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
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bg5
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The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bg5 »

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

Post by Katietsu »

I am fascinated by the average age of cars in places like Texas. In my world, a Toyota driven for 15,000 miles a year as a daily driver in all weather gets taken out by corrosion well before it can get to 200k or 300k miles.
Topic Author
bg5
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bg5 »

I live In Michigan and we get alot of snow which means the roads are covered in salt which can cause alot of rust. With that being said we dont have an issue in Michigan for plenty of cars to reach the high 200's
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by z3r0c00l »

Absolutely, I was the third owner of a 1994 Camry SE, a V6 coup with big rims and nice sound system, leather everything. It cost $24,999 to the original owner, maybe half that for owner 2, cost me $4,999 in the late 90's. Used it for about 10 years then sold it for $1200. A great sporty car that cost almost nothing to maintain.
alfaspider
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by alfaspider »

I think people are afraid of the risk, and there is certainly a decent bit of junk in the price range. You have to shop very judiciously.

My brother did follow this advise to decent success. He bought a Yaris 4 years ago for $2,200. We fixed an exhaust leak (bad gasket) right after he bought it, but he's done nothing but put in gas and change the oil in that time frame. However, I did closely inspect the car and steered him away from some options that were not nearly as good.
Broken Man 1999
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Broken Man 1999 »

A $700 car payment is extreme.

DD has a 2018 Toyota Highlander and her payment didn't break $400. Other family car is a 2020 Toyota Corolla, less than $300. The Highlander is paid off, the Corolla will be paid off this year.

Some of us appreciate safety features, and prefer to have newer cars.

Driving $2,000 - $4,000 cars may have made you think that made you wealthy, but there are untold numbers of people who have carried car payments all their driving days who are wealthy. You have simply chosen to pay for golf rounds and cheap cars. Everyone does that, just depends on making choices.

Maybe if you cut out the $500 golf rounds you could drive a newer car AND become wealthy! :D

I purchased our first new car in 1971, a Ford Pinto. I spent more than $2000 for it. My, I would rather buy new and keep 10-12 years. From 1971 until the present I have always bought new cars. For most of our time, DW and I had two cars.

What made us wealthy was not paying $500/golf rounds! :beer

Broken Man 1999
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White Coat Investor
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by White Coat Investor »

alfaspider wrote: Wed Apr 07, 2021 8:24 am I think people are afraid of the risk, and there is certainly a decent bit of junk in the price range. You have to shop very judiciously.

My brother did follow this advise to decent success. He bought a Yaris 4 years ago for $2,200. We fixed an exhaust leak (bad gasket) right after he bought it, but he's done nothing but put in gas and change the oil in that time frame. However, I did closely inspect the car and steered him away from some options that were not nearly as good.
Yea, I've won and lost this game. Some examples:

$1850 - Lasted four years with nothing but used tires, a battery, and windshield wipers and sold for $1500
$800- Lasted 14 months
$4000- Drove for six years (good) but put $3K into it only 6 months before it died (bad)
$7000- Wrecked it and got about that much out of it from insurance
$8000- Wrecked it and got about that much out of it from insurance
$3000- Sold 2 years later for $2000.
$18,900- Bought 12 years ago with 42K miles, still driving with 257K miles, blue book is $5900.

I am convinced that basic transportation can be had for $2,000 and reliable transportation can be had for $5,000.

But I agree, most spend far more than that and it impedes their wealth building significantly. Over a lifetime, there's a $1 million sitting in most people's driveways that doesn't need to be there. Now if you make $250K a year, not a big deal. If you make $50K a year, what you drive is the difference between retiring a millionaire and not doing so.
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cshell2
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

I bought a 1997 Camry with 192K on it for my son when he turned 16 for $500 and 200 bales of hay. :D I was hoping to get a year out of it, but it's been going strong for 3 years now. It did need a bunch of brake work to the tune of $800, but that's pretty much been it.

On the flip side, my 2005 Odyssey that I've had for 11 years is starting to become a money pit at 220K miles and I no longer feel confident taking it on long trips so I'm now car shopping. I don't think I want the 4-5K gamble this time around. I'm in my 50's and just want something I know I can take on a 3000 mile road trip without worry and am thinking of spending 20-25K. The thought of spending that much does make me pretty ill though.

