Before spending big bucks on a car, always get a second opinion. Spending big bucks on a car is one of the biggest sins in personal finance. Make no mistake about it. A car is a money-losing purchase.

Spending Big Bucks On A Car

As you may know, my 11 year old car is dying and I’ve been unsure whether to spend up to $2,500 fixing Moose, or let him fade away.  The service dealer said I would have to spend around $1,200-$1,500 to replace the entire exhaust system below, which is around 35% of the total value of my car!  That just doesn’t seem right.

As any frugal person would do, I got a second opinion.  The auto service industry is even more shady than the insurance industry and I wanted to make absolutely sure that I wasn’t being ripped off by the dealer before spending any more.  Besides, we all know that getting your car fixed at the dealer when you’re not under warranty is seldom the cheapest, and often the most expensive way to go.

Always Got Me To Spend Big Bucks On A Car

When I first moved out to San Francisco, I lived right next to a auto mechanic shop.  The owner’s name was Fred and we just started seeing each other everyday and chatting.  Over the course of 10 years, I’ve had him service and fix 7 different cars.  Furthermore, I’ve referred around 12 guys to his shop since he’s done such a good job.

Fred is so honest, that he’s told me on many different occasions not to fix the current problem at hand because it doesn’t really matter.  So long as everything works and safety is not compromised, fixing random things that cost a high price as a percentage of the car was not worth it.  He was very frank and never wanted me to spend more than I had to.

I brought Moose over to Fred and explained to him the slight engine leak and the rattle where the muffler is.  He immediately jacked up the car and pointed out that my muffler was fine. 

Instead, what had rusted away was the bolt holding my heat guard that was above my muffler!  As a result, every time the car moved, the heat guard would grate against the muffler and cause a rattling noise.

The Conversation

“So the muffler is absolutely fine?“, I asked.

“Yes, no problem at all.  Let me replace your heat guard with a new one.  Its easy to weld on“, Fred responded.

“How much?” I asked.

“Does $40 dollars sound good to you?”  Fred asked.

“Hmmmmm… did he really mean to say $400 and not $40?  Does a bear poop in the woods?”, I thought to myself.  “Absolutely!“, I blurted out.  With the dealer saying I would have to spend up to $1,500 to fix the entire exhaust system, $40 was a dream come true!

I was absolutely ecstatic!  I then asked Fred to take a look at the engine leak, and he basically said my top valve was leaking a little and to just check the engine oil once a month and make sure there’s enough oil.  He recommended not trying to fix it because he would have to take off all the parts above the engine to get to the valve.  “Save your money!” he said.  “Just buy a couple quarts of engine oil, top it off every other month and you’ll be fine!“

I then asked Fred if he could see anything else wrong with Moose.  He did mention my brake pads have about 30% left on them and that he recommends changing my front rotors and pads, and my rear pads before the winter.  Because Moose is heavier up front with the engine and all, replacing the rotors in addition to the pads is a good idea.  I haven’t changed my brakes and rotors in 4 years, and the previous owner already had one year on the existing brakes so it was about time.

Always Get A Second Opinion Before Spending Big Bucks On A Car

Servicing your car at the dealer is always an absolute rip off.  In San Francisco, labor is always around $100/hour vs. non-dealer auto mechanics at $50 hour. 

I drove out of Fred’s shop with a handsome bill of $75 to change my oil and fix my heat guard.  If I had done stuff at the dealer, not only would I have paid $1,200-$1,500, they would have probably also found more stuff to work on. 

They always do that.  You go in for an oil change, and they print you out a 25 item list of things to do.  It’s nuts!

The value of a trustworthy auto mechanic is worth as much as a trustworthy doctor.  In other words, the value is almost priceless because what you want is peace of mind that you aren’t getting ripped off or given the wrong diagnosis. 

Getting ripped off is horrible, and something mechanics have a reputation of doing since we common people don’t know much about cars.

The main tips for getting a trustworthy auto mechanic and not getting scammed are:

1) Do your research on the issue online first and make it sound like you know what you are talking about

2) Be courteous and straight forward.  Once they sense fear and/or rudeness, it’s all over.  They will make it a mission to gaug you like a Roman sport.  Even bringing them a piece of candy or a cookie will save you hundreds if not thousands.

3) Offer to refer a lot of new clients their way.  If they know you are well-connected, there is no way they are going to screw you.  They also love free advertising, so if you have a blog, then you’re really golden!

