The $2000-$4000 Car :) This made me wealthy so jump on board

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
HenryPorter
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by HenryPorter »

Scotty Kilmer has me nearly 100% convinced I will be OK with a good used Camry or Corolla.
lazybones18
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by lazybones18 »

I drive 50 miles everyday back and forth from work
I spent $60k on my last car because if I am spending 1.5 hours in my car everyday I rather get something luxurious, comfortable and fun to drive.
I enjoy the drive now and I wouldn't say the same if I was driving a cheaper car
Wannaretireearly
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Wannaretireearly »

I'm thinking of the EOL date for my wife's Honda Odyssey at 'only' 10 yrs and 96k miles.
Wife won't let me do this anytime soon! She loves it.
However, I fear the van becoming a money pit.
Low miles now though, 3/4k a year.
Delaying the timing belt change cos the annual miles are so low, and I expect to get rid of the van within the next 5 years. I really don't want to put big $ into a 10 year old vehicle, other than oil changes/tire rotations.

Food for thought, as for every seller of an old vehicle there is a buyer taking on risk imo.
This time next year, we'll be millionaires!
Wannaretireearly
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Wannaretireearly »

inbox788 wrote: Wed Apr 07, 2021 5:03 pm
phxjcc wrote: Wed Apr 07, 2021 1:40 pmMy Texas friend says it is because some feel that they will never be able to buy a house, they decided to buy a fancy car.
They've got it backwards. They'll never be able to buy a house BECAUSE they decided to overspend on fancy cars.

For the price of a couple of fancy cars, they can probably buy a home in a LCOL area.

FWIW, OP is driving average age vehicles (10-13 years old), though likely higher than average mileage. Just think, half the cars you drive past today might be older than what OP is driving.
https://www.caranddriver.com/news/a3345 ... d-12-years

25% of cars in the U.S. are at least sixteen years old as vehicle age hits record high
PUBLISHED TUE, JUL 28 2020
https://www.cnbc.com/2020/07/28/25perce ... -high.html
Heard this phenomenon in other countries too.
E.g. youth in UK have little chance of affording a house, even with good professional incomes.
So. Spending on cars becomes normal, while living with parents/family.
This time next year, we'll be millionaires!
onourway
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by onourway »

I’m sure this has been brought up somewhere in the 4 pages so far - but you’ve spent $15k on cars in the last 10 years. Your ‘savings’ in the sales price of each beater is illusory because it must be immediately rolled into the next purchase.

I’ve pretty much practiced this our entire life - owned exactly one new car (very cheap lease) and currently, despite a nw well into the two commas, we still don’t own a vehicle with less than 100k miles. That said, a few years ago, after about a decade of keeping track of every penny of repairs and maintenance in our vehicles, I gave up the idea that an old beater was enough cheaper over the long run to warrant the hassle. I think if you look at your real costs over the last 10 years - including oil changes and tires and brakes and taxes and so on that you would not be all that far ahead from if you’d just bought a decent $20-25k vehicle new or near-new in 2010. And you’d have driven a nicer vehicle during the last 10 years and saved yourself a whole lot of time. Certainly not enough difference to make any substantial impact in your path to long-term wealth.
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goonie
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by goonie »

Wannaretireearly wrote: Thu Apr 08, 2021 2:36 am I'm thinking of the EOL date for my wife's Honda Odyssey at 'only' 10 yrs and 96k miles.
Wife won't let me do this anytime soon! She loves it.
However, I fear the van becoming a money pit.
Low miles now though, 3/4k a year.
Delaying the timing belt change cos the annual miles are so low, and I expect to get rid of the van within the next 5 years. I really don't want to put big $ into a 10 year old vehicle, other than oil changes/tire rotations.

Food for thought, as for every seller of an old vehicle there is a buyer taking on risk imo.
10 years is starting to push it for most timing belts, regardless of miles. They deteriorate with age, just like tires. You said you expect to get rid of the car in the next 5 years - you could be really pushing it if you try to go 4-5 more years without replacing it. I also wouldn't considering a timing belt replacement as "big $".

Have you been maintaining the car beyond oil changes and tire rotations? If not, that may partly explain why you fear it becoming a money pit.
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sunny_socal
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by sunny_socal »

onourway wrote: Thu Apr 08, 2021 5:53 am I’m sure this has been brought up somewhere in the 4 pages so far - but you’ve spent $15k on cars in the last 10 years. Your ‘savings’ in the sales price of each beater is illusory because it must be immediately rolled into the next purchase.

I’ve pretty much practiced this our entire life - owned exactly one new car (very cheap lease) and currently, despite a nw well into the two commas, we still don’t own a vehicle with less than 100k miles. That said, a few years ago, after about a decade of keeping track of every penny of repairs and maintenance in our vehicles, I gave up the idea that an old beater was enough cheaper over the long run to warrant the hassle. I think if you look at your real costs over the last 10 years - including oil changes and tires and brakes and taxes and so on that you would not be all that far ahead from if you’d just bought a decent $20-25k vehicle new or near-new in 2010. And you’d have driven a nicer vehicle during the last 10 years and saved yourself a whole lot of time. Certainly not enough difference to make any substantial impact in your path to long-term wealth.
Yes, the $4000 car is actually a $7000 car:
- $4k for the car
- $1k for new tires on day one
- $1k for new fluids in order to baseline it (engine, brakes, transmission, differential, coolant)
- $500 for new shocks/struts
- $500 for a bluetooth capable head unit, to replace the crappy OEM HU

And it's like that with every used car. You really have no idea how it's been maintained, might as well fix it up. Looking at it another way, you could "subtract" that $3k from the price for a new car if you want to normalize the two.

So I bought a new Honda Accord in 2015, drove it for 130k miles and just sold it. Purchase price $20.5k, sale price $10.5k. Depreciation 10k.

Thrify OP "lost" this much on his three vehicles:
1) $500 + $3000
2) $600 + $3000
3) $700 + $3000

So I see roughly the same overall cost between the two approaches. Those driving a POS are simply robbing Peter to pay Paul. I understand the thinking and I've often driven such cars but much simpler to buy a Japanese car and drive it for a long time. Only expense is maintenance and that's a part of any vehicle.
vg55
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by vg55 »

I agree with the OP and others that stress saving on transportation (and housing).

I have done that for 46 years since i bought my first car.

The first car cost me $25 dollars. Bought it at a yard sale.

The guy was selling the car radio and I asked how much for the whole car. Same price $25. Took me through college and helped me get jobs. Sold it for $25 to a junk yard. My friend wanted to buy it from me, but his mom called me and begged me to find another buyer.

Since then, i have always bought used vehicles. Vintage has to be at least 3 years old so that I can rely on consumer reports, safety and recall data.

