|
|
WOW! How to save $250K over a lifetime!
05-28-2010, 10:29 PM
|
#1
|
gone traveling
Join Date: Oct 2009
Posts: 125
|
WOW! How to save $250K over a lifetime!
Liz Pulliam Weston: Make your car last longer, even a lifetime - MSN Money
Quote:
owning cars for 10 years instead of five could save the typical person more than $250,000 over a lifetime.
|
Figuring a discount value of 1/2 (but multiplying for 2 for a couple), this alone could mean a FIRE value of $250K.
And add in the savings of having a Las Vegas type of wedding rather than kind promoted by the typical Marital Industrial Complex, living in a good exurban school district (to avoid private school tuition) and only saving up enough for Little Johnny to go to State U rather than the best little private places that are recommended by the typical pompous high school counselor (like mine, who couldn't believe that with my perfect 36 on the Math ACT and 32 composite that I shouldn't be shooting for MIT or an Ivy League place), a couple could easily hit the critical mass target without giving up much other pleasures in life (relatively speaking.)
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
05-28-2010, 10:41 PM
|
#2
|
Moderator Emeritus
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,873
|
I absolutely believe that. I sold my car in 1980 and retired in 2008. Minimal transportion expenses were a cornerstone of my planning. Because I could function in the city without a car I was able to save enough to continue living in an expensive city.
|
|
|
05-28-2010, 11:17 PM
|
#3
|
Full time employment: Posting here.
Join Date: Feb 2008
Location: Central Coast, California
Posts: 923
|
This is one of the things I figured out (though didn't extrapolate over multiple years) early on. I had this utterly reliable but rather run-down looking Volvo for years, and when I was working and got a raise my co-workers would always say "so, you gonna get a new car now, right?" I always said "No, I'll keep driving this one, thanks." Finally someone asked me why I was driving my old, dented, still-running car, and I said "Because every month I drive it, it saves me $400+ dollars." It was paid for and insurance was unbelievably cheap (had legally mandated minimum insurance on it). No car payment, and we only spent about $1000/year on gas and maintenance for it. Compared to a new car, with a $300 monthly payment and much higher insurance, it was a no-brainer.
I always wondered why more folks didn't figure it out.
__________________
"You'd be surprised at how much it costs to look this cheap." -- Dolly Parton
|
|
|
05-29-2010, 01:36 AM
|
#4
|
Full time employment: Posting here.
Join Date: May 2008
Location: Lexington
Posts: 714
|
I understand why some people like spending a lot of money regularly, but what I have never been able to fully grasp is why most people spend lots of money regularly, their whole lives. Only a tiny percentage had more than pocket change to spend for the first 21 years of their lives, what the heck happens during the 10-15 years immediately after that? Sure, some people like to live on the edge, but how can it be most people?
|
|
|
05-29-2010, 04:35 AM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
|
I think we had a thread a year or two ago where someone pointed out a better strategy of buying a 3 year old car and replacing it every 3 years. It saves money, and while you don't get the latest and greatest, you also aren't 10 years out of date either, and you start getting more repair costs in years 7-10.
Or you can do what I've done with my Miata--bought used, and have had it for over 10 years now. To be fair, it's not a daily driver so the miles are low.
|
|
|
05-29-2010, 06:04 AM
|
#6
|
Moderator
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,290
|
Except for the two old clunkers I had in high school and college I've kept cars for at least ten years. The first decent one was a 1970 Plymouth Duster that I bought from my mother after Dad died in 1973 and I kept that until 1985, replacing it with a new 1985 Chevy pickup truck that I kept for 18 years. My "retirement present to me" was a new, special order 2003 GMC 4WD pickup that I intend to keep until parts availability becomes a problem. And I bought a new end-of-season 2008 Suzuki C90T motorcycle that I use for everything when weather and load permits. It gets ~45 mpg.
There's just something that strikes me as "wrong" about driving a 2.5 ton truck to pick up a prescription or go to the library so I use the bike for that stuff.
__________________
When I was a kid I wanted to be older. This is not what I expected.
|
|
|
05-29-2010, 06:12 AM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 9,067
|
Quote:
Originally Posted by RunningBum
I think we had a thread a year or two ago where someone pointed out a better strategy of buying a 3 year old car and replacing it every 3 years. It saves money, and while you don't get the latest and greatest, you also aren't 10 years out of date either, and you start getting more repair costs in years 7-10.
