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Drive a Beater… Get Rich

WCI minivan

Today’s Saturday Selection from The White Coat Investor is a classic post that plays nicely off a recent guest post from Dr. Cory S. Fawcett — When the New Car Bug Bites.

Although this post was originally published at WCI just over five years ago, the message still holds true. Dr. Dahle drove beaters, got rich, and guess what… he bought a new vehicle when he could easily afford to do so.

I haven’t pulled the trigger yet, but I’ll be due for a vehicle upgrade soon. I’m not saying it will be new, but it will have to ready and able to haul my family and I all around this great nation. And now, today’s Saturday Selection from Dr. Jim Dahle:



Drive a Beater… Get Rich



I wrote much of this rant many months ago, but it never seemed quite right, so I stored it away and never published it.  I had an email the other day that convinced me to dust the cobwebs off it and publish it.

It was from a doc several years out of residency whose medical school was paid for by the military looking for general financial advice.  I was surprised to see that he still had a negative net worth.  The main reason was that his family “owned” a 2011 car on which $30K was still owed and a 2012 car on which $29K was owed.

There was a little bit of educational debt, and some retirement and non-retirement savings, but the liabilities far outweighed the assets despite several years of attending-level compensation and no medical school debt.  As you might imagine, I recommended he spend less and save more, starting with his choice of automobiles.

In The Millionaire Next Door, Stanley and Danko have an entire chapter entitled “You Aren’t What You Drive.”  They note that only 23.5% of millionaires own a car from the current model year.  In fact, 55% of millionaires own a car older than 2 years old.  Most doctors aren’t even millionaires.  In fact, a large percentage of doctors in their 30s still have a negative net worth.  If most millionaires don’t drive new cars, why should a doctor?  Stanley and Danko write about what buying habits among used-car buyers reveal:

What factors explain variation in wealth accumulation?  Income is a factor.  People with higher incomes are expected to have higher levels of wealth.  But note again that members of this group of used-vehicle buyers have a significantly lower income than the average for the other groups of millionaires….Occupation is another factor.  We have noted many times that entrepreneurs account for a disproportionately large share of the millionaires in America.  Conversely, most of the other high-income-producing occupations contain disproportionately smaller portions of high-net worth types.  These include physicians…dentists….attorneys….


But there are exceptions.  For example, each of these non-entrepreneurial occupations is represented in the used vehicle-prone shopper group we are profiling.  Used vehicle-prone shoppers are unique even among their millionaire cohorts.  Note that, on average, they have the highest score values on all seven measures of frugality.  Behind their frugal behavior is a strong set of beliefs.  First, they believe in the benefits of being financially independent.  Second, they believe that being frugal is the key to achieving independence.  They inoculate themselves from heavy spending by constantly reminding themselves that many people who have high-status artifacts, such as expensive clothing, jewelry, cars, and pools, have little wealth.


Being frugal is a major reason members of the used vehicle-prone group are wealthy.  Being frugal provides them with a dollar base to invest.  In fact, they invest a significantly larger portion of their annual income than do any of the other types of vehicle buyers…the used vehicle-prone shopper group also contains the highest percentage of prodigious accumulators of wealth [those with a high net worth to income ratio].


The majority of people do not have the ability to increase their incomes significantly.  Yet income is a positive correlate of wealth.  What then is our message?  If you cannot increase your compensation significantly, become wealthy some other way.  Do it defensively….They successfully innoculated themselves from contracting the high-consumption lifestyle that many of their neighbors adopted.  More than 70 percent of their neighbors earn as much or more than they earn.  But fewer than 50 percent of their neighbors have a net worth of $1 million or more.


Saving on Automobiles


You can save a lot of money on automobiles in two ways. First, buy used. New cars cost far more than it takes to maintain a used one.  Second, drive the car for a long time. Even a new car buyer can get a great value if he drives the car for at least a decade.

Older cars also save you money on insurance and taxes. They can even save you money on maintenance. Who needs to fix a broken electric window or fix a little dent on a car with 150,000 miles? But on your brand new one, you’re going to pony up some cash to keep everything working and looking sharp.How much can you save?  Consider this.

Physician A buys a $30,000 car.  He drives it for 3 years, then sells it for $15,000 and repeats the process.  He will also pay more in sales taxes, registration fees, insurance, possibly maintenance, and most likely finance charges.  I’d estimate his cost of ownership at $7000 per year.

