Are Cars Worth It?
By Ryan Healy | November 13, 2007
I have two vehicles: a 2007 Honda Odyssey and a 2001 Hyundai Elantra.
I financed the Elantra and paid it off in two years. At the time, I regretted the decision; I thought I had spent too much money. Looking back, I’m actually glad I bought the car new. I still own it. It has only 74,000 miles and has never had any problems. Annual maintenance and gas expense are low. A few hundred dollars a year.
My van is much more expensive. I bought it this past June in anticipation of our third child. The price tag was approximately $30,000.
If I were to pay off the van quickly, I may decide it was a good decision. But right now the payments feel excessive. We drive so little these days (I work from home), it’s not worth having such an expensive vehicle.
I have considered selling the Elantra to pay for the Odyssey. But I’d only get about $5,000 if I were to sell the Elantra, so it seems a better choice to keep it.
I have also thought about trying to live without a car. It is appealing because it would be so simple. But it would make our lives difficult. Living in the Denver suburbs, most things are at least a mile away, usually 2-6 miles. That’s not walking distance, especially with three kids under the age of five.
On Plonkee’s blog, one man suggested it was possible to live car-free if we moved to a big city like New York. Hmm… that sounds like a bad idea. Big cities have a much higher cost of living. The expense of a car is probably a wash if you consider the additional cost of rent in a big city. Plus, we’d have to leave family, give up clean air, etc… all things I have no interest in doing.
If you are single or married without kids, then city life without a car may be an excellent choice. It’s just not where I’m at.
For most of my marriage, my wife and I have had one car. It was only when I began commuting separately that we bought a second car. Since then we’ve gone to one car and then back to two cars. I like having one car better. It’s cheaper, takes less time to maintain, and creates less stress in my life.
What makes the most sense for us is probably as follows:
- Sell the Elantra for $5,000.
- Sell the Odyssesy for $29,000.
- Buy a used Odyssey for $10,000. (Pay $5,000 down and get a small loan for $5,000.)
This decision would wipe out almost half my total debt and reduce my annual tax and insurance exposure. (Colorado is notorious for high auto insurance and tax rates.) Even if I kept the Elantra for convenience, swapping out our new van for a used van still makes a lot of financial sense.
Ultimately, car decisions are complex. They will be different for everybody. Buying used is a better route for your financial well-being, but buying new isn’t always bad.
Note: This post is part of a group writing project. You can see what others have written here…
- Moolanomy - My Cars and My Life
- Plonkee Money - About My Car
- I’ve Paid For This Twice Already… - My Evolution From the “New” to “Used”… Car, That Is
- Earning Our Freedom - New or Used: That Is The Question
- Cash Money Life - Save Time and Money By Trading in Your Car
- Budget of Destiny - New or Used What Kind of Car Do You Buy?
- Are You Going To Be This Way The Rest Of The Time I Know You - How Do They Sleep At Night?
- Gather Little By Little - 5 Reasons You Should Buy a New Car
- The Dough Roller - Service Beacon: A Free Online Tool to Track Your Car’s Maintenance Schedule and History
- Being Frugal - My Experience Buying a Used Car with Cash
What’s your experience with cars? Should you buy new or used? Should you go without? Why? Feel free to write a post about your perspective and link back here. I’ll include your post in the list above.
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Topics: Frugal Living |
11 Responses to “Are Cars Worth It?”
Comments
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November 14th, 2007 at 5:17 am
Thanks for the link. As you know, I’m a non-car person.
If I had kids, that might change, depending on whether I could find daycare that fitted in well with my walking commute. Small children on a bus in rush hour is not pretty.
Fortunately, I have no plans to have children, so I may never need to buy a car.
November 14th, 2007 at 8:02 am
I guess I’m 2 for 2 (or 0 for 2) on making right decisions with cars. At 23 years of age, I’ve lost more money on cars than anything else.
Bought 84 Celica for $200 - Drove for three months, something in engine broke, not worth fixing (first cars in high school are great, aren’t they?)
Bought 84 Nissan 300ZX - Spent $1850 - Drove for about a year until a not-at-fault accident in a parking lot put a huge dent in my side door and a month later the transmission went out.
Bought 1999 Volvo S80 - Spent $14,500 - Drive for a couple of years until there were so many repairs needed (including a transmission at $4800, plus others totalling more than $10,000), sold it for $800, but still owed more than $10k on the loan - ouch.
Bought 2007 Honda Accord new from dealer - Loan for $25k - thought this was great since I didn’t think my credit was good enough for anything else. Payments of over $700/month with insurance, let it get repossessed while traveling overseas. Owed $11k on loan, settled for what was a real blessing at $4300.
More money wasted on cars than on anything else, because of trying to live a “more successful” life than I could afford.
Ryan quoted it best: “One man pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.” Proverbs 13:7
That was me in spades and now I’m tasked with the work of paying many mistakes off. I’m grateful that what I have is what I have, and not more. =)
November 14th, 2007 at 9:37 am
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November 14th, 2007 at 9:40 am
Plonkee - You’re welcome. I agree–I’d never want to take young kids on public transit during rush hour. Yikes!
John - I bought a 1985 Saab 900 Turbo for $1,250 before I got married. It was a great vehicle for me at the time, but I quickly learned that having a car that needs major repairs can wreak havoc on your finances–not to mention your ability to get to your job!
After a few major car repair bills, I decided I wanted something that wasn’t going to break down and leave me stranded like my Saab had done. And I decided I preferred to have smaller predictable car payments of $200 a month vs. unexpected repair bills of $1,000 plus.
Anyway, I can see a bit of myself in your car history there. The good thing is we can recognize our mistakes and make better decisions in the future.
November 14th, 2007 at 11:28 am
No car for me till now, I have a bike for the past three years, before that I was using a bike for 5 years. In total 8 years on a bike, well I am unmarried, no kids, go to the office on my bike never required a car actually.
If I ever went for a car then I would be going for a used one, reason being, India’s growth story! people are buying new cars with every other new launch and the old cars are just one to two years old(or should I say new) and depriciated.
November 14th, 2007 at 9:53 pm
We’ve had two cars our entire married life. Mostly that’s because my husband has been in sales and has needed a car for his job. I would love to go down to one car someday, though that gets kind of inconvenient when you need to bring your car in to be serviced.
Keep us posted on what you decide to do, and thanks for participating in the project!
November 14th, 2007 at 10:04 pm
[…] Debt Reduction Formula - Are Cars Worth It? […]
November 17th, 2007 at 5:26 am
[…] Debt Reduction Formula - Are Cars Worth It? […]
December 3rd, 2007 at 12:34 pm
I am able to live car-free in a city with a reasonable cost of living: Montreal. It is a relatively common choice among my professional colleagues. Some of them rent a car once every month or two, but we haven’t found that necessary. Those that have cars have only one, and nobody drives to work. Nobody I know has small kids so I’m not sure about that. Definitely it was a deliberate choice on our part, as we chose where to live based on good access to public transit.
February 2nd, 2008 at 1:14 am
[…] and found these articles particularly interesting:1. Ryan Healy posed the ever happening question, are cars worth it? Heck, I don’t know. I need a car and use a car and if I DIDN’T have one, I would be in […]
February 6th, 2008 at 8:07 pm
Hyundai Elantra is one of the best car for college students according to survey. Because of its fuel efficiency and safety features that suits the need of every students. That’s why many parents are getting insurance for their teenagers.