Cars are (REALLY) Expensive - The Urbanist Agenda Podcast

[Log]

https://youtu.be/7xUBCGhOBIg?si=eqcpisshPeNJhW5J

Just riffing about how insanely expensive car ownership is, and how much drivers under-estimate the costs of driving compared to other costs they regularly complain about (ie, rent in a walkable place).

[theninthwall]

According to the AAA, ownership of a new car now costs $12,182 a year (for 15,000 miles). That's pretty wild, especially given many Americans have two new cars in the driveway. That's $33.37 a day for 41 miles, or a little over 80c a mile.

Like you say, many Americans would be immensely better off renting in a walkable location (or heck, even just close enough to bike to work).

[curious_george]

This makes me feel sorry for low income people honestly. Even used car prices are still expensive compared to pre-pandemic levels it seems.

[Log]

This makes me feel sorry for low income people honestly. Even used car prices are still expensive compared to pre-pandemic levels it seems.

Yeah, the bit where they talk about the case of the guy buying a cheap used Toyota and the ownership costs still coming out to about $5k/year was pretty remarkable.

The $10-12k average number is shocking, but then leaves the question of "but what about a more reasonable frugal option?" Obviously it's just an anecdote and not rigorous data, but a small, used, Japanese car is basically the most rational frugal option, and hearing it still came out to $5k is pretty damning.

Excluding flights but including transit, trains, occasional Ubers, etc., my entire transportation spending for 2023 came out close to $1k.

[spartana]

As a car-free/vehicle-free person I'm pretty shocked at over all total costs to buy and own even a relatively inexpensive used ICE car here in calif. Between high insurance, high registration cost and high fuel.costs (over $5/gal) it's a pretty large expense even before purchase price and sales tax.

But most people here commute a long distance and it's pretty unaffordable to live near a city if you have a family so I guess the trade off is worth it for them. I commuted approx 30 miles one way by motorcycle before I FIREd and ex-DH (who worked in the opposite direction) rode his bicycle about 15 miles one way so it was a pretty big cost savings over owning and driving cars (and we couldn't change jobs because we were in the coast guard). So I do get the need for a car by many but still... If we had a better public transit infrastructure in SoCal many more people would choose the option.

ETA: now if I had to commute that far I'd look into a very inexpensive EV - used Leaf 9r similar - even though I'd still have to pay for the high annual registration fee plus insurance (around $1200/year for liability).

[roomtempmayo]

This makes me feel sorry for low income people honestly. Even used car prices are still expensive compared to pre-pandemic levels it seems.

Yeah, the bit where they talk about the case of the guy buying a cheap used Toyota and the ownership costs still coming out to about $5k/year was pretty remarkable.

One of the advantages of spending some time moving yourself a significant distance under your own power - walking, running, biking, paddling, whatever - is that it gives you an appreciation of the energy it takes to move even your body weight.  Moving a typical car is something like 20-30x that effort.  Doing that for 15,000 miles a year would be an incredible feat. 

Normalizing driving 15k/year is bonkers.  There's some sort of oldtimey war campaign metaphor to be had here, like going on multiple Napoleonic campaigns towing an extremely large cannon.  For personal convenience.  Every single year.  And not giving it a second thought.

Of course driving 15,000 miles is expensive.  It's a massive amount of work.  And it's no wonder at all that a typical person can't really afford it.

[LD_TAndK]

I listened to the podcast, enjoyed the dissing on cars but as a data dork I wish they had more detailed cost analysis.

However, $12,182 for private transportation on a luxury motorized climate controlled couch, available the entire year, seems like a steal of a deal to me.

The real fire alarm is 15,000 miles annual driving. To roomtempmayo's point, as high schoolers we once pushed cars around a parking lot as "training" (goofing around really), and my god that'll give you respect for how much work a car engine is doing. Expending that much energy for 41 miles per day forever is insanity.

[Agatha Thrifty]

This makes me feel sorry for low income people honestly. Even used car prices are still expensive compared to pre-pandemic levels it seems.

Yeah, the bit where they talk about the case of the guy buying a cheap used Toyota and the ownership costs still coming out to about $5k/year was pretty remarkable.

Normalizing driving 15k/year is bonkers. 

And it's all so circular.  People "need" cars with entertainment systems and customized heated seats and who knows what all because at 15000 miles/year in city traffic, that's at least 500 hours/year expended* in the car (which is most likely a minvan or truck).
I figure I spend 60 -75 hours/year in my own car (which is an actual car), so personally, I can tolerate the discomforts of owning a less expensive one.