Physician B buys a $3000 car.  He drives it until it dies after 10 years.  Then he buys another one.  He paid cash for it (no sales tax)*, didn’t fix any of the little things, and paid minimal registration fees and insurance (liability only.)  I’d estimate his cost of ownership at $800 per year.


WCI minivan
WCI-mobile circa 2012


After 30 years, what is the difference between spending $800 a year on transportation versus $7000?  Invest the difference at 8% and you’ll get $702,000.  Yes, you read that right.  Is driving a new car worth $700K to you?  Most Americans retire with far less than $700K. Multiply that by two, or even three cars, and you’ll quickly realize the sum of money available to the frugal driver.

The example might be a little extreme, but run your own numbers and see what you get.  I’m convinced that many Americans are kept in the poorhouse simply because of their automobile choices.  No consumption item (except a house) will make as much of a difference in your accumulation of wealth.

My History With Cars


Now I realize full well that I’m a bit of an extremist on this subject. My parents have only bought two brand new cars in their entire life, and neither was bought during the 18 years I lived at home. I rode in beaters and I drove beaters, including a true Flintstone-Mobile due to a rusted out floor.  But they were able to raise 6 kids, own an airplane, and retire early on a middle class income.

I learned early on that you’re not what you drive (although I confess that in high school I was jealous of those guys with the jacked up little Toyota pick-ups.) In fact, my “first car” was an old Geo Prizm my parents sold to me for $3,000 as a college senior. I was just happy to get an interest-free loan from them. Prior to that time, I rode a bike or got a ride, so this was a huge upgrade.

I sold it after 2 years for $2,100 and we got another one for $6,000.  I totaled it** after 3 years, and the insurance company gave us $5,500, which we put toward the next car.


I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.


My third car cost $8,000.  It was totaled** after about 3 years and we got about $7,000 for it from the insurance company.  Before it was wrecked we bought a second car for $1,850, which was sold 4 years later for $1,500.  We took the insurance money from the totaled car, and added it to our savings to buy the car we really wanted, which we bought 3 years old for $18,900 and are still driving.

Most recently, I bought a car a couple of years ago for $4,350.  According to the blue book, I could sell it today for $6,000.  As you might guess, I got a great deal on most of these cars, but even if you just pay the sticker price at a used car lot, you’re still going to be far better off than getting a deal on a brand new one.


pof’s first hhr (seriously — i’ve driven two)


What About Driving a Reliable Car?


Initially, I thought I was just saving money now so I could drive whatever I want to drive later.  After a few years driving beaters, I’ve realized I no longer care what I drive around in as long as it runs well, is comfortable to sit in, and can carry what I need to carry and pull what I need to pull. I do like driving the $20K car better than the $5K car, but not 4 times better.

I probably won’t buy any more cars that cost less than $10K.  I simply no longer need to.  I’m 6 years out of residency, have no non-mortgage debt, have got a good chunk of equity in my home and rental property, have started college savings for the kids and have a portfolio on track to allow an early retirement.

Can you say the same?  Then what’s with the Lexus you share with the bank in your driveway?  I’d much rather have the ability to walk into a Lexus dealership and pay cash for a brand-new, top-of-the-line Lexus than actually have one in the driveway.

Some complain that they can’t drive an inexpensive used car because they need something reliable.  I just don’t buy it.  I haven’t commuted in a car with less than 100K miles….ever.  I’ve had to get a jump once on a cold morning after a night shift.  Replaced the battery that afternoon.  That’s it.  Even if you add on the cost of a AAA membership, you’re still not going to get anywhere near the cost of driving new cars.

Others worry about the cost of repairs on older vehicles.  It’s a rare car repair (not a collision) that costs more than $1,000 to $2,000.  Most are a few hundred dollars.  It doesn’t take long to pay for that when you don’t have a $500 a month car payment.  Even if you insist on having one nice car for road trips and driving the kids around, you can still buy a cheap commuter and save thousands.  Who says your car has to be as nice as your spouse’s?

In the end, spend your money on what makes you happy.  Do you need to drive $3,000 cars to be financially successful as a physician?  Certainly not.But you do need to save and invest 20% of your income a year.  If you can’t do that AND buy an expensive car then you’d best line up your habits with your true priorities.  Just keep repeating “You aren’t what you drive….you aren’t what you drive” until you believe it.