Be Respectful

I always tell anybody in the service industry that if they do a good job, I will refer them to all my friends.  I’ve done this with my mortgage guy, and I’ve done it with Fred the auto mechanic.  It always works, and you should always do it. 

Repeat business is what it’s all about, especially during times of economic turbulence.  The value of a customer is not just that one visit.  It is the value of all his subsequent visits plus all his friends he’s referred so that your business is always humming along!

I was mentally prepared to spend $1,500 to fix Moose, but instead, spent $40, with the might-as-well $35 oil change since I was there.  That’s a huge win in my book.  As a result of this incredible savings, the only thing I have left to spend is ~$600 for new brakes.

Not a bad idea with snowboarding season in Tahoe coming up.  So I guess I’ve answered my question on what to do with Moose.  I’m keeping him for as long as possible!  If anybody needs a good auto mechanic in San Francisco, please shoot me an e-mail!

RECOMMENDATION

Lower Your Auto Insurance Costs. Check out AllState online. They have some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. AllState has good driver discounts, and multi-product discounts as well.

Related post: The 1/10th Rule For Car Buying Everyone Must Follow

Updated for 2021 and beyond.

My car is dying and I need to decide whether to buy a new car, keep it, or buy a old car.

In a rush to get to a meeting, I managed to bash Moose’s right side mirror into a garage side wall and blow the mirror off.  Crap. 

That’s what happens when you have a large car, in a small garage, and do things in a hurry.  This little accident cost $135 to fix and 30 minutes of time.

While I was at the dealer, I used the opportunity to ask several other questions regarding what’s wrong with Moose.  For the past 12 months, there’s been a progressively louder rattling sound every time I drive, or slam the door shut. 

After a little inspection, the service agent said that it looks like my middle muffler connected to my catalytic converter is wearing out and needs changing.  OK, good to know.  “How much?”, I asked.  The service agent said around $1,200-$1,500!  YOWZA!

Related: The Car Sharing Economy Is On The Rise: A Conversation With RelayRides

Car Is Dying – Let Moose Live Or Die?

$1,200 to fix a muffler is ridiculous.  The service agent agreed and recommend I just go to a muffler shop and have them replace just the middle portion.  Parts plus labor will probably equal to $600 instead.  OK, that’s somewhat more reasonable I guess.  I certainly don’t want the muffler to fall off while I’m on my way to Tahoe when it’s dumping snow!

The issue is, Moose is an 11 year old SUV that is worth maybe $4,000.  My main concern is operability and safety, hence the muffler should be fixed.  In addition to the muffler problem, I’ve got three yellow lights on my dashboard that is indicating the traction control, ABS, and hill decent functions are out!  The reality is all three functions are working, it’s just the switchboard fuse that is broken. 

I’ve tested all three and reconfirmed with a mechanic friend of mine.  To fix the switchboard, that will probably cost another $1,200 bucks which is not worth it.  Instead, I just got some black tap and stuck it around the dashboard glass to block the lights so I don’t see them!  Finally, my brakes only have 30% left on them and will likely need replacing in 6 months.  That’s another $600-700 that must be spent.

All in, I will have to spend a minimum of $600 (14% value of the car), and perhaps up to $2,500 (62% value of the car) to get things nice and good again.  Oh yeah, I also got my DMV car registration renewal yesterday to the tune of $109.  Adding everything up, it just doesn’t seem worth it…. or does it?

Related: New Or Used Car? Why I Don’t Plan To Buy Another Car Again

THE ALTERNATIVES

I’ve been thinking about buying a new car for the past couple of years.  It’s just that every time I see a new model, I get bored of it in one year, which means spending tens of thousands of dollars on a car is not a good idea.  When the BMW 335i coupe first came out in 2007 for $47,000 I was determined to have one. 

By the time 2008 rolled around I was bored because I saw the new Audi S5 coupe roll out for the similar price.  And then I got over it because something better kept coming along.  It’s a never ending cycle of desires.

It’s strange, but to cure my car-lust, I go to car dealerships.  Sometimes, I just slide on into one of them babies and inhale the intoxicating new car small as I pretend she’s mine. 

Other times, thanks to very aggressive salespeople, I always respond “Oh, twist my arm and my nipples, OK!” when they ask me to go for a test drive.  By the end of the session, I am so thrilled, that the desire to spend any money on a car dissipates!

