Factoring opportunity cost into major purchases?

[HI Bill]

My guess is that you also mentally considered the cost in remaining years and health. The next few years have a greater value for some purposes than those farther out.

Absolutely! I haven't been able to travel due to my wife's health issues, and had a friend die last year at 62, which is way too close to my age (58). To me, the largest failure would be to FIRE at 55, then die less than 15 years later. Spend and enjoy while you can! By 75, you're probably done with travel, and home improvement projects probably won't do much for you. Driving a Ferrari also probably isn't such a good idea, as well.

 

[RetiredHappy]

To me, the largest failure would be to FIRE at 55, then die less than 15 years later. Spend and enjoy while you can! By 75, you're probably done with travel, and home improvement projects probably won't do much for you. Driving a Ferrari also probably isn't such a good idea, as well.

Tell that to my 75/76 yo husband (76 this year). We still travel alot, 3 months out of a year and spread over 3 to 4 trips. We just had more projects done on our house by contractors. He would like to buy a Bentley and I would like to buy the cheaper brother of Ferrari, a Maserati, but neither will happen because we don't need fancy and fast cars anymore.

My point is life does not necessarily slow down at 75 yo. It is individual.

 

[FLSUnFIRE]

Tell that to my 75/76 yo husband (76 this year). We still travel alot, 3 months out of a year and spread over 3 to 4 trips. We just had more projects done on our house by contractors. He would like to buy a Bentley and I would like to buy the cheaper brother of Ferrari, a Maserati, but neither will happen because we don't need fancy and fast cars anymore.

My point is life does not necessarily slow down at 75 yo. It is individual.

Quite a few of my bike tour guests are in their 70s+. Lots of active people and many could pass for being in their 50's.

 

[Romer]

Cars are always an interesting question. Some have cars simply to go from point A to Pint B and don't care what it is. For others, the vehicle they have can bring joy just getting behind the wheel.

As others have stated, it is also about personal freedom to go where you want when you want. To pickup stuff and no your vehicle can handle the load from the Grocery store, Hardware store etc. To be able to drive your family around or pickup your kids or grandkids. To be able to go help your parents and in-laws when they need it.

I can understand the case for someone living in the heart of NY city not needing a car and being cheaper. Living in the suburbs of Denver that becomes much harder as I would rely on Uber.

My vehicles are part of my retirement toy set and bring me pleasure. No financial opportunity analysis will indicate these are a good move, BUT the life opportunity for what these do for me and where they allow me to go is worth it to me.

 

[RetiredHappy]

Diuplicate.

 

[RetiredHappy]

My ideal living situation is a 1000 sq ft home with a 10-car garage.

Right now we settle for a 3000sq ft home with a 3-car garage for 1 car and 2 golf carts

 

[Chuckanut]

Opportunity costs don’t have to be financial.

 

[TickTock]

^^^^^^^^

Very true! +1

 

[Diogenes]

Just found this thread after auto-suggestion from a more recent car-related thread. As often happens, the comparison tends to be binary: buy a brand-new car and sustain its costs of ownership, or walk/bike/ueber everywhere.

Binary or Manichean choices tend to be simplistic. An important alternative is used-cars, of various age/condition/prestige. It is not impossible to find used cars near the bottom of their depreciation curve, meaning that ownership cost would include maintenance/repair, but zero depreciation, and possibly even negative depreciation. Examples would be mainstream sports cars, such as "NA" Mazda Miatas, Fox-body Ford Mustangs and the like... cars now well over 20 years old, which remain running, and are actually creeping up in price.

Every large purchase incurs opportunity cost, but some purchases aren't mere and unrecoverable consumption. It is possible to consume lavishly, and get financially rewarded for it. Yet another example is buying a C8 Corvette recently, and reselling it... for a profit. Sometimes markets get distorted, so that a used product is actually more expensive than sticker-price for a new one.

As for the overall question of owning a car vs. not, this of course is culturally-laden and situationally dependent. But my overall take, is that there are frugal ways of doing this, and not-frugal ways. Persons disaffected by car ownership, will cite for evidence the not-frugal ways... omitting the contrary options, that weaken their case.

 

[savory]

As an active transportation advocate, I think it is unfortunate that the problems with 100% ( and unnecessary)motor vehicle use) is not recognized. These include personal health, taxes, pollution, vehicle costs and more. Not all people can practice active transportation. But for those for example that say their closest store is 2.5 miles away, that is not outside of biking distance. In fact, if there are 2 traffic lights on the route, a motorist and a cyclist will arrive at about the same time. Plus, in a short period of time, 2.5 miles will not even be considered a big deal.

But most readers won’t be convinced. This comment is for those who want to try active transportation. My rule of thumb is once you know your destination ask yourself if you can walk, bike or bus before walking to you car. Take the time to really learn distances and safety from those with experience. You’ll learn that you can go further and be safer than you may have imagine. And in the end you will feel better and your community will appreciate your non-motorized contribution.

