“A new car loses 60% of its value in the first five years… If you lose $24,000 every five years, don’t be scratching your head and wondering why you can’t build wealth. It’s because you’re driving it—down the sewer.” — Dave Ramsey
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Cars are expensive.
They’re expensive to buy, expensive to maintain, and expensive to insure. Basically, they’re needy metal pets that drink go juice and depreciate when you look at them funny.
We originally planned to cover buying, maintaining, and insurance, all in one post… but if you’ve been here a while, you know how that goes. One paragraph turned into a chapter, and suddenly we were staring down the first draft of a novel.
So today, we’re sticking to just one piece of the puzzle: our philosophy on buying cars.
The Cost of a Car
According to Kelley Blue Book, as of December 2024:
- Average new car: $49,740
- Average EV: $55,544
- Average pre-loved car: $25,656
How long do people hold on to these metal monsters? Well, that depends.
- According to the insurance company The Zebra, a 2024 survey of 800 people found that the average American keeps their car for 8 years.
- S&P Global Mobility looked at car ownership trends from 2003 to 2023 and found:
- Gas-powered passenger cars: 13.6 years
- Light trucks: 11.8 years
- Electric vehicles (EVs): 3.6 years (based on nearly 2.3 million registrations from 2013–2022)
- Cartelligent, Cartelligent, a used car site, broke it down further by brand:
- Mini – 4.9 years
- Audi – 5.1 years
- Mercedes-Benz 5.6 years
- Acura – 6.1 years
- BMW – 6.2 years
- Lexus – 6.8 years
- Toyota – 7 years
- Honda – 7.1 years
- Subaru – 8.3 years
- Volvo – 9 years
According to Lending tree, here’s what Americans are paying for their cars:
- New cars: $745 per month for an average of 68.6 months — total cost about $51,107
- Used cars: $521 per month for an average of 67.2 months — total cost about $35,011
- Leases: $598 per month for an average of 35.9 months — total cost about $21,468
Cars vs. Retirement
Cars are expensive (Yes, we’re repeating ourselves — it’s worth saying twice).
It’s smart to run the numbers on a few scenarios before buying — type, price, and how long you’ll keep it all matter.
From a long-term perspective, in our post about how much we need to retire, we estimated we could live comfortably on $50,000/year. Buying a new car today would wipe out an entire year’s worth of retirement expenses. And that’s before factoring in insurance, taxes, or maintenance.
Not only would we lose that year of retirement income, but we’d also have to work several more years just to replenish that $50,000 in savings and investments.
The Trap
In reality — we need a car. We don’t live in a place where public transit or walking is an option. Which means, in a way, we’re trapped.
Some of you might be thinking: “But you can trade in your old car — it still has value!”
True, but that value can be depressingly low. At the end of 2024, Kelley Blue Book listed the average used car at $25,565 — but that’s the list price, not trade-in value. Dealers make money by buying as low as possible.
If the average list price is $25k, the trade-in could be well below that — maybe $500 to $20k.
We’ve seen it firsthand. Many years ago we were offered $1,000 for a car selling used for $5k–8k. A friend got $500 for their trade-in, and weeks later, we saw what looked like the exact same car for sale at $4,499 (same year, model, color, and similar miles).
Our Plan
Keep our cars as long as we can — or as long as it makes sense. That one decision has the biggest impact on what we save (and spend).
Over 21 years, we’ve bought four cars: two used, two new, spending a total of $110,183.56.
My (Adam’s) oldest car is 23 years old, bought used with 8k miles, and was $4k cheaper than new.
Anna’s is 16 years old, bought new with just 105 miles.
Between the two, we prefer buying used. New cars come with hidden costs like upgrades, extended warranties, higher taxes and fees, higher insurance — and with used, you simply get what you get. Plus, you don’t feel as bad when some jerk dings your door.
The Third Car Saga
We didn’t plan on a third car.
My car was stolen from work in 2017.
The thief was eventually caught, and the car was returned much later — but it was in a nearly totaled state (body damage, interior wrecked, and manual transmission destroyed).
The insurance company offered us $4,000, which felt like a slap in the face.
We decided to repair it vs going the totaled route, even though it would take several months to a year before it could be a reliable daily driver again.
The total repair bill came to about $9,000 ($4k from insurance and $5k out of pocket).
I still debate whether we made the right call, but so far that decision has given us an extra nine years of faithful service. And honestly, it still makes me happy every time I drive it.
In the meantime, I needed a way to get to work.
We bought a used 2016 Subaru Forester with 30,000 miles on it.
Not long after, Anna spotted a brand-new 2018 Subaru Forester at the same dealership for only $1,000 more than we’d paid for the used one. Since we were still within the 30-day return window, we went back and made the swap. The 2018 had less than ten miles on it when we drove it off the lot.
Fast-forward to 2024 — the airbag sensor on the 2018 Forester failed, meaning the airbags wouldn’t deploy in a crash. Yeah… not safe. We had no choice but to address it.
We waited eight months, while the car sat at the dealership during that time, with no update on when the part would be manufactured. After filing a claim with Subaru headquarters and still being told there was “no timeline,” we finally caved and bought a used 2024 Subaru Forester with 12k miles.
It felt like Subaru had us backed into a corner — we’d considered other makes and models, but in the end, we traded in the 2018 Forester for just $12,000, thanks to its “not roadworthy” status. By the way, we had to argue to get it up to $12k. They initially offered us less.
And that’s how, in a little over 20 years, we ended up owning four cars for an average cost of $5246/year.
If that hadn’t happened, we’d still be driving the 2018 Forester, which would have averaged out to $3798.22/year. I don’t know what we would have done if my car hadn’t been stolen which started the whole third car saga.
We’ve agreed that if either daily driver fails, we’ll scale back to two cars: one fun, fast car and one bigger off-road vehicle. We still set aside money monthly for a future car — in addition to our maintenance budget — as a safety net for surprises.
The Hidden Benefits of Keeping Cars Longer
Property tax: In our state, older cars have cheaper taxes. Our two oldest cars cost about $100/year each. The newer one is $500–$600/year, though it will drop over time.
Insurance: Newer cars cost more to insure. We’ll get into this in a future post — especially the discounts your agent may not mention.
A Friend’s Story: A friend bought a new car recently. The extra costs?
- $550 to register
- +$200/month in insurance
- $600/month car payment
Their budget increased by over $10k/year. The old car was still working, but higher maintenance bills and the lure of “new” tipped the decision. For them, it made sense.
Our Wrap-Up
For Anna and me, the goal is simple: no monthly car payment and drive our cars until we can’t anymore. Even though we have no intention of buying a new car anytime soon, we still set aside money each month for the day we inevitably need one.
When we unexpectedly had to buy the 2024 Forester, that habit paid off — literally. We already had enough saved to pay for it in cash.
Technically, we didn’t hand over all cash at first. We put as much as we could on our credit card, then politely asked the dealership if they could raise their usual limit. After a quick call to the manager, they agreed to let us put an extra $1,000 on the card. That little move earned us 9,000 airline points. We wrote a personal check for the rest, and when the credit card bill came, we paid it off in full immediately.
We only used this strategy because we knew — with absolute certainty — that the money was already sitting in our account.
In the next post, we’ll talk about how we saved hundreds of dollars a year in car insurance. Talk to you soon.
