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One perhaps not so hidden cost of American life that I wish someone prominent would seriously investigate is the cost associated with car ownership. I suspect

• diminoten 7y ago
  What makes you think this? There are lots of sites/people who do "total cost to own" and the numbers they come up with aren't ruinous amounts as far as I can tell.
  • Edmond 7y ago
    I have owned cars for over 20 yrs so I have a pretty good sense of just what a hole in my pocket the whole thing is :) There are all sorts of costs associated with car ownership beyond mere purchase cost and repairs...things like fines associated with cars that fall more heavily on poorer people...there is just A LOT of cost associated with cars.
    • hhs 7y ago
      You write: "There are all sorts of costs associated with car ownership beyond mere purchase cost and repairs". Service and maintenance is another one. I have colleagues who, overall, like the Uber and Lyft lifestyle, even when facing the occasional cancellations. I'm curious if there are empirical studies done on the overall benefits and costs of owning vs leasing vs ridesharing?
    • diminoten 7y ago
      I don't... understand what you're talking about. Sure there are additional costs to owning a car, but you're not really explaining how they're so commonly ruinous to a person's financial well being. So far all you've given me is a few worst case scenarios, but what about the average scenario? What's the normal car ownership process like in your mind, and how does that average situation teeter so close to the edge of ruin, as you say?
      • jogjayr 7y ago
        The IRS allows you to deduct $0.51/mile if you use your car for business. This takes into account all the costs of driving: gas, insurance, registration, depreciation, maintenance and repairs.[1] I don't know if it also takes into account the opportunity cost of having $15-50k sitting in your driveway instead of in an investment. The average American commutes 32 miles/day round-trip[2] (we're not counting other driving). So they're incurring ~$16/day in direct and indirect costs related to car ownership and driving. Over 1 year of workdays, that's approximately $4k in car-related costs. The median household income in the United States is approximately $60k.[3] This implies that the median household spends almost 7% of income just on one car. Most households have 2 vehicles so I'll wager it's more like 10-12% of income. This is also more than the amount households save annually (6%).[4] 1. http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/ http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-c... 2. https://itstillruns.com/far-americans-drive-work-average-7446397.html https://itstillruns.com/far-americans-drive-work-average-744... 3. https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United... 4. https://tradingeconomics.com/united-states/personal-savings https://tradingeconomics.com/united-states/personal-savings
        • diminoten 7y ago
          So? Their entire income is probably tied to that car getting them to/from work, so it is an investment, with returns being their ability to hold their job.
          • jogjayr 7y ago
            Right. But no one needs a $15k car, let alone a $50k one, to get to/from work. If you're counting job income as RoI from a car, why not buy a $7k car? That's far better RoI. And after one has held a steady job for a few years, no one should need to finance a $15k car either. That's where most of the costs of car ownership come from (apart from long commutes) - depreciation, interest payments, and insurance.
            • 7y ago
    • benj111 7y ago
      "fines associated with cars that fall more heavily on poorer people" Examples? If its a case of Ferraris don't need to pay to park, where other cars get ticketed, fair enough. If its just a case of poor people being more likely to speed, in which case that doesn't seem so reasonable to call out. I'm not even sure if fines in general should be counted as a cost of ownership. You can just pay to park, you don't have to speed, in general it seems like a cost of rule breaking to me. I'm not from the US, so the request for examples was genuine.
      • pmichaud 7y ago
        I imagine the person you're asking was talking about fines being regressive in the sense that if a wealthy person receives a $100 fine for speeding or parking violations, it's basically nothing, but the same $100 represents a day or 2 of labor for the working poor and could be ruinous if they are already barely able to pay their bills.
      • Edmond 7y ago
        We can start with the fact that fines are not means tested so a speeding ticket for someone driving x miles over the speed limit is the same for a Ferrari driver (likely a rich person) and someone who would having trouble covering a $400 expense (a poor person)...in fact it is known that this type of situation often has a cascading effect on poorer people...lose your license/registration because you can't pay the fine, lose your job because you can't get to work, become even poorer.... The real problem is that car ownership is more or less mandatory in America because of the lack of viable alternative in most cases. Those fines I speak of? I have a lot experience with...in fact for most of my late teens and early 20s I spent thousands in fines for various infractions. Not everyone manages to climbed out of those holes.