So my purchase criteria are:

- at least 3 years old vintage
- very green on reliability (consumer reports)
- high safety ratings (IIHS HLDI) https://www.iihs.org/
- at least a good deal (blue book)
- good to great mpg (less an issue now that i am in the PHEV world -- typically > 250 mpg)
- clean car fax
holycow007
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by holycow007 »

phxjcc wrote: Wed Apr 07, 2021 1:40 pm
Just got back from Costco—can’t believe the number of young families in $50,000+++ SUV’s.
Do the math....at 84 months, you are > $500 month.

I am a car geek, but that is ******g your money away.

My 700HP/800 TQ toy? $32K

My Texas friend says it is because some feel that they will never be able to buy a house, they decided to buy a fancy car.
I may have to agree that is true. It just depends on where people are
These days it is phone, car ,house in that order. Take your pick on where you spend.
A select few are an exception
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bg5
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bg5 »

Buying cheaper vehicles is a great way to save a lot of cash. I understand the safety part but the reality is the safety argument is not that solid. If you get in a bad accident these newer cars will not save your life....my as well drive something cheap and keep investing :D
cshell2
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

Wannaretireearly wrote: Thu Apr 08, 2021 2:36 am I'm thinking of the EOL date for my wife's Honda Odyssey at 'only' 10 yrs and 96k miles.
I have a 2005 Odyssey with 220K and it was pretty much all general maintenance until I hit 200K. Then stuff started going. This last year is when it really started to get annoying. Yesterday the AC quit. I'm hoping it's just the clutch (same thing happened on my 2007).
ajcp
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by ajcp »

Tingting1013 wrote: Wed Apr 07, 2021 11:48 pm
Slacker wrote: Wed Apr 07, 2021 10:29 pm
Tingting1013 wrote: Wed Apr 07, 2021 7:25 pm
Slacker wrote: Wed Apr 07, 2021 6:56 pm
Our current vehicle, purchased for $26,000 after tax credits, will hopefully last us at least 12 years.
Electric vehicle? If so put the VIN through Carvana and see how much you could get for it now!
I did this on your advice and was surprised to see our 2017 vehicle was potentially worth almost 20,000 on carvana. $6000 for 3.5 years of use and 38,000 miles. Of course this was only for my own entertainment since we have no desire to sell our car at this time.
You can get a brand new EV / PHEV for $20k OTD after tax credits. Nissan Leaf and Honda Clarity are the top contenders.
Given that they spent $26,000 after credits 3 years ago, they probably got a slightly higher end model than the Leaf or Clarity, which makes this basically "a 3 year old nicer car = a new not as nice care". Which is true of many things to be fair.
holycow007
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by holycow007 »

cshell2 wrote: Wed Apr 07, 2021 10:26 pm
New Providence wrote: Wed Apr 07, 2021 7:38 pm In old movies or old pictures you rarely see new cars.

Now, I look around. Never see a car older than 10 yrs. Never see, for example an old Benzo or old Bmer around. I go to the mall and don't see one single clunker.

It is strange.
Strange is right. I'm wondering where you live that you never see a car older than a 2011 around? Definitely not my experience.
These days it is hard to tell a old car from new unless you are in a area where weather takes a toll
we live in utah with 10 year old cars - both purchased used at 3-5 yrs old and they look fine on the outside except for the scratch on the bumper that wife managed to put on. They cost us 28K when purchased and are currently around 70K miles
stoptothink
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by stoptothink »

holycow007 wrote: Thu Apr 08, 2021 8:16 am
cshell2 wrote: Wed Apr 07, 2021 10:26 pm
New Providence wrote: Wed Apr 07, 2021 7:38 pm In old movies or old pictures you rarely see new cars.

Now, I look around. Never see a car older than 10 yrs. Never see, for example an old Benzo or old Bmer around. I go to the mall and don't see one single clunker.

It is strange.
Strange is right. I'm wondering where you live that you never see a car older than a 2011 around? Definitely not my experience.
These days it is hard to tell a old car from new unless you are in a area where weather takes a toll
we live in utah with 10 year old cars - both purchased used at 3-5 yrs old and they look fine on the outside except for the scratch on the bumper that wife managed to put on. They cost us 28K when purchased and are currently around 70K miles
We're in Utah as well. Our car is 4.5yrs old and there are some new/nice cars in our neighborhood, but just as many 10 and even 20 (and one ~40yr old truck) year old vehicles as well. I totally agree, it's probably just difficulty in discerning what is an "older" car.
cshell2
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

holycow007 wrote: Thu Apr 08, 2021 8:16 am These days it is hard to tell a old car from new unless you are in a area where weather takes a toll
we live in utah with 10 year old cars - both purchased used at 3-5 yrs old and they look fine on the outside except for the scratch on the bumper that wife managed to put on. They cost us 28K when purchased and are currently around 70K miles
I agree. I was thinking about the "no cars older than 10 years" comment when I was walking through the parking lot into work today and unless you know the body style of each make/model by year, it is hard to tell age by appearance...and I live in MN where weather is a factor. My 16 year old van driven every winter just has a couple quarter sized rust spots by the wheel wells. The rest of the finish is perfect.
dknightd
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by dknightd »

bg5 wrote: Wed Apr 07, 2021 8:11 am Good Morning,

Everyone has their "thing" that they enjoy to spend money on so if cars are your "thing" then please don't be offended. I have no problem dropping $500 on a round of golf at Whistling Straits or spending $200 on a meal every now and then.

With that being said I am always shocked at the amount of money people throw into cars. The vast majority of people cannot afford the cars they drive and it really takes away at their ability to become financially independent. I totally understand that on this boglehead board that most people can easily afford the cars they drive.

My goal with this post is to make people realize that if you want to get rid of your $700 car payments its very easy to buy a car in the $2000-$4000 price range and have it last for many years....often times being able to resell it for almost what you bought it at.

I have found that both Honda and Toyota's are almost indestructable and will often times reach well over 300,000 miles if you keep up on standard oil changes. There are plenty of cheap Honda Accords and Toyota Camrys on FB Marketplace right now in the price range I described above. I have been doing this for years and have found that the vast majority of my wealth has come from not having car payments and taking that money and investing it. See my story below and please understand that these cars are not rust buckets...I live and work in a wealthy area and these cars fit in just fine and dont stick out like a sore thumb.

2010 I bought a 2000 honda accord with 180,000 miles on it for $2200 and I drove it for 3 years and put 60,000 miles on it. The car still worked great and I ended up selling it in 2013 for $1700.

2013 - I bought a 2002 Honda pilot with 200,000 miles on it for $2800 and drove it for 2 years and put 40,000 miles on it. In 2015 I sold it for $2200.

2015 - I bought a 2005 Honda Pilot for $3300 and it had 210,000 miles on it. I drove it for 3 years and put 60,000 miles on it and in 2018 I sold it for $2600.

2018 - I bought a 2007 Honda pilot for $2300 and it had 210,000 miles on it. I drove it for 15 months and the engine blew......I sold the car in 1 day after the engine blew for $1000 :) Unreal as the resale value of Hondas is nuts....basically had people fighting over the car with the blow engine and still got a stinking grand.

