Thoughts on Cars, Hint They’re Expensive

Car MoneyWow, cars must be great money making machines because we just earned $3,000 with Lyft.  While the end of that sentence is true, you probably realized that cars have a lot of costs that go along with ownership.  In the last article I estimated the cost of ownership at 30 cents a mile, but that may have been too low.  According to KBB 5-Year Cost To Own tool my car costs 54 cents a mile which it estimates the cost to me of $33,669 over five years ($561 a month).  We have a 2014 Toyota Camry SE which is not the cheapest vehicle, but definitely on the lower end of the pricing spectrum.  The cheapest was a Chevy Spark which comes to $26,760, still $445 a month.  The point is it’s expensive, check out the details here.

Reducing the cost of ownership

Purchasing or leasing

The average American spends 14% of their budget on transportation, so let’s do better and make it 10% or less.  If you make $60,000 then you have $500 a month for transportation.  As you can see my Camry would not fit in this budget, so I’d have to go with a used car.  I am a big fan of used vehicles as new cars depreciate tremendously in the first few years.

I think there are some occasions when leasing may work out, but they are few and getting out of a lease is no fun.  Sometimes there are great deals like $99 a month for a electric Fiat which sounds worth it if you can handle only driving a pretty limited range.  In most cases buying will work out better especially since you will be less likely to fall into the trap of continually upgrading your vehicle.


Shop around.  Call Geico and see if they can really can save you 15%.  We drive around 1,000 miles a month combined, but are going to try to do less in the future because we just switched to Metromile which charges us per mile.  Our previous policy was $90 a month and our new one is $40 plus 6 cents a mile.  This means we are saving money if we drive less than 833 miles.  They give you a dongle to plug into your car and an app allows you to see all sorts of information.


You can get a 10% off the cost of gas if you plan ahead.  Here are my methods.


To reduce the cost of maintenance you can do it yourself.  You will still have to purchase parts, but you will save lots on labor.  It is cheaper to maintain your car regularly than to wait for it to break down.  For instance you can get your oil changed every 5,000 miles for $40, but if you forgo these for a long time your engine will overheat and you will get serious, costly problems.

Alternatives to car ownership

Public transportation

Even in Orange County where a car is “mandatory” we have public transportation that will get us around.  The downside here is that you will need to plan ahead to schedule what route you will take so you are not wasting your time waiting around.

Lyft and Uber

There will be times when you don’t have time to wait for the bus and feel upset that I convinced you to go without a car.  Well, guess what, you can summon a car to drive you.  This will be pricier and cost around $1.50 a mile, but great when you need it.

Bike and walk

At least one of us has to bike or walk to work each day because there is only one car.  I ride about three miles to work and then after many months my coworker decided to sell his car and bike 20 miles each way!


Maybe you only need a car sometime, actually this is everyone as it is estimated that the average car is in use only 4% of the time.  When it rains I will drop off and pick up my wife at work.  You can carpool to and from work.  For an occasional trip you can go use a car sharing service such as car2go or Zipcar.

My story

When I turned sixteen my parents got me a six-year-old station wagon.  I enjoyed being a Volvo driving soccer mom and drove it until I went to college.  I went to UC Berkeley and used a bike, my feet, and the bus to get everywhere and it was great.  When I came back after graduation I officially got my station wagon and the title was transferred to me.  I got a job in LA and had a 70 mile roundtrip commute.  Being excited to get a regular paycheck I thought it was time to get a car which would work better for the commute.  I thought MPG was important and would save lots of money.  Note, please do not get caught up with the cost of fuel, that is just a part of the cost of car ownership.  I researched many cars and was thinking of a Ford Focus which was priced under $20,000.  However I picked something bigger, more expensive, and with better fuel economy – a VW Passat TDI.  Yes, that one that had the pollution problems.

The next step was to buy the car at a good price.  The MSRP for the base model with an automatic transmission was $28,225, but the manual was $2,000 less.  I started with researching dealers locally as well as further away on TrueCar to see what prices they offered through the site.  I saw some for around $26,000 and visited some dealerships but all were quoting me around $30,000 and said I would have to get a Jetta if I wanted under $25,000.  From TrueCar I found a deal on a manual in northern California for $22,500 and called to ask about it.  They said they didn’t have it but would offer me an automatic for $23,500 which is just what I wanted.  I flew up on the weekend and bought the car which was $6,000 off MSRP.

I loved that car, 42 MPG with a tank that took me 750 miles.  It was diesel which was cheaper and I slept in the back before work to avoid morning traffic.  After a year I put 25,000 miles on it, got a new job closer to home, and was engaged.  I realized that cars were expensive and once I got married I wanted a share a car to save money to live closer to work.  I sold it to CarMax for $21,000 which would be $8,500 in depreciation, but since I got a deal it was only $2,500 for me.  However, I went back and made the calculations.  Even though I saved $3,000 in fuel costs, I would have been better off financially keeping my Volvo because I would have avoided all the initial taxes and fees, the $2,500 in depreciation because how big is the price difference from a 120,000 mile car and a 145,000 one, maybe $500?  So it cost me to about $1,000 more to have a sweet ride for a year and sleep in fetal position in the back versus having the entire station wagon as a bed.


I’m not going to recommend eliminating your car because I don’t know your situation.  What I will say is that understand that you are paying to own and operation your vehicle so make sure it is providing your with utility equal to your costs.  I hope your eyes have been opened to some new ideas about saving your money on transportation.

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