## Your car(s) are equal to how many months income

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities

## The car(s) you drive represents how many months income ?

lump family cars and incomes together. Gross income and current value of car. e.g. Our cars are worth less than one month' gross income
71
24%
1
51
17%
2
73
25%
3
44
15%
4
25
9%
5
11
4%
6
5
2%
7
1
0%
7+
13
4%

Topic Author
Professor Emeritus
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### Your car(s) are equal to how many months income

lump family cars and incomes together. Gross income and current value of car. e.g. Our cars are worth less than one month' gross income
Aptenodytes
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### Re: Your car(s) are equal to how many months income

The tails aren't quite right. Left tail should be 0 and right should be 8+.

I answered but am not sure why.
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### Re: Your car(s) are equal to how many months income

We just replaced an 18 year old car with a new to us car. Now if you had asked last week ....
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.
market timer
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### Re: Your car(s) are equal to how many months income

Undefined, \$0 / \$0
bcjb
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### Re: Your car(s) are equal to how many months income

Right now, it's less than one month. When we bought it (paid cash), closer to 3.
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

market timer wrote:Undefined, \$0 / \$0
No that would be one month's income. 0=0 its not 0/0
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

Aptenodytes wrote:The tails aren't quite right. Left tail should be 0 and right should be 8+.

I answered but am not sure why.
The first answer is < 1 month which includes 0 and the last answer is 7+ i.e. > 7 which includes 8+
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

market timer wrote:Undefined, \$0 / \$0
No that would be one month's income. 0=0 it's not 0/0

I had a car and income like that myself once
Aptenodytes
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### Re: Your car(s) are equal to how many months income

Professor Emeritus wrote:
market timer wrote:Undefined, \$0 / \$0
No that would be one month's income. 0=0 it's not 0/0

I had a car and income like that myself once
In my mathematics I was taught that market timer is right -- 0/0 is undefined.

However, I find it hard to understand how a car can be worth \$0. Every car has some value, even for scrap. Maybe market timer has no car, but that isn't the same as having a car worth \$0.
Rob5TCP
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### Re: Your car(s) are equal to how many months income

I only put on 3000 miles per year so my 45,000+ miles are on a 14 year old car. Less than 1 month.
Aptenodytes
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### Re: Your car(s) are equal to how many months income

Professor Emeritus wrote:
Aptenodytes wrote:The tails aren't quite right. Left tail should be 0 and right should be 8+.

I answered but am not sure why.
The first answer is < 1 month which includes 0 and the last answer is 7+ i.e. > 7 which includes 8+
Yes, but the problem isn't that the tails don't go far enough away from the middle, it is that they veer to close to the middle. In other words, the problem isn't that >7 doesn't include 8+; it does. The problem is that >7 also includes 7. E.g. if I do my math and I end up with 7.1, then that corresponds to 7 but it also corresponds to >7.

No big deal -- people will figure it out.
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### Re: Your car(s) are equal to how many months income

I almost said 1 month, and then I realized that if I look at my gross income, it is worth less than 1 months income. I've never broken 2 months worth of income.
leonidas
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### Re: Your car(s) are equal to how many months income

I voted for 3 months
kramer
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### Re: Your car(s) are equal to how many months income

I drive a scooter so I disqualified myself But even a brand new one is much less than one month's spending. It's a nice feeling
Crow Hunter
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### Re: Your car(s) are equal to how many months income

Wow. I feel like a spendthrift compared to you guys.

My 2 vehicles add up to 4.9 months.

2010 Corolla with 78,000 miles and a 2011 Chevrolet 4WD Extended Cab Work truck with 21,000 miles.

The good news, according to KBB is that the work truck is still worth nearly what I paid for it new. (I practically stole it from the dealership. )

We are fairly early in our vehicle cycle though. I will keep both vehicles until I get to at least 200,000 miles or we have another opportunity to steal new vehicles from dealerships when I have cash in hand.
letsgobobby
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### Re: Your car(s) are equal to how many months income

If the answers matter at all the more telling question would be how much did your vehicles cost when you bought them?
22twain
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### Re: Your car(s) are equal to how many months income

Assuming by "income" you mean things like salary, Social Security and pension, but not investment income:

A few years ago, before we started a transition to full retirement and were driving two 10+ year old cars, I would have answered 1 month.