2020 - I bought a 2009 Honda Pilot for $4000 and it had 220,000 miles on it


Bottom line is I realized that my cars Im driving are costing me very little amounts of money and I am taking all the money that I would of put into car payments and just invest it. Cars drop in value like crazy but what I have found is that there is always a HUGE market for cars that are selling in the $2000-$4000 range. If I showed you pics of these cars you would say to yourself that these are nice cars....they are not rust buckets and they look and fit in just fine.

So if you are someone who is trying to free up some cash then I would start with cars....they lost a lot of value and there are plenty of deals out there for reliable cars at a cheap price. I buy all my cars off of private sellers on Facebook marketplace and I know very little about cars. I could not even change the oil if I needed to. Buy a Honda or Toyota and it will run and last a lifetime while still having a great resale value.

If you have questins please let me know.
Your hobby seems to be buying and selling used Honda Pilot. You must like them ;)
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds. Retired 9/19. Still working on mortgage payoff.
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mmmodem
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by mmmodem »

sunny_socal wrote: Thu Apr 08, 2021 7:08 am Yes, the $4000 car is actually a $7000 car:
- $4k for the car
- $1k for new tires on day one
- $1k for new fluids in order to baseline it (engine, brakes, transmission, differential, coolant)
- $500 for new shocks/struts
- $500 for a bluetooth capable head unit, to replace the crappy OEM HU

And it's like that with every used car. You really have no idea how it's been maintained, might as well fix it up. Looking at it another way, you could "subtract" that $3k from the price for a new car if you want to normalize the two.

So I bought a new Honda Accord in 2015, drove it for 130k miles and just sold it. Purchase price $20.5k, sale price $10.5k. Depreciation 10k.

Thrify OP "lost" this much on his three vehicles:
1) $500 + $3000
2) $600 + $3000
3) $700 + $3000

So I see roughly the same overall cost between the two approaches. Those driving a POS are simply robbing Peter to pay Paul. I understand the thinking and I've often driven such cars but much simpler to buy a Japanese car and drive it for a long time. Only expense is maintenance and that's a part of any vehicle.
Spending $3000 on a $4000 car is the complete antithesis of what OP is saying. When I purchased my $3000 beater 3 years, I spent:

-$3000 for the car
-$0 for new tires. I inspected the tires they had a lot of life left in them.
-$30 for an oil change to baseline. The other fluids were inspected and were fine. Differential and transmission fluid will be replaced on schedule per owner's manual
-$0 for a BT dongle. I unplugged the $30 AUX BT dongle from my previous vehicle and transferred to this vehicle.
-$30 for front wiper blades

I see a huge difference in cost. Agreed, if you don't, this is not for you.
lazydavid
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by lazydavid »

bg5 wrote: Thu Apr 08, 2021 8:03 am Buying cheaper vehicles is a great way to save a lot of cash. I understand the safety part but the reality is the safety argument is not that solid. If you get in a bad accident these newer cars will not save your life....my as well drive something cheap and keep investing :D
Aside from the industry safety tests whose data suggests the exact opposite of your statement, there is a very high-profile crash in the news right now that illustrates it beautifully. Vehicle hit a tree at 75mph, cartwheeled through the air and rolled down an embankement. Driver broke his lower leg and foot, but is otherwise fine.

I literally had a conversation at dinner last night where I said "you know, it wasn't that long ago that hitting a tree at 75mph was fatal pretty much all of the time, no matter what you were driving".
JackoC
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by JackoC »

quantAndHold wrote: Wed Apr 07, 2021 2:04 pm
bg5 wrote: Wed Apr 07, 2021 10:55 am But I always hear people (even on this forum) say that they dont know how people got so much money. I think its fair to say that an easy place to look is in the driveway and if you are struggling to save for retirement your cars are probably a bug reason for this. Another poster mentioned people buying to much house which again makes total sense.
The thing, though, is that how people “got so much money” is almost never by saving, but by earning more. Broken Man’s caregivers are never going to build wealth, no matter how cheap their car is, because they just don’t make enough money, just like nobody, no matter how much or little they make, is going to become wealthy by cutting out their morning Starbucks.

One of the Boglehead tenets is living within your means, and like Klang Fool said, saving has to come before discretionary spending. But once that’s in place, there are limits to how much of an effect even extreme frugality is going to have. If someone is making $40k, they’re already living a pretty frugal existence by necessity, and being even more frugal is only going to have a small incremental impact. By the same token, if someone is making $300k, they can build wealth by just following some basic principles and not being a complete idiot with their money. For these people, a $2000 car isn’t necessary for success.
I agree. Funny thing often on spending threads here is implicit assumption in the suggestion and numbers of average-ish income, then repeated chiming in by people making several times to order of magnitude above median. Which is overwhelmingly the way people get actually rich, high savings rate at high income (on top of which you can add super frugality if you really want to, but it's not necessary with high income, and won't get you rich at low income).

Rules like saving half your after tax are valid for high income people seeking to get rich faster, IMO. The rule isn't *impossible* at median-ish income but by and large impractical in a family context in US society (you can ignore societal norms of a 'basic decent life' yourself, it's much harder to force your family to). Likewise suggestions like getting very cheap cars are practical at low incomes but break down at higher income, as financial ideas. People promoting their favorite rules sometimes become a little tiresome in their insistence their rule applies universally, when they could just quit while they were ahead with a consensus that their rule has merit in a certain income range. Getting very cheap cars breaks down at higher income due to both financial triviality and subjecting your family, again assuming one, to higher risk of death or life altering injury. Especially when the examples of very cheap cars are also small ones: multiple of IIHS death rate stats for old small cars vs. recent stats for new hefty vehicles. A big absolute chance of tragedy with a small old car? No, but I want no part of that gamble.
New Providence
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by New Providence »

bogledogle wrote: Wed Apr 07, 2021 10:26 pm
quantAndHold wrote: Wed Apr 07, 2021 10:02 pm
New Providence wrote: Wed Apr 07, 2021 7:38 pm In old movies or old pictures you rarely see new cars.

Now, I look around. Never see a car older than 10 yrs. Never see, for example an old Benzo or old Bmer around. I go to the mall and don't see one single clunker.

It is strange.
A quick Google tells me that the average age of cars in the US is 11.9 years, and 25% of cars are 16 years or older. So they’re out there, even if you’re not noticing them. I see old cars all the time.
Also, older cars sucked. Paint would peel off and metal would rust. You don't see that these days - cars have higher quality now.
Yes, that makes sense. Cars are old, but look better due to higher paint and metal quality.

I'm a big spender, money only makes sense to me if it's spent. However, I'm not a car guy and my Subaru is 10 yrs old and going strong.
dknightd
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by dknightd »

lazydavid wrote: Thu Apr 08, 2021 9:10 am
bg5 wrote: Thu Apr 08, 2021 8:03 am Buying cheaper vehicles is a great way to save a lot of cash. I understand the safety part but the reality is the safety argument is not that solid. If you get in a bad accident these newer cars will not save your life....my as well drive something cheap and keep investing :D
Aside from the industry safety tests whose data suggests the exact opposite of your statement, there is a very high-profile crash in the news right now that illustrates it beautifully. Vehicle hit a tree at 75mph, cartwheeled through the air and rolled down an embankement. Driver broke his lower leg and foot, but is otherwise fine.

