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THIS PAST YEAR marked my 50th anniversary of driving. Over that time, our family has owned 19 cars and driven them roughly 1.9 million miles. While latte purchases frequently evoke financial debate, cars seem less discussed, despite being Americans’ second-largest expenditure after housing. The purchase, ownership, maintenance and sale of cars can all get pretty complicated.
Cars are considered a depreciating asset, but not always. My first car was a 1967 Mercury Comet, which I bought for $400 in 1973. I sold it two years—and 15,000 miles—later for $400. While reliable, the car had a dodgy transmission. I said a silent “thanks” for every successful gear shift.
My second car was a hot, three-speed 1971 AMC Javelin, which I bought for $1,200 in 1975. It had a whopping 145 horsepower, which is less than today’s base model Honda Civic. I had to MacGyver a coat hanger to tether the exhaust pipe, use hose clamps and a split Coke can to patch holes in the exhaust, and spray starter-fluid in cold weather. As a student, I just couldn’t afford the $200 to repair the exhaust or $40 for the carburetor.
I owned that Javelin for 11 years and about 130,000 miles. Once I got a job after college, I fixed the exhaust system and carburetor. This car taught me the benefits of a buy-and-hold approach to car ownership, which we’ve refined over the subsequent 45 years.
In midlife, two events abruptly cut short our normal habit of owning cars for lengthy periods. In 1988, our house burned down and took with it two station wagons—a 1981 Pontiac and 1985 Ford. Then, in 2001, we were transferred overseas and had to quickly unload our three station wagons—a 1988 Volvo, 1992 BMW and 1997 Volvo.
Having three cars for two drivers may sound excessive. Our work commutes totaled 190 miles per day, however, so we were racking up nearly 80,000 miles a year. These three cars eventually accumulated more than 400,000 miles between them.
Having a spare vehicle bailed us out of a jam many times. Remember, these were the days when there was no working from home. Employees were required to show up every day on time, snowstorm or not. Our ownership philosophy evolved to owning three high-mileage, highly depreciated beaters to ensure that we always had two running cars. We still use this approach.
Since returning from overseas, we’ve owned 10 cars over 16 years, including two for the kids. Nine of these cars were bought used, typically at the three-year mark with 35,000 miles. We paid 30% to 70% of the car’s original price, thanks to the steep depreciation on new cars. Fortunately, there hasn’t been a lemon in the bunch.
We’ve turned over four of these nine cars, after averaging about 135,000 miles and eight years of ownership for each. We still own three of the nine cars, and gave two to the kids. On average, our cars are 11 years old and have 70,000 miles on them. These mileages are on the low side for us, as we’ve been driving far less in retirement. For six months, we were down to just two cars, but then our mechanic offered his older car at a bargain price that I just couldn’t pass up.
Our children still have their two cars. They average six years old with 100,000 miles. Our habit of holding onto cars may have rubbed off on the next generation.
One of our few new car purchases occurred when my wife returned to the U.S. several months before me. She had to promptly buy a family vehicle for herself and the kids. A new Honda minivan seemed an expedient option, as tire-kicking was out of the question. It became the family vehicle of choice for the next 12 years and 190,000 miles.
A 1988 Mazda 626 was the all-time mileage winner, with 303,000 miles clocked over eight years. We bought it new after our fire, and it required only two significant repairs. A 2006 Jeep Liberty was the cost-efficient champion. We paid $9,000 for it in 2010 and sold it for $3,000 in 2020, after driving it 120,000 miles. It never needed a major repair.
Over the years, I’ve learned some key lessons from our buy-cheap-and-hold car ownership strategy, including these seven:
John Yeigh is an author, speaker, coach, youth sports advocate and businessman with more than 30 years of publishing experience in the sports, finance and scientific fields. His book “Win the Youth Sports Game” was published in 2021. John retired in 2017 from the oil industry, where he negotiated financial details for multi-billion-dollar international projects. Check out his earlier articles.
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A similar strategy has worked well for me, although buying with 70-150k miles means paying significantly less, as the depreciation continues year by year.
Sold my last POS used car in 1975 and haven’t looked back, thank you very much. I guess some folks really have no idea how lucky they are when they go for years with just “oil change expense” on a used car – ha!
We generally buy at around 100K miles and drive until the wheels fall off or is in a major accident. It has worked out well so far, although as others have mentioned, the dynamic may change in the coming years with electrics. (Not sure about battery life and whatnot…)
You mentioned about having a minimum threshold of 11 years and 150,000 miles. Does this rule depend on make and model?
These days there are tax credits for brand new EV, and PHEV. Wouldn’t it make more sense to buy brand new EV, or PHEV?
If maintained, I don’t believe the model matters – we’ve gotten 150,000+ miles out of an AMC, GM, Volvo, 3 BMWs, Jeep, Mazda, Honda, Audi and soon a Suburu.
Per my comment below, our kids live 500 miles away in rural areas, so we still appreciate the range of gasoline cars. We also feel older cars are fundamentally cheaper than newer options.
I really enjoyed this article and the comments section. I would encourage more articles on HD on optimizing spending…
My wife and I also usually buy used and drive our cars until safety concerns or the cost of repair does not make economic sense to me. I have performed the light maintenance, oil changes and brake pad changes, but I have given up going into the engine. I have not found a good local mechanic and will pay the dealer for any repair that is safety related. I have been very happy with the local body shop for the usual dings and dents that bother me. I have found having the extra car worked well for us after all the kids left home as the insurance seemed too expensive when a under 25 child is a primary driver. I have twice gifted a old car to our kids when they leave the nest and in my state that family gift transfer is not subject to sales tax. My youngest was gifted an old van and is called often to help when friends are moving locally.