In the meantime, our salaries have dropped and we bought two new cars last year, so now it's 7-8 months.
Help save endangered words! When you write "princiPLE", make sure you don't really mean "princiPAL"!
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

Aptenodytes wrote:
Professor Emeritus wrote:
market timer wrote:Undefined, \$0 / \$0
No that would be one month's income. 0=0 it's not 0/0

I had a car and income like that myself once
In my mathematics I was taught that market timer is right -- 0/0 is undefined.

However, I find it hard to understand how a car can be worth \$0. Every car has some value, even for scrap. Maybe market timer has no car, but that isn't the same as having a car worth \$0.
I agree that 0/0 is undefined. But that was not the question it asks for "equals" 0=0 is defined.

I had a car I had to pay to have towed away 0 would have been a stretch
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

Aptenodytes wrote:
Professor Emeritus wrote:
Aptenodytes wrote:The tails aren't quite right. Left tail should be 0 and right should be 8+.

I answered but am not sure why.
The first answer is < 1 month which includes 0 and the last answer is 7+ i.e. > 7 which includes 8+
Yes, but the problem isn't that the tails don't go far enough away from the middle, it is that they veer to close to the middle. In other words, the problem isn't that >7 doesn't include 8+; it does. The problem is that >7 also includes 7. E.g. if I do my math and I end up with 7.1, then that corresponds to 7 but it also corresponds to >7.

No big deal -- people will figure it out.
> 7 does not include 7. that is why I put in both 7 and >7 in particular 7.1 > 7
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

letsgobobby wrote:If the answers matter at all the more telling question would be how much did your vehicles cost when you bought them?
not helpful if you want to sum the data. Everyone's current value will include people at all life cycle is in the car owning process
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### Re: Your car(s) are equal to how many months income

Using edmunds.com, total car value ~\$30k. Total montly income ~\$12k, so less than three months income but more than two.

2012 Volvo (bought used) and 2008 Honda (bought new).
Kosmo
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### Re: Your car(s) are equal to how many months income

2005 Ford and 2008 Hyundai. Both have about 120k miles. Combined value is about 60% of monthly gross. Car values are low, income is not high.

I'm not sure what one would do with this data.
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

Kosmo wrote:
I'm not sure what one would do with this data.
My hypothesis is that on the two 'big ticket consumption items" for most people (houses and cars) , that bogleheads will prove to be very thrifty consumers. The values are useful proxies for consumption costs in groups.
DFrank
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### Re: Your car(s) are equal to how many months income

I calculated just over 2.5 months for us, voted for 3 months.
Dave
letsgobobby
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### Re: Your car(s) are equal to how many months income

Professor Emeritus wrote:
Kosmo wrote:
I'm not sure what one would do with this data.
My hypothesis is that on the two 'big ticket consumption items" for most people (houses and cars) , that bogleheads will prove to be very thrifty consumers. The values are useful proxies for consumption costs in groups.
TravelforFun
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### Re: Your car(s) are equal to how many months income

Bogleheads are cheap when it comes to cars, clothes, and watches.
Grt2bOutdoors
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### Re: Your car(s) are equal to how many months income

One, but I was recently solicited to purchase a 70K car to which I kindly said no thanks. My credit rating must be improving, I've never received such a solicitation before or maybe the car manufacturer is just getting desperate to offload those vehicles?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
VictoriaF
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### Re: Your car(s) are equal to how many months income

I am dumbfounded by this question, and that does not happen to me often. I have a 17-year old Honda Civic. Every once in a while it gets mechanical problems that make me think, "This is it. It's time to get a new car." But before I do, I ask some questions, and people in this Forum and outside the Forum tell me how to fix the problem inexpensively. I fix problems, the Civic gets back to running, and I shelf the decision to dispose of it until the next mechanical problem.

I am assuming that the price I'd get for the Civic is close to zero. However, for me, it's value is rather large, because it's a stand-in for a new car. The disparity between the price and the value is huge.