I literally had a conversation at dinner last night where I said "you know, it wasn't that long ago that hitting a tree at 75mph was fatal pretty much all of the time, no matter what you were driving".
If you hit tree at 75 mph, I'd consider that driver error.
If you are driving cheap cars, drive carefully!
Last edited by dknightd on Thu Apr 08, 2021 9:54 am, edited 1 time in total.
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds. Retired 9/19. Still working on mortgage payoff.
Topic Author
bg5
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bg5 »

I agree that newer cars are safer....but not that much safer. At the end of the day I would assume that 90% of drivers that hit a tree going 75 mph will die. The 10% who survive do so by the grace of god and luck. Maybe a few features might help but highly unlikely to save your life in a case that you described
onourway
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by onourway »

dknightd wrote: Thu Apr 08, 2021 9:45 am If you hit tree at 75 mph, I'd consider that driver error.
Again, a post that tries to categorize all possibilities into a simplistic narrative that fits ones world-view. Reality is far more complicated than that. People - even ourselves or those we love, do make errors. Medical events happen. Accidents occur while trying to avoid something else. The possibilities are near endless. The truth is that modern vehicles do a much better job of protecting their occupants, giving them a second chance at life - whatever the originating cause.
mrsmitt
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by mrsmitt »

Lots of good points from many bogleheads above.

It really comes to what you enjoy and your financial situation. I came to this country with literally nothing and had to experienced public transit, old cars with tons of mechanical problems, used cars with some problems, gently used budget cars for 2-3 years, new regular cars, 2-3 year old luxury cars and new luxury cars.

The worst financial decision - paying cash for a 3 year old luxury car. Nothing was wrong with the car for five years, but the actual depreciation was in par with leasing costs and my own cash that could be invested was depreciating.

The worst experience - we bought about 10 year old car with just never ending mechanical problems. Reliability was an issue. I do not wish anyone to experience that.

At this point I only lease cars (mostly luxury). There is a LeaseHackr online community that can help you to lease smart but you will have to spend your time to understand the system. Leasing any other way will usually be way too expensive vs car ownership. This system is not for everyone as some people are not good with math and negotiation. In this case you will need to use a broker $300-$500 per lease.

Couple of points:
1. Stop thinking about monthly payments. Look at the annual car ownership cost.
2. If you finance your car, part of your payment will go into equity that is locked in your car. Make sure you account for 6-8% return on that capital when comparing options.
3. Leasing some cars like Nisan leaf, Chevy Bolt, BMW i3 and others can be extremely affordable ($40-$200/mo) in some areas. If you can afford $3-$4k a year you should be able to get decent budget cars with MSRP of $22k-$35k. $3.5k-$5k annually - luxury sedans and SUVs MSRP $40k-$60k.

Financial responsibility is extremely important, but it shouldn’t mean that one cannot enjoy the most active part of their life.
H-Town
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by H-Town »

JackoC wrote: Thu Apr 08, 2021 9:17 am Getting very cheap cars breaks down at higher income due to both financial triviality and subjecting your family, again assuming one, to higher risk of death or life altering injury. Especially when the examples of very cheap cars are also small ones: multiple of IIHS death rate stats for old small cars vs. recent stats for new hefty vehicles. A big absolute chance of tragedy with a small old car? No, but I want no part of that gamble.
You gamble when you drive.
Ron Ronnerson
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Ron Ronnerson »

Lee_WSP wrote: Wed Apr 07, 2021 11:17 am
Ron Ronnerson wrote: Wed Apr 07, 2021 10:28 am
burritoLover wrote: Wed Apr 07, 2021 10:13 am Sorry, I value my life over money. The difference in safety in a crash between a similar new and 10-15 year old vehicle is massive.
I am curious if a calculation has been done on this. Let’s say two people have the same income and let’s assume it’s the median salary in a typical MCOL area. One person replaces their car every few years in order to have relatively new safety features that can be found only in pricey new models. The other buys old, inexpensive cars. All else held equal, the one with the habit of buying newer cars may have to either live further away from the job located in the city center and/or retire at a later date and spend more years on those crazy roads as they have a later retirement date. Accounting for this, which car purchase provides more safety? I honestly don’t know.
Probably not, but it would be simple enough to do.

The calculation is odds of an accident per mile driven multiplied by expected cost of accident (probably doesn't take into account time off work and other things) compared to the opportunity cost of the delayed retirement or other costs you've outlined. However, it gets real fuzzy because you don't necessarily have to live outside the city or make any other drastic changes to purchase a relatively new car.

A brand new Kia Rio MSRP's for $16k, you can probably get a used one for 14 or less. Plus you could shift spending from another area like dining/entertainment rather than housing; or get a roommate.
Yes, the math does get fuzzy. I’m saying hold all else equal. For example, say that you would get roommates no matter what and no dining out no matter what. That way, there is no “shifting” of expenses. Otherwise, we’re not comparing apples to apples. If your prime objective is to decrease miles driven over a lifetime in order to decrease the chances of your dying in a car accident, what is the best car to purchase for this objective?

New safety features are coming out perpetually. The safest thing would seem to be to get new cars with the most and latest safety features as often as possible. To accomplish this, one could live far, far away from their job in the middle of nowhere and postpone their retirement date by many years in the name of safety. On the other extreme, eliminating a car all together may allow one to be able to afford to live closer to work or perhaps to retire years earlier. After all, $350 saved per month for 40 years times two people (assuming they’re married) at a 5% rate grows to over $1M. If they’re saving from being frugal in other ways as well (after all, they don’t eat out and have roommates), they may be able to move up their retirement date considerably compared to someone buying a new car each and every time that a new safety feature comes out.

We need to be able to factor in the time not spent in a car directly caused by owning a “junky” car to be able to say whether said car increased or decreased one’s safety. It doesn’t sound like this has been measured and it makes sense that it hasn’t since it sounds like it would be sort of tricky to figure out.

Still, the question shouldn’t be ignored in the consideration: what if owning a cheap, old car allowed you to (perhaps drastically) shorten the number of hours spent driving over your lifetime? Is it still unsafer?
JackoC
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by JackoC »

onourway wrote: Thu Apr 08, 2021 9:51 am
dknightd wrote: Thu Apr 08, 2021 9:45 am If you hit tree at 75 mph, I'd consider that driver error.
Again, a post that tries to categorize all possibilities into a simplistic narrative that fits ones world-view. Reality is far more complicated than that. People - even ourselves or those we love, do make errors. Medical events happen. Accidents occur while trying to avoid something else. The possibilities are near endless. The truth is that modern vehicles do a much better job of protecting their occupants, giving them a second chance at life - whatever the originating cause.
Also the same basic data source, IIHS driver death rates, show's a very clear correlation to vehicle size. That actually outweighs the factor of improving safety tech over fairly recent times. If you compare IIHS surveys from ~12 yrs ago, death rates for eg. Corollas now are much higher than for say Lexus RX 300 then, the Corolla is just at more of a disadvantage vs contemporary RX. You can of course have a big beater, but often the examples given are small beaters, where you're compounding the safety disadvantage of smaller size and weight with lack of latest safety tech refinements.