Or you can do what I've done with my Miata--bought used, and have had it for over 10 years now. To be fair, it's not a daily driver so the miles are low.
|
When I was young, I knew I was messing up by buying new and too often but retirement was the last thing on my mind. I finally got it and I do buy at least a 2 year old vehicle and hold on to it for as long as I feel it is reliable.
My parents always hung on to cars for a long time. Not sure why it took me so long to figure it out. My mom has a 1990 Olds Delta 88 that still runs great. I drive it to the golf course a couple of days a week just to keep it running.
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
|
|
|
05-29-2010, 07:56 AM
|
#8
|
Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Seattle-ish
Posts: 1,156
|
My first car, a used 1972 Mazda, I got in college in 1979. (I briefly had a nice black and white 1953 Ford in high school.) Some drunk driver ran into it as it sat parked in front of my house in 1981 and totaled it. My next car was a 1976 Toyota Corolla that had 27,000 miles that I bought in 1982. I drove that into the ground for the next 16 years, until I bought my one and only brand-new car--a 1998 Saturn SW2, which I have been driving for the past 12 years and 66,000 miles. With ER starting today, I expect my annual mileage to go way down, perhaps to about 5,000/year. The point is that I also believe I have saved lots of money by not buying new every few years.
Contrary to many others, I don't see anything unfavorable about buying a new car, if you're gonna hang onto to it for at least seven to ten years. I know that as soon as you drive off the new car lot it depreciates considerably, but I think it evens out, financially, after about seven years. I must say that the feeling of a new car was very nice, as I never had one before--except for new GSA cars my employer got about every three years or so. This Saturn has been a very dependable car these past 12 years, at its 33 MPG is a bonus.
__________________
"What do I do? I do as little as I can, and mostly what I want." Festus Haggen
|
|
|
05-29-2010, 07:59 AM
|
#9
|
gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
|
Quote:
Originally Posted by Urchina
I always wondered why more folks didn't figure it out.
|
Vanity costs...
|
|
|
05-29-2010, 08:00 AM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
|
There are sometimes still good deals in the "1-2 year old car" category compared to buying new, but this strategy has largely become a victim of its own new-found popularity. Now that this "secret" has gone mainstream, the depreciation of many new vehicles isn't as immediately steep as it used to be because of an increased demand for "almost new." To some degree it depends on make and model as well.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
|
|
|
05-29-2010, 08:02 AM
|
#11
|
Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: Austin
Posts: 1,142
|
Quote:
Originally Posted by CuppaJoe
I absolutely believe that. I sold my car in 1980 and retired in 2008. Minimal transportion expenses were a cornerstone of my planning. Because I could function in the city without a car I was able to save enough to continue living in an expensive city.
|
Sadly, few U.S. cities (and almost no towns - the old stores have closed and the Walmart is "out on the loop") are walkable enough to do without a car. However, we discovered that we could do just fine with only one car after retirement. Losing that expense helps pay for us living in trendy and expensive downtown Austin, where almost everything is within walking distance. We only use our car to visit friends in the 'burbs.
__________________
Start by admitting
from cradle to tomb
it isn't that long a stay.
|
|
|
05-29-2010, 08:21 AM
|
#12
|
Thinks s/he gets paid by the post
Join Date: Jul 2004
Posts: 1,321
|
I continue to find great values in 3 to 5 year old "certified" used cars. In 1995 I bought a 1992 certified Toyota Camry, 6 cyl., leather, top of the line. It came with a 3 year, 100,000 original mile bumper to bumper warranty. It had 47,000 miles on it and I paid around $16,500 cash for it. I drove it until 2002 and sold it privately for $4000. I then bought for cash a certified 1997 Lexus with 41,000 miles on it. It carried the same type of warranty. I paid $20,000 cash. I drove it until 2010 and sold it with 131,000 miles for $4400. I just bought a 2007 certified Lexus with 45,000 miles (same warranty) for $24,000 cash. These certified cars are fully reconditioned (new battery, new tires, new brakes, etc.) and are detailed so well that they look and drive like brand new cars. None of them ever required major repairs and the certified warranty gave me the peace of mind that I wasn't buying somebody's lemon.