 

[Fermion]

As an active transportation advocate, I think it is unfortunate that the problems with 100% ( and unnecessary)motor vehicle use) is not recognized. These include personal health, taxes, pollution, vehicle costs and more. Not all people can practice active transportation. But for those for example that say their closest store is 2.5 miles away, that is not outside of biking distance. In fact, if there are 2 traffic lights on the route, a motorist and a cyclist will arrive at about the same time. Plus, in a short period of time, 2.5 miles will not even be considered a big deal.

But most readers won’t be convinced. This comment is for those who want to try active transportation. My rule of thumb is once you know your destination ask yourself if you can walk, bike or bus before walking to you car. Take the time to really learn distances and safety from those with experience. You’ll learn that you can go further and be safer than you may have imagine. And in the end you will feel better and your community will appreciate your non-motorized contribution.

If your store is 2.5 miles away and you need 2 50 pound bags of salt for your water softener, how do you bike that?

We limit our trips to the store to the point where when we do go, the amount of consumables we purchase is way more than I can bike, unless we look into some sort of bike trailer, and even then I am not sure how to get that up the 7% grade back to the house (it is a easy bike on the way down though!)

Now I have thought of motorizing a bike trailer, but I don't know how safe a pusher type trailer would be...

 

[savory]

If your store is 2.5 miles away and you need 2 50 pound bags of salt for your water softener, how do you bike that?

We limit our trips to the store to the point where when we do go, the amount of consumables we purchase is way more than I can bike, unless we look into some sort of bike trailer, and even then I am not sure how to get that up the 7% grade back to the house (it is a easy bike on the way down though!)

Now I have thought of motorizing a bike trailer, but I don't know how safe a pusher type trailer would be...

There is a solution. First 100# is not much. You won’t find it all over the US, but in some cities, 2 kids on a cargo bike will be 100#. Mom takes them to school that way

As for the hill, there are two choices. It will help with the load too. An e-bike will take you up the hill like you’re 12 years old again. You will get similar calorie burn as you would on a bike without a battery. If you elect a bike without assist, you may have to walk the bike up the hill.

You may have to make two trips since your space might be limited, even if you have a trailer. But it will not add much time since driving a car and riding a bike will be a similar eta if using city streets. Give up the car as often as you can for a bump in health.

Can’t do it all year long? Do it when you can.

While I am guessing you’re really not considering a change in transportation habits, I wanted to provide some thoughts for perhaps another person who might read this.

 

[savory]

There is a solution. First 100# is not much. You won’t find it all over the US, but in some cities, 2 kids on a cargo bike will be 100#. Mom takes them to school that way

As for the hill, there are two choices. It will help with the load too. An e-bike will take you up the hill like you’re 12 years old again. You will get similar calorie burn as you would on a bike without a battery. If you elect a bike without assist, you may have to walk the bike up the hill.

You may have to make two trips since your space might be limited, even if you have a trailer. But it will not add much time since driving a car and riding a bike will be a similar eta if using city streets. Give up the car as often as you can for a bump in health.

Can’t do it all year long? Do it when you can.

While I am guessing you’re really not considering a change in transportation habits, I wanted to provide some thoughts for perhaps another person who might read this.

Just a coincidence that I am posting this. As I pulled up to the

bike rack this morning, a beauty of a cargo bike was locked up there. I am not familiar with most of the brands but this is called Thick. The 'container' is fairly large.

 

[Lewis Clark]

Just a coincidence that I am posting this. As I pulled up to theView attachment 51983 bike rack this morning, a beauty of a cargo bike was locked up there. I am not familiar with most of the brands but this is called Thick. The 'container' is fairly large.

Saw lots of bikes like this in the Netherlands and Belgium.

 

[savory]

Saw lots of bikes like this in the Netherlands and Belgium.

And you may have seen some of the mothers wearing high heels as they were taking their kids to school and Mom was on the way to work. A major non-motorized culture there. The Netherlands is the most developed in the world.

 

[Koolau]

Mentioned earlier in this thread, bikes are MUCH more dangerous to ride than cars are to drive. I couldn't find good statistics that would be on an equivalent basis (say deaths per 100,000 miles) but what I did find suggested that bikes kill WAY more people per miles ridden than people killed in cars per mile.

I see reports of horrendous car vs bike accidents in the Islands all the time. I see why (bikes don't follow the rules - and sometimes drivers don't follow the rules.) People don't see bikes either. Biggest reason is that in bike/car accident, you're looking at $1000 damage to your car door or fender with a badly injured or dead bicyclist. It just isn't worth it to most of us though I totally understand the exercise, freedom, saving the planet for bicycles. NOT anti bike - except for DW and me. YMMV

Oh, and bikes in the Islands have a way of disappearing in seconds if every piece (body, wheels, accessories, sprockets, chain, etc.) isn't chained to something that a meth head can't move. Our chained and locked bike rack in the parking structure has been hit several times. It's just too much of a temptation.