I had a 2007 Odyssey as well, but totaled it in February. I had paid 5K for the van and insurance paid out $6200 after driving it for 2 years.
Last edited by cshell2 on Wed Apr 07, 2021 8:36 am, edited 1 time in total.
sabtastic
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by sabtastic »

Story of my life as well. The 529s are essentially the two Teslas I never bought.
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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 »

Broken Man 1999 wrote: Wed Apr 07, 2021 8:31 am A $700 car payment is extreme.

DD has a 2018 Toyota Highlander and her payment didn't break $400. Other family car is a 2020 Toyota Corolla, less than $300. The Highlander is paid off, the Corolla will be paid off this year.

Some of us appreciate safety features, and prefer to have newer cars.

Driving $2,000 - $4,000 cars may have made you think that made you wealthy, but there are untold numbers of people who have carried car payments all their driving days who are wealthy. You have simply chosen to pay for golf rounds and cheap cars. Everyone does that, just depends on making choices.

Maybe if you cut out the $500 golf rounds you could drive a newer car AND become wealthy! :D

I purchased our first new car in 1971, a Ford Pinto. I spent more than $2000 for it. My, I would rather buy new and keep 10-12 years. From 1971 until the present I have always bought new cars. For most of our time, DW and I had two cars.

What made us wealthy was not paying $500/golf rounds! :beer

Broken Man 1999

I think its very common for a husband and wife to both have car payments that total $700 a month. Again, if you can afford it then go for it but I think most people with lower incomes spend way to much money on cars and if they invested that cash then they would be amazed at how putting your money to work pays off in the end.

I wish schools spent more time on financial education.
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MrBobcat
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by MrBobcat »

I've preached for years the 2 controllable things people do that hurt their financial well being the most is spend too much on transportation and spend too much on housing.
Ron Ronnerson
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Ron Ronnerson »

What a great way to hack transportation costs! About 15 years ago, my wife and I were newly married and had $40k in credit card debt. My wife bought a car for $5k, put 100,000 miles on it over several years (she had a long commute at the time), and then sold it for $2k. It was one of the things we did to dig ourselves out of the hole as quickly as possible. People tend to accept high costs in all sorts of categories as “necessary” but there are ways to keep them in check if someone really wants to. Thanks for showing how a car can cost close to nothing.

Now that we’re in a much better place financially, we have upgraded to luxury vehicles. We own his and her Corollas that were purchased new. We intend to keep the cars for 15+ years. We only buy cars that we can afford to pay for in cash.
cshell2
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

Broken Man 1999 wrote: Wed Apr 07, 2021 8:31 am A $700 car payment is extreme.

DD has a 2018 Toyota Highlander and her payment didn't break $400. Other family car is a 2020 Toyota Corolla, less than $300. The Highlander is paid off, the Corolla will be paid off this year.
Well, obviously you can't really judge the true cost by the payment. I'm assuming those cars had big down payments and/or they're 84 month loans.
MishkaWorries
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by MishkaWorries »

I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
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alfaspider
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by alfaspider »

MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
njdealguy
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by njdealguy »

I got scared off this game after buying a lemon Lexus RX350 fully loaded with 30k miles back in 2014 for about 20k. Ended up having repair issues one after another including an episode of the coolant overheating due to engine cylinder misfires (and this was after keeping the car for 2 years where it reached 60k miles) which was a $1800 repair.

After that repair, sold the car to carmax for the car I drove a total of 30k miles (from 30k to 60k) for about $10k.

So total cost of what I expected would be a reliable car after accounting for depreciation, repairs, and taxes was close to $15k for just 2 years of ownership. For that amount of total cost could have just leased a brand new Lexus RX350 probably.

But your right that being very careful and involving mechanic inspections for the used car should be the way to go and save a lot.
Last edited by njdealguy on Wed Apr 07, 2021 9:10 am, edited 1 time in total.
Topic Author
bg5
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bg5 »

MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.

Please understand that this is on very special occasions....maybe once a year if that. But someone with a low income who buys a newer vehicle is just burning their money away.

I have no gripe if people have the money....but I often hear on this forum that they are amazed at the size of some peoples retirment account size.

I would say look in the driveway and that is an easy place to free up cash and invest.

My wife and I will probably easily reach 1-2 millon by the time we are 50 making middle class wages. We will be retired in our early 50's with no debt. We live on around $100,000 a year now and travel often. We are able to do this because we invest at least $50,000 a year even though we have 3 kids.

