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DRIVE A BEATER. That’s what my coworker Neil admonished us to do. He explained that this was a key strategy on the path to financial freedom. Neil, as you might recall from one of my earlier articles, was the colleague who warned about the perils of funding a 401(k) plan.
All you really need is something to get you from point A to point B, Neil said, and consistently spending money on expensive cars simply meant you’d be forced to stay in the workforce longer. Also, when you drive a beater, you can drop collision insurance, and who cares if you pick up a few more scratches and dings?
While not consciously following Neil’s admonition, I’ve found his advice resonates with me. I also had my own corollary to Neil’s “drive a beater” mantra, which was “run a car into the ground.” I’ve owned 11 vehicles over nearly 40 years, shelling out a total of $135,000 to purchase them. Not all were beaters, but five of them averaged under $1,000 a year to drive if you consider only purchase price.
My all-time beater champion was a 1994 Ford Tempo that I purchased from my boss for $1,000 in 2014. It had been his mother’s car and had clocked 120,000 miles when I got it. It wasn’t pretty to look at on the outside and was in even worse shape on the inside. Still, it did have a strong air-conditioning system and a good radio.
I bought it for my son, so he could have a car to drive to high school and get around on his own. After he graduated from high school, he was too embarrassed to drive it any longer and, in any case, he went away to college.
Wanting to wring every dollar I could from my investment, I started driving the Tempo to work. Let’s just say it stood out in the parking lot. Even the plant manager teased me about it, to which I responded, “Maybe if you paid me more, I could afford a better car.” Needless to say, that suggestion went unheeded.
I drove the Tempo to work for more than two years, enduring ridicule but enjoying the crisp AC and the exceptional radio. One autumn day, I started feeling ill at work and decided to go home a little early. While ascending the first hill beyond the plant, I heard a weird noise and the car lost all power. The transmission had failed catastrophically. A sympathetic young maintenance technician came to my rescue and, using gravity, guided the car down the hill to a parking lot close to the plant. A week later, it was in the junkyard.
I took a different approach with another vehicle. In December 1990, while getting maintenance done on my 1985 Accord hatchback at the Honda dealership, I spotted a leftover 1990 Accord coupe with an enticingly low price. I didn’t really need a new car, but I let the salesman make his pitch to me.
In January 1991, the Gulf War began, and car sales ground to a near standstill. The salesman kept calling me about the coupe. Late in January, I made him my final lowball offer, which he accepted. I ended up driving that car for almost 15 years, racking up 185,000 miles. When the brakes started behaving erratically, I decided I’d achieved my goal of running it into the ground and traded it in for another vehicle.
At this stage in my life, I’m done with beaters, but I still like to buy used. After my two-year-old son used a stone to innocently engrave artwork into several panels of our brand new 1999 Honda Odyssey minivan, new vehicles somehow lost their appeal. As Neil might have pointed out, that inevitable first scratch or ding isn’t an issue for a used vehicle.
Used vehicles have the advantage of a reliability track record. I make use of the extensive data available from Consumer Reports to identify acceptable options. My latest vehicle is a 2017 Chevy Equinox, which I would never have considered except for its excellent reliability rating. I’m enjoying it more than any other vehicle in recent memory. Another change that age has brought: I no longer feel the obligation to drive the car into the ground. If I can get 10 years out of it, I’ll be happy.
Ken Cutler lives in Lancaster, Pennsylvania, and has worked as an electrical engineer in the nuclear power industry for more than 38 years. There, he has become an informal financial advisor for many of his coworkers. Ken is involved in his church, enjoys traveling and hiking with his wife Lisa, is a shortwave radio hobbyist, and has a soft spot for cats and dogs. Check out Ken’s earlier articles.
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I just bought a 2023 SUV. I wanted the latest safety features as I’m getting older and my driving isn’t what it used to be. My SUV signals me using visual and audio cues when my attention wanders on the road. I’d prefer a self-driving vehicle but we’re not there yet.
The trick is to find a cool but unloved used car. Ask a mechanic. People love to hate on GM, but they have so many cars from the mid-90s to 2008 that used the 3800 V-6 that gets 21mpg around town and 29-30 on the highway. They drive like nothing else. They are tanks and will go to 400k miles with just basic maintenance. I’ve got 2, and one is a late 90’s Riviera that is near a classic that I got on eBay this summer for 3k. It turns heads and it is practical too.
