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I found this article interesting because I couldn't for the life of me understand why so many people spend so much money on their cars. For me, a car was just

I found this article interesting because I couldn't for the life of me understand why so many people spend so much money on their cars. For me, a car was just a convenient way to get to where I wanted to go. My ego wasn't tied up in at all. I didn't own a car as a way to show off my status. I drove a series of "beaters" and often did my own maintenance and repair of relatively simple issues. I finally bought exactly one new car for cash, and drove it for twelve years. I never carried collision or comprehensive insurance, having the opinion that dealing with insurance is always a pain in the ass. The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it. Because of this, my total cost of ownership of cars was really low. I piled all the money I saved into investing, and came out far ahead. I sold my last car when I retired. Now, I walk everywhere: to the supermarket, to the park, to the gym, to restaurants, to the downtown bars. I'm so glad not to own a car.

cstejerean 8y ago
What other types of insurance did your inner mathematician prevent you from getting? Did you also skip out on health insurance because the premiums are a markup on the expected value of your health care costs?
- hyperpape 8y ago
  The difference is that health insurance has an enormous upper limit on what it can save you. You rarely want to spend money for insurance on things you can eat the cost of. You want to spend insurance money on things you can't afford, and health care often meets that criterion. Plus, if it's employer sponsored, you're getting it at a substantial discount.
- gruez 8y ago
  it's not really applicable to health insurance case because getting it through your employer is tax free, effectively saving you 25% on the cost.
  - hyperpape 8y ago
    I believe it's not just tax free, right, it's just priced into your salary. They won't give you the employer contribution back as cash if you decline, will they?
    - gruez 8y ago
      The money that goes towards the health insurance isn't subject to income tax, so it's cheaper than taking the money and buying yourself. employer provided health insurance: $50k salary $5k health insurance $50k taxable income buy your own health insurance: $50k salary $5k in lieu of health insurance $55k taxable income
      - hyperpape 8y ago
        But it's better/worse than that. Because they won't pay you $55k if you decline healthcare. Instead, you get paid $50k with the option to get healthcare (take it or leave it). My family's insurance healthcare isn't tax-free, which would mean saving $2k or $3k or whatever. It's over $10k of insurance a year that I pay less than $2k for.
  - seanmcdirmid 8y ago
    And if you must go to the individual market, you can’t deduct it until it reaches 10% of your income. Not really fair.
- deleted 8y ago
  [deleted]
- kileywm 8y ago
  Financially, insurance is only a smart purchase if you 1. Cannot afford the worst-case-scenario. (Example: replace your car if it were totaled) 2. You expect the return from claims will exceed the cost of premiums/deductibles. This should never happen if insurance companies are savvy and want to be profitable. Large companies with a vehicle fleet often self-insure those vehicles (AT&T last I heard) because they can afford every vehicle worst-case-scenario (ignoring liability, which is a legal obligation). Socially/emotionally, insurance is a peace of mind which is important and valuable to some people. Security and all that.
- maimeowmeow 8y ago
  His car is less than 10k, its simply not worth the insurance on somethat that at best covers around 90% of the value. Other insurance covers hundred of thousands for not much more the price cost.
seanmcdirmid 8y ago
Car ownership really is cheap in the states at the low end. Amazingly so from the perspective of the rest of the world.
gruez 8y ago
>I never carried collision or comprehensive insurance, having the opinion that dealing with insurance is always a pain in the ass. The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it. so what do you do if you drive to work, and you total your car? do you have the cash on hand for a replacement car?
- sokoloff 8y ago
  Considering the next "beater" is likely to be well under $5K, I'd wager they probably do.
- maimeowmeow 8y ago
  He drives a beater, you can buy another one for around 10k. If you dont have that kind of money in emergency fund, your playing it risky
  - s5fs 8y ago
    I see "runners" on Craigslist all the time for around $1500, I'd say that's the bottom dollar for something that you can probably drive for a year without serious mechanical failures. However, used is always a gamble (at any cost) so if you're buying cheap, make sure parts are cheap too. Just because you can get a 2000s+ BMW for $3k doesn't mean you should!
- gascan 8y ago
  He describes he piled it in to investing. Put the repairs on a credit card, and you've got thirty-ish days to liquidate, which is plenty of time.
lolsal 8y ago
Other people want or need vehicles that offer more than a conveyance of themselves: Kids, gear, livestock, boats, ATVs, lumber, etc. It's easy to own a 'beater' if you only use it to drive from your house to your job, to the grocery story and back for 40 years.
- KozmoNau7 8y ago
  The vast majority of people grossly overestimate their needs, though. Rental vans/trucks exist.
  - lolsal 8y ago
    Fair point, but renting a vehicle most weekends could easily make owning more cost effective.
    - KozmoNau7 8y ago
      If you truly need it every weekend, that's a very legitimate reason to buy such a vehicle, if you can't afford the money/room for a smaller commute-friendly vehicle, or similar reasons. I'm talking about the people who maybe need it once or twice a year, or like to imagine themselves needing it, when in fact they really don't.
  - z0r 8y ago
    The vast majority of people are airily dismissive of the logistics of other peoples lives.
    - KozmoNau7 8y ago
      Some people do have a legimate need and reason for owning such an overly large vehicle. Most people dont. They have a desire, not a need.
- throwawayjava 8y ago
  > livestock, lumber The latter two sound like business uses. The article is about personal use of personal vehicles. > Kids, gear Even then, a sedan or utility/mini van can do the job at much lower costs. > boats, ATVs Boats and ATVs are also good examples of money pits that prevent people from saving for retirement. (Especially boats. I looked into buy one, and quickly noticed that I'd have to be on the lake like half of in-season weekends and/or use all my vacation during the summer before ownership beat renting. But I'm only on the lake a few weekends a year, and even then only need/want something other than a kayak maybe every other visit.) And again, the conclusion of the article is "But if you’re one of the many people who are woefully unprepared for retirement or any of your other saving goals, a good place to start would be cutting back on any unnecessary spending on transportation." If you're on track to retire, go ahead and buy that nice car/boat/etc. But if not, maybe consider cheaper alternatives.
KozmoNau7 8y ago
Some people obviously have a genuine need for a larger vehicle. Those people usually don't spring for the blingmobiles. To a lot of people, their cars and or other material belongings are outwardly visible extensions of their (imagined) personality, and signifiers of wealth to their peers. It's just a different set of values. Personally I absolutely love cars. Not for any status or macho identity, but for the mechanical intricacies and neat design ideas. I am much more interested in a 1970s Opel Kadett than a big new Mercedes or something. I enjoy the act of driving, not the idea that "I am driving something expensive that other people desire". Have you considered cycling instead of walking? It's cheap and there are so many opportunities to geek out over neat ideas.
- hyperpape 8y ago
  > Some people obviously have a genuine need for a larger vehicle. Those people usually don't spring for the blingmobiles. Eh, I've seen people in construction/trades buying "utility blingmobiles". They need a big truck, but what they buy is bigger and nicer than what they really need. It's the equivalent of buying a $10,000 workstation to do web development (you can, surprisingly, run slack on a lesser machine).
EliRivers 8y ago
The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it. Is that not true of all insurance? Does this mean you go through life with only whatever legal minimum of insurance is required in any given circumstance?
- deleted 8y ago
  [deleted]
- marssaxman 8y ago
  That's how I do things. Insurance has generally proven not to be worth it, in my experience; they always find some way to not pay - so I only pay for the insurance I'm required to have. It's just another tax.
poulsbohemian 8y ago
There are states (I don't know how common) that require a base amount of insurance, so perhaps you were "lucky" in this regard that you didn't have to carry that cost.