      • lostlogin 7y ago
        Any fine is an example. $40 to someone on the breadline is a problem. While to someone wealthy it’s nothing. There are people who don’t worry about fines due to their wealth, and just avoid situations that would risk their licence.
        • 7y ago
    • FabHK 7y ago
      One can find Total Cost of Ownership calculators online, eg edmunds.com. A Toyota Camry that costs $25k has a total cost of ownership over 5 years of $40k, or some $670 per month. One could get a pilot's license for that amount and fly an hour per week.
      • dependenttypes 7y ago
        That sounds like a lot to me. Our Nissan sunny from 1991 costs around 500 euro/year for us.
        • qes 7y ago
          Including gas, oil changes, insurance, new tires, etc? How many kilometers per year?
          • war1025 7y ago
            I used to keep very close track of my finances and commented one day at work on how much of our money we spent on our cars. Everyone in the office thought that I was being preposterous and that they spent nothing near that on their cars. Nevermind the fact that I drove the oldest car and lived the closest to work. Gas / insurance / registration are costs people just generally don't count into car ownership. Probably part of the reason people are so happy to buy SUVs that get terrible mileage.
          • dependenttypes 7y ago
            1200km/year Yes, including all of these.
            • kgwgk 7y ago
              1200km year is not much (3km/day). The calculation above probably includes ten times as much usage. Edit: apparently the edmunds.com calculator assumes 15000 miles per year which are 24000 km, 20 times your 1200km.
    • mikeash 7y ago
      Avoiding fines is pretty much trivial. It’s insignificant compared to the cost of maintaining and fueling the car unless you’re incredibly irresponsible.
  • benj111 7y ago
    Define ruinous. I'd expect car ownership to be someone's 2nd largest expense. I could see how it could tip someone over the edge.
  • Fellshard 7y ago
    A great deal of this depends on whether the car is bought outright or paid over time, as car loans are usually hideously bad deals. Better to get a cheap car that will be short-lived while you save for something more durable, in many cases.
    • diminoten 7y ago
      Wait, why are car loans hideously bad deals?
      • jogjayr 7y ago
        1. You're paying interest on a depreciating asset that doesn't earn any return. Worse, the minute you drive the car off the lot, it's worth 20% less than you paid for it. So you're underwater on the loan immediately. Even if you sold it for book value you would lose money on the deal. 2. If you are able to pay cash but choose to take a low-interest loan and put the cash into investments that have a better return, you can come out ahead. But most people either don't have cash upfront, or are not sufficiently disciplined to do this. 3. If you own a car outright you can get by with liability-only insurance. If you owe money on it, the lender will require collision and comprehensive insurance, which costs a bundle.
• jerrac 7y ago
  It also could be the thing that lets them find a job and avoid financial ruin. Public transit sometimes works, but it almost always increases how long it takes to get somewhere. If I was struggling to make ends meet by working two jobs and had kids, public transit would likely add so much time to my commute, that I'd have to choose between a second job, and having any time with the kids. Frankly, I think car ownership is one of the most freeing things we have in modern life. It opens up doors that would be closed if you relied on other forms of transportation. Being able to go where you want, when you want, is very valuable.
• MuffinFlavored 7y ago
  Doesn't America offer some of the most affordable car prices? This might be a bad example, but I am pretty sure that luxury German cars like Mercedes/BMW are cheaper to purchase/register in America than Netherlands/Denmark due to taxes.
  • mcjiggerlog 7y ago
    I have no statistics to back this up, but as far as I can tell the US seems way bigger on both buying new cars instead of used and on buying cars on finance instead of outright. You're not saving money buying a brand new BMW on finance in the US instead of Europe if you could have bought a perfectly good used car for 5000 USD in cash.
  • ngngngng 7y ago
    Yes, but cars are more of a necessity here than in Europe. No matter how poor you are, a 20 minute drive can still take over 2 hours by bus in some areas, and that's nearly impossible to work with.