Good discussion. My first three cars I owned cost me a total of $1,200. I just discovered the CVT transmission in my 2012 Nissan Murano I purchased used from my parents two years ago is failing. Estimate is $7,775 to replace with a factory rebuilt one. I have discovered, as others have pointed out, used car prices are historically high right now, almost reverse depreciation. Mine has 126,000 miles, but I cannot get a 3- or 4-year-old low mileage similar car for less than $30,000. Looking at depreciation cost estimates for a newer vehicle, it probably makes more sense to fix mine and keep driving it. My parents kept it in a garage in Florida, so it is extremely clean and has no rust. Plus, I really love driving it.
Wife and I have owned 7 cars in our life, 4 were new 3 used. the 3 used cars 2 had problems: a 83 Corolla I needed 2 transmissions, and a 85 VW Jetta had rain water getting in. Our 89 Corolla had no issues. My 4 new cars were a: Chevy blazer 76, many issues ,rust being the big one. 83 Mazda RX7 no problems but stolen twice. 2008 Camry no issues, 2009 Toyota Avalon(best one yet) ,no issues still have it. 1999 Honda Odyssey. no big issues, but 6 minor recalls on the 1st year of this new model. So i don’t mind buying new and keeping it until it dies. We still haave the Honda 1999 and 2009, Both have 100,000 miles and in retirement we only do 1000 miles a year so these 2 cars could last a lifetime. Both the cars we still have were $27,000 so the cost 1000 and 2000 a year (and dropping) purchase price divided by the years we have them.
At the urging of my wife in 2020 I bought what I figure is my last (at 62 yo) pickup, a new 4 door 4 WD Tacoma with all the bells and whistles (which has already saved me from a few driving mistakes). Why? I this is only the fourth truck I have owned since I graduated from graduate school in 1983. First was a brand new 2 WD standard cab Nissan, owned it till it rusted out. Then bought a 3 yo Nissan extended cab 2WD (needed extra space for work), kept till it rusted out. Then bought a new 2002 Tacoma standard cab, 2WD, no power anything for $13,000 (most I had ever paid to that date) for my vehicle. Owned it until I bought the most recent truck, so it was 18 years old (sold it my brother for $3,000 and he’s still driving it). After paying and estimated $30,000 for transporting me for 38 years I agreed it was time to treat myself. Besides we could easily to pay cash for the last one.
My advice buy either new or old, but keep it till it dies!
good idea.
My first car was a 1970 Maverick. $500, drove it for 6 years or so and sold it for the same amount. Great first car, with a 6 cyl auto, wasn’t going anywhere fast. I recently purchase a new car and while I love old card, the safety tech is impressive and likley to save me from some accidents. The used car market really us upside down. New is a better deal right now, the prices they want for older, high mileage cares is insane. Because of the millions of cars that were not manufactured and sold during COVID, this defect in cars will take a long time to play out of the system (kind of like the housing shortage due to low home building rates during the past decade).
I love, love, love buying used cars as cheaply as possible and driving them into the ground. I find that lots of people are scared of vehicles over the supposedly “magical” 100,000 mile mark and you can find some great deals on vehicles that should regularly make it to 250,000 before any major repairs are needed. Also, the older the vehicle, the better the deal. I often find two of the same model car, one a year or two older but with lower miles cheaper than the newer version with more miles. (In other words, most people will pay a premium for a newer model car even if the mileage is more.)
Our family just bought a cheap 10-year old vehicle that should last us for many years to come.
Ken, you are too funny! Waking up this Saturday am with a big laugh was better than a first cup of coffee. My daughter is still driving the 2008 Chevy Cobalt that was purchased new by me and was perfect when I was a visiting nurse in Onondaga County, NY, and all five boroughs of NYC. This great, now banged-up car with 182,000 miles, transports her from her home in Brooklyn to her job, also in Brooklyn, parking on the street both places. It’s so small she can fit in all the spots that the SUVs have to pass up. She plans to upgrade when it eventually dies but I’m sending her your article to consider another beater. 😂
Linda, thank you for your comments! I’m still trying to “read the room” of Humble Dollar readers…not always sure how the humor goes over. Of course, I can’t help myself even if I suspect I’m the only one laughing. Sounds like the Cobalt has been a real win. Hopefully your daughter can get a few more years out of it. The best beater is the usually the one you already own.
In the state of today’s economy, buying a beater, or even a used car doesn’t necessarily make financial sense. It’s like going to the grocery store and buying the smaller bottle of ketchup because it’s cheaper, even though you are paying more per ounce. New car prices are within 10% of used cars up to 3 years old these days. Try to buy a 10-year-old car and you’ll likely pay half of what the original owner paid for it with some models close to 100%. If you consider the value of a car to be cost per mile driven and you need a car today, that new car makes the most sense when you consider depreciation, cost of maintenance and repairs, insurance, and reliability.