*And I do consider time spent in the car as an expense.  Most people do on some level; that's why we hate commuting to work.  I think most people here who commute would consider commuting time part of what we recover when we attain FIRE.

[roomtempmayo]

This makes me feel sorry for low income people honestly. Even used car prices are still expensive compared to pre-pandemic levels it seems.

Yeah, the bit where they talk about the case of the guy buying a cheap used Toyota and the ownership costs still coming out to about $5k/year was pretty remarkable.

Normalizing driving 15k/year is bonkers. 

And it's all so circular.  People "need" cars with entertainment systems and customized heated seats and who knows what all because at 15000 miles/year in city traffic, that's at least 500 hours/year expended* in the car (which is most likely a minvan or truck).
I figure I spend 60 -75 hours/year in my own car (which is an actual car), so personally, I can tolerate the discomforts of owning a less expensive one.

A friend of ours in LA has explained the high prevalence of luxury cars there as a simple matter of reasonable priorities.  If you're in your car for hours every day, then of course you want it to be comfortable/quiet/visually pleasing/have a good sound system/on and on.  Your car is just a major, major priority when you live in freeway commuting culture.  The culture is crazier than the car.

[getsorted]

My car was a gift, is very small, insurance is low because of a salvage title, parts are cheap, and I still spent $4,000 last year to own it. About half of that was fuel, the other half was repairs and maintenance.

[theninthwall]

Just thinking about this thread today in relation to something I keep seeing on r/personalfinance. A lot of people talk about being 'underwater' on their car loans. And I'm wondering, has the last few years changed people's expectations of what car prices do?
Obviously the post-COVID market was very strange and perhaps once-in-a-lifetime, where used car prices were exceeding new car prices. Prices on used cars were going up and up. I think this led people to think of cars as assets rather than liabilities.
When I read posts from people saying they are 'underwater' on their car loan now, they seem to think it was an unexpected, unusual and unlucky event rather than the norm.

[getsorted]

I think this led people to think of cars as assets rather than liabilities.

Thinking of cars as assets is the only way to justify financing them. It's older than just the crazy post-pandemic used car market-- old enough that Dave Ramsey has been going on about it for at least 20 years.

[neo von retorch]

Cars are assets, just depreciating ones (under normal circumstances). If you don't have a car loan, you don't hold a liability (in connection with the car). You can turn around and sell it for the value it holds. It's an asset.

(You may hold a less tangible liability in your obligation to work somewhere that requires a personal car to get you there...)

[theninthwall]

That's true - my own perspective may be underwater haha 🙃

[achvfi]

I calculated all the costs we incurred over last 13 years that I have records on. On an average we spent about 5500 dollars a year to drive and maintain two cars. I shouldn't be surprised but I am surprised that it is that high..

Why is it surprising? We drove small used cars for most of these years. 4-5 years ago we bought a new to us Minivan. We don't drive that much, I would estimate about 8000 miles a year at the most.

Costs I am including are...
Auto purchase and interest costs.
Auto insurance
Auto Maintenance
Gas

It seems to me we underestimate Cars/transport cost.

[roomtempmayo]

Just thinking about this thread today in relation to something I keep seeing on r/personalfinance. A lot of people talk about being 'underwater' on their car loans. And I'm wondering, has the last few years changed people's expectations of what car prices do?
Obviously the post-COVID market was very strange and perhaps once-in-a-lifetime, where used car prices were exceeding new car prices. Prices on used cars were going up and up. I think this led people to think of cars as assets rather than liabilities.
When I read posts from people saying they are 'underwater' on their car loan now, they seem to think it was an unexpected, unusual and unlucky event rather than the norm.

I think it's historically unusual because banks haven't typically been willing to write loans where the outstanding liability exceeded the value of the car at any point in the loan's life.

People getting "underwater" is an underwriting failure, as it is with a mortgage, and only occurs in volatile/unpredictable markets.

(This of course excludes the scammy buy-here-pay-here places where the whole business model is recurring sale and repossession.) 

[Michael in ABQ]

For 2023 we spent:

~$1,800 on insurance
~$5,400 on repairs and maintenance ($800 for a new set of tires, a $3,100 bill for a 23-year-old vehicle, plus misc. smaller repairs, oil changes, a few car washes, etc.)
~$4,400 on gas
Total of approximately $11,600 for the year.

For 2022 we spent:

~$1,800 on insurance
~$1,900 on repairs and maintenance
~$5,000 on gas
Total of approximately $8,700 for the year.