    • namdnay 7y ago
      Depends where in the US, and where in “Europe” (it’s a pretty big place you know...)
  • MandieD 7y ago
    All the cars are cheaper in the US than in Germany; either somewhat when the EUR/USD rate is low, or enough that (re)importing from the US becomes attractive. Example: base 2019 Prius MSRP Germany: 28,450 EUR ($31,920) - includes 19% VAT MSRP US: $23,770 - does not include local sales tax That’s even more of a difference than I was expecting, as the exchange rate is currently on the low side ($1.12, compared to the long term $1.20-1.25 or eye-watering $1.50 it touched about 10 years ago)
  • bluedino 7y ago
    We still buy $50,000 cars
  • 7y ago
• ngngngng 7y ago
  My dad and I tried to run a blog investigating things like this and giving advice. We've both been able to keep our car costs remarkably low. He's currently driving the most expensive car he's ever owned which cost him 10k (high mileage truck) and I'm still driving a 1993 Nissan SUV I bought a few years back for $900. Even when factoring in cost of repairs for both cars and bad gas mileage, we've saved thousands and thousands versus driving new[er] cars. I don't think we were being condescending, but all of the posts were met with outrage that we dare suggest such things. People would say things like "I need a reliable car to get to work, and if it's not new, it's not reliable."
  • bitcurious 7y ago
    How do you calculate the cost of the risk associated with not having the latest safety tech? Especially subtle things like generous crumple zones which make a car less durable but pay off in the worst case?
    • razorunreal 7y ago
      I think people forgot that a 10 year old car means 2009. Newer cars are still safer, sure, but that's easily recent enough for good crumple zones, strong pillars and plenty of air bags, all for under 10k.
      • hanniabu 7y ago
        In his post he says his car is from 1993, which is 26 years old, not 10.
        • AdrianB1 7y ago
          Cars are being built for 100 years; there are improvements, but not that big to say a 26 year old car is not safe enough. My 6 year old motorcycle has the almost the same technology like my 1993 bike I had 15 years ago, the only difference is fuel injection and nothing else. It is not even more reliable, but the manufacturer is the same.
• ferongr 7y ago
  Car ownership can only be financially ruinous if you value your time at no cost. I live in a city with excellent public transport, and still, purchase of a car really improved my quality of life. Instead of 45-60 minutes using public transport, I can get to my dad's house with 13 minutes of driving. A recent example where I picked up a PC monitor from Samsung's service center and returned it to the store I bought it from for a replacement took 1 hour total instead 3 hours lugging the 27" monitor through public transport or spending two days worth of income on taxi rides. The monthly TCO of my car amounts to around 4 times the cost of the public transports' monthly pass, and that doesn't account the money spent on taxis or ride hailing apps. I consider it worthwhile for the immense benefits I'm getting.
  • repolfx 7y ago
    We're talking about Americans who live paycheque to paycheque. Presumably their time actually is valued at close to no cost (by their employer). Nobody is arguing everyone should drive a cheap old car.
• nexuist 7y ago
  >I suspect over the course of a lifetime car ownership could easily be the most ruinous financial baggage that a lot of people incur. Not everyone in America needs or wants a car (NYC, etc). But everyone needs a roof over their head, and so I would vouch that the most ruinous financial baggage is....rent. In my area minimum rent starts around $700/mo, but I have friends in the Bay paying $2000+/mo. $2000 a month! You could buy 2 beaters every month with that! Your first car broke down because it cost $900? Don't worry, just buy another for $900 and still have $200 left over... I recognize repairs are expensive for cars that are $30k or even $20k, but there is nothing mandating you to keep that car or to not trade it in for a sub-$5k beater. The only counterargument here would be safety, and if you have kids, I guess that justifies the price tag. Kids or not, though, you still need to pay rent, and if you're lucky enough to own a house, you still need to pay a mortgage.
  • laurencerowe 7y ago
    In the Bay Area more realistic numbers seem to be around $2000 for a beater and $2000/year for fixing things that go wrong with it (mostly labour costs, $120-150/hour at independent shops here.) Had my commute been a little less (bringing me under 15K miles a year) the overall cost was remarkably similar to a lease on a modest car.