[PoF: *Sales tax may be owed when you register the purchase of a used car. That has been my experience.

** I’m kinda regretting the multiple rides I’ve taken with the driver who admits to totaling not one, but two cars! I’m happy to have escaped unscathed, but glad I buckled up!]


I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.


Readers, how much did you pay for the vehicle you’re driving? Did you buy it used or new and how recently? What is the make and model? I won’t judge you, but inquiring minds want to know!

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52 thoughts on “Drive a Beater… Get Rich”

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  5. I’ve used 2 schemes

    1. I started with an accord in the Navy drove it for 200K miles and gave it to my brother. While driving it I started putting $234 a month into a muni bond fund (this was back in the days when muni’s paid 4% or so). After about 5 years I had $20K, so I bought a new Honda accord and continued to put away about $234 per month. I drove the new car for about 3 years and had 45- 60K miles on it (I don’t remember). 60K is about the mileage where a used car can no longer be financed. After 60K resale value drops quickly.

    I would sell that car and take the proceeds and add that to the accumulated money from the bond fund and buy another new car.

    This was like a self lease deal where I was leasing to myself. I would typically have to add a little to make it work (inflation and such) but my cars were pretty much always under warranty , I never really had to buy new tires, batteries or brakes.

    I started a second fund, extended the driving period to about 4 years and started to finance my wife’s cars the same way, so we were typically flipping a new car for one or the other, every 2-3 years with very low maintenance costs. It’s not as cheap as driving till the wheels fall off but it’s actually pretty cheap if what you desire is dead reliable transportation with a good safety profile. If you want to move upscale a bit add a bit to the monthly bond fund. This doesn’t work so well these days since muni’s pay such little interest but you might be able to ladder some CD’s or something.

    2. I saved $90K for a retirement car, but I just couldn’t bring myself to pull the trigger on that kind of car, precisely because of the “$2000 sensor change-out” issue. It would tick me off way too much.

    So I bought a year old (but brand new) Honda Accord Touring from a dealer when the new model year Accords came out for $31k and put $59K into BRK.B. The BRK.B has gone up 30% (from $59K to $75K or $16K), and my car has depreciated from $31K to $24K ($7k) according to KBB. I’m driving my retirement car, and I’m essentially $9k in the black. I have some LTcap loss laying around so if I want a new car, I’ll slice off a dab of BRK.B, offset the cap gains with cap loss, add my car’s trade in value and drive away for free. I mention this as an alternative way of looking at things beside the “drive the wheels off” philosophy.

    My kid’s cars come from Hertz rentals resale lots. The cars are rentals pulled from the rental service. They typically are a year or two old and have 35K-45K well maintained miles. My kids drive Nissan Altima’s. I’ve bought 3 of these cars over the years and am very happy with the value these cars represent. You can buy an extended warranty. Perfect value for a late HS to college kid, or even the young attending who wants a work car to “drive the wheels off.” I think the last one I bought was a 2015 Altima with 38K miles and I bought it for about $13K plus I added a warranty.

  6. I drive a 14 year old Honda I bought new for about 20k. Sometimes getting a reasonable new car and keeping it long term is a good strategy compared to the risk of a used car with uncertain maintenance history.

    Regarding cars in general, the whole point of making money is being able to enjoy it. There is no need for a physician to be driving a 5000 dollar beater with 100k miles on it unless that extra bit of saving is what makes you happy. For most doctors a 5k car vs 20k makes very little financial impact, especially if kept for many years.

    I’m in the market for another car, because although it’s true that you’re not what you drive, people do look at you funny if you make 500k a year and drive a 5000 dollar car with 100k miles on it. I’m not entirely sure that a new attending that can afford and spends 40k on a new BMW is that much more foolish than one who drives an extremely cheap car. You gotta spend money somewhere; whether you value time, a little luxury, experiences, investing. It’s not entirely rational to hoard/invest extremely.

    • I agree you should put your money towards the things that make you happier or get your from point A to point B more reliably or safely.

      But funny looks from other physicians aren’t going to persuade me to upgrade. I’m learning to care less about “societal norms” and what others think. I’ll do what works for me, and I encourage others to do what works for them.


  7. It amazes me the price of the “expensive” cars that you use as an example of a car a doctor would buy. In Australia, they’d be more likely to spend 80,000 on a BMW. A 30,000 car would be considered cheap, bottom of the range.

