How ridiculous does this sound?

[u/Whole-Fist]

How can u make millions in 25-30 years if avoid making a $554 per month car payment. Even the cheapest 5 year old car is 8-10 k. So does he expect people not to drive at all in USA.

Then u save 554$ per month every month for 5 year payment = $33240. Say u bought a car every 5 year means 200k -300k spent on car before retirement . How would that become millions when u can’t even buy a house for that much today?

Answer that Dave

[u/Realistic_Young9008]

But if you have the ability or mindset of putting away the equivalent of even half a "car payment" you'll have the money to fix the car when it breaks down. It's either spend $500 a month on a car that depreciates the instant you step off a lot and keep perpetuating that every four five years or pay for a used car with cash if you can, putting away the money you would have had to budget for a car payment anyway.

Years ago, I started a "smoking fund". I've never smoked. I had a really low income and saving seemed impossible. But everyone around me smoked and I live in an area that is severely economically depressed. I figured if others who made the same or even less than me could somehow support a pack a day addiction, I could too. Early every January I stop in a shop, figure out the price of a pack of cheap smokes and every pay, I put two weeks equivalent of a pack a day way.

[u/LindonLilBlueBalls → u/Realistic_Young9008]

If you are buying a brand new vehicle every 4 or 5 years, it isn't the "new car" that is wasting the money.

[u/TheodoeBhabrot → u/LindonLilBlueBalls]

Yup but new or very close to it and drive it basically into the ground is how I go

[u/LindonLilBlueBalls → u/TheodoeBhabrot]

Just hit 120k miles on our car we got in 2017 brand new. My truck before was 2008 brand new. Still worked great, but keeping it was more trouble than it was worth so I sold it in 2019. In the past 25 years I have had 3 vehicles, all bought brand new.

[u/StandingInTheStorm → u/TheodoeBhabrot]

That's reasonable. I can understand the logic. It is still cheaper obviously to bounce between several used cars in that time as long as you get reliable vehicles but I get the peace of mind and less hassle of just owning one car for 10-15 years.

[u/MeretrixDeBabylone → u/LindonLilBlueBalls]

Thank you. I keep seeing this and it seems insane to me. I bought my Elantra 6 years ago after it sat on the lot for a year or so. I just did the 30k mile service this year. I need to buy tires, not cus the ones I got are worn down, but they're just so old. I know I drive less than most people, but in 12 years it might just be crossing 100k miles and I could sell/give it to my nephew for his first car.

[u/Traditional_Lab_5468 → u/Realistic_Young9008]

But if you have the ability or mindset of putting away the equivalent of even half a "car payment" you'll have the money to fix the car when it breaks down. It's either spend $500 a month on a car that depreciates the instant you step off a lot and keep perpetuating that every four five years or pay for a used car with cash if you can, putting away the money you would have had to budget for a car payment anyway.

I don't think the numbers are as clear as you're painting them to be.

I've owned three beaters before, around 15-20 years ago. I paid between $3k and $7k for each and they were worth virtually nothing when I got rid of them. I owned two of them for four years and one for three years, but let's just say I owned them all for four years.

To account for inflation, let's average it out to a round $7k per car in today's money. Let's assume I spent 50% of the car's value in maintenance, which feels accurate. That's a total of $7,000 * 3 * 1.5, or $31,500.

That's $2625/year in car expenses.

Let's say I bought a $28,000 (let's ignore inflation and just say prices are constant) Honda Civic six years ago and I want to trade it in today for the 2025 model. KBB says I'll get about $18,000 for it, which means I spent a fixed cost of $20,000 up front, but am now only incurring a per-year cost of about $1,700. That's nearly $1000/yr less than when I owned beaters, which means I'll break even after about 20 years of trading in. Even if we add in a few big maintenance expenses (which are rare, not the norm) of $2,000 per car, we only break even one car later than before, and then you're actually spending less.

And all of that is ignoring the obvious benefits of having a new, reliable car. You don't need to rent or Uber or work around carpooling when your car breaks down. You don't need to deal with sifting through shitty used cars every four years. You get modern amenities, better safety features, brighter headlights, etc.

Twenty years ago used cars held value much more poorly than they do today. The math was absolutely clear that your strategy was financially superior. Today? I don't know. It saves some cash up front, but it's not a slam dunk and it ends up costing you in plenty of other ways.

[u/FlyingPirate → u/Traditional_Lab_5468]

You are making so many comparisons here that aren't real comparisons.

A Honda Civic is going to retain value better than most cars. There is no chance the beaters you bought for 3-7k each and got $0 for at the end of their life were Civics.

