The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: RidetheRain on June 21, 2017, 02:44:59 PM
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Hi. In my recent journals and case studies, people like to use the phrase "assuming your car isn't stupid" or "assuming your car makes sense" and I have no idea what that means.
I understand the intention behind the phrase, of course. But I have very little concept of what a stupid car is beyond a giant truck. I'm just not great at cars. Can someone give a good explanation of what I should look for in a car? I'm not particularly looking to buy, more trying to learn.
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I imagine most here intend to say "beyond practical." Like a Chevy Tahoe that only ever has one person in it. Or a lifted Jeep that never leaves the pavement. Or a $50,000 luxury car when trying to dig out of debt. Beyond that it gets much more subjective. Some folks might consider any car over $10,000 (used) to be impractical. Others consider mpg to be a big factor. I would think practicality would extend to the vehicles you see driven the most. Camrys, Civics, Sonatas, Cruzes, Sentras, basically the popular models marketed by the makers to your every day person. Most folks here would likely say that new is impractical but I think that can vary based on your situation. I drove a lot and that wasn't going to change when I was working and a base Elantra wasn't really any more expensive than a used car when I considered the miles I was going to rack up. There are certainly circumstances where a new vehicle may make more sense than a used one.
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Many many things.
The main idea is that your car fits a specific need. Good purchase price, high MPG rating, nothing larger than necessary.
I normally think quite highly of the initial quality studies by JD Power, but this year is curious*. The most recent one was just released today actually.
http://www.jdpower.com/press-releases/2017-us-initial-quality-study-iqs (http://www.jdpower.com/press-releases/2017-us-initial-quality-study-iqs)
Kia coming it at #1 this year and Genesis (Hyundai's new luxury brand) at #2. The Korean companies had a great year! Meanwhile, this was an exceptionally bad production year for Toyota, Lexus, Honda and Acura. Typically they lead the field.
Overall quality (for all brands) is up 8% year-over-year. So, everyone is getting better.
*A lot of the "problems" this year are infotainment system related. I wouldn't consider that in the same category of engine reliability. But I'm not JD Power.
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It's a sliding scale really. Vehicles make less sense the more they cost (initial purchase, depreciation, maintenance, insurance, fuel, etc.) and the less practical they are. Figuring out rough numbers for specific vehicles is the hard part. But in general the small, cheap hatchbacks (e.g. Nissan LEAF, Honda Fit) purchased used will make the most financial sense while large, luxury SUVs (e.g. Cadillac Escalade, Bentley Bentayga) purchased new will make the least sense. Vehicles in between can make sense depending on what you're using them for. A minivan makes sense for a large family. A small pickup makes sense for landscapers. Etc.
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Have you tried having a conversation with your car?
Stupid is a car that doesn't move you towards your goals. Some cars are stupid just by existing, like if you live in a city and only use it every other month. Others are stupid because you spend time repairing them when you should be earning money or enjoying yourself (same car might be smart for a tinkerer). Most stupid cars are stupid because they are brand new, twice the size needed and financed exorbitantly.
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A car is a tool. It's an extremely powerful, expensive, and dangerous tool for getting from point A to point B across a road network. And yet most of the people I know, when shopping for one, take things like the color of it into serious consideration. Because we have a ridiculous car culture. (http://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/)
What are you transporting? Yourself? Maybe 1-3 passengers? You need a 4-cylinder, manual vehicle that's reliable and will retain its value. You don't NEED "extra horsepower to get up to speed on the highway" or "4 wheel drive in case it snows." A 4-cylinder, FWD car will do just fine in the snow with the right tires unless you live in extreme conditions. Can't drive a stick? You can get an automatic, I guess. They're less reliable.
Are you hauling cargo? Routinely? No? You don't need a truck. You definitely don't need an F-150 to commute back and forth to your office job, with absolutely nothing in the cargo bed, day in day out. I've met people who do this.
Are you climbing steep inclines? No? You don't need an SUV or a Jeep Wrangler. You definitely don't need a Jeep Wrangler to commute back and forth to your office job while you pay back your mortgage. You also definitely don't need a Hummer because you "need absolutely the safest vehicle for your child" the safety difference is marginal compared to, like, not driving places. I have met people who do this.
Kinda seems like you get this already, so extrapolate backwards. What's a smart car (http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/)? Gets you from point A to point B in relative comfort and safety for the least cost. Ideally, also, you like it.
P.S. I think this is a really great question, by the way.
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I have a 1975 Triumph. I drive it probably 3-4 times a year. It gets shitty mileage. If it breaks, I have to mail order parts out of Pennsylvania. It's fairly unreliable. I pay about $500/year in insurance and registration fees.
This is a stupid car. I am sure there are other examples.