    One of my clients just bought a volvo for 112,000 and his son bought a range rover for over 120,000. They run a trucking company and have yearly family income of about $180K each.

    Granted our dollar is cheaper, but still!

    • What?!? Six figures on a Swedish car? It may be high five figures in USD, but still… The most we’ve spent on a vehicle thus far is $20,000 on a used Chrysler Town & Country. Our kids will get nothing but hand-me-downs — certainly not a Range Rover.


  8. I feel like I’ve been all over the map with my vehicles. My first car was a hand-me-down two door Chevy Cavalier that was super basic and I eventually traded in for a mountain bike in college. My next car I bought new (a Toyota Prius) with the $20k I had not touched from my college fund. I was able to work or get scholarships/fellowships for 10 years of schooling so I wanted a reliable and efficient vehicle. While I don’t regret this purchase necessarily, it was back before I learned about personal finance. Therefore, if I could do it again I would probably have invested that money towards my retirement.

    Anyway, fast forward and I have lived car-free for about 3 years with no plans of owning my own vehicle again (too much of a hassle!). I am not fortunate to live somewhere with great public transit, but I love biking and walking year-round in my smaller Midwest city. Though my husband did purchase a new Chevy Volt last year and took advantage of the generous tax credit that dropped the price by $7.5k (and took advantage of 0% financing). So while we didn’t pay cash, we wouldn’t have made this purchase otherwise.

  9. I think you just have to run the numbers and see what works out. I was in the market to purchase a car last year. I was looking at anything from compacts to small suv’s. I wanted something reliable with a good track record. I looked at both used and new, got insurance quotes for various types of vehicles, looked at gas mileage, potential lifespan (assumed I would use it up to 150k miles), and calculated average annual cost. The difference between the low-end (a used compact) and the high-end (new suv) was maybe $500 or so. The price difference was negligible to me and went with the newer and safer suv. The closeness in price was due to the smaller car having higher insurance premiums. Based on my searches, often the cheaper a used car was, the higher mileage it had, which would shorten it’s “lifespan,” thus negating savings from its purchase price. Of course every situation is different and there are a lot of variables and unknowns, but a beater may not always be a significant savings.

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  11. We buy cars that are 2-3 years old with low miles. Realizability is important for us, so we have bought lots of Hondas, Toyotas, and a Mercedes. I have two BMWs now, too – but they have been very low cost to own.

    We’ve done pretty well financially with cars, but my wife’s Mercedes just required a $2K repair for a new ‘blind spot sensor’ that require taking the back end of the car off at the dealer. I was so mad!

  12. In 2014 I bought a new 2013 Honda crv. I negotiated down to a price lower than the used 2013 honda crvs on the lot. It was also much lower price than other dealers were selling their used 2013s. I bought this car because I had a 1998 honda crv that was running pretty well but I was concerned about my trips that were over 100 miles one way. I sold that 1998 crv in 2015 for $3000. I would buy my car new again searching for a similar bargain but with cash. However, I also know I won’t need to do that for another 10 yrs or so. I believe if you buy the right new car at a used price you can avoid buying multiple cars over the years that add up to nearly the cost of the new one if you factor in repairs.

  13. I feel like the two examples are fairly extreme cases. I don’t know if I could buy a car for $3000 and drive it for ten years. My 2001 Ford Mustang has a KBB value of $4000. It doesn’t even look like you could get a 2005 Hyundai Accent for $3000 from a quick online search.

    If you were able to pull something like that off it would be a 20+ year old car if you tried to drive it for 10 years. If you are going to drive a 20 year old car then maybe you should simply buy new and not think about the cost of cars.

    I tried really hard to buy a used Subaru Forester a few years ago. We had a newborn and reliability was important. AAA doesn’t help when a 3-month old can’t get to milk. The math didn’t work out when buying used. Anything that was around 3 years old was only discounted about 10-20%. The new cars had all the dealer incentives to lower prices and 0% financing for 60 months (a 0% loan has value).

    So paying $22K for a new car with 0% financing or 18K for a used car at 3% financing gets to be pretty close. We plan to drive the car for 13 years. So 22K/13 is better than 18K/10 anyway.

    Hopefully, we won’t need to buy another car when this one dies. I’m looking forward to self-driving/on demand/solar-charged electric cars

  14. We’ve had quite a history with cars. If there’s one thing I’ve learned, it’s that reliability trumps everything when it comes to a vehicle. If it’s driving great, there’s little need to upgrade and uproot your finances on a depreciating item.

