The private vehicle is an odd beast. It provides incredible convenience. It also causes or contributes to many of the ills in the world. But rather than tackle the environmental or health aspects of driving today, I’m going to outline my reasons why I believe the traditional logic of the financial independence community regarding cars is flawed in one key way.
What I do agree with
Most finance bloggers would agree that as far as private vehicles go, you’re better off if you can live without one. That much I agree with! Your wallet and your health (and the planet) will be better off if you can walk, bike, take a bus or a train. Sadly because I do shift work 25km from my house and all the roads to get there are dangerous for active transport users, I’m forced into my car 🙁
Where I diverge with the established wisdom
Most finance bloggers would also agree that the cheapest way to transport yourself in a private vehicle is to buy an old clunker and essentially drive it until it won’t go any more. Read just about any financial independence blog and somewhere in the archives is a post along those lines. There’s one key problem with this line of reasoning in my view: You can’t be financially independent if you’re dead.
I 100% see the money logic in buying the cheapest car you can and then reducing your depreciation expense by driving it for as long as possible. That is surely the cheapest way to go if you must drive. But the problem with cheap cars is they are often old cars. And the problem with old cars is they feature heavily in road fatality statistics. People who drive newer cars with better safety features (and who wear their seatbelt – make it click people!) are less likely to become one of those statistics.
Clearly some kind of compromise is necessary. Obviously if safety were the only concern, a massive, brand new SUV would be the best option. After all, a key strategy to surviving a crash is to have a bigger car than the other guy. This would also most likely be the most expensive car on the lot! Funnily enough it also seems to resemble the kinds of cars most people are buying these days (and no doubt going into huge debt at the same time).
What we did
In 2017, we bought a 2010 Honda Insight. It’s a hybrid car so gets about 5 litres per 100km in terms of petrol efficiency (don’t ask me what that is in mpg, we don’t do that here in kiwiland). That’s less than pretty much every non-hybrid car out there, so we’re saving big time on running costs. As it was seven years old when we bought it, we didn’t have to part with any limbs in order to fund it (we did extend our mortgage to take advantage of the low interest rate but made sure the extra $$$ wasn’t for the full term of the loan or we’d have lost that rate advantage in the long run. I should write more about this another time). Crucially, it’s a car with a five star safety rating, so we know that if our family were to ever be involved in an incident, we’d have a fighting chance of surviving it.
Obviously as technology improves, standards change. Our car that received a five star safety rating in 2010 probably wouldn’t get one today, what with all the improvements in technology such as assisted braking, dynamic cruise control etc. I guess what I’m trying to say in this post is find a compromise you’re comfortable with. If I’d followed the advice of many finance gurus I probably would have bought a car that cost half the price but would have crumpled in an accident with me, my wife and my kids inside it! If I’d only worried about safety I probably could have bought a car so expensive I’d have been better off just taking taxis to work.
So next time you’re in the market for a vehicle (and I hope you never need one), save as much money as you can. But make sure to save your life as well.
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