Some will say it cannot be done....my point is if you want to invest more money get rid of your cars and someday you will be able to afford the nice ones :)
Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

alfaspider wrote: Wed Apr 07, 2021 9:04 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
And yet the OP still buys beater cars...

OP, I play the opposite game with my cars. Instead of buying beaters that need to be replaced every year, I buy brand new cars that can be flipped a year or two later for the same price that I bought it. Better financial outcome and quality of life.
protagonist
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by protagonist »

Having to go through the hassle of shopping for cars five times in ten years? Especially buying used ones?
No thanks. Regardless of how much they cost.
The next time I have to go through the hassle of automobile shopping I intend for the car to drive itself.

What is the point of being wealthy, if the impact on your lifestyle is having to shop for (and trade in or sell) 10 year old cars every two years?
Last edited by protagonist on Wed Apr 07, 2021 9:16 am, edited 1 time in total.
bloom2708
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by bloom2708 »

I think a person has to be willing to drive cars with some/bunches issues after 150,000 and especially over 200,000 miles.

Clunks and clanks and suspension/shocks/struts that type of area really take a beating.

Especially if you are in the rust belt. Parts just disintegrate at times.

I can see buying at 100k and driving to 150k being a strategy. My current vehicle has 95,000. I plan to drive it to 140-150k if it doesn't implode.

Lots of different workable strategies.
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geerhardusvos
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by geerhardusvos »

Purchased a 90s Japanese car in 2011 for $4000 (my second car). I still drive it. It has only 130k miles, and I plan to drive it to 250k. It has AWD, ABS, airbags, Bluetooth upgrade, and I keep great tires and brakes on it. I wouldn’t rather have any other car. Wife drives in early 2000’s Japanese car with the same features and loves it. Both manual transmission. Both super efficient and reliable, and very easy and cheap to maintain. Surprising value and quality! 🤙🏻🇯🇵🇺🇸

I will never buy a new car.
Last edited by geerhardusvos on Wed Apr 07, 2021 9:21 am, edited 1 time in total.
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7eight9
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by 7eight9 »

cshell2 wrote: Wed Apr 07, 2021 9:02 am
Broken Man 1999 wrote: Wed Apr 07, 2021 8:31 am A $700 car payment is extreme.

DD has a 2018 Toyota Highlander and her payment didn't break $400. Other family car is a 2020 Toyota Corolla, less than $300. The Highlander is paid off, the Corolla will be paid off this year.
Well, obviously you can't really judge the true cost by the payment. I'm assuming those cars had big down payments and/or they're 84 month loans.
2021 Corolla. Excellent credit. $1,160 down. $299/month - 72 months.

Toyota Payment Estimator - https://www.toyota.com/payment-estimator
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PowderDay9
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by PowderDay9 »

I've bought and sold cheap cars but I've come to realize there are several counter points.

1. Lemon Law - good cars get kept, bad ones are more likely to be sold over and over
2. Safety - especially with children
3. Reliability - once you have some wealth and a decent income, you don't want to be spending time fixing or paying to fix things here and there
4. Reselling - this takes time and the buyers of a $2k car can be much different than a $15k car
5. Taxes & fees - if you're churning cars, this can add up

I would much rather buy a new or slightly used non-luxury car and keep it for 10+ years.
Last edited by PowderDay9 on Wed Apr 07, 2021 9:43 am, edited 2 times in total.
MishkaWorries
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by MishkaWorries »

bg5 wrote: Wed Apr 07, 2021 9:09 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.

Please understand that this is on very special occasions....maybe once a year if that. But someone with a low income who buys a newer vehicle is just burning their money away.

I have no gripe if people have the money....but I often hear on this forum that they are amazed at the size of some peoples retirment account size.

I would say look in the driveway and that is an easy place to free up cash and invest.

My wife and I will probably easily reach 1-2 millon by the time we are 50 making middle class wages. We will be retired in our early 50's with no debt. We live on around $100,000 a year now and travel often. We are able to do this because we invest at least $50,000 a year even though we have 3 kids.

Some will say it cannot be done....my point is if you want to invest more money get rid of your cars and someday you will be able to afford the nice ones :)
What makes you think the people with expensive cars don't understand the math? Everyone knows the best financial decision for transportation is public transport. If you can't or don't want public transportation then get a beater car and drive it in the ground.