  15. I haven’t driven a beater since my second year of residency. But I do hold on to my cars for a long time. All are in great shape and going strong. All were purchased new. I have 4 vehicles now. 2009 Toyota Prius (Paid cash low 20,000s), 2004 Ford Expedition (Was going to pay $36,000 cash and they offered me zero % financing and I had somewhere to put the money for a guaranteed tax free 8% and did that. You can read about it in my blog this week about 0% financing), 2002 Fleetwood Bounder 31 foot motorhome (paid cash in the $90,000s), 1998 Toyota Avalon (Paid cash $29,000).

    I am 55 years old now and between my wife and I, we have purchased throughout our life only 7 cars, 3 of which we have now, 2 were purchased used. We have also purchased 2 motorhomes, one was used.

    One doctor I know buys a new car every two years. Because he has 2 cars, his and hers, he trades in for a new car every year. I doubt I could have retired from medicine this year if I had been buying a new car every year like him.

    • “In the end, spend your money on what makes you happy. Do you need to drive $3,000 cars to be financially successful as a physician? Certainly not.But you do need to save and invest 20% of your income a year. If you can’t do that AND buy an expensive car then you’d best line up your habits with your true priorities. ”

      Just to provide an alternate viewpoint, my wife and I love cars. We lease new luxury cars each every 2 – 3 years. We’ve opted to be thriftier elsewhere (house, vacations, dining out, etc)

      That being said, we are meeting the live on half challenge (actually saving 50% of gross), waited until we were debt-free (including the mortgage), and had a million in investable assets before doing so.

      I will concede that I enjoy what I do (don’t plan on retiring early, I prefer the FI portion of FIRE) and make a bundle. I probably wouldn’t be splurging on vehicles as often we do without those 2 factors

  16. I didn’t get my first car until I was 28, when I bought my mom’s used Chevy Malibu in cash for about $3,000. I had planned to drive it until it died, but I was rear-ended in my last year of medical school, and it was written off. I very unfrugally leased a new Toyota Corolla for about $24,000, but I’ve been driving it for almost 8 years (only 75,000 km on it), and I intend to keep driving it until it dies, so the used car depreciation will be spread out over many years. The biggest repair bill I’ve ever had was $800 this spring, which fixed my breaks and my transmission and lots of little things that were worn. It was still a lot less than the $500 a month purchase cost to buy a new Corolla!

  17. I’m kind of embarrassed to say it but my parents bought me a brand new Subaru Forester a couple of weeks ago that they paid cash for it after they came into some money. It cost 30k. Before this I was driving a Toyota with 190k miles on it that was on the verge of dying for the past two years. When my father told me he got it for me he said it was because he was proud of me for getting into my state school and that he wanted to get me something that would definitely get me trough school (I am commuting a half hour) and residency.

    I am extremely grateful, but if they were willing to spend 30k on me I probably would have told them to use 25k on my school tuition and buy a 5k car. Not going to look a gift horse in the mouth though and the car is amazing. Safety features are insane and I’ll be able to use it for all of my outdoor hobbies and If i have a family during residency I won’t need to upgrade.My goal is to have all my loans paid off by the time I need a new car. I’m hoping to get at least 15 years out of it. It will be amazing not having a car payment for the next 15 years and I’m very thankful to have parents in a position to do something like that for me.

    I feel like a spoiled brat though. Especially on this site and WCI.

    • Don”t feel bad. My parents bought me a new Toyata Corolla when I was in Med school. It was a great car. Unfortunately I totaled it on the interstate.

  18. I currently drive a 2011 escalate, that I bought new through the office with cash. My last car was a 1995 Subaru Outback that I drove until 2011 when it finally stopped running. I do outreach clinics and like having the bigger car in case of deer in the road, and the ability to pack up staff and lasers. Yes I could have bought used and the Best Buy is usually a 1-2 year old car because that’s where the biggest depreciation is. However I just don’t like having someone else’s car and I really don’t know what they did to it. But if I didn’t have a High income and high net worth then I would probably have bought used. I have a car account that I put money into each month and then pay cash for a new car when it’s time. I could also use the money elsewhere if needed. I like to buy new then run it into the ground and buy new again. I agree with the post to get you to FI, but I think once you are there you can splurge and enjoy life with that money. But the KEY is that you have to get there first. You can’t spend like you are FI when you aren’t.