All new cars come with a 3 to 7 year warranty and the reliability of any new car far exceeds cars from just 10 years ago. Maintenance schedules have been stretched out in the new cars and un-worn mechanical components will make your tires last longer. This doesn’t even take into account the safety of the newest cars vs. older models. To build on that, insurance is actually cheaper in some states for the new car. I pay more for my 2008 Ram than for my 2017 Ram because of the safety features (without collision). If you are not paying cash, you’ll get a lower interest rate on a new car and with many credit unions offering great low rate deals, I’d argue it makes better financial sense to borrow and keep your money invested, especially since that $1000 beater will cost you $10k today.
If you need another car now, buy a lower equipped new car. If the state of the industry is the same in three years, you can get another new one before you have to replace the tires or the battery. If things return to the way they used to be pre-pandemic, then you’ll have that used car you can drive for many years and still pay less per mile driven while having enjoyed those worry-free years and all the new technology and safety features.
I have to disagree. We just bought a very reliable 10-year old vehicle for $5500 and it has a lot of life left. (Only at around 100,000 miles and should last for another 100,000+ easily.)
I do agree that the last couple years have been bad for all car prices (new and used) but the market is correcting itself now and should be fully healed in the next 6-12 months.
Also, the point about not worrying so much about dings and dents is incredibly freeing.
I love Carmax for used cars. You get 30 days to return it if you want.. that is plenty of time to get it checked by an independent mechanic. Which our buddy Clark Howard recommends. It cost $130 for me to have that done locally on my “new” 2019 convertible. Thank goodness she got a clean bill of health, it would have broken my heart to return her!
Amen to Ken. Since the start of COVID and working from home (WFH), we decided not to purchase any new car. Our last 2 cars are pre-owned (read: used) and I felt so free. No longer to worry who’s going to ding my car doors or key my car’s body (yes, a person in my household wears that red cap). It is true that I yearn for that white Tesla or the red BMW down the street. But the feeling of care free suppresses that itch minutes later.
My last Acura MDX hit 215000 miles. We popped a can of IPA to celebrate and donated it to our favorite charity the subsequent Christmas. My current car is a 2007 Lexus !
Thanks for reading and commenting. Not having to worry about ding-bats is quite freeing!
I absolutely love this article and discussion. My affinity for used cars has most definitely contributed to our financial freedom. At this point, my 2001 Toyota Avalon with 238,000 miles is a source of great pride. My wife drives a 2015 Cadillac. I drive the beater.
But my best story is about the Pontiac Phoenix I bought many years ago for $600. I sold it ten years later.
For $600.
Steve: The Phoenix story is a major win. I salute you, sir.
Your comment – “Also, when you drive a beater, you can drop collision insurance”
Over five years ago a pickup truck with a trailer lost control and jackknifed in front of me and its load of mulch spilled on to the interstate. I hit my brakes but the mulch on the roadway resulted in poor traction and the beater I was driving slid into the trailer. The claims representative for insurance company for the other driver denied my claim and told me to sue them if I disagreed clearly thinking that no one in their right mind would sue over beater with a current Kelly Blue Book value of under $2K. I sued in small claims court.
I had collision only insurance.
Here is what I learned. When you only have collision insurance and you sue an insurance company they may counter-sue you. My insurance company provided me with an attorney to defend me against the counter suit but I was on my own for my claim against them. Enter my hiring a second attorney to prosecute my claim.
The small claims court in my county is not a court of record. Claims are limited to under $25K. Our small claims court assigns a hearing date but not a specific time and, in my case, all uncontested and default matters are heard first before contested cases. I would guess there were more than one hundred uncontested and default matters prior to the one contested hearing, mine. The judge works fast.
In small claims there is no advance discovery and the bench judge makes the decisions on allowable evidence. I had pictures and both parties were allowed to speak and answer questions. Both of my attorneys did their jobs well as did the insurance company attorney. We all had a delightfully long day in court which ended with the judge deciding that there was insufficient evidence to rule in favor of either party. I decided not to exercise my right to appeal to a court of record and neither did the other party.
My suggestion is that if you carry liability only insurance and have an accident is to pass on further legal action over low dollar tangible property damage if the other party or their insurance company refuses to pay.
The local NPR station received a donation of my wrecked car which was towed to a junk yard which sold usable parts. My neighbors were happy the car was gone from my driveway. I got a good civics and economic lesson and the radio station got a small, very small, donation.
