Buying a New(ish) Car, Saving $500,000

Some months ago, the driver’s side window of our minivan stopped working and wouldn’t go down.  Next, as it got warmer, we noticed that the air conditioning wasn’t able to do much to cool the air if was warmer than 75° outside.  And there was that self-inflicted damage to the car’s front grill panel, which occurred years ago, that I had fixed (literally) with duct tape and coat-hanger wire.

Then, a few days ago, came the straw that broke the minivan’s back, so to speak: the annual safety inspection.  The news wasn’t good.  The car wouldn’t pass inspection with a non-functioning window.  The inspection also showed that the headlight lenses were fogged up with road-wear scratches and needed restoration and one headlight had water inside the housing assembly.  All in all, it looked as if the car needed at least at least several hundred dollars worth of work to make it pass inspection (the window, the headlights) and more hundreds of dollars to make it comfortable (the air conditioning) and hundreds more to make it less of an embarrassment to drive (the front end grill).  It was a 2004 model, so it seemed reasonable to use it for a trade-in and buy another car.

Given that our time with this particular 2004 Honda Odyssey (“Redrock Pearl” a.k.a. “Burgundy” with “Ivory” interior, evidently) has come to an end, it seems a good time to get an idea what it cost.

car_invoiceWe bought our 2004 Honda Odyssey for $16,551 on March 9, 2010.  That price included a 2-year warranty (which was probably not worth what we paid for it).  It was a remarkably dependable car.  We had only two completely unexpected repair expenses, which totaled about $1,700.  (Of course, we did have the usual driving and maintenance expenses for gasoline, oil, coolant, transmission fluid, brake jobs, a couple batteries, and a serpentine belt.  But those would have been more-or-less the same regardless of which minivan we purchased.)  Let’s say that the cost of the car itself was about $18,250.

We drove the car regularly from March 2010 to May 2017, over 86 months total.

Considering the cost of the car and the time we used it, we spent about $210 per month or about $7 per day.  (Again: this is only the cost of the car itself plus major repairs, and not the total cost of driving, which would have to include operating expenses.)  Incidentally, the odometer was showing about 60,000 miles when we bought it and had reached 180,000 when we traded it in, so the cost of the car for 120,000 miles of driving was about 15¢ per mile.

Looking back, I am pleased that we purchased a used — ahem, “pre-owned” — car.  Had we purchased a new car in 2010, it would have cost about twice as much, meaning we would have spent about $400 each month on just the cost of the car itself.  In other words, over the past 7 years, we’ve been able to save and invest roughly $15,000 (which is, coincidentally, approximately the cost of the car itself.)

This method of saving money — buying used cars, paying for them as fast as possible, keeping them for a long time — allows us to save and invest over $2,000 each and every year.  This can easily amount to perhaps $100,000 ($2,000 per year for 50 years) worth of investments over a lifetime.  An extra $2,000 per year, with compounded earnings, for 50 years might grow to $500,000 or more.  A half-million dollars for driving used cars?  Sounds good to me!  Remember: In order to have at least $1,000,000 in your retirement account by the time you need it, you need to save several hundred dollars each month (more or less, depending on when you start investing and the returns you get on your retirement investments).  The savings you get from buying used cars can go a long way towards the amount you need to save each month.

We were so happy with our old car — the Honda Odyssey — that we decided to get another one.  And guess what?  It’s the new car that we could have bought 7 years ago!  Yep, we now own a 2010 Honda Odyssey that will probably be saving us money for the next 7 years.

Advertisements

Removal Salt, Avoid Rust

In much of North America the last snow of the winter usually occurs sometime in February or March, which is also the time of the last road salting.  Once the salt is gone — and it’s good to wait until there’s been a heavy rain that gives the roads a good rinsing — you will want to get the road salt off your car.  You could go to the local car wash and spend money … or you could avoid convenience and save money by doing it yourself.  I’ve always gotten good results with a bucket of warm water mixed with a little dish-washing detergent.  Apply with a large sponge, scrub, dump the remaining detergent-water mix over the car, and rinse well.

auto_rustHowever, removing the road salt from your car’s unpainted undercarriage is even more critical than washing the car’s body.  It’s the metal parts under the car that can be damaged by salt’s corrosive powers.  The painted body can usually withstand contact with road salt pretty well.  Also, the top of the car gets rinsed by the rain.  The underside of the car isn’t exposed to rain.  Most people know this, which is why commercial car washes offer an “undercarriage wash” and why they do such a good business after the end of the snowy season.

But you don’t need to pay $$$ (not to mention, wait in a long line) to give your car’s undercarriage a good washing.  You can just use a garden hose and a sprinkler.  When I wash the car for the first time after the last of the winter snow, I attach a lawn sprinkler to the garden hose, turn on the water, and use the hose to slowly push the sprinkler back and forth under the car.  It’s a good idea to avoid spraying too much water into the engine compartment.  You might need to get down on your hands and knees to make sure the water is directed at the wheels and suspension.  There are actually special tools that attach to a hose to perform the undercarriage washing.  Some clever people have made their own.  In my honest opinion, it seems that a lawn sprinkler works just as well. The whole point is to get the salt off your car, and because salt is water-soluble, all you really need to do is get water into contact with the underside of the car.

It takes a little time, but … as usual, avoiding convenience means you’re paying yourself instead of paying someone else.

(However, if you search the internet you can find lots of people saying that you need to use some kind of special salt-removing product to really do a good job.  All I can say is that the sprinkler method has worked for me, but as the saying goes, your mileage may vary.  What’s happened to me is anecdotal.  I haven’t owned enough cars to do a scientific study.  It might be that my car is less susceptible to rust or maybe I reduce my driving when roads are icy and salty.  (The second part is true.  I really do try to avoid driving when there’s ice and snow on the roads.)

Trusting Your Car to Turn Off the Headlights

c ar_parked_headlights_onAs far as I know, this opinion is unique to me, and I think there’s a good chance that some people might find it a little wacky.  But here goes:  Every time I see a driver get out of their car and walk away, leaving the headlights on, I think, “I could never do that“.

Yes, I guess it’s a little crazy.  These days most cars have some sort of electronic mechanism that automatically turns off the headlights a few minutes after the engine is turned off or the car is in park.  Sometimes I watch, and, sure enough, I see that’s what happens.

Bur suppose the lights don’t go off by themselves?  If that happens, the car’s owner might return to a car with a dead battery.  That’s a chance I don’t want to take.  Sure, the car lights go off by themselves more than 99% of the time … but there’s going to be that one time when it wasn’t a good idea to act as if you believe that no automotive component could ever fail!  Nothing in a car ever just stops working!

Besides the risk of the lights staying on and draining the battery, there are a few other things that come to mind.

Could leaving the headlights on mean that they will burn out sooner?  It stands to reason that any sort of headlight is only going to last so long, that is, some certain number of hours of “on” time.  If you burn your headlights an extra few minutes every time you start the car, they’re going to reach the end of their useful life sooner.

Also, using the headlights needlessly wastes gasoline.  The electricity in a (gasoline-powered internal-combustion-engine kind of) car’s battery doesn’t just come out of the air.  The electricity is generated by the car’s alternator, which is turned by the engine.  When it’s actually making electricity, it’s a little harder to turn, and therefore the engine uses a little more gasoline whenever the alternator needs to make electricity to charge the batter or operate the car’s electrical components.  Not only does burning the headlights for no reason waste gasoline, it also adds wear and tear on the alternator and battery, shortening their lives.