  19. So I did buy a Lexus about 2-3 years into being an attending. I felt proud of myself for waiting and buying a “reasonable” car while a lot of my colleagues and classmates were purchasing Porsches their first and second years out. I guess it’s all relative because it’s definitely not a beater and after reading this post, I wonder if I could’ve done even better – even buying the same car used. At least I purchased it in cash that I had saved up.

    Actually, my goal is to get rid of my car altogether. Luckily I live in an area where ride-sharing is prevalent and almost to the point where it makes more financial sense, especially when I think about liability. The only thing holding me back is the kid situation. Now if I could order an Uber Minivan with child seats as an option, I’d get rid of my car in an instant.

  20. I generally agree with the idea of driving only used cars and driving them into the ground. My wife drives a Honda Fit, paid cash for it certified used from Honda with a 7 year, 100k mile warranty. We’ll own it for at least 10 years I’m certain. However, I made a slight exception for my current car…a BMW i3 (all electric vehicle). The reason being is that even though it’s technically a luxury car and the price with tax was 47k, we were able to sell our old Honda Element (9 years old and only got around 22mpg) for $9500 and we get a $7500 tax credit. So, the car only cost us an additional 30k. That’s still a lot. BUT, there’s more. I’m saving at least $1500 a year on “fuel” for this car (when u do the math on how much I would have spent driving the element at 22mpg and compare it to how much it would cost to buy an equal amount of electricity) and I estimate around $500 a year on maintenance since these cars require nothing other than rotating the tires from time to time. So, if I drive this car for the 8-10 years we usually drive cars for, it will actually only cost us around 10k-14k after you factor in the 2000/yr savings. That’s how I justified it. I would never buy an expensive new ICE car otherwise. So far, the car has been free to drive since I’m able to plug it in while I’m at work. I never even need to use the charger I installed at our house. Even if I only drive it for 5 years, that’s still only a 20k car after the fuel/maintenance savings. For a couple that makes 300k+ a year and saves over half of it, I think that’s still acceptable. Plus I really wanted to support the electric car industry that I see as important to the future, so I don’t mind the extra cost.

  21. All three of our cars were purchased new, which likely makes me the exception here. My Corvette was bought new in 2007. This is the one I wouldn’t recommend to others. My wife bought a new Nissan Versa in 2008 before she met me. Finally together we bought a new Mazda 3 in 2014. Every car was paid for with cash except the Mazda. The Mazda I arbitraged the loan by parking the equivalent cost of the 0 percent loan in a 3 percent cd. Honestly most people shouldn’t buy new cars, but a select few have a hobby of cars. My corvette is not a status symbol to me, it’s my equivellent of a wood shop, beach house, boat, or whatever. But the important part is hidden in what I wrote above, only one of our cars is younger then 9 years old. Barring an expensive breakage none are on the list to sell. If you do enjoy cars and go that route, then be prepared to drive it to the wheels come off. It’ll still cost you more but still way less then normal.

    • We typically buy new and drive for about 200,000 miles. I purchased my new corvette last fall and it is a blast! Agree – I would not recommend it unless you can pay cash.

  22. This advice will never get old, and most people will still ignore it. I’ve had a young co-worker tell me it’s “almost impossible” to get a new car for less than 30k.

    We just got a 2009 Sienna to replace our 2003 Sienna. As much fun as it would be to buy a 2017 van, I would rather have 10k going down in value than 40k going down in value.

  23. Great article. I made it by fine with beaters until I graduated from medical school, then I think I tried to do the exact opposite of WCI’s “live like a resident rules”. Bought a new car, bought a house, etc. Since 1998, there have been 4 new cars (married and kids came along in there, and lost one car to an accident on the D.C. beltway. Not my fault PoF, lady in the Honda Pilot crossed 4 lanes of traffic after losing control of her car to take out my 9 year old Jetta that was good for another 100k miles at least). Well past the 1 mill net worth at 46, but reading this article, that could be 2 approaching 3 mill if used cars had stayed the norm, assuming the difference was invested. That said, I will consider a used car for myself next time, but we are on a path to FI and the ability to RE, so this may be a luxury we keep. There is some piece of mind knowing how the vehicle has been driven and maintained since it rolled off the lot, even if it comes at a price, we keep them long term. Kids will share a safe beater one day though, I remember trying to drive my dad’s manual Honda Civic like I was in the Indianapolis 500. Resulted in a new clutch.