Victoria
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Drew31
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### Re: Your car(s) are equal to how many months income

Based on responses, I see a new rule of thumb being created.... Never buy a car more than 3x's your gross monthly income.
DFrank
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### Re: Your car(s) are equal to how many months income

Drew31 wrote:Based on responses, I see a new rule of thumb being created.... Never buy a car more than 3x's your gross monthly income.
Except as noted above the statistic might look very different if asked about value at purchase as opposed to current value. The average age of our fleet of 3 vehicles is approaching 9 years old. We don't shy away from buying vehicles that are more expensive than average, but we tend to keep them for a relatively long time (Although in general not as long as Victoria ).

We have a 15 year old pickup truck that still carries a value of ~\$10k. It's a very popular model with a diesel engine, and has very low mileage for it's age since it's not driven daily. At purchase it was 4X that amount, and our income was quite a bit less than today. I plan to keep that truck for as long as we can get parts for it and maintain it, which conceivably could be a very, very long time.
Last edited by DFrank on Wed Nov 12, 2014 11:48 am, edited 1 time in total.
Dave
stoptothink
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### Re: Your car(s) are equal to how many months income

When we bought them, about three months. Now (2yrs later), based on slight increases in income and decreased value of vehicles, a little less than two months. With my wife's job change, we are trying to figure out if we can go down to one car and may sell the other to my sister; that would leave us at about a month.
texasdiver
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### Re: Your car(s) are equal to how many months income

Now if I had included the 9 bikes in my garage the calculation would have been a bit different!
femur
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### Re: Your car(s) are equal to how many months income

Mine is about 1/2 of one month.
Drew31
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### Re: Your car(s) are equal to how many months income

DFrank wrote:
Drew31 wrote:Based on responses, I see a new rule of thumb being created.... Never buy a car more than 3x's your gross monthly income.
Except as noted above the statistic might look very different if asked about value at purchase as opposed to current value. The average age of our fleet of 3 vehicles is approaching 9 years old. We don't shy away from buying vehicles that are more expensive than average, but we tend to keep them for a relatively long time (Although in general not as long as Victoria ).

We have a 15 year old pickup truck that still carries a value of ~\$10k. It's a very popular model with a diesel engine, and has very low mileage for it's age since it's not driven daily. At purchase it was 4X that amount, and our income was quite a bit less than today.
Blast... just ruined all the fun.
anonforthis
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### Re: Your car(s) are equal to how many months income

This topic hurts because we spent too much on cars 50% of our annual income but we paid cash for them.
hexagon
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### Re: Your car(s) are equal to how many months income

Professor Emeritus wrote:
market timer wrote:Undefined, \$0 / \$0
No that would be one month's income. 0=0 its not 0/0

My math says 0=3*0, so it is 3 months income.
Jack FFR1846
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### Re: Your car(s) are equal to how many months income

8.2667 months

Includes a car my mom drives, one my son drives, wife's 13 subaru, my 14 wrangler and my 07 lotus elise.

All paid for with cash, as is my son's college tuition
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akblizzard
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### Re: Your car(s) are equal to how many months income

I consider the Harley as recreation instead of a vehicle so didn't include it...turning money into fuel and fuel into noise since 1975
czeckers
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### Re: Your car(s) are equal to how many months income

Bought a 2-year old Subaru for less than 1 mo income.

Did buy a new van for the family at 2x monthly income.

-K
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Steelersfan
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### Re: Your car(s) are equal to how many months income

DFrank wrote:I calculated just over 2.5 months for us, voted for 3 months.
My calculation came to the same result and I voted 2 months, so we average out just fine.
greg24
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### Re: Your car(s) are equal to how many months income

If I buy a beater every 3 months, I'll have a much better ratio than if I buy a brand new car and drive it for 20 years. But the latter will be better for my bottom line.
Bungo
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### Re: Your car(s) are equal to how many months income

I would guess my car is worth about \$5k if I had to sell it, so less than one month's income. It's worth a lot more than that to me, though, because it prevents my having to buy a more expensive car.
backpacker
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### Re: Your car(s) are equal to how many months income

We don't own a car and bike everywhere. It's grand!