On cars that have have completely died I have three times gifted those cars to my local PBS station. They come and tow the car away without cost to me after I legally transfer title, they auction the car and if the proceeds exceed $500 I would receive an appropriate detailed acknowledgement of the amount but all of my car gifts have gone at auction for less. I no longer itemize on my return so it really does not matter tax wise to us, seems to me to be a win-win for the charity and me. I like knowing that the car I disposed of has had the title properly transfered and that my owner liability for that car has ended and I can prove it.
Well-written, informative article. Thanks!
My most fun experience with a used car was a 1970’s Plymouth Valiant station wagon. I told the dealer what I wanted and the worse shape the better. A few days later they had one with major rust in all 4 wheel wells, asking $400. I said $250 and they couldn’t get rid of that car fast enough. I drove it for about 8 years until it overheated and started leaking oil at a rapid rate – about a quart every 100 miles. Even so, it ran for another year before the engine gave out. Called the junkyard and they hauled it away and paid me $50!
$200 over eight years crushes all but my first car which was free for two years use. My 303,000 mile Mazda was the only oil burner for its last 100,000 miles – I used to fill up the oil and check the gas. At 303,000 miles, it amazingly still had the original clutch…..which was starting to slip.
Nice Article
I have a bet with my bother who is 58 and I am 57 on who can keep their 19-year-old vehicle the longest. The bet is for one dollar and I do not like losing to my brother. He has a 2003 Suburban, I have a 2003 Honda Accord with 200k miles on it. I will win that dollar from my brother no matter how long it takes. Total maintenance costs last year beyond standard oil/fluid changes. $25 dollars
Instead of wasting money on cars we focus on travel and experiences
I’d never bet against a Honda or Toyota for longevity, even though I prefer driving some other cars. Likewise, we often have a couple years running with only an oil change cost, and then some more significant repair will occur. In all 19 cars, we’ve only had one AC compressor go and never any transmission issues.
I’m hopeful that electric cars will dramatically reduce the expense and hassle of car maintenance. Unfortunately, I suspect cars may require subscriptions and hefty tech upgrades in the future.
The frugal will always find ways of saving money on transportation, but I’m not optimistic that car manufacturers and dealers will stop fleecing the average consumer.
One of my best tips to reduce car expenses is to live as close to work as you feasibly can and to use public transit when it’s available. Yes, you’ll almost certainly pay more for housing, but this added expense may be offset by time and money saved on commuting. Of course, with the housing crisis in the US, living in urban centers with robust job markets is becoming less financially attainable.
Both of our kids live 500 miles away in rural areas, so EV’s are not yet a viable option for us. EV’s definitely lower maintenance costs, but just like gasoline cars, they have their own environmental challenges. Like you say, living close and reduced mileage is the best overall outcome if it can be managed.
Great piece, John. We’ve followed the same buy-and-hold strategy here for most of ours too since the 70s.
You may want to re-consider your EV suitability answer. We’ve driven ours about 475 miles each way to Montana from Seattle many times, in a Tesla Model Y or a Tesla Model 3. So much fun to drive.
Limited charging stations in rural areas where my kids live 500 miles away, and plenty of the power is coal based. I’m sure Tesla’s are way more fun to drive than my older cars, but I’d bet my beaters are lower cost.
John, thanks for an interesting article. As for keeping 3 cars, I’m wondering about additional insurance cost. Since the two of you are driving the same amount whether 2 cars or 3, logically your premiums shouldn’t go up much. But I doubt the insurance companies see it that way. What’s been your experience?
As a former actuary in an insurance company (my first career many years ago ), I’m not sure I understand your concern about three cars with two drivers. Our bigger concern was, for example, a one car household with three or more drivers. That car was likely being driven almost constantly. Today insurers are able to track mileage by downloading DMV records or with other technology to calculate rates and discounts accordingly (along with other factors)
Andrew – We ‘currently’ live in a high insurance cost state and the added insurance is $500/year for the third beater car which ensures always having two operational. This insurance will go down lots soon….. We also have loaned our spare to friends and local Naval Academy midshipmen whom we sponsor. The spare car has also enabled triage for airport dropoffs and ensures there is always a visible car in the driveway even when my wife and I are both away. We feel the $500/year (1.5 car payments or two weeks emergency rental) is worth the flexibility and reliability given that we are driving cheap old beaters.
I would not be at all surprised if many of the HD readers employ a similar pragmatic approach. Our wrinkle to this “formula” is that we’ve not formally purchased used cars. Our extended family is large enough that there are almost always folks that insist on buying new and selling early. They form our own personal “used car lot”, and that has accounted for more than half of the cars we’ve owned in the last 40+ years. The other half we’ve bought new and, as John mentions, investing in maintenance typically pays for itself. Our challenge in the next few years is managing the transition to electric vehicles. We’ve leased an electric in the past with very good results for use as an “urban commuter” and want to see if this upcoming generation of EVs will extend that envelope even more.
I am sure there are many HD readers with cars that can crush our average of 11+ years, 150-200K mileage thresholds. I’m looking for both the daily-driver age and mileage champs………..
Love the approach. We have five vehicles for four of us. Three Saab’s averaging 150,000 miles; a 2008 Audi Q7 with 200,000 miles and a 2002 BMW M5 with 195,000 miles. I do some of my own maintenance and have a great Indy mechanic to handle the rest. Just need to anticipate future part failures by keeping detailed records.
The repair/maintenance per year is $3-4K. The depreciation cost is 0. The excise tax and insurance (except for the M5) is very low.
Kirk in Boston
Yep – exactly same approach.I’ve generally exited by the 200K mile mark to avoid major refresh repair costs and assure getting residual rather than scrap value. I probably could have squeezed out a bit more juice as all our cars were fully operational when sold onward. One buyer pinged us months later saying the car was still going strong.