It's not a knowledge problem, it's a cultural problem. Some people value keeping up with the Joneses more than saving for retirement. Some people prefer to buy expensive cars rather than saving for retirement. Some people prefer to live in poverty to create music or art. Etc etc etc
We plan. G-d laughs.
whereskyle
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by whereskyle »

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.
+1. Bought a 97 Corolla in 2011 for $1600. Kept it for 2 years and then sold it for $1000 when I moved cross-country.
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Tingting1013
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Tingting1013 »

7eight9 wrote: Wed Apr 07, 2021 9:20 am
cshell2 wrote: Wed Apr 07, 2021 9:02 am
Broken Man 1999 wrote: Wed Apr 07, 2021 8:31 am A $700 car payment is extreme.

DD has a 2018 Toyota Highlander and her payment didn't break $400. Other family car is a 2020 Toyota Corolla, less than $300. The Highlander is paid off, the Corolla will be paid off this year.
Well, obviously you can't really judge the true cost by the payment. I'm assuming those cars had big down payments and/or they're 84 month loans.
2021 Corolla. Excellent credit. $1,160 down. $299/month - 72 months.

Toyota Payment Estimator - https://www.toyota.com/payment-estimator
You can get into a Camry for that much

https://forum.leasehackr.com/t/norcal-s ... ril/293430
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Devil's Advocate
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Devil's Advocate »

Ron Ronnerson wrote: Wed Apr 07, 2021 9:01 am What a great way to hack transportation costs! About 15 years ago, my wife and I were newly married and had $40k in credit card debt. My wife bought a car for $5k, put 100,000 miles on it over several years (she had a long commute at the time), and then sold it for $2k. It was one of the things we did to dig ourselves out of the hole as quickly as possible. People tend to accept high costs in all sorts of categories as “necessary” but there are ways to keep them in check if someone really wants to. Thanks for showing how a car can cost close to nothing.

Now that we’re in a much better place financially, we have upgraded to luxury vehicles. We own his and her Corollas that were purchased new. We intend to keep the cars for 15+ years. We only buy cars that we can afford to pay for in cash.
Only on bogleheads is a Corolla a "luxury vehicle"!
Love ya Ron!

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

Post by MikeZ »

So I'm going to disagree with the OP. I tried buying a Civic for $4700 once and it was nothing but a pain.

I am squarely in the camp that the sweet spot is this:

A 3 year old car with 50-60k miles. Keep it for 7-10 more years.

Here are the downsides of driving a beater:

1) Transaction costs: At least in Florida, you're paying $~350 to register the used car plus sales tax. That means a every time you change cars your looking at a minimum of $500 in expenses.

2) Transaction time: It takes time to buy and sell a car. I rather do it less often.

3) Deferred maintenance: Think tires and breaks. It's one thing to spend $500 for new tires on a car you plan to drive 40k more miles. It's anther to do it and not know if you'll get the value out of it.

4) AC compressors that blow. Driving a car with no AC is a terrible existence. Paying $1k-$2k to fix it on a car that is not worth much more than that is worse.

5) Because of the low value of the car, there is a tendency to want to use 'shade tree mechanics' instead of real shops that charge more. In my experience, this has been nothing but a pain.

In 2006 I bought a 2004 Mazda 3 with 58k miles for ~$12.5. Sold it ten years latter for $3,300 with 132k after it was clear that it was starting to sound bad. I figure including repairs along the way I spent $120/mo to own that car. I don't see the point in trying to optimize beyond that. I tired the to buy a $4,700 Civic after that, but it turned into nothing but a regrets. I traded it in on a 3 year old Camry a year latter with 52k miles for $14k. I got $2k for the trade in.

That $4,700 Civic was the most expensive car I've ever owned.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by cshell2 »

7eight9 wrote: Wed Apr 07, 2021 9:20 am
cshell2 wrote: Wed Apr 07, 2021 9:02 am
Broken Man 1999 wrote: Wed Apr 07, 2021 8:31 am A $700 car payment is extreme.

DD has a 2018 Toyota Highlander and her payment didn't break $400. Other family car is a 2020 Toyota Corolla, less than $300. The Highlander is paid off, the Corolla will be paid off this year.
Well, obviously you can't really judge the true cost by the payment. I'm assuming those cars had big down payments and/or they're 84 month loans.
2021 Corolla. Excellent credit. $1,160 down. $299/month - 72 months.