The Wizard
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### Re: Your car(s) are equal to how many months income

I have two vehicles, both purchased new, for \$20k in 2004 and for \$25k in 2009.
So I used \$45k in the numerator to get my ratio as high as possible...
Attempted new signature...
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### Re: Your car(s) are equal to how many months income

greg24 wrote:If I buy a beater every 3 months, I'll have a much better ratio than if I buy a brand new car and drive it for 20 years. But the latter will be better for my bottom line.
If you bought and sold a beater every 3 months the cost would be directly proportional to the state taxes/fees for a car. So, a real beater goes for ~\$1k, and within 3 months you should be able to sell it for the same price you bought it. In NY, that would run you 4 * (8% * \$1000 * + \$25 + \$50 + \$20) = \$700/year (that is sales tax, plates, title, and inspection). You get a refund on the registration fee so that is no more expensive than buying a new car (its based on weight). Maintenance would essentially be \$0 so long as every car you buy will pass a state inspection.

So, I'd argue that your beater strategy would actually be pretty effective (but not optimal) at keeping car costs down (\$14000 for 20 years ignoring inflation), but would be very labor intensive.
Topic Author
Professor Emeritus
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### Re: Your car(s) are equal to how many months income

letsgobobby wrote:
Professor Emeritus wrote:
Kosmo wrote:
I'm not sure what one would do with this data.
My hypothesis is that on the two 'big ticket consumption items" for most people (houses and cars) , that bogleheads will prove to be very thrifty consumers. The values are useful proxies for consumption costs in groups.
No. durable goods are "consumed" over time. Consumption of a car can take 10 or 15 years. The value of a car at any time tells you how much wealth is going into car consumption at that moment. I agree that driving costs additional sums.
BrandonBogle
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### Re: Your car(s) are equal to how many months income

letsgobobby wrote:
Professor Emeritus wrote:
Kosmo wrote:
I'm not sure what one would do with this data.
My hypothesis is that on the two 'big ticket consumption items" for most people (houses and cars) , that bogleheads will prove to be very thrifty consumers. The values are useful proxies for consumption costs in groups.
DFrank wrote:
Drew31 wrote:Based on responses, I see a new rule of thumb being created.... Never buy a car more than 3x's your gross monthly income.
Except as noted above the statistic might look very different if asked about value at purchase as opposed to current value. The average age of our fleet of 3 vehicles is approaching 9 years old. We don't shy away from buying vehicles that are more expensive than average, but we tend to keep them for a relatively long time (Although in general not as long as Victoria ).

We have a 15 year old pickup truck that still carries a value of ~\$10k. It's a very popular model with a diesel engine, and has very low mileage for it's age since it's not driven daily. At purchase it was 4X that amount, and our income was quite a bit less than today. I plan to keep that truck for as long as we can get parts for it and maintain it, which conceivably could be a very, very long time.
I agree with these sentiments. In my family, our cars at age of disposal were:
- 13 years (bought at 5 years)
- 11 years (bought at 3 years)
- 10 years (bought new)
- 9 years (bought at 3 years)
- 8 years and counting (bought new and still going)
- 4 years and counting (bought at 2 years and still going)

The question of the car's value compared to our monthly income will vary greatly depending on when you ask us. Disregarding the fact that income could vary greatly, a car's value to another buyer (or scrap heap) will vary greatly until it reaches an outlier age where the value is close to zero.

I abstained from answering b/c the more valuable answer IMO would be what's the annualized cost of the car on average for Bogleheads. That way, we take into account purchase price, selling price, and years of ownership. Then compare that annualized cost to monthly income.
The Wizard
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### Re: Your car(s) are equal to how many months income

Annualized cost is hard to compute except in retrospect, that's why...
Attempted new signature...
BrandonBogle
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### Re: Your car(s) are equal to how many months income

The Wizard wrote:Annualized cost is hard to compute except in retrospect, that's why...
True, but may provide more of an insight of any trends. There will be flaws there too when you consider cars there were stolen or lost in accidents.
Hector
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### Re: Your car(s) are equal to how many months income

Some people buy brand new cars and keep it for more than a decade. Some keep it till car dies. Some always buy used. Some lease. Its not effective to read anything based on the pole results.
IMO something like average vehicle cost/year to average gross income/month over last 10 year pole is more effective.

The way I see, \$\$ paid to buy and \$\$ got at sell matters. Whats the point of checking your current vehicle's value if you are not going to sale it now?