Commandment #4: A Car is Nothing More Than an Expensive Disposable Tool
Our young employee, Malevolent Missy (MM) has just landed her first real paying J.O.B. and is on the path of figuring out the best use of that gravy train of cash that pulls into the station every two weeks. It must be tempting to chug on over to the dealer and sign up for a brand new $50,000 SUV.
Slow your roll, Missy! Let’s take a look at some associated costs and long-term affects of that potential decision. If you missed the other parts of the story you can find them here.
Let’s take a look at some numbers that I laid down for y’all in Commandment #3 where we calculated the cost of a fabulous new working life. These are just some general assumptions but from the comments I think they are somewhat typical but exclude line items like a high-end gaming system or that premium GoldMember service on the Tinder dating machine. I don’t recommend these things for any real adult but if you go down that rabbit hole please get games from Activision Blizzard, graphics chips from Nvidia, and GoldMember status from one of the Match Group companies as I own stock in ATVI, NVDA, and MTCH.
When I calculated the car payment via an online payment calculator machine I made a few more assumptions. I figures our heroine and caped crusader was lucky enough to have a vehicle to trade in at the
rotten filthy thie ving vermin car dealership for $5000 bucks. Personally, I would just drive the $5k rig until the wheels fell off but that’s not the point of this piece. I didn’t include a downpayment as we used a trade value and I included 10% tax and 3% interest rate on the 5 year loan.
What can our gal “afford?”
You might say that she could cut some other parts of the budget like sharing an apartment with multiple friends/roommates, which is always a great idea anyways if you can find people you trust and with whom you can get along. Maybe the groceries are a little high or she’s lucky enough to have navigated the
rotten filthy thieving American University System with zero student loan debt. Hell, maybe she studied computer science and the take home pay is double what I estimated. For me though, the calculated amounts for a fancy car were absolutely astounding! We bought a car around 2006 for around 14,000 bucks and one around 2014 for around 20,000 and even making those payments made my colon clench. If our gal Missy in the above example opted for the 25 grand model with the parameters I laid out that extra $730 a month to enjoy her new working life just dwindled down to just over 300 bucks per month. If you really want the damned car then just be aware of the trade-off you are making. It’s harder to put extra into that house fund or travel to exotic destinations if all your steam is spent paying for some fancy wheels. Think of your extra money like air in a long balloon like those nerds use to make shapes and animals at the fair. If you divide your extra into things you enjoy and then inflate the car portion of the balloon you just had to squeeze the other lifestyle end of the balloon that includes $7 Starbucks drinks and avocado toast. If you opt for the grandly impressive $50,000 vehicle in this scenario you have not only blown your fun money budget but will likely have to cut other things like funding your E-fund or deferring your student loans. Don’t do this. Just don’t freakin’ do it.
Oh, and there’s this if you’re not convinced yet
I calculated $140/month for transportation in the little budget in the graphic above. That is just the cost of operating a car before you have even bought the damned thing. I just calculated 3 years worth of expenses for just my car. I only included maintenance, gas, car insurance, and government crap like license, registration, and safety inspections. My calculated expense on that car is for a high insurance deductible and I only commute around 7 miles each way and rarely use the thing on the weekends. It does include around 10,000 driving miles per year as we drive across the state 4-5 times a year and usually take one driving trip to the beach in North Carolina. The 2018 costs included around 900 bucks for tires and around 900 for new brakes and rotors. The rotors rust in this winter climate and I asked the guy at the garage if there was anything I could have done differently to extend their life. You know what he said? “No.” So, ’16 and ’17 were inexpensive years for vehicle ownership at around $900 each for one car but ’18 rolled in around $2500! If you must own a car then you ought to be prepared for those kinds of costs. You can’t cry about it if you know they’re inevitable. My average for that 3 year period was $116/month so I think $140 is reasonable for a person who drives a little bit more than us. Let’s do another fun little calculation to determine The total cost of operating a car if you include the cost of the vehicle. I’ll assume Missy takes the plunge and buys the Audi A3 because it’s super cool and the info-tainment system is “insane.” She’ll do the semi-responsible thing and intend to keep it for 10 years so that’s 5 years with a payment and then 5 years with only the monthly gas and maintenance costs.
60 months x $503/month = $30,180
$30,180/ 120 months (10 years) = $252/month plus the $140/ month to operate the thing
So, the grand total is around $392/month over 10 years just for the privilege if going out and running the gauntlet of highways and other texting knucklehead drivers and such. I don’t know about you but 400 dollars a month is a lot of money to me. It doesn’t stop either. You can count on these costs in perpetuity! We haven’t even thought of the possibility you might crash the thing up or have it stolen. Thieves love fancy cars if you hadn’t heard. A young person is much more likely to crash a car when they think they have it all figured out. Your rates will go up if you cause a crash. Mark it down. Almost all of my driving related mishaps occurred for me in my teens and 20’s when I was young and dumb. Most of them were because I didn’t realize I was young and dumb! So, are you getting to realize that your car is not much of an asset but just a fixed cost in your life to be minimized? If not then I haven’t done my job very well.
Is car ownership all bad?
Absolutely not. You might need a vehicle if you’re like us and live in a rural area or just live in a place where public transportation sucks. We also have that little thing called winter where it snows and makes riding a bicycle or scooter to and from work near impossible. I know it’s not impossible, but I’m not riding a bike in the snow. You might also have semi-frugal hobbies like kayaking or camping that almost always require you drive somewhere with your gear. There’s another thing too. It sure is handy and cost effective to pack up the rig and for about 100 bucks in gasoline to get at any destination within 800 miles in about a day. It’s also handy to just drive to the store any time you want and get what you need. Even though I don’t drive much other than to/from work it sure is nice knowing the car is there when you need it. How can you minimize the impact of car ownership, here are some hairbrained ideas:
- If you get a traffic ticket of parking ticket, take care of it on time. These things multiply like minks if you ignore them.
- Take car of your vehicle if you own one. Find a decent mechanic who’s not at the car dealership and if you need references go and get them from somebody who’s been using a particular shop for some time. Those places like Jiffylube and Firestone and the strip mall joints are not likely a good long-term choice.
- If you live where it snows then wash your car a few times every winter. If you’ve ever had a perfectly fine car fall apart due to rust you know what I’m talking about.
- Maybe you’re lucky to have great public transportation to get to work and you can just rent a car or use some car-share service for when you need to go out of town or run big errands a couple of times a month.
- Put down your phone and just drive.
- Keep costs as low as you can for your needs. You can shop your car insurance around every few years and try and drive less if possible. You’ll save money on gas and aggravation.
- We might consider a van to use as an art hauler next time we replace a car. The bonus is that you can sleep in a van on a road trip. They’re especially nice down by the river I’m told.
- New cars vs. used cars are an individual choice. I can see plenty of good arguments on both sides of this one. Our last 2 cars we bought new with the money in hand to pay them right off if necessary. I just want to emphasize the overall cost of driving more car than you maybe can comfortably afford or need. Do some math but if your rig gets a little older you might want to set aside some extra dollars to baby the thing as long as you can. Stuff will break. Shit happens.
Ok, Smidlappers, what have I missed. Did I just write 1600 words of obvious-ness? It kinda feels that but all the Malevolent Missy’s and Derelict Dirks out there need the 4-1-1. What’s your worst car horror story? Are y’all convinced that a car is just a sometimes necessary cost to get you from place to place and not an asset or investment?