I have never made a car payment in my life and have always had nice, dependable cars. I know that this strategy help me reach FIRE at 55.
|
|
|
05-29-2010, 08:41 AM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
|
Quote:
Originally Posted by ziggy29
There are sometimes still good deals in the "1-2 year old car" category compared to buying new, but this strategy has largely become a victim of its own new-found popularity. Now that this "secret" has gone mainstream, the depreciation of many new vehicles isn't as immediately steep as it used to be because of an increased demand for "almost new." To some degree it depends on make and model as well.
|
Yep, I think the Japanese brands often depreciate so little that you might as well buy new if you are going to hold onto it for 10 years. I think the Korean makes still depreciate a lot in their first few years, and their quality has come up a lot.
Now that I drive far less, the attraction of a new car is even lower. I drove about 4K miles last year, so I sat in the car for less than 100 hours. If I had a $300/month car payment, that would work out to $36 per hour for each hour I was in the car. There are very few vehicles that provide a "fun factor" worth $36 per hour, and most of them have wings.
|
|
|
05-29-2010, 08:58 AM
|
#14
|
Thinks s/he gets paid by the post
Join Date: Aug 2006
Posts: 1,558
|
This matches my experience. When I was car shopping it quickly came down to a choice between buying a new Honda or Toyota, or a 2-year old Kia.
The huge depreciation of the Kia got me to buy it.
I'm just hoping that that quality has improved as much as they claim
Time will tell.
Quote:
Originally Posted by samclem
Yep, I think the Japanese brands often depreciate so little that you might as well buy new if you are going to hold onto it for 10 years. I think the Korean makes still depreciate a lot in their first few years, and their quality has come up a lot.
|
|
|
|
05-29-2010, 08:59 AM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: Austin
Posts: 1,142
|
__________________
Start by admitting
from cradle to tomb
it isn't that long a stay.
|
|
|
05-29-2010, 09:19 AM
|
#16
|
Thinks s/he gets paid by the post
Join Date: May 2005
Location: Texas
Posts: 1,038
|
Bought a new 2008 Ford F150 for $15K when the gas was $4.00 a gallon and they were setting on the lot unsold. Bought a used Ford Focus 15,000 miles for $11K.
$26K for the pair.
__________________
In theory, theory and practice are the same. In practice, they are not.
|
|
|
05-29-2010, 09:51 AM
|
#17
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2008
Posts: 13,127
|
Quote:
Originally Posted by RunningBum
I think we had a thread a year or two ago where someone pointed out a better strategy of buying a 3 year old car and replacing it every 3 years. It saves money, and while you don't get the latest and greatest, you also aren't 10 years out of date either, and you start getting more repair costs in years 7-10.
Or you can do what I've done with my Miata--bought used, and have had it for over 10 years now. To be fair, it's not a daily driver so the miles are low.
|
I heard about the 3 year rule too. That said, my car is about 15 years old. Didn't drive it much when I used to w*rk as I commuted mostly by train. Now I drive it more.
Next time, I'll probably buy used.
|
|
|
05-29-2010, 10:21 AM
|
#18
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
But I don't need to save $250K over a lifetime.
One can work on the savings side, but it is often easier to work on the earning side.
|
|
|
05-29-2010, 10:28 AM
|
#19
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
|
Quote:
Originally Posted by LOL!
But I don't need to save $250K over a lifetime.
One can work on the savings side, but it is often easier to work on the earning side.
|
True, but the reality is that it's both, and the more we see means testing and higher taxes on incomes, the more effective "cost avoidance" becomes compared to higher earnings.
An extra dollar earned may net out to 60 cents after taxes. An extra dollar not spent nets out to a dollar. And if taxes and means testing of government programs increase, that difference will only widen, most likely. As a result of this I suspect financial planning in the future will focus more and more on the "cost avoidance" side of the ledger rather than strictly making more and investing more.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
|
|
|
05-29-2010, 10:28 AM
|
#20
|
Full time employment: Posting here.
Join Date: Mar 2010
Posts: 889
|
I'm coming up on year six for my car, which I bought new, in cash. I will definitely be keeping my car at least four more years. Besides making my cars last at least ten years I will also always pay cash for them and save a few thousand by not getting a loan.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|