I Say Drive It Till the Wheels Fall Off
Columnist Amber Woods shares her take on saving money on car payments by driving a car to the end of the road.
I don't think it's coincidence that some of the most successful and wealthy people I know drive older cars and trucks that have been long paid off.
Unlike many Americans, they don't fall into the trap of thinking "I'll always have a car payment."
Instead, they buy a quality vehicle, pay it off, and then drive that sucker into the ground.
I'm one of those people.
And we aren't alone in our way of thinking.
According to Forbes, the second richest man in the world, Warren Buffet, reportedly drives a 2001 Lincoln Town Car with a license plate that says "Thrifty."
Similarly, Microsoft CEO Steven Ballmer has a 1998 Lincoln Continental.
And I've read that Wal-Mart heiress Alice Walton has a 2006 Ford 1-50.
I love it.
If you're wondering, I drive a 2003 Volkswagen Passat I bought in college. While it's true my car is "paid off," it has certainly needed it's share of repairs over the years (and has had more recalls than I can count.)
Before this car, I bought a used Dodge Dakota pickup truck in high school that I thought I had driven into the ground, when I passed it off to my dad with more than 100,000 miles on it (Dad's good with wrenches.) He revived it for another 100,000 miles. (He's still driving it.)
I come from a long line of people with the "drive-them-into-the-ground" mindset. My cousin, who has a Ph.D. and a high-earning job, has been driving the same Nissan since I was in middle school.
We were recently having a conversation about when and if we should "upgrade" our cars, but we quickly agreed. No way. Why bother?
She said, "Every day I drive this car without a payment, I feel a little like I'm stealing it!"
And it's true.
Americans are trained to believe we "deserve" a new car every three to four years (in Europe public transportation is the way to go) and we are so wasteful when it comes to spending on automobiles, that we often strap ourselves down with a $500-$1,500 car payment each month.
Often, it's half or the same as our mortgage payments.
This is insanity.
I paid $30,000 for my car in 2001. I haven't had a payment in four years. During that time, I saved money for a down payment on my house and paid off all of my college debt.
Is my car fancy? Heck no. But it's good enough.
It has heated leather seats, which are pretty nice, but it has it's issues too. For instance, some electrical issue occasionally causes the sunroof to open for no good reason at all.
If it's raining or snowing, that's definitely no fun. And I'm sure I could have that issue resolved if I slowed down long enough to take it to the shop. But I haven't bothered.
Still, it's a decent car.
So I question our culture's obsession with purchasing a new car every few years.
If it's a status thing, I say rethink this one.
Consider buying a car you can drive for the next 10 to 20 years. I know that seems crazy now, but when you're putting that would-be car payment into your retirement fund, you'll thank me.
Let's say you keep your paid-off car. Sure, it's going to need some repairs with time. Using my past experience as a guide, if we assume you'll pay $1,000 to $1,500 for repairs each year, it's still significantly less than the sum of new car payments annually.
When I was thinking about this column, I was reminded of Dave Ramsey's "Drive Free, Retire Rich," where he proposes a plan for driving your car until it's "free" and then buying another used car, saving millions over time. And retiring rich.
By driving my not-so-cool, older car, I save at least $350 per month.
I have been fortunate enough to be around really successful people with a similar mindset,
I saw the rewards of saving by not falling into the "new car trap."
If you have pre-teens or teenagers, now is the perfect time to talk to them about what's really important in life. Maybe show them that if Warren Buffett can do it, we can too.
Think about the options. The money we save will buy educations, world travel and lifelong experiences versus a piece of metal that will eventually be obsolete anyway.