Minimize Car Costs

Disclosure: This post is not for people who love cars.  If driving, admiring, or massaging your ride is one of life’s great pleasures, bounce now.  Nor is this post for people who are concerned with using their car to project an image of success.  This post is for people who feel that car ownership is a necessary evil, like flossing or making eye contact.

AAA reports that in 2017 the average annual cost of owning and operating a new vehicle was $8,469.  The average for sedan owners was the lowest, coming in at $6,354.  Owning a car does to your budget what working in a pizzeria does to your waste line. (I speak from experience).

Are you stuck in a hellish maelstrom of car costs?  Lenders are glad to hear it.  You start a new job, you get a new car (small down payment!), you spend five years paying it off, then you want to trade it in before it loses any more value, becomes unreliable, or damages your fragile image.  The auto industry, insurers, and state budget office are excited you will be starting the new car buying process again.

Newer post: Cheapest Car Ownership Strategy

Buying a new car:  Example X using

  • Car price:  $34,000 (paying $1000 down and $300 in fees)
  • Sales tax: $2,380 (PA 7%)
  • Total loan interest: 3,464.71 (5 years at 4%)
  • After five years you have paid: 40,144.71 (not including insurance, registration, maintenance, etc.) and the trade in value is now $15,640 (if the dealer is willing to give full value to get you into a new deal).
  • Five-year loss= $24,504.71

car loan interest

How can you get off the merry-go-round of interest, taxes, fees, and depreciation?  What if you could cut your car costs in half?  What could you do with an extra $4000 dollars a year?  Rethink your car ownership habits and save yourself tens of thousands of dollars.

Big ways to save on car ownership:

Buy a used car: example Y using

According to Consumer Reports, the average vehicle loses 64% of it’s resale value after five years. Do you think that a 2013 civic is 64% less useful than a 2018 civic? Let’s say you are on the other side of the equation in example X (shown above).  You buy a car that is five years old at a cost of $15,640 plus taxes and fees.  You give the same down payment and have similar loan terms (higher interest on used vehicles). Do you think that you can drive this vehicle for five years? (Of course you can; don’t be a weenie.)

used car calculator

  • The value of this car at 10 years old is about $6,940
  • Five-year loss= 11,830.83 (as compared to loss of $24,504.71 in example X)

True, the maintenance costs are likely to be higher, but will they be more than twelve grand higher? No. In addition, you will be spending less to ensure a car with a lower worth.  If you put the amount you are saving on your car payment every month into a car savings account, you will really be starting to break the cycle.

Follow these steps and break the car buying cycle.

  1. Buy your next car used (as in example Y).
  2. Put aside the hundreds that you are saving every month into an automatic savings account – a “car savings account.” (I use a Capital One 360 Savings account).  The interest rate is negligible, but you will be amazed how it adds up.  This money is for unexpected repairs and, ultimately, buying your next car in cash.  If you save $250 a month for five years you will have $15,000 (not including interest).
  3. Buy your next car in cash.  Let’s say you spend an additional $6,000 (from your car savings account) maintaining your used car from example Y. (Hopefully, you will spend less).  Take the $9,000 remaining in your car savings account and add it to the 6-7 grand the car is still worth.  Now you can buy a five-year old car in cash.
  4. Live the dream.  You are now saving all of the interest on a loan and you can move up to slightly better used car every five years.  Your payment (car savings account) will always be low.  Instead of paying interest, you are earning interest.

Own fewer cars.

one car family
Like a boss.

Is there any way you can be a one care household?  I am fortunate to live in a city with an excellent public transit system.  My wife takes the train every day and her SEPTA pass costs about $150 a month.  Her employer has even opted-in to a program where she can pay before taxes.  Switching from two cars to one will cut your costs (almost) in half.

  • Worst case: two new cars
  • 2nd worst case: one new car and one beater
  • 2nd best case: two beaters
  • Best case: one beater (You, my friend, are living the dream.)
  • Ultra: Being car-free

Buy a reliable car.

Consumer Reports is a must-use tool when it comes to buying a used car.  A lemon could turn your car savings account into a Chinese take-out savings account.  You can join CR for one month for $6.95 and access several used car tools and guides based on extensive data from repair shops and owners.  Once you have bought the car, cancel your subscription.  Seven bucks could save you thousands and give you piece of mind.

Buy a car with a low cost of ownership.

My doctor is telling me that if it tastes good, I should spit it out.  Well, if you think a car is sexy, spit on it.  Fully-loaded pickup? Sexy.  Monstrous SUV? Spit on it.  Classic muscle car? Hello, lovely. V-12 sports car? That’s hot. Elon Musk’s new vehicle that runs on rotten banana peels and emits only positive vibes? Damn sexy.  Consumer reportsEdmunds, and AAA can all help you identify the car that fits your monthly budget and keeps your sex appeal at a manageable level.  (Please, think of your neighbors.)

Related post: The Tao of Cheap: What Taoism Teaches about Money

Minimize car insurance

Be proud of your piece of crap car.  Smile every time that you look at, and think about the money you are saving.  Shake your head bemusedly at the vanity of your neighbors.  My car is compensating (for the fact that I am superior to all other mortals).  Feel good about yourself when your crap car helps others feel good about themselves.  After all, what would Jesus drive? Think about it. (My car is so humble it makes a donkey look like a Lotus Esprit!)