Our upstairs neighbor had a $6000 bike. He didn't EVER leave it anywhere. If he went to a store, he pushed it along inside. When he got home, he hefted it into the elevator and pushed it or lugged it into his apartment. He was in fear that someone would try to take it from him when he was riding it. It's been done (bike-jacking?)

So do it for enjoyment or because you wish to save the planet. Just don't suggest that it's as safe as driving in a car. YMMV

 

[Lewis Clark]

And you may have seen some of the mothers wearing high heels as they were taking their kids to school and Mom was on the way to work. A major non-motorized culture there. The Netherlands is the most developed in the world.

Several of the locals told us - somewhat jokingly - that their bike paths were tinted red from the blood of toutists who were not watching out for oncoming bicycles.

 

[Andre1969]

I used to do the opportunity cost mental gymnastics when I was younger. Mostly, it was back before I hit the $1M mark. It would usually be in terms of "if I hadn't bought X-Y-Z-whatever, I'd be a millionaire by now!" But, once I hit that threshold, I didn't think about that kind of stuff quite so much.

Sometimes I'd also apply the 4% rule to whatever financial obligation was on my mind at the time. For instance, awhile back, I had my deceased Granddad's '85 Chevy Silverado on my insurance policy. It was basically a spare vehicle that sat around, unless I needed it for a backup, or needed to haul something. It added about $400/yr to the insurance policy, as I recall. So, as an ongoing expense, that means I needed to have $10,000 ($400 is 4% of $10K) of my invested assets allocated simply for keeping that truck on the policy. My mind hasn't wandered down that path in awhile, though.

The only other "opportunity cost" scenario my mind has toyed with lately, is where would I be, financially, if I had never moved, in 2018. I had paid off the mortgage on the old house around Jan/Feb of 2018, and was debt free. But that September, I bought another house, which was much larger and more extravagant, than my younger self could have ever imagined moving into. It also has a swimming pool, which can be a big financial drain. My mind will sometimes think, "If I hadn't moved, I could have retired back in 2018!" But, I'd also be in a house that's much smaller, much older, needed a lot of work, in a county I was learning to hate.

And, in running my numbers, it turns out that I probably could have retired in 2018, anyway, even with buying the new house and everything that happened afterwards, so either way it didn't matter.

These days, I'll sometimes mull over a high-dollar purchase. But it tends to be more in terms of "do I really want it/need it/see the value/joy in it/etc" and not really in terms of opportunity cost.

 

[savory]

Mentioned earlier in this thread, bikes are MUCH more dangerous to ride than cars are to drive. I couldn't find good statistics that would be on an equivalent basis (say deaths per 100,000 miles) but what I did find suggested that bikes kill WAY more people per miles ridden than people killed in cars per mile.

I see reports of horrendous car vs bike accidents in the Islands all the time. I see why (bikes don't follow the rules - and sometimes drivers don't follow the rules.) People don't see bikes either. Biggest reason is that in bike/car accident, you're looking at $1000 damage to your car door or fender with a badly injured or dead bicyclist. It just isn't worth it to most of us though I totally understand the exercise, freedom, saving the planet for bicycles. NOT anti bike - except for DW and me. YMMV

Oh, and bikes in the Islands have a way of disappearing in seconds if every piece (body, wheels, accessories, sprockets, chain, etc.) isn't chained to something that a meth head can't move. Our chained and locked bike rack in the parking structure has been hit several times. It's just too much of a temptation.

Thanks Andre, let me share a couple of things. Comparing miles driven is one measurement but since cyclist ride MANY fewer miles and organizations have very poor statistics of miles biked, it has been considered a less than perfect measurement. The League of American Bicyclists (LAB) a more than 100 year NGO, share this data:
"The rate of bicyclist fatalities per 100,000 people is about 0.26, while the rate of traffic fatalities per 100,000 people for passenger vehicles is 7.6. This means that the rate of traffic fatalities is more than 28 times higher for passenger vehicles than for bicyclists. However, bicyclists are still at a high risk of being involved in fatal accidents with motor vehicles, and are twice as likely to die while riding a bike than driving a car."

I am sharing data executed in Minneapolis as part of their regular data updates. Minneapolis was selected since it is currently the city doing the best job in the USA integrating active transportation into their community. One highlight that I learned about reading their report is that bicycle deaths skew to poor communities. Safety data

Our upstairs neighbor had a $6000 bike. He didn't EVER leave it anywhere. If he went to a store, he pushed it along inside. When he got home, he hefted it into the elevator and pushed it or lugged it into his apartment. He was in fear that someone would try to take it from him when he was riding it. It's been done (bike-jacking?)