cstejerean 8y ago

What other types of insurance did your inner mathematician prevent you from getting? Did you also skip out on health insurance because the premiums are a markup on the expected value of your health care costs?

hyperpape 8y ago
The difference is that health insurance has an enormous upper limit on what it can save you. You rarely want to spend money for insurance on things you can eat the cost of. You want to spend insurance money on things you can't afford, and health care often meets that criterion. Plus, if it's employer sponsored, you're getting it at a substantial discount.
gruez 8y ago
it's not really applicable to health insurance case because getting it through your employer is tax free, effectively saving you 25% on the cost.
- hyperpape 8y ago
  I believe it's not just tax free, right, it's just priced into your salary. They won't give you the employer contribution back as cash if you decline, will they?
  - gruez 8y ago
    The money that goes towards the health insurance isn't subject to income tax, so it's cheaper than taking the money and buying yourself. employer provided health insurance: $50k salary $5k health insurance $50k taxable income buy your own health insurance: $50k salary $5k in lieu of health insurance $55k taxable income
    - hyperpape 8y ago
      But it's better/worse than that. Because they won't pay you $55k if you decline healthcare. Instead, you get paid $50k with the option to get healthcare (take it or leave it). My family's insurance healthcare isn't tax-free, which would mean saving $2k or $3k or whatever. It's over $10k of insurance a year that I pay less than $2k for.
- seanmcdirmid 8y ago
  And if you must go to the individual market, you can’t deduct it until it reaches 10% of your income. Not really fair.
deleted 8y ago
[deleted]
kileywm 8y ago
Financially, insurance is only a smart purchase if you 1. Cannot afford the worst-case-scenario. (Example: replace your car if it were totaled) 2. You expect the return from claims will exceed the cost of premiums/deductibles. This should never happen if insurance companies are savvy and want to be profitable. Large companies with a vehicle fleet often self-insure those vehicles (AT&T last I heard) because they can afford every vehicle worst-case-scenario (ignoring liability, which is a legal obligation). Socially/emotionally, insurance is a peace of mind which is important and valuable to some people. Security and all that.
maimeowmeow 8y ago
His car is less than 10k, its simply not worth the insurance on somethat that at best covers around 90% of the value. Other insurance covers hundred of thousands for not much more the price cost.