• nickjj 7y ago
  I'm not surprised and the problem starts with buying a car. I've always purchased fairly low cost used cars but I recently went to a dealership for the first with someone who was getting a new car (for themselves). It boggles my mind how reluctant the salesman was to give the "real" price of the car. He also made it sound like it was a nearly impossible task just to get the actual amount the payments would be. He explained how it would take days, require making a charge and would have to get permission from his manager to even start the process. It was a total joke. They also did everything in their power never to mention the real price of the car with interest applied on the payments, but it's such a non-ignorable amount. It could easily end up being 20-25% on top of what the listed price is from interest. It really striked me as a situation where if you weren't detail oriented and let the salesman convince you into the purchase without running the numbers yourself you could easily get yourself in a lot of financial trouble.
  • davidjnelson 7y ago
    You can find list prices and option prices on the manufacturer website. Then google for what discounts people are getting off msrp, as well as interest rates. Then tell the salesperson you know what if costs, and you’ll buy it if they give you that price. If they don’t, walk and use a lower hassle service like Cartelligent.
    • ZeroGravitas 7y ago
      I think the point is that if avoiding, or outsmarting the main sales channel is required, then it probably explains why all the old, sick, busy, distracted people are struggling financially, as this is only one industry out to con them.
      • davidjnelson 7y ago
        Yes. These types of things can require mistakes to be made, and then self education once identified to prevent the same mistake in the future. Which is a lot to ask of someone running a family and working two jobs...
  • 7y ago
• jws 7y ago
  For rough numbers: The average cost of car ownership in the US is around $9000/yr and 15000 miles (24000 km). So, if an extra $25/day would ruin you, or paying $25/day to go 40 miles (65km) seems ridiculous to you, then you should not buy a car. This is of course an average. Where you live and what sort of car you choose matters a lot. Putting aside luxury, and new cars and focusing on just transportation… there is a tradeoff between average daily cost of ownership and reliability. If you can say "sorry, won't be to work on time, my car died" without jeopardizing your income then you can live the exciting life of the $500 car. My daughter's friends who do this get by on something like $4-5/day to pay for the car (excluding "mandatory" insurance, which is around $3/day, they pay that sometimes, or not depending on their work situation). Fix the small things, maybe with help from friends, sell it to the scrap yard and get another when the big repair comes.
  • deleted 7y ago
    [deleted]
  • shoo 7y ago
    more rough numbers: I live in an Australian city with decent public transport -- well, decent in patches. It costs about USD $3.3/day for public transport fees if you take the train every day all year. I don't need a car. Now I mostly commute to work on bike (15km return). It costs maybe USD $140/year for bike parts and repairs on a bad year, call it USD $0.4/day. I still use public transport a day or two per week, so that's maybe plus USD $1.2/day on average. On the other hand I pay a bit more in rent to live somewhere with easy bike and public transport options.
  • kartan 7y ago
    > then you should not buy a car How then they go to work? I understand that in the USA public transportation is quite lacking except for a few big cities.
    • jws 7y ago
      Picture a US old suburban area as a network of multi lane roads on something like 5 to 10 mile spacings. These roads will be lined with businesses. There will be some area of small shops on the road, some of strip centers. Maybe a big mall. Some office buildings. Behind these buildings it becomes residential. There will be bus service along these major arteries. So, choose to live on an artery near a bus stop, and that entire artery becomes available to you for employment without owning a car. It’s true, you can’t get to arbitrary residential addresses without long walks, but commerce is on the arteries. Try to avoid needing transfers to a different artery. That is a huge time sink. Newer suburbs, 20+ miles from city center, are different. They only have commerce at the intersection of arteries or specialized areas and this does not work for bus riding. This is all for fungible employees in fungible jobs. If you are a skilled professional in a suburban employment your pay will be high enough to have a car and live in the quieter areas off the arteries.
• geodel 7y ago
  If I do not have car it will increase my commute time at least 3 times. I may manage to come late to work due to flexible IT job but most people do not even have that option. Considering job situation in general in this country people have to commute wherever they get job. I feel this is just fantasy that all of us can live near public transit.