So an average total of about $10k/year. This is for a minivan and a full-size van, both of which were bought used for cash multiple years ago ($5.5k and $10k, respectively). Between the two we probably drove 25-30k miles since our kids' school is 24 miles away so a typical daily commute of Home > School > Work > School > Home is about 80 miles (virtually all on the freeway).

Next year we're homeschooling so that commute will drop to about 25 miles daily, plus way fewer double-trips to the school for after-school activities. But this is for a family of 8 - not really practical to use public transit in a spread-out sunbelt city.

[achvfi]

Average cost of a vehicle sold in US is about $45000, may be it skews higher due to pickups and luxury cars. Let's say for a typical adult is purchasing a new car for $35000. Total cost of ownership for 5 years for a $34500 car is 40592.

40592 x 2 = $81184 is 5 year total cost of ownership for 2 cars! That is $16236.8 a year. Crazy!

===================================================
Ownership Costs: 5-Year Breakdown
Selected Model: $34500 car
Ownership Costs: 5-Year Breakdown
Year 1   Year 2   Year 3   Year 4   Year 5   Total
Insurance   $712   $737   $763   $789   $817   $3,818
Maintenance   $389   $781   $489   $2,000   $1,361   $5,020
Repairs   $0   $0   $114   $270   $394   $778
Taxes & Fees   $2,604   $37   $37   $37   $37   $2,752
Financing   $2,297   $1,859   $1,386   $873   $318   $6,733
Depreciation   $6,517   $1,541   $1,457   $1,710   $1,619   $12,844
Fuel   $1,629   $1,677   $1,728   $1,780   $1,833   $8,647
True Cost to Own®   $14,148   $6,632   $5,974   $7,459   $6,379   $40,592
*Based on a 5-year estimate with 15,000 miles driven per year.

[Fru-Gal]

The part that jumps out to me is keeping a car for 5 years. Our average is roughly 10 years, 1 car at a time. Also because our latest new car (replacing the old one) is 20 years old, registration and insurance are very very low.

Today as I passed a house with a bunch of old cars parked in the driveway I was just thinking how glad I am that I traded in the old one, even though I loved it so. I really like the simplicity of just one car.

I was pushing spouse to go car-free, but they really need a car for the 2-3 days a week when they do overtime and don’t have the energy to bike commute.

I feel like I overspent on the new (old) car but at least it was well under $10k and has surprisingly low mileage and absolutely pristine interior/exterior.

Even though we’re very good at being a transit-taking and biking family, having dogs, hauling feed bags and construction supplies and wanting to go places that feel a bit dangerous for biking at night are reasons we have a car.

I would like to get to the point of no car and only having a cargo e-bike/scooter or vehicle, however. Before buying this car I was looking at tuk-tuks and tricycles and other small e-vehicles like street-legal golf carts. Or Kei trucks. Most seem overpriced though, and the 3-wheelers turn out to be kind of hazardous from what I’ve read.

[badger1988]

Vehicle 1: 2011 Ford Fiesta
-Purchased new - 128k miles to date
-$2,487 per year (10,028 miles/yr)

Vehicle 2: 2011 Chrysler T&C
-Purchased used in 2017 @ 63k miles - Current odometer=144k miles
-$3,927 per year (12,153 miles/yr)

[Morning Glory]

A lot of the costs of car ownership are hidden or externalized,  such as when parking minimums increase the cost of rent or prevent  enough affordable  housing  from being built. For example when I rented a 2 bedroom apartment I had no choice but to rent 2.3 parking spaces along with it even though I only had one car. Same thing if I walk to the grocery store, my purchase helps pay for all that car parking, most of which sits empty at any given time.

Parking is the easiest to measure but it's a drop in the bucket compared to the mental and physical health effects of living in a car-oriented landscape.

[Cranky]

Just thinking about this thread today in relation to something I keep seeing on r/personalfinance. A lot of people talk about being 'underwater' on their car loans. And I'm wondering, has the last few years changed people's expectations of what car prices do?
Obviously the post-COVID market was very strange and perhaps once-in-a-lifetime, where used car prices were exceeding new car prices. Prices on used cars were going up and up. I think this led people to think of cars as assets rather than liabilities.
When I read posts from people saying they are 'underwater' on their car loan now, they seem to think it was an unexpected, unusual and unlucky event rather than the norm.

I think that even before 2020, people were taking out what seemed to me like really long car loans - 7 years or so. Then they decided the car was unreliable and rolled the old loan over into a new one.