Toyota Payment Estimator - https://www.toyota.com/payment-estimator
So, a base Corolla for almost 23K. I'll pass. I'm looking at all option 3 year old Touring CRVs with less than 25K miles for that price.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by marti038 »

If I've done my math correctly, you got 88.88miles/dollar on your first three cars. (160,000 at a total out of pocket cost of $1800) You didn't provide mileage on the Pilot with the blown engine, but I imagine you didn't do as well here.

We bought a slightly used Buick Enclave for $26,000 in 2010 with 24,000 miles on it. It now has about 176,000 and the car is worth about $5000. So we've gotten 7.238 miles/dollar thus far.

I'd say you've done pretty well with your approach assuming you haven't had to deal with a lot of extravagant maintenance costs.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by whomever »

"I think a person has to be willing to drive cars with some/bunches issues after 150,000 and especially over 200,000 miles.

Clunks and clanks and suspension/shocks/struts that type of area really take a beating."

FWIW, that hasn't been my experience. You do eventually accumulate minor cosmetic issues - if the light is just right you can see door dings, and putting touchup paint on the little paint chips on the front end doesn't make for an invisible repair. But I fix any functional issues like it was a new car[1]. If the struts or shocks or bushings need replacement, I replace them.

My personal practice is to generally buy new and then maintain meticulously. I don't hesitate to spend money/time on maintenance. For example, if I have a 15 year old/200k miles car and have to drain the coolant to replace a water pump, I will proactively replace all the coolant hoses while I have it drained, because I don't want to have to deal with a blown hose at an inconvenient time, etc, etc.

Rust is a different issue, if you live in places where it's an issue.

[1]there are a few repairs that aren't generally worth repairing ... when the rings go, a block cracks, transmission bearings, etc., then it's generally time to get a new car, or at least I haven't had good luck getting quality work done for that kind of thing.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Broken Man 1999 »

bg5 wrote: Wed Apr 07, 2021 9:09 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.

Please understand that this is on very special occasions....maybe once a year if that. But someone with a low income who buys a newer vehicle is just burning their money away.

I have no gripe if people have the money....but I often hear on this forum that they are amazed at the size of some peoples retirment account size.

I would say look in the driveway and that is an easy place to free up cash and invest.

My wife and I will probably easily reach 1-2 millon by the time we are 50 making middle class wages. We will be retired in our early 50's with no debt. We live on around $100,000 a year now and travel often. We are able to do this because we invest at least $50,000 a year even though we have 3 kids.

Some will say it cannot be done....my point is if you want to invest more money get rid of your cars and someday you will be able to afford the nice ones :)
Well, even if I wanted to have no vehicles, not having reliable transportation would not have added to our investments. Our employers were kinda old-fashioned in that they wanted us to be at work on time, and they really didn't care how we got there. We drove new cars after our first new one, and we did quite well for ourselves. New cars over other luxuries.

Education is the surest way out of low-income employment, no matter what you drive, if you drive at all.

I think there are those who judge low-income folks thru their lenses, which might make them believe all paths are the same as their own. Reflection on their experiences often are radically different than those they observe.

My health aides are low-income workers. They might visit 4-6 clients a day. Reliable transportation is critical, so they can't afford hoopties. If they don't show up on time, they don't get paid, and several absences would cause their agency to take away clients. Public transportation isn't practical, as their schedules are tight. They leave one client and go to another, sometimes close enough to make it in 15 minutes, sometimes 30 minutes.

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

Post by cshell2 »

A problem for low income folks is it's hard to get a loan on a beater and 5K for a cash car might be out of reach, but a 0 down new car with a $300/month payment is doable. Even with bad credit, dealerships can make it happen with crazy high interest rates.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Ron Ronnerson »

Devil's Advocate wrote: Wed Apr 07, 2021 9:32 am
Ron Ronnerson wrote: Wed Apr 07, 2021 9:01 am What a great way to hack transportation costs! About 15 years ago, my wife and I were newly married and had $40k in credit card debt. My wife bought a car for $5k, put 100,000 miles on it over several years (she had a long commute at the time), and then sold it for $2k. It was one of the things we did to dig ourselves out of the hole as quickly as possible. People tend to accept high costs in all sorts of categories as “necessary” but there are ways to keep them in check if someone really wants to. Thanks for showing how a car can cost close to nothing.

