LIKE MOST PEOPLE, owning a car is my second largest monthly expense, right after housing. But unlike a lot of people, I also strive to be a super-saver, loosely defined as folks who max out their retirement accounts each year. That means I’m constantly looking for ways to cut my transportation costs.
Four years ago, when I found myself needing to buy a car, I settled on a gently used Honda CRV. Even though it was nearly six years old when I purchased it, the car had just 32,000 miles on it. I knew Hondas had a reputation for being dependable and the CRV is among a handful of models known for making it to 200,000 miles without too many problems. For me, buying a used car was a no-brainer. Knowing new cars depreciate at a rapid rate—by some estimates losing as much as 60% of their value in the first five years—I decided a used vehicle was the wiser choice.
I paid cash for my car—and thereby avoided finance charges—by using the proceeds from an insurance settlement. At the time I purchased my car, I also invested $15,000 of my own money in a conservatively invested mutual fund. It’s an account I’ve designated to be used for another car purchase in the future, once my CRV is finally destined for the junkyard. After just four years, that account has grown to more than $18,000, easily keeping pace with inflation and rising vehicle costs.
To maximize the life of my car, I make sure to service it on a regular basis, taking it in for scheduled oil changes and other routine maintenance a couple of times a year. I also thoroughly clean it, inside and out, every few weeks. These steps not only keep it running smoothly, but also help me maintain a sense of pride in ownership.
I make sure both my car and me are adequately insured, to protect myself financially from a lawsuit. Maintaining a clean driving record and opting for high deductibles keep my insurance rates reasonable. I also purchase an annual AAA membership to provide me with peace of mind.
I buy most of my gasoline from Costco, since it almost always has the cheapest prices. I also use a credit card that provides me with 4% cashback on gas purchases. Occasionally, I’ll fill up at a grocery-store chain, using the multiple 10-cent-per-gallon discounts I’ve earned from purchasing groceries.
Of course, living in a city means I could opt for public transportation, rather than car ownership. But for me, the cost-benefit analysis heavily favors the car. If I relied on the local bus and train system, my daily commute would take 77 minutes each way. By car, it’s usually less than 30 minutes. And because my job requires me to run frequent errands, car ownership is pretty much a necessity.
My no-frills, no-nonsense approach to car ownership is in line with my other financial values. By keeping transportation costs at a reasonable level, I’m able to maximize my retirement savings—and make my super-saver dreams a reality.