So do it for enjoyment or because you wish to save the planet. Just don't suggest that it's as safe as driving in a car. YMMV

 

[DJRR]

Opportunity costs don’t have to be financial.

True. I forget the name of the famous investor who would tell his wife "Why would we buy a couch when we can invest that money in the market and buy 3 couches". He is now divorced. Opportunity cost

 

[Koolau]

"The rate of bicyclist fatalities per 100,000 people is about 0.26, while the rate of traffic fatalities per 100,000 people for passenger vehicles is 7.6. This means that the rate of traffic fatalities is more than 28 times higher for passenger vehicles than for bicyclists.

That's the reverse bias of the fatalities per 100,000 miles. It makes bikes seem much less dangerous than cars and we know better.

 

[savory]

hat's the reverse bias of the fatalities per 100,000 miles. It makes bikes seem much less dangerous than cars and we know better.

It represents a better representation of fatalities. On the high end for the last several years 20 people per State were killed in bicycle collisions on average. As you know, the distribution is not this clean.


Let's look at Minneapolis since I shared their data. Pop 425K. 4% bike to work = 17000 bike to work (this is a statistic from the State). Safe to say another 4% bike recreationally (based upon my research in the industry). 34,000 cyclists use the roads and trails. The data I could find for 2022 was for the county; No fatalities in that county which as you know would reduce the percentages I am using as I did not use the County pop. just MPL.


Here is the report of collisions "In 2022, Hennepin County had no bicycle fatalities. But 199 collisions between bicycles and automobiles produced 183 injuries, ..." 35 were considered serious.

Perhaps I am naive but that looks like pretty good odds to me. Especially considering most people do not take the time to learn the safest approach to biking. Their last lesson was when their Mom/Dad was holding their bicycle seat.

Plus fatalities on a national basis reporting are skewed to under served and tribal communities. My guess, (I have no evidence) is these are service workers who must bike in the dark when returning home. They may not use lights, wear helmets, or have learned proper road positioning for safety.

On a personal basis, during my adult life, I have bicycled thousands of miles as has my DW. Neither of us have had a collision with a motor vehicle. She has not had a car to car collision. I have had two.

 

[Koolau]

It represents a better representation of fatalities. On the high end for the last several years 20 people per State were killed in bicycle collisions on average. As you know, the distribution is not this clean.


Let's look at Minneapolis since I shared their data. Pop 425K. 4% bike to work = 17000 bike to work (this is a statistic from the State). Safe to say another 4% bike recreationally (based upon my research in the industry). 34,000 cyclists use the roads and trails. The data I could find for 2022 was for the county; No fatalities in that county which as you know would reduce the percentages I am using as I did not use the County pop. just MPL.


Here is the report of collisions "In 2022, Hennepin County had no bicycle fatalities. But 199 collisions between bicycles and automobiles produced 183 injuries, ..." 35 were considered serious.

Perhaps I am naive but that looks like pretty good odds to me. Especially considering most people do not take the time to learn the safest approach to biking. Their last lesson was when their Mom/Dad was holding their bicycle seat.

Plus fatalities on a national basis reporting are skewed to under served and tribal communities. My guess, (I have no evidence) is these are service workers who must bike in the dark when returning home. They may not use lights, wear helmets, or have learned proper road positioning for safety.

On a personal basis, during my adult life, I have bicycled thousands of miles as has my DW. Neither of us have had a collision with a motor vehicle. She has not had a car to car collision. I have had two.

Statistics probably aren't going to get it here as we can't decide on the kind of statistic that is germane. Of those injuries of bike riders you mentioned, I wonder how many (if any) of the car passengers were injured. IOW we have nothing even close to an apples and oranges comparison - more like a grape to a grapefruit comparison.

SO, how about a thought experiment instead? Would you rather be on a bike being hit by a car or in car being hit by a bike? Your answer is probably a good clue to the problem.


One more time - I'm not anti bike but as long as cars and bikes are forced to share the same space at the same time, the people on bikes are going to come out on the losing end of the equation. Wishing the physics were different won't change things though YMMV.

Be safe.

 

[Badger]

One thing I haven't seen mentioned that might be a good compromise or "middle ground" is buying a used scooter or moped. They get excellent gas mileage, are much cheaper to own and maintain compared to even the cheapest, most basic cars, and they are incredibly fun to drive! I could see myself switching from car to moped/scooter at some point if my lifestyle allowed for fairly short, in-town driving trips only (no highway driving).

Both my wife and I rode motorcycles (cruisers) for many years and I restored a couple of vintage vespas for an occasional fun change. The first time my wife took hers around the block for a test ride she came back and decided it was too dangerous. I also found them very unstable and top heavy whereas the motorcycles had low center of gravity and were way more comfortable. The vespas were sold a month later.