But you're right on first sentence, repeated in dozens/hundreds of posts of threads like this. It rains a bit on the parade of people aiming to get 'rich' by buying old, often small and old, cars to point out the safety issue, which is hard to price if you have a family especially. But everyone would rather think their preferred idea is a win-win rather than a difficult trade off.

In fairness to beater fans though, there probably is a trade off at least with many people of driving less safely because they rely more on the crash safety of the vehicle if worse comes to worst. Would a given driver be as likely to do ~85mph on a curvy 45mph limit road driving a little beater as a brand new expensive all-safety-features big SUV? Depends on the person I think actually, but it's not entirely bogus to suggest there's some element of offset to vehicle safety via it encouraging greater risk taking.
JackoC
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by JackoC »

H-Town wrote: Thu Apr 08, 2021 10:04 am
JackoC wrote: Thu Apr 08, 2021 9:17 am Getting very cheap cars breaks down at higher income due to both financial triviality and subjecting your family, again assuming one, to higher risk of death or life altering injury. Especially when the examples of very cheap cars are also small ones: multiple of IIHS death rate stats for old small cars vs. recent stats for new hefty vehicles. A big absolute chance of tragedy with a small old car? No, but I want no part of that gamble.
You gamble when you drive.
Obviously I'm speaking of the incremental gamble of saving money by driving beaters if not financially forced to. Otherwise I could just retort that you gamble when you live. :happy
H-Town
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by H-Town »

JackoC wrote: Thu Apr 08, 2021 10:33 am
H-Town wrote: Thu Apr 08, 2021 10:04 am
JackoC wrote: Thu Apr 08, 2021 9:17 am Getting very cheap cars breaks down at higher income due to both financial triviality and subjecting your family, again assuming one, to higher risk of death or life altering injury. Especially when the examples of very cheap cars are also small ones: multiple of IIHS death rate stats for old small cars vs. recent stats for new hefty vehicles. A big absolute chance of tragedy with a small old car? No, but I want no part of that gamble.
You gamble when you drive.
Obviously I'm speaking of the incremental gamble of saving money by driving beaters if not financially forced to. Otherwise I could just retort that you gamble when you live. :happy
Exactly! So why bother about things that out of your control? If you're behind the wheel, you're in control of what you do. You can also have the power to turn off the beeping sound that the modern cars make when you change lane without a blinker.

I think defensive driving skills matter more than taking chances that your modern car has an ample crumble zone that in theory will protect you in a head-on crash.

Like honestly, I have a hard time believing that a couple of camera, sensors, and a computer could overcome the laws of physics.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

As someone that has worked in the electronics industry for the past 30 years. All the modern safety features actually make me a little nervous. Both from the standpoint of I know the failure rate of these items in high end applications (we do medical and military stuff), and from the cost standpoint of repairing these vehicles as they get older and stuff starts to go. Although I guess if we're in the sell them before they're "old" camp that one wouldn't matter so much.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by LadyGeek »

This thread is now in the Personal Consumer Issues forum (car).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
JackoC
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by JackoC »

H-Town wrote: Thu Apr 08, 2021 10:36 am
JackoC wrote: Thu Apr 08, 2021 10:33 am
H-Town wrote: Thu Apr 08, 2021 10:04 am
JackoC wrote: Thu Apr 08, 2021 9:17 am Getting very cheap cars breaks down at higher income due to both financial triviality and subjecting your family, again assuming one, to higher risk of death or life altering injury. Especially when the examples of very cheap cars are also small ones: multiple of IIHS death rate stats for old small cars vs. recent stats for new hefty vehicles. A big absolute chance of tragedy with a small old car? No, but I want no part of that gamble.
You gamble when you drive.
Obviously I'm speaking of the incremental gamble of saving money by driving beaters if not financially forced to. Otherwise I could just retort that you gamble when you live. :happy
Exactly! So why bother about things that out of your control? If you're behind the wheel, you're in control of what you do. You can also have the power to turn off the beeping sound that the modern cars make when you change lane without a blinker.

I think defensive driving skills matter more than taking chances that your modern car has an ample crumble zone that in theory will protect you in a head-on crash.
But it is firmly in my control to get a safer vehicle, I just probably have to pay more. And there's no evidence based argument that average vehicle safety does not depend on size (most obviously) as well as safety refinements over time. I don't believe you can read through the IIHS Driver Death Rate stats releases over time and argue that's not true, not anecdotes or hypothetical scenario's. Again I get why people who want to or are forced to spend less on cars try to convince themselves there's no way to buy increased safety by spending more on cars. Everyone would prefer their ideas be a simple solution without complication. But it's obviously false to say you can't get more safety by spending more on vehicles *all else equal*, and all else equal is the only rational way to make any decision about spending more money on something at the margin. For your argument to be effective you have to show that defensive driving skills make crumple zones *irrelevant*, which is pretty clearly false by the evidence we have. If defensive driving skills are just more important than crumple zones, then I'll take both: I'll spend more to get a statistically very safe vehicle, *and* employ defensive driving skills (or even pay for a course on them; I took the BMW one, an absolute blast and a lot of it was actually safety oriented, you can't maximize the braking and avoidance capability of those cars never having practiced all out, although some of it was basically racing :happy )
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Rob_Burke »

sabtastic wrote: Wed Apr 07, 2021 8:35 am Story of my life as well. The 529s are essentially the two Teslas I never bought.
When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
getthatmarshmallow
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by getthatmarshmallow »

I mean, maybe? Cars and housing are big expenses, and cutting back on those is likely more efficient than nickeling and diming over the grocery bill, but here is how I would rank my satisfaction with cars:

1) Reliable, well-maintained appliance car.
2) Not owning a car (shoe leather express + public transportation. Great as a grad student.)


[big gap]

[keep going.]
3) Owning a cheap car prone to breakdowns (the entire reason I didn't bother with a car in grad school.)

The problem with the cheap car is that they often wind up in category 3 -- and the sheer hassle of not knowing whether you can make it to work because of your car or never being able to travel on a highway because your car might break down is to me worth paying for above-beater-but-still-modest vehicle.

