Driving

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Cost of driving

The IRS estimates that driving costs 55.5 cents per mile. AAA estimates a similar figure of 58.5 cents per mile.

These figures illustrate that driving is very expensive, and can also be used to make rational decisions about transportation options. For example, a USPS First Class letter stamp costs 45 cents, so sending a small object by post is cheaper than driving for any distance longer than about a 1 mile round trip. Round trips shorter than 1 mile can be easily made by foot or bike. So driving to make small deliveries is wasteful.

Not driving

Automobiles are expensive and difficult to maintain entirely yourself, so are best avoided.

Early Retirement Extreme 21-Day Makeover Day 7: Going car free

See: How to Live Well Without Owning a Car by Chris Balish.

Simple vehicles

One way of controlling the cost and complexity of motor vehicles is to use simpler ones. The following is a list of motor vehicle categories, organized from simplest to most complex:

  • mopeds or scooters less than 50cc (often exempt from licensing or insurance requirements)
  • single-cylinder motorcycles
  • multi-cylinder motorcycles
  • automobiles built before the advent of emissions controls (circa 1975)
  • automobiles built before the pervasive use of digital electronics (1990s)
  • modern cars with conventional engines
  • modern cars with hybrid engines

Within these categories, the absence of specific features may make vehicles simpler. For example, the following options are simpler than alternatives:

  • manual transmissions
  • diesel engines (much simpler ignition system)
  • manual windows
  • manual door locks
  • fixed (non-convertible) roof
  • single drive axle (instead of 4x4 or all-wheel drive)

Depreciation Avoidance

Depreciation is typically the most expensive part of owning a car, so it makes sense to focus on avoiding depreciation. Depreciation may be (approximately) defined as

depreciation cost = ((price to buy) - (price to sell)) / (length of service) .

(This definition ignores inflation and investment opportunity costs.)

So, to minimize depreciation, one should buy cars so as to either 1) have a low initial purchase price, 2) maintain a high resale value, and/or 3) have a very long length of service.

For comparison's sake, a typical consumer might purchase a new Ford Explorer XLT and sell it 5 years later, for an approximate depreciation of (32000-13000)/5 = $3,800/year.

Early Retirement Extreme Blog Saying "No" to a new car Car depreciation and maintenance

Beaters

A "beater" is a vehicle that is nearly worthless, yet still functions as basic transportation. A typical beater might cost $500 or less, has a functional propulsion system, many cosmetic defects, and several broken nonessential systems (e.g. stereo or air conditioner).

An inexpensive strategy is to buy a beater, drive it until an essential system finally breaks, and donate the car or sell it for scrap. If a $500 beater runs for a year and then becomes worthless, it experiences $500/year depreciation. This strategy works by minimizing the initial purchase price.

A skilled mechanic might be able to extend a beater's life for an even lower depreciation rate. Some people maintain a fleet of mechanically-compatible beaters, which has a synergistic effect since parts, tools, and skill interchange directly.

See

Lifers

A "lifer" is a vehicle that an owner intends to keep and maintain for the rest of their life. Since the cost of the vehicle is amortized over several decades, the annual depreciation rate is low, even for an initially expensive vehicle. This strategy works by maximizing the length of service. If a lifer costs $20,000 and lasts 40 years, it experiences $500/year depreciation.

Maintaining a vehicle for a long time period is only possible when parts and knowhow for that vehicle remain available. So ideal vehicle models feature

  • manufactured in large quantities
  • have an enthusiast following
  • parts that interchange with other models
  • relatively easy to repair
  • manufacturer still in business

For a vehicle to remain appropriate throughout many phases of life, it should be robust and adaptable to many uses. Over the course of a lifetime, the vehicle may be called upon to commute to work, transport children, drive cross country, go on a vacation, pull a light trailer, drive off road, drive in foul weather, carry a large group, carry someone with mobility limitations, and so on. Unanticipated requirements may arise, so an ideal vehicle is a jack of all trades with excess capacity.

Examples of vehicles that meet these constraints are: Ford and Chevrolet pickup trucks, large BMW and Mercedes sedans, Jeeps, Subaru station wagons, Toyota Camry and HiLux/Tacoma and Honda Accord.

Classics

As explained in the ERE book, a classic vehicle tends to appreciate rather than depreciate. This strategy works by maximizing resale value. If a classic is purchased for $10,000, it might be later sold for approximately the same sum as the vehicle's inherent appreciation mitigates the depreciation due to added mileage. In this case depreciation is $0/year.

Examples of classic vehicles include: Vespa scooters, Harley Davidson motorcycles, BMW "M" models, air-cooled Volkswagens, American muscle cars, Nissan Z-cars, rotary-powered Mazdas, and others.

Enthusiast cars are collectibles, so appraising their value requires some domain knowledge. For example, Mustangs with a V8 engine maintain value much better than those with 6 or 4 cylinder engines. A 1974 model is more valuable than an otherwise-identical 1975 model since the '75 is subject to emissions regulation and the '74 is exempt. It's important to research this kind of lore before buying a classic.

See Also