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Originally Posted by noglider
(Post 20680482)
And again, since he advocates buying used cheap cars, depreciation is a smaller fraction of the costs. So is insurance; when your car is paid for, there is not much reason to have insurance beyond liability insurance. You can also get a break on your premium if you don't drive much. A relative of mine has a big pickup truck that he may only use two or three times a year.
Anyone all that concerned with minimizing their car expenses should have more sense than following such a regimen of car purchases. |
Originally Posted by Slaninar
(Post 20680515)
If you can live without a car, fixed costs should be considered - what can you buy for the cost of yearly insurance and registration vs how much you need a car. Boils down to that.
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Originally Posted by I-Like-To-Bike
(Post 20680530)
As you point out, buyers of cheap used cars, especially those who are selective in their purchase, have much lower fixed costs, and their marginal (variable costs), except perhaps for prorated maintenance, are not higher than new cars. The high per mile costs of approx. 59¢/mile over 15,000 miles/year, from the AAA, often quoted on LCF and elsewhere on BF, is based on the costs of buying a new car every 5 years and trading in the old one with only 75,000 miles on the odometer.
Anyone all that concerned with minimizing their car expenses should have more sense than following such a regimen of car purchases. I've also learned (the hard way) that expensive, heavy cars have higher per-mile costs, especially with tires but also with other maintenance items. So drive the lightest car you can. |
Originally Posted by noglider
(Post 20680566)
So drive the lightest car you can.
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Originally Posted by RubeRad
(Post 20680585)
But then how can we win the SUV arms race! In order to survive any and all crashes, our vehicle must be the biggest and the heaviest! `Murica!
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My point was kind of that those of us here in the Commuting forum already deal with risk of collision with a vehicle that overwhelmingly outweighs us on a daily basis
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Originally Posted by noglider
(Post 20680566)
Now you are reinforcing MMM's argument. The more you spend on your car, the greater the ratio of fixed-to-marginal costs. So MMM advises us to spend little on our car purchases and then consider each mile to be expensive so we will use it as little as possible (within reason).
A more expensive car will cost more if it never is driven and will also have a higher marginal cost for every mile added starting with mile one on the odometer. There is no money to be saved per mile or total by buying more expensive cars, unless the purchaser can find a car that is guaranteed to appreciate in value. Perhaps MMM can get his listeners to believe in his MMM mind tricks as a means to saving on car expenses, but that doesn't work for most rational people. |
Originally Posted by I-Like-To-Bike
(Post 20680632)
Perhaps MMM can get his listeners to believe in his MMM mind tricks as a means to saving on car expenses, but that doesn't work for most rational people.
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Originally Posted by noglider
(Post 20680566)
Now you are reinforcing MMM's argument. The more you spend on your car, the greater the ratio of fixed-to-marginal costs. So MMM advises us to spend little on our car purchases and then consider each mile to be expensive so we will use it as little as possible (within reason).
I've also learned (the hard way) that expensive, heavy cars have higher per-mile costs, especially with tires but also with other maintenance items. So drive the lightest car you can. 2011 VW Golf 1.2 TSI (105hp) S 5-door £17300 new. bought in 2014 with 6400 miles for £8952 now, in 2018 with 67000 miles still retails for about £4000-5000. car A much slower depreciation one could say after we bought it. Hoping to get another 10 years out of it, should we want! |
Originally Posted by I-Like-To-Bike
(Post 20680632)
Hardly, the ratio of fixed-to-variable costs is irrelevant for MMM's argument since he doesn't make any distinction between fixed and variable costs.
A more expensive car will cost more if it never is driven and will also have a higher marginal cost for every mile added starting with mile one on the odometer. There is no money to be saved per mile or total by buying more expensive cars, unless the purchaser can find a car that is guaranteed to appreciate in value Lemme quote MMM (some stuff snipped out of the middle because this is still a very long quote) let’s imagine two 15,000-mile-per-year drivers: Consumer Carl buys a new 2012 Toyota Corolla S with a 5-speed manual transmission, for $20,000 including taxes and fees and registration. This is one of the best new-car values on the market when measured on a cost-per-mile basis when you factor in its long term reliability and fuel efficiency. He drives it for 13 years, traveling 200,000 trouble-free miles. After 13.3 years, tying up that $20 grand in a car cost Carl about $38,269, compared to putting the money into paying off part of a 5% mortgage or making another investment that pays a 5% annual return. Mustache Mary buys a 2006 Toyota Corolla with 90,000 miles on it for $9,000 including taxes. She can only get 110,000 miles out of this car which takes 7.3 years to use up. At that point, she buys a second used Corolla to cover the remaining 90k miles. To make our numbers clean, let’s say she buys a slightly older one such that it only has 90,000 miles of life remaining. This costs her $7,500. She has to go without that $9000 for the entire 13.3 years, which could have earned her $17,221 if she had used it to pay off her mortgage. Then she spends an additional $7,500 which is missing for the final 6 years at a cost of $10,050. So at the end of 13 years, Consumer Carl spent $38,269 on Corolla ownership, while Mustache Mary spent $27,271. She saves about $11,000 even while doing the same amount of driving, and she will repeat that windfall every 13 years or so by continuing this strategy. Even while driving a nearly-equivalent car for exactly equivalent mileage, Mary saves 30% on the cost of driving simply by buying her Corollas used instead of new. Make no mistake about it – if you have a good reliable type of old fuel-efficient car, it will always be cheaper to maintain and repair it as necessary, compared to buying a brand new car. There may be situations where upgrading from a very old used car, to a somewhat newer car, are cost-effective, but the brand new car always loses. The most exciting part of all of the calculations above are that I designed them to show the worst case savings. I picked the Corolla because it is one of the slowest depreciating cars on the market. When you buy a 2006 Corolla with half of its miles used up, you still pay about half of the price of a new one. With most cars, the depreciation is exponential rather than linear, meaning that the first fifty thousand miles are the most expensive ones of all. It’s a bit of a balancing act, because in theory you could get the lowest driving cost by driving around in a very old car. A 1991 Honda Civic that you picked up from a bearded musician for $500, or even a 1984 Nissan Pickup like the one I used as a construction vehicle from 2005-2010. But it takes additional skill and patience to keep vehicles like those running. If you do depend on a car for daily driving, or you’re a single person living in Miami and hoping not to scare off too many potential mates, or you need to carry clients around and look somewhat normal doing so, even a single breakdown could cause more costly side-effects than the old car is saving you. That’s why I am suggesting that busy professionals play in the 5-15-year-old car range, rather than diving right into the 1990s. |