You still win because driving a crap car lowers your insurance.  Furthermore, if your car is worth six grand, and you have fifteen grand in your car savings account, how much insurance do you really need?  You might decide to pay for liability insurance only and pass the savings into that car savings account.

Cars and longevity

Car commercials want you to reach your full potential and have a car that is worthy of your majesty.  (I have news for them; my full potential is represented by an ’89 Ford Escort hatchback.) Car dealers will tell you that your current car is a death-trap, and it is a miracle that anyone in your family can still hold a sloppy Joe.  Are old cars really shameful or even unsafe?  Do I really need a car that will start talking to me when the lid to my coffee drifts into the wrong cup holder?

Cars are lasting longer than ever before.  You can get even the most temperamental models to reach 200,000 miles.  Since the late 80’s, modern alloys have made engines almost supernatural.  Stop looking at your older car like a ticking time-bomb, that’s what THEY  (the gov’ment and the bourgeois pigs) want you to think.

Small ways to save on car ownership

Car Maintenance

Everyone knows that you should “protect your investment,” but as I learned from Rich Dad Poor Dad, a car is not an investment but a liability.  Poor people think that their car is an investment whereas rich people know that it is an unfortunate liability.  What you really want to do is minimize your liability.  Keep up with you car’s maintenance schedule, check the tire pressure (which also improves fuel economy), change the filters, etc.

Think about the 30,000-mile mark.  For many makes and models, the 30,000-mile mark is when you get some important components serviced.  I confess that I really only think about the oil changes and the 30,000-mile marks.  If you are faithful about the multiples of 30,000 miles (which is easy to remember), you will be doing better than most used car owners.

You can save money by doing some things yourself.  I do not want to mess around with borrowing specialty tools or wasting a Saturday, but there are some things for which I will not pay:

  • Changing air filters
  • Putting in a new battery
  • Rotating tires
  • Replacing wiper blades

Note: If you are getting a warning light, most Pep Boys, AutoZones, etc. will plug in their diagnostic deally and tell you what’s up for free.

Car spa

Love your piece-of-crap car.  When you start to feel down on “Ol’ Bessie,” give her some love.  Maybe car spa can coincide with your 30,000-mile maintenance.  Quality time together may get you through the “my-car-gives-me-feelings-of-inadequacy blues.”  Some polishing and fancy accessories may be just what the doctor ordered.

family car

Best products for car spa

  1. Armor-all:  Old plastic looks like, well, old plastic.  Think of all the UV rays it has absorbed!  Armor-all is cheap and will make the interior gleam (for a while).
  2. Turtle wax: Once your car’s exterior is clean, put on some paste wax.  When the wax has dried, polish it with a clean terrycloth towel.  You will be amazed at the difference.
  3. Upholstery cleaner: I always keep this on hand, since I have dogs.  You can’t unzip the covers and clean them, so this is the best you can do.  It actually works pretty well.
  4. Accessories: Roof racks, dog grills, flood lights, inverters, floor mats, leopard print seat covers – it’s all fair game.  They are a tiny expense compared to a new vehicle.

Arguing with insurance people

Unfortunately, I have a yearly appointment at State Farm when I go in to the office and make a scene.  I think I may get a Tony Award for this year’s performance (#mantradesdignityforlowerrate).  If you can visit an office for twenty minutes and save $200, isn’t it worth it?  Every time I go in and make everyone feel ashamed of belonging to the human race, I save a nice chunk of cabbage.


Do not own a truck unless you need to.  A truck with a 2.4 liter, 4-cylinder engine will get significantly lower gas mileage than a 2.4 liter, 4-cylinder car.  They are heavier and geared differently.  Furthermore, most states charge truck owners more for the privilege of registration.


That’s it.  Cars suck (money from your life).  Since I can’t get by without one, I want to spend as little as possible.  I could argue that I want to help the environment, but who would believe me?  Get from point A to point B without spending too many C-notes.

There are also un-quantifiable benefits to owning a piece-of-s#&t car.  I am reminded of when I used to blaze my abused ’91 Geo Metro (3-cylinder) down the Los Angeles freeway.  I would giggle with glee as the Benzo’s and Lexuses (Lexi?) cleared a path; they knew I had nothing to lose.  When I park my piece-of-crap car at the end of the subway line to go see a Phillies game, I do everything but leave the keys in the ignition. (The opossum living in the spare tire well is your problem now, sucker! PS. She answers to Irving.)  I think it was Kris Kristofferson who wrote, “Freedom is just another word for nothing left to lose.”

Lastly, I used to (accidentally) live in a well-to-do neighborhood in Los Angeles.  I was struck (literally and figuratively) by the rich people who drove crap cars and careened recklessly though the canyons with their bathrobe belts flapping in the breeze.  They didn’t pin their worth to their mode of transportation and neither should you.

Am I way off base?

Did I miss something in my calculations?

Do you have any tips for spending less on transportation?

Please leave a comment.

Leave a Reply