So let’s say your car is dying, you are by nature a frugal person, but fulfill the important 1/10th rule and can pay cash for whatever car it is that you desire.  Do you spend 20-62% of the value of the car ($500-$2,500) fixing it to a level which can last another 5 years? 

Or, do you spend perhaps 35-150X that amount and buy a new, safer, more reliable car which has a 4 year, worry-free warranty?  OK fine, I could also spend $20-$30,000 and buy a cheaper car too, but then I’ll really get bored with the car after a year. 

By the way, don’t forget about higher car insurance, crying if you ding your new car, sobbing if your girlfriend or boyfriend dings your new car, and never feeling at ease when you park at the grocery store!

Related: Don’t Let Your Emotions Get The Best Of You When Buying A Car

RECOMMENDATIONS

Lower Your Auto Insurance Costs: Check out AllState online. They have some of the best plans with the lowest rates around due to their lower overhead costs.

It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. Esurance has good driver discounts, and multi-product discounts as well.

In 2017 I ended up finally trading in Moose for a Honda Fit named Rhino! It costs $22 to fill up a tank of gas vs. $80 before.

And in 2021, I’m now rolling in a sweet Range Rover Sport with 22″ wheels. I love the car because it’s roomy and safer for transportation my family of four.

Check out my top financial products to help you achieve financial freedom sooner, rather than later. Also check out the best free wealth management tool I use to manage my wealth since 2012.

Buying one of the least expensive cars will help you build greater wealth over time. A car is a money pit. You could use that money to invest instead!

If you are in the market for a new car—and have ruled out buying used for whatever reason—and you are on this site then you are probably concerned about getting the best deal possible. 

After all, nobody wants to overpay. Even a financial fool appreciates knowing that the value they’re getting from their purchase is up to par and that they didn’t make an embarrassing deal.

It is imperative that you strike a compromise between affordability and practicality if you’re looking for a set of bargain wheels. This has been said a million times in the past, but the current offerings of both foreign and domestic automakers makes this easier than ever.

Many Americans are turning towards cars that can be bought for relatively cheap but still want something new and something that has the basic comforts and amenities we’ve grown accustomed to. 

Everyone’s situation is different, but purchasing an inexpensive car is a great idea for if you need a second car or a commuter; or you simply need a cheap car period. 

If you’re looking for your primary mode of transportation for you and the family though, it’s best to err on the side of a larger car than having to buy another one down the road when finances improve or you outgrow it.

The Least Expensive Cars

1) The Hyundai Accent is an inexpensive but reliable car that can be bought for around 10,000-$12,000.  This car is great for people that need a decent form of transportation they can count on without worrying about it breaking down. 

Long gone are the bad Hyundai stereotypes of unreliability and such.  With the low price tag comes a few sacrifices, however. No car at this price will not come loaded, and features such as a sun roof, nice wheels and paddle shift transmission are absent.

However, the car is not totally deprived of options.  A peppy 110-horsepower engine is standard, along with safety features such as a low tire pressure indicator and seat belt pre-tensioners. If you are looking for the least expensive vehicular option to point A to point B, the Hyundai Accent is a viable option. (Official Hyundai pricing and Specs at Automotive.com)

2) The Nissan Versa can be bought for just slightly more than the Accent, but offers a few more options.

The inexpensive Versa will come with things such as power windows and power locks, and it is a larger car. 

However, the downside of buying an absolute base Versa is that things such as a CD stereo system and air conditioning are not included.  Pay a grand or so more though and you’ll get it.

In addition, the color choices on the basic Versa are limited to just blue, silver and black.  Overall the good news is that if you are willing to pay a few extra dollars you can get more features for not that much more money. Plus, it’s a larger car than the Accent.

3) The Chevy Aveo is GM’s entry-level car and costs under $13,000. The least expensive Aveo’s do not include many options, however, they do come with a stereo system as well as a few nice colors that you can choose from.

The all-new 2012 Aveo will be a completely revamped model, so if you’re planning on getting a deal now, go for the 2011 and take advantage of the discounts and incentives. You may be able to get a 2011 2LT model with MP3 player, XM radio and keyless entry today for the price you would have paid for a base model last year.

4) Next up, the Kia Rio. It will cost right around $13,000 for the base model sedan. This Rio, however, is devoid of any and all options.

The base model does not include a stereo, air conditioning or even floor mats. In addition, the color choices are very limited. For the price you would pay for a stripped down Rio the sensible thing to do would be to purchase a Hyundai Accent that included a few upgrades.

