If you’re trying to save 20% of your income-and you should-you’ve got to deal with your major expenses. That’s why I love my slightly dinged-up  2003 Elantra. Every month I hang onto it rather than buying a new model, I save about $400.
Yeah, your teenagers will complain. But you’re doing it for them.
Author: Harold Pollack
Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.
View all posts by Harold Pollack
It occurs to me that if you really want to embarass your kids, you've got a car with huge white panels fit for painting or decals.
Wow, a new car! I drive a 1995 Camry with a bashed in door. I tend to forget to lock cars, and having one that no one would steal was easier than changing.
Harold's car isn't old. It's the same age as the mean of the US light vehicle fleet (11.4 years). To score points for thriftiness, you need at least 15.
$400 per month sounds like the upfront cost of the replacement vehicle is being depreciated over the first few years. There are other ways to calculate it, although in the long run (e.g., over the rest of one's car-owning lifetime) they end up not being terribly different.
I just replaced my (13-year-old, bought new, a bit short of 200k miles) car a couple of weeks ago after losing my bet that it would at least get me into fall. I had just paid $500 a couple of months earlier to get it to pass inspection again. With an older car, both the predictable cost for normal maintenance and the expected cost of unexpected problems are part of the expense of keeping it on the road.
My own teenager was never embarrassed by the old car. It wasn't exciting, but (aside from a few scrapes from taking a mid-sized sedan on lots of camping trips) it looked okay. And even in a fairly affluent town like ours, very few other parents have vehicles that are anything interesting by a teenage boy's standards anyway.
I think the right way to calculate depreciation is to take the reduction in market value over the relevant time period. Right now I'd guess depreciation is pretty low. How much less will the car sell for a month from now than today?
The other thing to count is capital cost. Assuming you pay cash it would be the foregone return on the money. If you borrow it gets trickier. Offsetting that is the possibility of lower maintenance costs.
I even embarrass myself, I'm driving a Honda Accord I bought brand new in1986. It's almost to 300K, and I wish it would run forever. I recently read that a car more than 25 years old is considered a "classic," but mine's just old!
Harold, for someone with real financial acumen and money-saving advice, I fear you're overlooking the elephant in the room here:
Stop spending four bucks each time you want a latte. THERE'S a tip you can take to the bank, dear chap.
Hey now. Let's let the man drink his coffee in peace. He gave at the office. Plus, it creates jobs.
And for my money, you can't really get a decent cup of hot chocolate in most places, but you can at the Fatty Starbuckles. They use too much sugar but at least there is perceptible use of cocoa. Most places you get a swill that tastes like coconut oil and no choco at all.
Of course, technically you are correct. It's not that hard to make good coffee at home. Drinking some now. : )