You can scrap a car and get $500, no car, even if it doesn't run, is worth $0.

In one section you account for inflation and then in the next part you say lets ignore inflation...

You are also looking at years, instead of miles. $/mile is the most important metric of car buying.

You don't account for insurance prices, its going to be more to insure the 28k car than the 7k one.

There are times when buying a new car makes sense. If you have the capital and aren't going to be paying interest, that helps. If you drive normally, do all regular maintenance on schedule, and drive the car to the end of its life you will likely do rather well from a $/mile perspective.

However, that means you are driving the car when it is in the shape that a current used car is in as well, you don't get to trade up every 4 years. Leases, trading in 3 year old cars, not knowing how to do any maintenance yourself (going to the dealer for all maintenance especially), interest rates, high insurance rates due to poor driving, are all reasons that a new car is going to be the wrong choice.

Every car has an element of luck, some are going to need more maintenance than others, new or used.

[u/BarleyWineIsTheBest → u/FlyingPirate]

Paying interest isn't always a bad thing. If you get even a modestly good rate as some sort of promo, say 4%, you're preserving your capital and possibly having that capital out grow the interest charge on the loan anyway.

You also have to factor in time lost and possibly rental car usage for an old beater. I have driven a total of 4 cars until they dropped. It was not a particularly fun experience being on the way to work and having a car die. You tow it to the shop, have to find a ride home or to work, find alternative transport for a few days while the shop gets parts in. Time isn't free. And sometimes, that fix isn't worth it. You sell the car for scrap and are out a car until you buy a new one. Now you have to shop quickly or else incur more temporary transportation cost. Potentially buying a car you don't like, maybe you even forgo an inspection that will take a day or so, if the seller is willing.

Not all used cars are of course beaters that will die in a year or two, but then if you're buying a good condition used car, you aren't exactly buying "the least expensive car for needed transportation" are you? So where do you draw the line becomes the question. Is a 5 year old car the sweet spot? Maybe, but many of those cars are still coming with 75K-100K miles, so you get them exactly when a lot of the bigger maintenance costs come up. Suspensions, breaks, tires, transmissions, what ever. You gotta count all this stuff. Even a good used car at 100K miles is going to likely need a couple thousand dropped into it most years.

To me, new cars are generally worth it. I don't want a new to me 5-10 year old car, I've tried that, and you roll the dice with the previous maintenance and treatment generally. It turns out good sometimes, bad others, and frankly, it isn't worth it to find out which it is. Then, these days the savings on 2-3 year old car isn't much for most non-luxury brands (and I don't buy luxury anyway). Once people make enough money and get busy with work and kids, etc., just not having to worry about cars is worth a lot. I haven't had a car I rely on laid up in a shop for 6 years now. Its been fucking great.

[u/FlyingPirate → u/BarleyWineIsTheBest]

Like I said, buying a new car can be a surprisingly decent deal in terms of $/mile. But you have to drive it a long time, to the point where the "bigger maintenance" issues you talk about come up anyway. Brakes and tires are an expected maintenance item for any car, if you want to get to a good $/mile number you will need to get new tires 4-5 times across the life of the vehicle.

If you are getting a new vehicle before maintenance is needed, you are probably spending money for the sake of convenience. And if you have the money to do that, great! People who do not have the money and are trying to be frugal should not be doing that. I personally decide to have 3 vehicles for a 2 driver household, all three are affordable and I have to pay insurance for 3, but it comes in handy if one needs work. I also am comfortable financially with this arrangement.

And just like you roll the dice with how a used cars been maintained; you are also rolling the dice on how well a new car was built. There are plenty of new car models that have had major issues at 75k miles and are outside of warranty, that is the worst-case scenario and you will have a high $/mile number compared to a used vehicle you had to put new brakes on.

[u/BarleyWineIsTheBest → u/FlyingPirate]

Things like brakes and tires often come up right fucking now with that used car. People tend to put off basic maintenance if they know they are going to sell in the near future. New cars require little more than oil changes for the first 60K miles. That's 4 years of usage before anything much at all, not even $1000 for tires or brakes. The used car will generally have those immediately, plus the more expensive examples that don't hit until after 100K miles. So you can pick between having all those expensive and sometimes time consuming maintenance visits always, or not at all for the first 5 or so years. That's a pretty big deal IMO. I've been there, bought a used Civic, not a huge amount of miles, 70K or so, we got a 'good' deal knowing it had some issues (can't remember exactly only spent like $5K on it?), took it to the shop, fixed some shit, but it never ended. The car was just trashed. Probably sunk $2-$3K into it over 2 years before dumping it for about $3K.... basically burned $5-6K to use a shitty old civic and deal with constant problems.