Since the Rio is so stripped down it would take an additional $2,000 dollars or so to get the car with some decent upgrades in it. The car is decent sized however, larger inside than the Aveo and the Accent and with more cargo room. (All new Kia prices and dealer quotes at Automotive.com)

5) Finally, the last on our list is the Toyota Yaris, though certainly not least. Offered as a sedan or three door hatch, this little Japanese import packs more base features than any of the aforementioned.

For the price of $14,000 it’s one of the best deals, especially when considering the versatile interior and customizable ordering options.

However, the Yaris rides on the shortest wheelbase in its class, and has smaller cabin room than the offerings from Korea and the U.S. When buying any Toyota though you’ll for sure know that you are getting a reliable vehicle that will stand up the test of time. All Toyotas are well made and have a reputation for reliability. The Yaris is no different.

Burnt Rubber

With gas prices regularly over $4 a gallon now, you’ll appreciate these inexpensive, fuel sippers. Our European brothers and sisters pay US$8+ a gallon for gas and if you ever go, you too, will start to appreciate the beauty of small vehicles. 

The above five cars are perfect for one’s budget, especially if you follow the 1/10th rule for car buying. You probably aren’t going to be turning many heads and picking up babes with these cars. But, what you will turn is a new page in your journey towards financial freedom.

Recommendation

Lower Your Auto Insurance Costs: Check out AllState online. They have some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. Allstate has good driver discounts, and multi-product discounts as well.

Updated for 2021 and beyond

I’ve been neglecting Moose for a couple weeks since I’ve been traveling so much. But, I took him out for a spin the other day and was absolutely shocked to see that gas prices have ROCKETED to $4.11, $4.29, and $4.39 for regular, plus, and supreme at my neighborhood Chevron station! I know WTI oil prices have risen to $112, but it really didn’t hit me until I saw and paid for the latest gas prices.

As a city dweller, I take the bus to and from work, and try and ride the bus as much as possible on the weekends. The only times I really drive is to and from the tennis club, and up to Tahoe which is about 180 miles away. 

Overall, I drive about 6,500 miles a year which is not that much compared to the national average of 15,500 miles a year. With Moose getting roughly 17 mpg, I spend around $2,145 a year in gasoline, up from just $1,750 this time last year.

If I’m Shocked At Gas Prices, Why Aren’t You Shocked Too?

When gas prices were only $3.50/gallon, my yearly gas bill would be roughly $1,750 for 6,500 miles. $395 more in gas costs isn’t exactly going to break the budget for me, or for most people ($33 more a month). Yet I’m pretty shocked nonetheless. 

I’m so shocked at gas prices that I’ve decided to asset allocate out of equities and back into cash and selective bonds in my 401K because I’m worried high energy prices, along with problematic state government deficits will ignite another sell-off. I’m happy to lock in 6.8% performance YTD in my mothership fund and play it safe.

In addition, I’m looking to cut an additional $100-$200/month out of my expenses to counteract $4+ gas prices, which only costs $33 more a month.  Skip a lunch here, cut down on gym usage there, drink more water are all things I plan on doing. In other words, thanks to oil, I’m looking to slash spending by 3-6X more!

In my world, everything is rational. The reason why gasoline prices are as high as they are is because people are willing to pay for it. If people weren’t willing to pay for it, prices would be lower. 

Rising Gas Prices Help Me Stay Frugal

I, therefore must be an anomaly to believe that $4.11-$4.39/gallon is a painful level. I’m consciously reducing my gas consumption, even it it only costs me $395-500 a year because I’m mentally revolting at paying so much.

But now, as I think rationally still…. if someone like me, who drives half as much as the average American and has a steady flow of income is clamping down consumption, then it’s logical to assume that other people will also start tightening as well. 

It’s not like I can’t afford an extra $33/month, it just annoys me that gas prices have gone up so quickly. I’m mentally going on strike and just going to take the bus everywhere now, even if it does take longer. I figure, why not use this time to reduce my global footprint, reduce traffic, and save some money in the process?

Maybe There’s Another Reason People Don’t Care About Gas Prices

There’s one important variable that we should recognize.  The job market has come back in force as predicted! People are getting raises and getting jobs again. 

Why else would traffic be as horrendous as it has been in SF in a long while? There are plenty of positive anecdotes that suggest things are drastically improving in addition to the government labor statistics. 