seanmcdirmid 8y ago

Car ownership really is cheap in the states at the low end. Amazingly so from the perspective of the rest of the world.

gruez 8y ago

>I never carried collision or comprehensive insurance, having the opinion that dealing with insurance is always a pain in the ass. The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it. so what do you do if you drive to work, and you total your car? do you have the cash on hand for a replacement car?

sokoloff 8y ago
Considering the next "beater" is likely to be well under $5K, I'd wager they probably do.
maimeowmeow 8y ago
He drives a beater, you can buy another one for around 10k. If you dont have that kind of money in emergency fund, your playing it risky
- s5fs 8y ago
  I see "runners" on Craigslist all the time for around $1500, I'd say that's the bottom dollar for something that you can probably drive for a year without serious mechanical failures. However, used is always a gamble (at any cost) so if you're buying cheap, make sure parts are cheap too. Just because you can get a 2000s+ BMW for $3k doesn't mean you should!
gascan 8y ago
He describes he piled it in to investing. Put the repairs on a credit card, and you've got thirty-ish days to liquidate, which is plenty of time.

lolsal 8y ago

Other people want or need vehicles that offer more than a conveyance of themselves: Kids, gear, livestock, boats, ATVs, lumber, etc. It's easy to own a 'beater' if you only use it to drive from your house to your job, to the grocery story and back for 40 years.

KozmoNau7 8y ago
The vast majority of people grossly overestimate their needs, though. Rental vans/trucks exist.
- lolsal 8y ago
  Fair point, but renting a vehicle most weekends could easily make owning more cost effective.
  - KozmoNau7 8y ago
    If you truly need it every weekend, that's a very legitimate reason to buy such a vehicle, if you can't afford the money/room for a smaller commute-friendly vehicle, or similar reasons. I'm talking about the people who maybe need it once or twice a year, or like to imagine themselves needing it, when in fact they really don't.
- z0r 8y ago
  The vast majority of people are airily dismissive of the logistics of other peoples lives.
  - KozmoNau7 8y ago
    Some people do have a legimate need and reason for owning such an overly large vehicle. Most people dont. They have a desire, not a need.
throwawayjava 8y ago
> livestock, lumber The latter two sound like business uses. The article is about personal use of personal vehicles. > Kids, gear Even then, a sedan or utility/mini van can do the job at much lower costs. > boats, ATVs Boats and ATVs are also good examples of money pits that prevent people from saving for retirement. (Especially boats. I looked into buy one, and quickly noticed that I'd have to be on the lake like half of in-season weekends and/or use all my vacation during the summer before ownership beat renting. But I'm only on the lake a few weekends a year, and even then only need/want something other than a kayak maybe every other visit.) And again, the conclusion of the article is "But if you’re one of the many people who are woefully unprepared for retirement or any of your other saving goals, a good place to start would be cutting back on any unnecessary spending on transportation." If you're on track to retire, go ahead and buy that nice car/boat/etc. But if not, maybe consider cheaper alternatives.

KozmoNau7 8y ago

Some people obviously have a genuine need for a larger vehicle. Those people usually don't spring for the blingmobiles. To a lot of people, their cars and or other material belongings are outwardly visible extensions of their (imagined) personality, and signifiers of wealth to their peers. It's just a different set of values. Personally I absolutely love cars. Not for any status or macho identity, but for the mechanical intricacies and neat design ideas. I am much more interested in a 1970s Opel Kadett than a big new Mercedes or something. I enjoy the act of driving, not the idea that "I am driving something expensive that other people desire". Have you considered cycling instead of walking? It's cheap and there are so many opportunities to geek out over neat ideas.

hyperpape 8y ago
> Some people obviously have a genuine need for a larger vehicle. Those people usually don't spring for the blingmobiles. Eh, I've seen people in construction/trades buying "utility blingmobiles". They need a big truck, but what they buy is bigger and nicer than what they really need. It's the equivalent of buying a $10,000 workstation to do web development (you can, surprisingly, run slack on a lesser machine).

EliRivers 8y ago

The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it. Is that not true of all insurance? Does this mean you go through life with only whatever legal minimum of insurance is required in any given circumstance?

deleted 8y ago
[deleted]
marssaxman 8y ago
That's how I do things. Insurance has generally proven not to be worth it, in my experience; they always find some way to not pay - so I only pay for the insurance I'm required to have. It's just another tax.

poulsbohemian 8y ago

There are states (I don't know how common) that require a base amount of insurance, so perhaps you were "lucky" in this regard that you didn't have to carry that cost.