I've never spent more than $250/month on a car payment. Both of our cars are eight years old, and with only 60-65K miles on each of them, I really have no idea when we'll replace them.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

Rob_Burke wrote: Thu Apr 08, 2021 11:31 am
sabtastic wrote: Wed Apr 07, 2021 8:35 am Story of my life as well. The 529s are essentially the two Teslas I never bought.
When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
onourway
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by onourway »

cshell2 wrote: Thu Apr 08, 2021 10:55 am As someone that has worked in the electronics industry for the past 30 years. All the modern safety features actually make me a little nervous. Both from the standpoint of I know the failure rate of these items in high end applications (we do medical and military stuff), and from the cost standpoint of repairing these vehicles as they get older and stuff starts to go. Although I guess if we're in the sell them before they're "old" camp that one wouldn't matter so much.
I have an 8 year old model Volvo that has every single safety option available at the time - lane monitoring, blind spot alert, automatic emergency braking, pedestrian detection, front and rear sensors of all sorts, dynamic cruise control, a basic camera system for reading speed limit signs, etc. The vehicle has 130k miles on it and there has not been a single problem of any sort with the entire vehicle. All safety systems are still functional and have never had a single false positive (ie. doing something unexpected and dangerous). It's remarkable to me that the systems are as advanced (and reliable) as they are given the iPhone 5s was cutting edge tech at the time.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by inbox788 »

mmmodem wrote: Thu Apr 08, 2021 9:06 am
sunny_socal wrote: Thu Apr 08, 2021 7:08 am Yes, the $4000 car is actually a $7000 car:
Spending $3000 on a $4000 car is the complete antithesis of what OP is saying.
It all comes down to trying to compare apples to apples and apples to oranges.

I did find the Edmunds TCO comparisons interesting and you can adjust items to your desired fruit.

Total 5-Year Ownership Costs
LE 4dr Sedan (1.8L 4cyl CVT)

2021 Toyota Corolla Cost to Own
True Cost to Own $34,650* Total Cash Price $21,045
https://www.edmunds.com/toyota/corolla/ ... st-to-own/

Used 2015 Toyota Corolla Cost to Own
True Cost to Own $33,109* Total Cash Price $12,191
https://www.edmunds.com/toyota/corolla/ ... st-to-own/

Only $25/month difference ($1500/5 years). About a 4.447% savings in TCO vs 42% reduction in initial outlay. (1-33,109/34,650 and 12,191/21,045)

Plug in your own values for the 2000 Corolla.

[Just noticed there is a high first year $3000 depreciation on the used vehicle that may include a sales/purchase event. A more realistic number would be the average of year 5 of the new car and year 2 of the used car, which would be around $1000, so the used car benefit difference is more than doubled if you keep your vehicle 10 years and beyond]

Higher year 4 new car depreciation may be from loss of factory warranty and flood of lease returns entering the market.

In 5 years, if the 2015 cost $12k now and depreciates $6k, it's still over 4k. It needs a few more years of depreciation or a lot of miles to make it into the $2k-4k range.
Workaholic
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Workaholic »

Tingting1013 wrote: Thu Apr 08, 2021 11:39 am
Rob_Burke wrote: Thu Apr 08, 2021 11:31 am
sabtastic wrote: Wed Apr 07, 2021 8:35 am Story of my life as well. The 529s are essentially the two Teslas I never bought.
When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
Californiastate
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Californiastate »

bg5 wrote: Wed Apr 07, 2021 8:11 am Good Morning,

Everyone has their "thing" that they enjoy to spend money on so if cars are your "thing" then please don't be offended. I have no problem dropping $500 on a round of golf at Whistling Straits or spending $200 on a meal every now and then.

With that being said I am always shocked at the amount of money people throw into cars. The vast majority of people cannot afford the cars they drive and it really takes away at their ability to become financially independent. I totally understand that on this boglehead board that most people can easily afford the cars they drive.

My goal with this post is to make people realize that if you want to get rid of your $700 car payments its very easy to buy a car in the $2000-$4000 price range and have it last for many years....often times being able to resell it for almost what you bought it at.

I have found that both Honda and Toyota's are almost indestructable and will often times reach well over 300,000 miles if you keep up on standard oil changes. There are plenty of cheap Honda Accords and Toyota Camrys on FB Marketplace right now in the price range I described above. I have been doing this for years and have found that the vast majority of my wealth has come from not having car payments and taking that money and investing it. See my story below and please understand that these cars are not rust buckets...I live and work in a wealthy area and these cars fit in just fine and dont stick out like a sore thumb.

2010 I bought a 2000 honda accord with 180,000 miles on it for $2200 and I drove it for 3 years and put 60,000 miles on it. The car still worked great and I ended up selling it in 2013 for $1700.

2013 - I bought a 2002 Honda pilot with 200,000 miles on it for $2800 and drove it for 2 years and put 40,000 miles on it. In 2015 I sold it for $2200.

2015 - I bought a 2005 Honda Pilot for $3300 and it had 210,000 miles on it. I drove it for 3 years and put 60,000 miles on it and in 2018 I sold it for $2600.

2018 - I bought a 2007 Honda pilot for $2300 and it had 210,000 miles on it. I drove it for 15 months and the engine blew......I sold the car in 1 day after the engine blew for $1000 :) Unreal as the resale value of Hondas is nuts....basically had people fighting over the car with the blow engine and still got a stinking grand.

2020 - I bought a 2009 Honda Pilot for $4000 and it had 220,000 miles on it


Bottom line is I realized that my cars Im driving are costing me very little amounts of money and I am taking all the money that I would of put into car payments and just invest it. Cars drop in value like crazy but what I have found is that there is always a HUGE market for cars that are selling in the $2000-$4000 range. If I showed you pics of these cars you would say to yourself that these are nice cars....they are not rust buckets and they look and fit in just fine.

So if you are someone who is trying to free up some cash then I would start with cars....they lost a lot of value and there are plenty of deals out there for reliable cars at a cheap price. I buy all my cars off of private sellers on Facebook marketplace and I know very little about cars. I could not even change the oil if I needed to. Buy a Honda or Toyota and it will run and last a lifetime while still having a great resale value.

If you have questins please let me know.
Do you do seminars or is there a book available? I'd like to be wealthy too.
Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

Workaholic wrote: Thu Apr 08, 2021 2:09 pm
Tingting1013 wrote: Thu Apr 08, 2021 11:39 am
Rob_Burke wrote: Thu Apr 08, 2021 11:31 am
sabtastic wrote: Wed Apr 07, 2021 8:35 am Story of my life as well. The 529s are essentially the two Teslas I never bought.
When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
Workaholic
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Workaholic »

Tingting1013 wrote: Thu Apr 08, 2021 2:14 pm
Workaholic wrote: Thu Apr 08, 2021 2:09 pm
Tingting1013 wrote: Thu Apr 08, 2021 11:39 am
Rob_Burke wrote: Thu Apr 08, 2021 11:31 am
sabtastic wrote: Wed Apr 07, 2021 8:35 am Story of my life as well. The 529s are essentially the two Teslas I never bought.
When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
For the very base model or one with AWD and autopilot? That would be nonsensical as one could simply order a brand new Model 3 from Tesla. Obviously nobody is actually paying a new car price for a used one.
alfaspider
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by alfaspider »

sunny_socal wrote: Thu Apr 08, 2021 7:08 am
onourway wrote: Thu Apr 08, 2021 5:53 am I’m sure this has been brought up somewhere in the 4 pages so far - but you’ve spent $15k on cars in the last 10 years. Your ‘savings’ in the sales price of each beater is illusory because it must be immediately rolled into the next purchase.