  24. I keep cars a long time because I hate the car buying process. My father always kept cars around 10 years also. My current ride is a 2011 Ford Edge SUV. I need a SUV for dog hauling. I bought it new. My last SUV was a new Mercedes SUV which I kept for 12 years. The safety tech really improved over 12 years. I too am waiting on an autonomous vehicle.

  25. I drive a 2001 Honda CRV with 145k. She’s still good to me despite me calling her The Beast. This is the one and only car I’ve bought (used) at a dealership and will most likely never do that again…too much waste. I think I paid around 10k (with a loan) about 13 years ago. You’ve inspired me to go find the title!

    I prefer public transportation when in the city but being in the burbs (with an ever fluxing climate) requires a car.

    • That’s funny. That’s the exact car and mileage that I sold three years ago. Mine was forest green, which was popular that year, so yours might be exactly the same.

      My approach to cars is to buy new, because you know what you are getting (usually) and run them into the ground. I can tell from this crowd’s comments that my definition of “ground” may not be very rigorous. For me, when a car gets over 150K mileage or so, I start to get irked that I pay more in repairs than the value of the car. My last break replacement on my old CRV was about half the value of the car at the time. I also start to consider reliability at that mileage, but I am not sure that is an entirely objective concern at just 150K.

      I am currently running an Audi into the ground. I defend that choice because it is the highest mileage all wheel drive around (including hybrids), and all wheel drive is close to required where I live.

      • Haha – mine is silver but I had a friend in high school who had the green one! I still see them on the road all the time. If it’s a silver one we pull up and wave like freaks. 🙂

        I like the idea of knowing what I am getting, however, I am more prone to love knowing that the kinks have been played out. I do agree that the value of car vs cost of repairs is something many tend to overlook as the cars get up in age. In Chicago, the rust tends to take over before the lifespan of the engine! I just had a muffler replaced then the catalytic converter all due to rust. Such a bummer! When I lived in Oregon circa 1999, I bought a 78 Toyota Corolla wagon for $300 with 200k+ miles on it. She was all sorts of shades of green due to sun exposure but not a spot of rust. I drove it for 2 years (including the drive back to Chicago) then sold it for $300. BEST CAR EVER!!!

  26. I hate to not contribute but me and my husband never owned a car before and we’re in our late 20s riding public transportation (pretty decent in Seattle).

    My parents are far from millionaires. They were minimum wage renters in San Francisco and my dad drove a used Lexus. They pay $20,000 for it which was a smoking deal apparently. They also had another Honda. Not sure why…public transportation in San Francisco is amazing. But then again my mother will do anything to keep up with the Wongs next door.

  27. I have a Honda Accord I bought new in 2003 and am still driving, currently at over 180,000 miles. It was my first car and has been amazingly reliable. I don’t care if it gets scratched up in a parking lot (it has plenty of scratches already). I really don’t care much about what type of car I drive. I’d like to see a cost analysis on buying a new Honda/Toyota and driving it forever vs buying a used luxury car q2-3 yrs.

  28. Cars are a major expense. When I was 18 I bought a used Audi and it was a Lemon. After that, I only drove used Honda’s and Subaru’s with over 100,000 miles. I did not buy an almost new car until I was age 35. It was 1 year old Subaru Legacy with less than 10K miles for under $20K. I have to drive between our healthcare centers for my job and get reimbursed mileage. I get about $500 per month, so in reality the car costs me very little.

  29. Great chapter from Millionaire next door, a classic book that keeps me grounded. My wife and I are 3-5 years from financial independence and so I agree with your post, but I would never drive a 3K vehicle knowing the safety features may be 5-10 years outdated (think brake systems in the 2000s). Maybe its my field of medicine (radiation oncology) but 5 years or more is very old and maybe malpractice. I do like you approach of “why have as nice a car as your spouse”. I paid cash for my 3 year old Subaru. My wife is on her 7th year of driving a used lexus sedan. She drives more than I do and takes care of the kids most of the time, so I dont mind. I actually like that I sacrifice my comfort so she can ride in style (and amazing road smoothness and lack of road noise *insert Lexus.com link*) She currently needs a larger car owing to the 2 kids we now have, and while we can easily get a cheap midsized SUV for 15-20K, I just like the idea of her driving something more updated and comfortable (as does she). So we are holding out for a good deal on a used Lexus SUV, pay cash, around 30K. She claims she will drive it for 7-10 years and I think I believe her ; ). I know its more upfront, more insurance, cost of parts, etc, but I also paid my mortgage off asap knowing that I would probably come out ahead but investing the difference. I dont mind losing out on some “end game” retirement money if it buys peace of mind, joy, security. “So the wine is stolen, so the oil is spilled, such is the price of tranquility”. As for me, I get more joy driving my spartan Subaru SUV and knowing I could pay cash for a new Audi A8 than actually driving the new Audi, so Ill stick with a cheaper (but not cheap) car. Great post!

