To get you to and from work, to get you to the store so you can buy food, and to get you to places you can’t get on foot or bike. It can even serve as a supplementary source of income, if your car has less than 130,000 miles, it can be listed for rent on Turo. If your vehicles are newer than ours, it can be used for an occasional Uber ride.
The average new car loan has topped $31,000 in 2018 with average payments of $515/mo. This means the duration of a new car loan is almost six years! (transparency alert!) As someone who earns in the top 10% of income for the area, these numbers are still asinine to me! $515/mo on average is paid with after-tax dollars. Throw in vehicle registration taxes and full coverage on insurance for this area the vehicle alone will drain $700/mo from your budget. That is an incredible amount of money exiting your bank account.
I often attempt to engage in this conversation, but the same excuses come up from people to justify their status symbol:
I want reliable transportation: The reliability of the mass produced vehicles today is incredible. You can drive a mass produced/well maintained Honda/Toyota well over 200,000 without “breaking down on the side of the road”. Usually this fear is from the experience of driving an actual shitty car in their earlier years and relating the “breakdown” to being poor. There’s a deep secret I’m going to reveal to you today: Expensive cars break down too.
The other thing you have to ask yourself is just how bad is a breakdown today and how likely would it really happen? In 90% of the country you can park your car, whip out your fancy smart phone, tap a few buttons and there’s your own driver from Uber or Lyft to get you where you need to know. Find a trusty mechanic (which is easier today in the world of online review services), have them tow your car in and fix it and you’re on your way. The cost of repairs will be astronomically cheaper than the $8,000/year a new car would cost.
I have to go visit clients in my car: I hear that from my peers in financial sales and legal. I’ve got a secret for you: They probably don’t care. Even worse, if your car is too nice they actually might think you’re overcharging them. This exact thought crossed my mind when I went to lunch with a litigator representing my company and I rode with the attorney. I’ve seen three top people in their field drive the following: 15 year old Toyota Avalon, 10 year old Prius, and a baseline Honda Accord purchased every six year and covered by company mileage. The first billionaire I ever met in person drove up in a non-discrete Chevy Tahoe.
I need a “safe” vehicle: Modern vehicles are incredibly safe. Motor vehicle fatalities per million miles driven has been flat for the last 10 years and barely decreased for the twenty years before that. Modern vehicles have airbags all around them, rigorous crash test standards, and some even carry early warning detection. The flattening of fatalities is likely because the constant push for fuel standards have caused manufactures to replace a lot of metal with lighter materials while still maintaining the same crash testing performance. You are likely just as safe in a 10-20 year old vehicle using more metal surrounding you than a newer fuel efficient car.
How do you keep a vehicle for twenty years?
Regular maintenance: Change the oil and look at the recommended maintenance that is published in your owner’s manual. Join the message board for your vehicle and you can find a community of people who can answer your questions. YouTube can teach you how to do basic tasks and finding a mechanic that can do both routine maintenance and repairs is worth
Take care of the exterior: I’ve always lived in the south/southeast and this means heat can destroy the paint. So can sun. Use a garage if you can and invest in some basic wax (the Turtle Wax Ice kit is my favorite) and apply it every three to four months. This protects the paint from deteriorating in the sun, builds a protective layer between dirt and your car, and can give you some extra protection against the damage flying debris can do to your car. I also find there’s a sense of pride when you set eyes on a newly waxed vehicle.
Strategic rentals: If you have to take a long car trip over a short period of time (such as 1000 miles in less than a week), consider renting a vehicle for the drive. Costco usually has discounted prices on car rentals and you can redeem travel rewards towards rentals. One vacation might be responsible for 10-20% of your total vehicle miles in a year. A rental can satisfy the concern about reliability when far away from home while outsourcing that high mileage period of time.
So what does this all add up to?
There’s a reason we get bombarded with vehicle ads every day. They are expensive and we just don’t use them all that often. Vehicles are also parked for 95% of their life. Just how important is that fancy new vehicle to you? Is it worth trading years of your working life for a tool you’ll only use 5% of the time?