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I have a 1975 Triumph. I drive it probably 3-4 times a year. It gets shitty mileage. If it breaks, I have to mail order parts out of Pennsylvania. It's fairly unreliable. I pay about $500/year in insurance and registration fees.
that's awesome
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I have a 1975 Triumph. I drive it probably 3-4 times a year. It gets shitty mileage. If it breaks, I have to mail order parts out of Pennsylvania. It's fairly unreliable. I pay about $500/year in insurance and registration fees.
This is a stupid car. I am sure there are other examples.
I'm guessing you find it well worth keeping that stupid car. :)
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Stupidity is a spectrum. It starts here:
(https://www.autocheatsheet.com/images/negotiate-with-dealers.jpeg)
and ends here:
(https://i.redditmedia.com/abE0TkSwsnQO1bwvKVw3OeDq5x4nlFKYj-6y5erIgtA.jpg?w=715&s=4b0df10180bf99378b378774e5e4d6d4)
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A car is a tool. It's an extremely powerful, expensive, and dangerous tool for getting from point A to point B across a road network. And yet most of the people I know, when shopping for one, take things like the color of it into serious consideration. Because we have a ridiculous car culture. (http://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/)
What are you transporting? Yourself? Maybe 1-3 passengers? You need a 4-cylinder, manual vehicle that's reliable and will retain its value. You don't NEED "extra horsepower to get up to speed on the highway" or "4 wheel drive in case it snows." A 4-cylinder, FWD car will do just fine in the snow with the right tires unless you live in extreme conditions. Can't drive a stick? You can get an automatic, I guess. They're less reliable.
Are you hauling cargo? Routinely? No? You don't need a truck. You definitely don't need an F-150 to commute back and forth to your office job, with absolutely nothing in the cargo bed, day in day out. I've met people who do this.
Are you climbing steep inclines? No? You don't need an SUV or a Jeep Wrangler. You definitely don't need a Jeep Wrangler to commute back and forth to your office job while you pay back your mortgage. You also definitely don't need a Hummer because you "need absolutely the safest vehicle for your child" the safety difference is marginal compared to, like, not driving places. I have met people who do this.
Kinda seems like you get this already, so extrapolate backwards. What's a smart car (http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/)? Gets you from point A to point B in relative comfort and safety for the least cost. Ideally, also, you like it.
P.S. I think this is a really great question, by the way.
This is a great place to start.
Ultimately, a car is a transportation tool, and even the inexpensive cars of today are fantastic luxury vehicles that'll do 100MPH+ and have all sorts of luxury appointments. An ordinary, plain-Jane Corolla or Civic or Mazda3 or Focus or whatever is still quite a luxurious vehicle.
And driving a V8 truck on a 50 mile each way commute when you never put anything in the bed of the truck? Obviously that means you end up spending an awful lot of money on gas. If the price spikes up again, then you're heavily affected. A bit of optimization can cut the amount of money spent dramatically.
Owning an expensive (to own or run) car when one doesn't have a need for it is something that can be easily optimized and can save people hundreds of dollars a month.
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"stupid" is a sliding scale. What is fine for a multimillionaire may be stupid for a person like me with a half million net worth. I'm definitely firmly in the "buy a 10 year old car club" at my level of wealth. Here's some general guidelines I like to follow:
Total Cost of Ownership = Depreciation + Insurance + Maintenance/Fees + Gasoline
I want to find a car that minimizes total cost of ownership.
I believe buying a car costs a low enough number that you can personally justify getting PLPD insurance is the #1 most important thing. For me, if a car costs 5k, I can just go out and buy another one, so I feel absolutely no need for full coverage. Not only that, but the depreciation of a 5k vehicle is almost nothing. By that car being a prius, I'm sipping gas. People overestimate how much maintenance of a used car will be if you drive sanely, and underestimate the crippling effects of depreciation and insurance.
The comment that I hear often that I think is "stupid" is people saying they want to get a low interest car loan so that they can keep their money invested. The dealership will require you to fully insure that car to protect their collateral. And again, if you are forced or even feel the need to do this, you have bought waayy too much car. The amount you lose from the depreciation + insurance will dwarf any gains your invested money makes. When people say things like this, all I hear is "I really want to buy a car I can't afford and need an excuse to take out a loan".
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The comment that I hear often that I think is "stupid" is people saying they want to get a low interest car loan so that they can keep their money invested. The dealership will require you to fully insure that car to protect their collateral. And again, if you are forced or even feel the need to do this, you have bought waayy too much car. The amount you lose from the depreciation + insurance will dwarf any gains your invested money makes. When people say things like this, all I hear is "I really want to buy a car I can't afford and need an excuse to take out a loan".
While I agree that most people use financing to buy more car than they can afford it can make sense. For example, when we bought our last car we were going to pay cash but the dealer offered us 2.9% financing. We took the financing and have come out way ahead compared to paying cash over the last four years. Not as far ahead as if we had purchased a significantly cheaper vehicle though, of course. In our case whether we bought the car or not had nothing to do with whether we financed the purchase.