I’ve pretty much practiced this our entire life - owned exactly one new car (very cheap lease) and currently, despite a nw well into the two commas, we still don’t own a vehicle with less than 100k miles. That said, a few years ago, after about a decade of keeping track of every penny of repairs and maintenance in our vehicles, I gave up the idea that an old beater was enough cheaper over the long run to warrant the hassle. I think if you look at your real costs over the last 10 years - including oil changes and tires and brakes and taxes and so on that you would not be all that far ahead from if you’d just bought a decent $20-25k vehicle new or near-new in 2010. And you’d have driven a nicer vehicle during the last 10 years and saved yourself a whole lot of time. Certainly not enough difference to make any substantial impact in your path to long-term wealth.
Yes, the $4000 car is actually a $7000 car:
- $4k for the car
- $1k for new tires on day one
- $1k for new fluids in order to baseline it (engine, brakes, transmission, differential, coolant)
- $500 for new shocks/struts
- $500 for a bluetooth capable head unit, to replace the crappy OEM HU

And it's like that with every used car. You really have no idea how it's been maintained, might as well fix it up. Looking at it another way, you could "subtract" that $3k from the price for a new car if you want to normalize the two.

So I bought a new Honda Accord in 2015, drove it for 130k miles and just sold it. Purchase price $20.5k, sale price $10.5k. Depreciation 10k.

Thrify OP "lost" this much on his three vehicles:
1) $500 + $3000
2) $600 + $3000
3) $700 + $3000

So I see roughly the same overall cost between the two approaches. Those driving a POS are simply robbing Peter to pay Paul. I understand the thinking and I've often driven such cars but much simpler to buy a Japanese car and drive it for a long time. Only expense is maintenance and that's a part of any vehicle.
The thrifty used car buyer does their own work for basic maintenance, plus some of your estimates are way high. I feel like you are just working to justify your newer car.

First, tire condition is something to evaluate when you buy a used car. I've bought cars for $4k that have plenty of life in the tires. Most sub $4k cars are going to use inexpensive tire sizes. You can get a decent set for under $500 installed if you do need tires.

$1k for fluids is ridiculous for a $4k car. Oil and filter: $30, coolant $20, transmission/diff fluid (~$30), brake fluid $10. Call it $100 to refresh the fluids. Pads and rotors on a 15 year old Camry are about $150 for all four corners. In reality, most aren't going to do anything but an oil change on their "new" car and it will probably be fine.

Blown shocks and struts are going to be obvious on even a cursory test drive, I wouldn't assume replacement at all.

You don't need to replace the HU. It's a 15 year old car, why does it need 100% modern features? But if you just want to add bluetooth, you can get units for around $100 that will do that just fine, even one of those android units that looks fancy is under $200.

Even if you are not mechanically inclined, judicious buying can keep costs on a used car extremely low. My brother's $2,200 Yaris I mentioned earlier has needed the following in 4 years: one exhaust gasket (cost $15), one battery ($100), four oil changes ($50 with no DIY), gasoline. That's it.
H-Town
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by H-Town »

Tingting1013 wrote: Thu Apr 08, 2021 2:14 pm
Workaholic wrote: Thu Apr 08, 2021 2:09 pm
Tingting1013 wrote: Thu Apr 08, 2021 11:39 am
Rob_Burke wrote: Thu Apr 08, 2021 11:31 am
sabtastic wrote: Wed Apr 07, 2021 8:35 am Story of my life as well. The 529s are essentially the two Teslas I never bought.
When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
Anyone that actually went through the sale and got paid $35k?

If you go to Carvana and search for 2018 Model 3, you'll find a car that has $35.9k range with 26.5k miles.
Tingting1013
Posts: 1078
Joined: Mon Aug 24, 2020 5:44 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

Workaholic wrote: Thu Apr 08, 2021 2:25 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:14 pm
Workaholic wrote: Thu Apr 08, 2021 2:09 pm
Tingting1013 wrote: Thu Apr 08, 2021 11:39 am
Rob_Burke wrote: Thu Apr 08, 2021 11:31 am

When my daughters asked why I don't have a Tesla, I discussed the 529 plan.
Now they are in college without loans, they stopped telling me to get a Tesla.
A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
For the very base model or one with AWD and autopilot? That would be nonsensical as one could simply order a brand new Model 3 from Tesla. Obviously nobody is actually paying a new car price for a used one.
Base model, no self-driving:
Image

Basically, everyone who has thought buying a Model 3 but dismissed it as too expensive turned out to be wrong, myself included. Anyone who bought one three years ago when it came out has been driving a free car for all this time.
Last edited by Tingting1013 on Thu Apr 08, 2021 2:39 pm, edited 1 time in total.
Workaholic
Posts: 556
Joined: Thu Jul 18, 2013 6:55 am

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Workaholic »

Tingting1013 wrote: Thu Apr 08, 2021 2:35 pm
Workaholic wrote: Thu Apr 08, 2021 2:25 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:14 pm
Workaholic wrote: Thu Apr 08, 2021 2:09 pm
Tingting1013 wrote: Thu Apr 08, 2021 11:39 am

A three year old Tesla Model 3 has not depreciated at all since 2018.

If you had bought two of those you would have had several thousand dollars per year increased net worth compared to owning a regular car.
Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
For the very base model or one with AWD and autopilot? That would be nonsensical as one could simply order a brand new Model 3 from Tesla. Obviously nobody is actually paying a new car price for a used one.
Base model, no self-driving:
Image
That would still have depreciation though and of course I imagine sales tax is not included in the price on the Tesla webpage? So yes the depreciation curve is low but still is there. The only mass produced vehicle I see right now with 0 depreciation is probably the new Corvette.
Tingting1013
Posts: 1078
Joined: Mon Aug 24, 2020 5:44 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

Workaholic wrote: Thu Apr 08, 2021 2:39 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:35 pm
Workaholic wrote: Thu Apr 08, 2021 2:25 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:14 pm
Workaholic wrote: Thu Apr 08, 2021 2:09 pm

Not according to numerous websites that list depreciation curves for vehicles:

https://caredge.com/tesla/model-3/depreciation

Any mass-produced vehicle will have depreciation no matter if it is gas powered or electric.
The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
For the very base model or one with AWD and autopilot? That would be nonsensical as one could simply order a brand new Model 3 from Tesla. Obviously nobody is actually paying a new car price for a used one.
Base model, no self-driving:
Image
That would still have depreciation though and of course I imagine sales tax is not included in the price on the Tesla webpage? So yes the depreciation curve is low but still is there. The only mass produced vehicle I see right now with 0 depreciation is probably the new Corvette.
MSRP for this model back in 2018 was $46k but back then it still qualified for the full federal tax credit. Add CA state and utility rebates and at the end of the day you paid $35k + TTL (around $4k)

TTL is not depreciation.
Workaholic
Posts: 556
Joined: Thu Jul 18, 2013 6:55 am

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Workaholic »

Tingting1013 wrote: Thu Apr 08, 2021 2:46 pm
Workaholic wrote: Thu Apr 08, 2021 2:39 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:35 pm
Workaholic wrote: Thu Apr 08, 2021 2:25 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:14 pm

The depreciation curves are pro forma expectation, not reality.