I have bought my last several cars new. (I won’t go into my first car, which was very definitely used, and died on the guy who bought it from me.) I sold one to my mechanically-inclined ex-husband when it starting needing work. The next, one of the last Mazda MX-6s built (I loved MX-6 turbos), was totalled in an accident (NOT my fault). The replacement Camry Hybrid is now sixteen years old, but has only done 67,000 miles. I just had to have the AC fixed (expensive), along with replacing a tire pressure sensor for the third time, but when I asked the mechanic whether it was time for a new car she looked quite shocked at the idea. Still, next year I will start looking seriously at plug-in hybrid sedans, in the expectation that whatever I buy will be my last car.
In this country if you drive old cars you can become very rich. I love old cars, but probably more, the people who drive them. But for me about 10 years is the max. I just get too darn sick of the old girl after a decade.
Great story, and a little bit of a redemption arc for Neil. LOL.
Thanks Ben. Agree Neil comes off a bit better with this advice, especially considering his target audience of young engineers who were prone to spend their excess cash on fancy cars rather than looking toward the future.
I just bought a new car for the first time in 40 years. A 2023 Toyota Venza hybrid SUV — very cool car.
Buying new has never made sense to me, but today’s used-car market is bizarre. Due to the unavailability of new-car inventory — the microchip shortage has dramatically slowed manufacturing and delivery — we found 2020 models with 60K miles going for virtually the same price as the their brand-new 2023 counterparts.
And the older the car, the more warped the pricing. “Beaters” are solid gold. I actually took advantage of that by selling my 2005 camper van for 2/3 of what I paid for it new, and used that startling windfall to buy the Venza.
Sometimes you just have to let market forces dictate your decisions.
If your saving and investing works out, you might be turn out to be well able to buy an expensive car. After all, you can’t take it with you, and the tax rate for estates starts at 40%
I’ve also saved a bunch driving cars for a long time. Two additional thoughts I’d add: First, these days with the availability of drive sharing services such as Uber & Lyft the risk of getting stranded driving an old car (at least around town) is greatly mitigated by the availability of Uber & Lyft, mitigating the impact of “getting stranded” concerns of driving an older car. Second, while I don’t have any statistics I suspect that 2 very frequent reasons for getting stranded is either a flat tire or dead battery. Drive-flat tires and changing your battery every 3 years (especially here in the hot southwest) will greatly reduce the likelihood of these 2 issues, and both these mitigations work equally well on older cars as on new cars.
I bought three used cars in my life. In one case the front wheel flew off at 50 mph, in the other two the engines blew up, one while driving down Interstate 95. I think I will stick with all new. The last new car we bought in 2020 came with free maintenance service for life.
Just this week my son’s 2015 CR-V broke down twice (engine) on I-95, once before and once after being repaired by AAA. Initial breakdown was Monday and we had a 9 hour ordeal on Tuesday. It’s still in Honda shop. I have not had such bad experiences with used cars as you but I think you have the right idea, especially at your stage of life.
I can’t kill my ’93 Volvo 240 wagon even if I had to. And based on the purchase price I’m at about $410/year. A better ROI than the S&P 500!
Those engines have a non-interferince timing belt, so when the timing belt breaks you just pull the radiador fan and a few plastic covers and you replace it. Easy peazy.. owned 4 of those 240 tanks.. all 3 of my kids learned to drive and had a Volvo 240 in high school…
When my boys were in high school, one of the other dads on the rowing team bought his son a used Volvo. When a couple dads kidded him about buying a “fancy” car for his son, he replied that we make our kids were helmets when batting or riding bikes, and worry about their safety all the time. Driving is by far the most dangerous thing they do, especially a 16 year old. He said – “why wouldn’t I buy him the safest car I can afford?”. I never forgot that. The top two criteria I look for in a car are safety and reliability. Any thing after that is gravy.
That’s impressive. My ’94 Tempo cost per year was $333, but that was only over a three year time period.
Exactly – drive a beater.
https://humbledollar.com/2022/01/driving-lessons/
John, thanks for reading and including the link to your article. Your seven key lessons at the end are excellent and a great complement to my more story-oriented article. I recommend readers check out what you wrote.
Just before we married in 1999, I paid $15,300 cash for a 1998 Chevy Lumina for my soon-to-be bride. We owned it for 22 years, it’s last service taking me to and from work. It was definitely a parking lot standout—the opposite end of the spectrum from the Bentley driven by the physician next door. The only major repair was a new transmission. I gave it to a friend to sell and he surprised me by getting $2,000. I was so pleased I told him to keep half the money.
That’s an impressive life for the ’98 Lumina.