Now that we’re in a much better place financially, we have upgraded to luxury vehicles. We own his and her Corollas that were purchased new. We intend to keep the cars for 15+ years. We only buy cars that we can afford to pay for in cash.
Only on bogleheads is a Corolla a "luxury vehicle"!
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Watty »

There are lots of other very reasonable middle of the road strategy too.

For example you can buy something like a new Corolla/Civic or Camry/Accord then keep it for ten years or so then sell it and replace it with a new similar car.

Unless you get unlucky or drive a lot of miles you will likely have very little non-routine maintenance and a ten year old one owner well maintained Toyota or Honda will sell for a surprisingly high price if you sell it yourself.

The other operating costs will be similar if you are driving a 20 year old car or a 1 year old car. Insurance on a newer car may be a bit more but newer cars often get better gas mileage which which partially offset that.

You can tweak the numbers all sorts of ways but for something like a Corolla you are looking at somewhere around $100 to $120 a month in depreciation over 10 years($12,000 to $14,400 total).

That is not the cheapest way to own a car but I can afford that and I find it is worth that much to me to drive a reliable fairly newer cars with fairly current safety features.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by burritoLover »

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

Post by marti038 »

Tingting1013 wrote: Wed Apr 07, 2021 9:10 am
alfaspider wrote: Wed Apr 07, 2021 9:04 am
MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I'm guessing most folks who will drop $500 on a round of golf have enough income and/or wealth that a $700 car payment won't be the difference between accumulating wealth or not.

I did the cheap car thing until my late 20s, but once I had small kids, I decided it was worth it to spend more on something newer and with new car safety features. I hit a point in income/wealth where new cars wouldn't take a big bite out of my finances.
And yet the OP still buys beater cars...

OP, I play the opposite game with my cars. Instead of buying beaters that need to be replaced every year, I buy brand new cars that can be flipped a year or two later for the same price that I bought it. Better financial outcome and quality of life.
I recall reading about this approach the Millionaire Next Door, but I have to admit I am skeptical. How do you find a brand new car for sale at a price it will still be worth in a year or two? Not trying to be argumentative, but genuinely curious. This seems like one of the best approaches if you can pull it off.

Our approach has been to buy a slightly used car (less than 30k miles) with cash and drive it until we get 200k or more miles on it.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Scott S »

burritoLover wrote: Wed Apr 07, 2021 10:13 amSorry, 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.
Let's not get into a false sense of security about that. Today's car will be a "death trap" compared to a new car another 10-15 years from now. ;)
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Dottie57 »

Katietsu wrote: Wed Apr 07, 2021 8:16 am I am fascinated by the average age of cars in places like Texas. In my world, a Toyota driven for 15,000 miles a year as a daily driver in all weather gets taken out by corrosion well before it can get to 200k or 300k miles.
+1
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Lee_WSP »

I think OP's lesson boils down to two things.

1) you must live below your means to build wealth
2) cars are a big ticket item most people are unwilling but, unlike housing, are able to tackle

Clearly if the house hold is a 1% earner, a $700/mo car is well within their budget.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by burritoLover »

Scott S wrote: Wed Apr 07, 2021 10:17 am
burritoLover wrote: Wed Apr 07, 2021 10:13 amSorry, 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.
Let's not get into a false sense of security about that. Today's car will be a "death trap" compared to a new car another 10-15 years from now. ;)
That's why I monitor safety advancements and crash tests (like IIHS) and when I feel the next-gen vehicle makes enough relative improvements, I upgrade.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by watchnerd »

MishkaWorries wrote: Wed Apr 07, 2021 9:02 am I'm in shock someone would waste $500 on a round of golf and $200 on a dinner.
I once spent $1500 on a dinner with the only diner being myself.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by gwe67 »

Scott S wrote: Wed Apr 07, 2021 10:17 am
burritoLover wrote: Wed Apr 07, 2021 10:13 amSorry, 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.
Let's not get into a false sense of security about that. Today's car will be a "death trap" compared to a new car another 10-15 years from now. ;)
Burrito is 100% correct. And obviously future vehicles will be even safer, but you can't buy a future vehicle right now.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by Ron Ronnerson »

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

Post by Triple digit golfer »

I've always loosely figured that you divide the new cost by 200,000 miles (assumed life of car), and that is the cost per mile new. So a $25,000 new car will cost $0.125 per mile, so if I can get a used car with 150,000 miles for less than $6,250, it is equivalent before factoring in maintenance, which will clearly be higher with a used car. So maybe $4-5k is a better number.