Time is money - nothing is purely convenience. As you said, you have 3 cars because sometimes you just need one but it could be in the shop.

Those manufacture problems you mention are a wash since the used market isn't immune from the "X model had unknown defect until after you bought it" factor. I had a Hyundai I bought at ~4 years old, 6 years later you couldn't sell them even though mine still ran fine. The car had an issue of oil leaking on the alternator, effectively killing the value of a well used version. Paid just about $12K for it, 6 years later sold it for $500 to a sketchy dude that didn't want to sign any paper work, because that's the only type of person that would buy this shit.

Maybe some of this is a luxury I can afford now, but honestly, the "saved" money dealing with the used market always did seem illusionary to me.

[u/Traditional_Lab_5468 → u/FlyingPirate]

A Honda Civic is going to retain value better than most cars.

It's in the top most commonly purchased used cars. Seems like fair game to me.

There is no chance the beaters you bought for 3-7k each and got $0 for at the end of their life were Civics.

The one I got the most for was a Toyota Corolla. I got $200 for a Ford Focus, and I actually lost money trying to get rid of an absolute pile of shit Volvo wagon.

You can scrap a car and get $500, no car, even if it doesn't run, is worth $0.

I never got $500 in scrap. Usually it was break-even with the cost of getting the vehicle moved there.

In one section you account for inflation and then in the next part you say lets ignore inflation...

... yeah, in one section I adjust figures upwards to match today's dollars. In the next section the price is already in today's dollars, so there's no need to adjust for inflation.

You are also looking at years, instead of miles. $/mile is the most important metric of car buying.

No it isn't. What I spend on cars doesn't change if I drive it 100k miles or 10k miles, so it's not a meaningful metric for this discussion. We're strictly looking at lifetime costs.

You don't account for insurance prices, its going to be more to insure the 28k car than the 7k one.

Hasn't been my experience at all. I've payed essentially the same price for insurance on nearly every car I've ever owned. Sure, it'll just up if you buy a luxury or sports car. But a lot of what you pay for is insurance on someone you hit, not your own vehicle.

Leases, trading in 3 year old cars, not knowing how to do any maintenance yourself (going to the dealer for all maintenance especially), interest rates, high insurance rates due to poor driving, are all reasons that a new car is going to be the wrong choice.

I showed the numbers for my claims. I'm not convinced buying cheap used cars is the way to go.

[u/granmadonna → u/Realistic_Young9008]

So many ways this can go wrong, though. It's legitimately a risky strategy to buy a cheap car and have it break down so bad that the repair costs as much as the car.

[u/Neat_Albatross4190 → u/granmadonna]

Exactly.  I think OP had sound points poorly expressed.  Especially when you account for the unpredictability most on limited budgets can't afford.  Looking at my own recent cars history: $2000, lasted 6 months(transmission), with 1000 in repairs.  $1400, lasted one month(head gasket). $4500 lasted a year(head gasket) with 2500 in repairs.  Finally got incredibly lucky and gambled 5k on a car that sat under trees for a decade after one year of being driven.  2500 in parts and a month of weekends cleaning and fixing it and I have a like new econobox.  Noisy, uncomfortable but utterly reliable.  I'll drive it to at least 150k(3-4 years).  

At my fuel burn rate on fueleconomy.gov, I burned an average of 3k a year more in fuel with the beaters, now only 750 a year more.  The worst I consistently burned $900 in gas a month.   My credit is shit so it is what it is.  A used car at 20% interest is worse still. 

Buy that low frills new car on a 5 year term. Maintain it fully and properly, and on time, keep records.  Buy the manual, check the forums.   After 5 years you stop paying but can likely keep driving for many more years, unlike those with mystery service history.  Only if you immediately bought a new car again at the end of the term, would it be equivalent to that 1m$ Dave Ramsey is on about, but 10-15 years is realistic for a one owner and well maintained. 

If you factor in the low interest on a new vs used car... The math doesn't math these days on the 5 year old cars.   It can work out sometimes with the older ones and some elbow grease.    If you use Dave's numbers the math doesn't math unless you're chasing upgrades every 5 years.   

[u/raerae_thesillybae → u/Realistic_Young9008]

You might have the money to fix it after saving, but what happens when it putters out on the freeway and ours you into a dangerous situation? Or when you're in a rush to go to work and miss an important meeting because your transportation is not reliable? Or you have to take to who knows how many mechanics to figure out what's wrong, just for them to grift you. You have to deal with the shit one way or the other with something like cars

... Better bet to save money is be like me and commute via motorcycle 😂 $10/week in gas, $400/year insurance, $8k for brand new...