Fellow blogger’s online incomes have skyrocketed in March. Flight loads are soaring, the markets are at 3-year highs, and head hunters are calling out the wazoo.

Despite it all, I’m still cutting down on energy consumption and re-balancing my portfolio. I’m happy to see the economy and the markets continue to improve, even if I’m not fully invested anymore. Call me conservative, or too easily satisfied. The older I get, the less I really need.

Recommendations

I’m always looking for ways to cut costs and save more. Whether or not you care about gas prices, here are some great suggestions to help your finances.

Lower Your Auto Insurance Costs

Check out Allstate online for some of the best plans with the lowest rates around. It’s worth spending a moment filling out a quote to see if you can save some money. Drivers who switch to Allstate can save over $700 on average.

Car insurance is one of the largest ongoing expenses for car owners. When was the last time you compared rates? Allstate lets you save up to 10% when you sign your policy 7 days before it becomes effective and when you pay your policy in full. Find out how much you can save with Allstate today.

Manage Your Finances In One Place

The best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize.

Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing and how my net worth is progressing. I can also see how much I’m spending every month.

The best tool is their Portfolio Fee Analyzer which runs your investment portfolio through its software to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was paying! There is no better financial tool online that has helped me more to achieve financial freedom. It only takes a minute to sign up.

Updated for 2021 and beyond

Ever hoped for something to break in order to buy a new car? Well I am! I want to buy a new car.

I have to admit, I’m having withdrawals from not driving a different car for over 3 years now.  I used to get a new (used) car every year by wheeling and dealing on Craigslist, but I stopped once I found Moose.  Moose is so handsome and adventurous, even the ladies love him.

I picked up a friend of mine one evening to go grab some grub, and she mentioned a week later that her stalking neighbor, who has a crush on her said he’s frustrated that guys who own “Moose-like” cars always gets the girl.  Maybe buddy, it’s the creepy way you stare out the corner of your window to spy on women that makes you still single?!

A year ago, Moose’s passenger side electronics seat stopped working to my dismay.  Luckily, the seat was in a comfortable, semi-reclined position so I let it be.  I told myself then that it might be time to start looking for another car soon as fixing the thing might cost $500+ dollars.

And so, I made a decision that as soon as the driver’s seat electronics also stopped working, I’d go and buy me another car.

Each week that went by, I started secretly hoping my seat would stop working.  I was hoping for something bad, but not too bad to happen, so I could justify buying something new!  Screw it, I thought.  I’m going to go visit the dealer and check out the new rides anyway.  Moose ain’t ever gonna fail me!

Buy A New Car At The Dealer

As I was inhaling the wonderful rich smell of leather and glue, a service man came up to me and asked if I wanted to consider trading-in Moose for something new.  I started feeling horrible since Moose and I had grown so attached. 

But, I did tell the serviceman I’d consider it.  I revealed the only problem with Moose was the non working passenger side seat, and he said not to worry.  He came back 5 minutes later, opened up a compartment under the seat, and swapped out a fuse.

“Your car is as good as new!” the service man shouts.

“Sweet crap,” I think to myself as now I have no reason to exchange Moose for anything else.  I also wondered why I didn’t go into the service department to buy a $1 fuse long ago.  I told the serviceman that given my car was “as good as new“, I’m good to go and am not interested in spending $58,000 for a new Moose.  Now I realize why car dealerships keep Service & Sales separate!

Buy A New Car? Nah

If Moose is a babe magnet, handsome, reliable, and inexpensive, why do I long for something new?  Change is human nature and unavoidable so it seems.  It’s just like asking why Tiger Woods can’t just be happy with Elin, his family, and his mega millions?  The longing for something different is so hard to conquer.  It’s almost like an addiction.

Changing cars frequently is one of the stupidest things you can do if you don’t have the financial capacity.  You pay taxes with each purchase, often lose money with each sale, your auto insurance may go up, and you never quite know what you are going to get. 

Cars are money pits, which is why I seriously recommend you never spend more than 1/10th your annual gross income on the purchase of a car. If you find a car that gives you little-to-no problems, cherish it completely and forever. Buy a new car if you need to. But only if you can afford to using my 1/10th rule for car buying.

RECOMMENDATIONS

Lower Your Auto Insurance Costs: Check out AllState online. They have some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. Allstate has good driver discounts, and multi-product discounts as well.

Related: The Safest Cars To Buy To Survive A Crash

Updated for 2021 and beyond