      • So you are saying that a 1930 all steel body car is safer than modern materials with crumple zones?
        Take this example.
        “ABS are required on all new passenger cars sold in the EU since 2004. In the United States, the NHTSA has mandated ABS in conjunction with Electronic Stability Control under the provisions of FMVSS 126 as of September 1, 2013”

        Im not saying that a 3 year old car is unsafe, but WCI talks about a $3,000 car which could easily be 10 years old and wont have ESC as mandated above. Safety is improved in small increments im sure and I dont think a new car each year is necessary, but I do think substantial advances are made each 5-10 years.

        Another example.
        “On March 31, 2014, the U.S. National Highway Traffic Safety Administration announced that it would require all automobiles sold in the United States built beginning in May 2018 to include backup cameras. On October 31, 2016, Transport Canada issued a similar mandate beginning at the same time.”

        This is probably reduce accidents with other vehicles and car vs pedestrian collisions.
        One last point, I would never say anything on any subject is thoroughly debunked as you say by anyone, even a blogger as esteemed as WCI, MMM and “others”. (No offense to those bloggers as I have read WCI since practically the beginning).

  30. December 2016 I bought a USED Nissan Leaf for $9k

    It was me finally getting some sense and not having a delusion that I needed to buy a Tesla!

    A few years early we did buy my wife’s car brand new. We did this before reading about personal finance.

    • Very nice — I just heard the next generation Leaf will go 200 miles on a charge. I’m encouraged by the improvements in battery technology.


      • The range issue is why we still have 1 gas car… For now.

        Also I picked up an electric lawnmower this weekend. So much nicer to use than my old gas one!

        • Good for you — I made the switch last year and love it. I’ve got they Ryobi 40v system — 20″ mower, leaf blower, weed whip, and chainsaw.

          The only gas implement I have left is the snowblower.

  31. I drive a 2012 Hyundai Sonata that I purchased for $18k. It was a year old return and I received what I think is a good deal on it because it had less than 5k miles. For my job, I receive $600/month for an auto allowance plus gas. I paid the car off in 3.5 years and never plan to finance a car again.

    My wife drives a 2010 RAV4 that we purchased when the car was 3 years old. It was about $18k too and we paid that car off in 3 years. Both cars have been reliable so far!

    • That’s a generous auto allowance. I assume you’re able to use that money in any way you choose?


      • I certainly can. And the auto allowance isn’t taxed! We are supposed to drive a car that is 5 years old or newer, and my Sonata is a little over 5 years old now. I’m going to keep driving it until my boss yells at me to get a new car 🙂

  32. I currently drive a 2004 Toyota Camry, which I bought in 2010 for about $8500, and has been very good to me.

    I was thinking about getting a low-mileage, 2-3 year old used car of a reliable make and model when I replace this Camry. You still get a great car that should last a while, but you save on the new car depreciation.

    • That’s what we’ve done — bought late model vehicles with the first 30,000 to 40,000 miles driven by someone else who was willing to take the accelerated depreciation hit.

      It’s been six years since our last vehicle purchase, so we’re now driving vehicles with 130,000 to 140,000 miles. My next purchase will be a vehicle with excellent towing capacity.


  33. Ok, I’ll go first.

    I drive a 2011 Toyota Prius, which I purchased new in 2011. I do not remember exactly what I paid for it, but it was in the low 20’s.

    It has about 60,000 miles on it, some minor dings and bruises, but it runs well and uses little gas. Given what I am reading (including in the WSJ this week), I am hoping that it is my last vehicle before I give way to the not-yet-available service of summoning an autonomous vehicle when I need to get somewhere.


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