Put any 2018 Model 3 VIN into Carvana, you’ll get an offer for at least $35k.
For the very base model or one with AWD and autopilot? That would be nonsensical as one could simply order a brand new Model 3 from Tesla. Obviously nobody is actually paying a new car price for a used one.
Base model, no self-driving:
Image
That would still have depreciation though and of course I imagine sales tax is not included in the price on the Tesla webpage? So yes the depreciation curve is low but still is there. The only mass produced vehicle I see right now with 0 depreciation is probably the new Corvette.
MSRP for this model back in 2018 was $46k but back then it still qualified for the full federal tax credit. Add CA state and utility rebates and at the end of the day you paid $35k + TTL (around $4k)

TTL is not depreciation.
So essentially it depreciated $11K but because it qualified for tax credits, the cost of ownership was negligible? I mean it actually did DEPRECIATE but because of federal subsidies, the cost of owning the Model 3 was low.

No thanks...I'll stick to my gas-powered vehicles until I die...no desire to drive an electric vehicle.
Tingting1013
Posts: 1078
Joined: Mon Aug 24, 2020 5:44 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

Workaholic wrote: Thu Apr 08, 2021 2:51 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:46 pm
Workaholic wrote: Thu Apr 08, 2021 2:39 pm
Tingting1013 wrote: Thu Apr 08, 2021 2:35 pm
Workaholic wrote: Thu Apr 08, 2021 2:25 pm

For the very base model or one with AWD and autopilot? That would be nonsensical as one could simply order a brand new Model 3 from Tesla. Obviously nobody is actually paying a new car price for a used one.
Base model, no self-driving:
Image
That would still have depreciation though and of course I imagine sales tax is not included in the price on the Tesla webpage? So yes the depreciation curve is low but still is there. The only mass produced vehicle I see right now with 0 depreciation is probably the new Corvette.
MSRP for this model back in 2018 was $46k but back then it still qualified for the full federal tax credit. Add CA state and utility rebates and at the end of the day you paid $35k + TTL (around $4k)

TTL is not depreciation.
So essentially it depreciated $11K but because it qualified for tax credits, the cost of ownership was negligible? I mean it actually did DEPRECIATE but because of federal subsidies, the cost of owning the Model 3 was low.

No thanks...I'll stick to my gas-powered vehicles until I die...no desire to drive an electric vehicle.
It’s not a coincidence that the MSRP on the car dropped as the federal tax credit phased out, the base model is now $35k MSRP on the website (net of the remaining CA rebates).

It didn’t depreciate at all, the intended pricing has always been at $35k.
deltaneutral83
Posts: 1843
Joined: Tue Mar 07, 2017 4:25 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by deltaneutral83 »

quantAndHold wrote: Wed Apr 07, 2021 2:04 pm
The thing, though, is that how people “got so much money” is almost never by saving, but by earning more. Broken Man’s caregivers are never going to build wealth, no matter how cheap their car is, because they just don’t make enough money, just like nobody, no matter how much or little they make, is going to become wealthy by cutting out their morning Starbucks.

One of the Boglehead tenets is living within your means, and like Klang Fool said, saving has to come before discretionary spending. But once that’s in place, there are limits to how much of an effect even extreme frugality is going to have. If someone is making $40k, they’re already living a pretty frugal existence by necessity, and being even more frugal is only going to have a small incremental impact. By the same token, if someone is making $300k, they can build wealth by just following some basic principles and not being a complete idiot with their money. For these people, a $2000 car isn’t necessary for success.
It's funny that a poster mentioned $40k (in the context of an LCOL/MCOL and below for purposes of what I've seen). Two retired teacher couples and each couple will have two full pensions, two SS checks whenever they choose to take (hopefully 70), and close to a combined million in retirement accounts for one couple, easily over for the other, ages 59-66 for the four people (one couple has 2 kids, the other has 3, all out of college now except 1). No inheritances either couple. I imagine median pay throughout 30+ years of k-12 teaching is somewhere (adjusted for today) in the $45-48k range annually, outside tutoring here and there as well for side cash. Drive Toyotas/Hondas (you guessed it) into the ground, modest house, children worked as teenagers and attended state supported schools, worked their way through school, a full scholarship for one kid, although college was cheaper 10-15 years ago. One of the couples managed to travel more than anyone I know in the summertime through discounted programs through their school traveling with students. Certainly not first class sipping champagne, but have easily circled the globe a few times.

Response I generally get is "No need for known lower incomes to keep up with Jones'" as teachers. Guy said most people think he and his wife live hand to mouth in almost full fledge pity. I guess the only downside is that both spouses per couple worked and there was no choice as to that, but I can't think of any readily available downside to no debt, and very few money issues along the way. Certainly not a lavish lifestyle, but making good decisions right out of undergrad for 30 years with modest home/cars has worked out well in LCOL/MCOL. Teachers are a surprisingly high % of millionaire households in America. Sometimes I can't believe it but when you factor in the "not looking at the Jones'" it makes total sense. I read Millionaire Next Door and these people have to be the kinds of people Stanley interviewed. Most likely, each couple will live off pension/SS at 70 so for the amount of time of life from SS to death, their retirement accounts will just compound to be left to children, one of whom said his kids don't have any idea but he plans to have that discussion soon. If they live to 80+ that will be some serious wealth.

I guess to me, if you spend 90+% of your income (or more) it's going to be tough, the magic starts happening at saving 15% and gets really good at 20% and above. Yes, very tough to do for those at HHI of median salary and below for the COL, but even teachers seem to do it with more regularity than most (but again, duel income). Good health is also a factor that healthy people may not consciously think about, but plays a large role.
H-Town
Posts: 3468
Joined: Sun Feb 26, 2017 2:08 pm

Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by H-Town »

Tingting1013 wrote: Thu Apr 08, 2021 2:54 pm It’s not a coincidence that the MSRP on the car dropped as the federal tax credit phased out, the base model is now $35k MSRP on the website (net of the remaining CA rebates).

It didn’t depreciate at all, the intended pricing has always been at $35k.
I wonder who gonna buy a used 2018 Model 3 at 36k from Carvana when they can order a new 2021 Model 3 from Tesla for 38k (33k after credit & rebate)?

I don't understand the used car market since the pandemic. Sure, the demand is higher for cars in general. But the market for used car is very strange.
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