I wonder if it’s worth mention that the cost of mx is a huge variable depending on the skill/motivation of the car owner to perform it. Changing your own oil might save you $5, but being able to replace a head gasket or clutch or transmission yourself will save you close to $1k each, usually a one time thing for most cars. DIY brake job can save $300 each time. Etc etc etc. |
I don’t know if the personal experience is helpful, but I drove used imports (Toyotas and Hondas) for many years and performed the maintenance myself. With high mileage cars, one can expect to spend about $1k/year on average on various maintenance costs, preventative and reparative - IF doing the work yourself. If maintained correctly, most imports from around ‘95 forward you can expect to get pretty much unlimited mileage from the car unless/until the frame rusts apart. I drove several cars to around 300k miles before selling them for about $1k. The sweet spot for “beaters” is around $2k-$4k purchase price - spend less and get into doing more work sooner, spend more and you’re only buying depreciation. Tools are a big cost to consider as well. |
so true. and if you can't do it yourself, being able to take an older, more common car (i.e. toyota corolla) to a commoditized/competitive mechanic will cost a lot less than taking a newer and/or fancier car (bmw, jaguar, saab) to a more specialist mechanic, or god forbid a dealership
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Originally Posted by RubeRad
(Post 20680780)
so true. and if you can't do it yourself, being able to take an older, more common car (i.e. toyota corolla) to a commoditized/competitive mechanic will cost a lot less than taking a newer and/or fancier car (bmw, jaguar, saab) to a more specialist mechanic, or god forbid a dealership
I’m sure some of the distaste for big name bike shops comes from people’s dealings with “big name car shops” |
Originally Posted by noglider
(Post 20680646)
You can agree or disagree with him, but he is not irrational.
Each extra mile is NOT so expensive at all, no matter what MMM advises or his listeners consider. |
Originally Posted by I-Like-To-Bike
(Post 20680910)
Sounds like he expects his listeners to be irrational instead -" So MMM advises us to spend little on our car purchases and then consider each mile to be expensive so we will use it as little as possible (within reason)"
Each extra mile is NOT so expensive at all, no matter what MMM advises or his listeners consider. It’s hard for me to imagine that financial advice sounding irrational. |
Originally Posted by RubeRad
(Post 20680676)
Lemme quote MMM[/URL] (some stuff snipped out of the middle because this is still a very long quote)
Did any of the deleted stuff explain how MMM came up with a 50¢/mile "marginal" cost; or what investment he recommends that his listeners make with this unspent money that will guarantee the future 5% annual return for the 13 year period that the money must remain unspent for MMM's financial model to work? |
[MENTION=20232]I-Like-To-Bike[/MENTION], I should mention that I am grossly paraphrasing him with quite a bit of time between reading his articles and now, so I may be quite wrong. Rather than finding fault in my words, which should be easy, try finding it in his. He's a good writer. In any case, referring to his theories as mind games shows that you may be predisposed to disbelieving him or disrespecting him. Try considering it before dismissing it. You haven't read his articles as far as I know, and I'm not a good representative of his.
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Further, MMM is far from a prophet or revolutionary or even controversial. His column is about frugal living. He didn’t invent it, he’s just sharing how it’s worked for him. The same principles he employs are scalable for most incomes, certainly anybody who has already searched the Internet for financial advice is probably in a position to benefit from frugal living. He’s far from the only person posting a frugal living blog. |
But he's pretty damned funny and also good at arguing.
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Originally Posted by noglider
(Post 20681066)
But he's pretty damned funny and also good at arguing.
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Originally Posted by I-Like-To-Bike
(Post 20680910)
Sounds like he expects his listeners to be irrational instead -" So MMM advises us to spend little on our car purchases and then consider each mile to be expensive so we will use it as little as possible (within reason)"
Each extra mile is NOT so expensive at all, no matter what MMM advises or his listeners consider. Whether or not one deems it "expensive" is subjective. It is certainly not irrational to use the term that way nor is it irrational to suggest people might want to save money by driving less. |
Originally Posted by jon c.
(Post 20681113)
Each additional mile is an expense.
Whether or not one deems it "expensive" is subjective. It is certainly not irrational to use the term that way nor is it irrational to suggest people might want to save money by driving less. |
Originally Posted by I-Like-To-Bike
(Post 20681227)
Everything has a cost; a budget based on buying less and doing less because buying or doing almost anything beyond the subsistence level is allegedly too "expensive" and unnecessary as well sounds pretty much like the lifestyle advice touted by one or two of the devotees of asceticism who frequently provide their version of economic advice on the LCF sub-forum.
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Originally Posted by jon c.
(Post 20681235)
The average person in this country is carrying a credit card balance and needs to either increase their income or reduce their expenses just to maintain their standard of living. This author is suggesting an approach that can help folks toward that end. Suggesting that this is akin to asceticism seems rather extreme to me.
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