But maybe 200,000 miles is the wrong number. Maybe 300,000 is right, in which case a car with 150,000 miles should be less than $12,500, so even spending $5-6k is a good deal and leaves plenty of room for higher maintenance costs.

So, my two questions are:

1. How does one reasonably determine what a good deal is on a used car vs. buying new, or buying newer and spending a bit more?

2. How do you know if the car has been maintained properly and how do you estimate what might be lurking in the form of large future repairs?
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by KlangFool »

bg5 wrote: Wed Apr 07, 2021 9:09 am
My wife and I will probably easily reach 1-2 millon by the time we are 50 making middle class wages. We will be retired in our early 50's with no debt. We live on around $100,000 a year now and travel often. We are able to do this because we invest at least $50,000 a year even though we have 3 kids.
bg5,

I live on 50K to 60K per year and save 50K to 60K per year. I only buy new car. In my opinion, at this income level, it is not about the car. It is more about the house.

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

Post by Dottie57 »

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.
Very true especially at this point where there are so many new safety features.

There are a lot of ways to increase wealth. My way is different than yours. I choose a new car and. Don’t spend as much on other parts of lufe. Savings goals met.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by MikeZ »

I think the broader message here is this:

Most of us are good at optimizing a few of the major expenses in our lives. We can choose the ones we work on to match our strengths. That said, there are real points of diminishing returns.

The difference between driving a beater and a decent used car on a monthly basis is often an amount of money most people can save by tweaking their cell phone plans.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by tibbitts »

I completely disagree that very low priced cars make financial sense for anyone who doesn't want to or can't repair a vehicle themselves. Almost always when someone talks about their vehicle with hundreds of thousands of miles on it but they don't d-i-y, when you ask you find out the hvac doesn't work, or a window or two doesn't work, or they have to jiggle the ignition key, or they can't adjust one of the seats, or the floor mat is covering a hole in floor, or the power mirrors don't work... and on and on. But it's just the greatest vehicle! Not everybody wants a vehicle like that, even if it saves them money. Sure, there is the opposite extreme with trading every couple of years, but a happy medium is best for most people.
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Re: The $2000-$4000 Car :) This made me wealthy so jump on board

Post by mmmodem »

bg5 wrote: Wed Apr 07, 2021 9:09 am Please understand that this is on very special occasions....maybe once a year if that. But someone with a low income who buys a newer vehicle is just burning their money away.

I have no gripe if people have the money....but I often hear on this forum that they are amazed at the size of some peoples retirment account size.

I would say look in the driveway and that is an easy place to free up cash and invest.

My wife and I will probably easily reach 1-2 millon by the time we are 50 making middle class wages. We will be retired in our early 50's with no debt. We live on around $100,000 a year now and travel often. We are able to do this because we invest at least $50,000 a year even though we have 3 kids.

Some will say it cannot be done....my point is if you want to invest more money get rid of your cars and someday you will be able to afford the nice ones :)
Everyone has their own vices and their own preferences. I cannot fathom spending that much on a sport I don't play but I would gladly hand over $3000 for a full body massage chair and $800 for a new Playstation 5 and a few games.

There is a small albeit non-zero quality of life improvement for me to drive a newer vehicle versus my $3000 beater, a 2009 Ford Escape. But the quality of life improvement in less college loans that my children would have to take is much more dramatic. Similarly, there is a 25% improvement in safety in terms of death rates for a 2008 small SUV versus a 2017. But I can also say it's 0.00000048% versus 0.00000036%. Too many spaces after the decimal to be significant for me.
https://www.iihs.org/ratings/driver-dea ... -and-model

Anyway, we do both. I drive the beater. DW drives the newer used vehicle with the family for safety and she hates car shopping and is very particular so I cannot buy it for her. Reducing the number of times she has to go to the dealer is a huge quality of life improvement for her. She could care less about my opinion in the above paragraph. Her car is safer and will last longer. That's all that matters. :D
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