Fix The Car Or Buy A New One?

Are you wondering whether to fix the car or buy a new one? Used car prices are up huge post pandemic. Therefore, new cars may be of better value. That said, buying any type of car that costs more than 1/10th your annual gross income is a waste of money in my opinion.

This month is turning out to be an expensive one.  Originally, I was planning on joining the no-spend November movement given I'll be spending more than normal during the holidays.  I've been tempted to buy a new or new used car for the past year since Moose is 11 years old and needs some work done.  It was basically sell Moose now and avoid the extra expenditure, or buy a new new/used car in great condition.

After much deliberation, I decided to keep Moose and do some work. After 4 years, his brakes finally needed replacing. My auto-mechanic of 10 years recommended I change both rotors and pads in the front since Moose is heavy up top, and just change the pads in the rear.  

I followed his directions for a total cost of $705 ($400 parts, $300 labor).  $705 after tax is pretty darn good, especially after 4 years.  I've also heard folks spend $1,200-$1,500 on brakes before.  Expensivo!

When I went to pick Moose up, he wouldn't start!  It turns out the battery only had a couple months left to live after 5 years. I'm glad Moose didn't start at the shop, rather than somewhere in the snowy Sierra Nevadas this winter!  That would have been such a disaster. I spent another $90 for the new battery for now a total cost of $795.  Tick, tick, tick, things are getting up there.


The reason why I spent months deliberating on whether to fix Moose or buy a new car is because Moose only has a Bluebook value of around $4,000.  Therefore, a $800 fix equates to 20% the value of the car, and the value DOESN'T come close to going up by the amount spent.  Maybe after the new brakes and battery Moose is now worth $4,200.  So in essence, it's almost like I'm losing money by fixing it to the tune of $600.

Five things to ask yourself before buying a new car:

1) Can you afford a new car?  You can only afford a new car if your income is at least 10X the value of the car you wish to purchase. This is known as the Financial Samurai 1/10th rule.  If you make less than 10X the value of the car, then you are hurting your finances.  Do you think Mark Zuckerberg drives around in a $800 million dollar car?  Heck, I was at a party with Mark Pincus, the founder of Zynga and the valet only went to retrieve a $75,000 BMW X5, and Mark is worth billions!

2) What percentage will the costs be compared to the value of your car?  Maintaining a car gets relatively more expensive as time goes on because the value of your car is always decreasing while costs generally increase due to labor and component inflation.  If a fix costs more than 30% the value of your car, and you can afford a new car, consider buying a newThe benefit of buying a new car is that I won't have to buy new brakes, tires, battery, etc.  Take the cost of maintenance of your old car and subtract it from the purchase price of your new car and re-calculate whether you can afford the new car.

3) Do you have any debt or other big expenses on the horizon?  Think property taxes, income taxes, trips, credit card bills, student loans, and other debt.  Best to minimize your expenditure on a depreciating asset if you have other large expenses on the horizon.  For some reason, guys right after college are especially weak at controlling themselves when buying a new car.

4) How long do you believe your old car will last, and how long do you plan on driving it?  My new brakes and battery should last at least 3 years.  My existing tires should also last another 3 years since I only drive about 7,000 miles a year.  Moose has 109,000 miles on it now, and he should have no problem going to 150,000.  Moose's survival is consistent with the time I'd like to stay in San Francisco.  I have hope he will last for 6 years longer, which happens to be when I look to change sceneries.

5) Know your car's maintenance cycle.  The big maintenance intervals are generally after 15,000 miles, 30,000 miles, 75,000 miles, 100,000 miles, 125,000 miles, 150,000 miles, and so forth.  You should consider selling about 5-10,000 miles BEFORE the main intervals and let the new buyer pay for maintenance.  I recently did the 100,000 mile service, and want to milk it for as long as possible.  If you don't sell your car before it hits 100,000 miles, then you might as well keep it for as long as possible.

Related: The Ideal Length To Own A Car Is Not Forever

Fix The Car And Take A Gamble

Spending $795 on Moose is taking a gamble that nothing else major breaks down on a 11 year old car.  It would be quite unfortunate if an alternator blew up, costing me another $1,000. Then Moose becomes a serious money pit as now I'm spending 50% of the value of the car on maintenance.

My desire for driving a fancy luxury car has essentially fallen to 0 given the movement against luxury. When it's time to make the decision again on buying a new car, I will consider safety issues as the main criteria.

In 2021, I am driving a 2015 Range Rover Sport HSE. I plan to own the car until at least 2025. It's a great family car for my wife and two children.

Related: Plug Or Patch A Tire?

Recommendation For Your Car

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.

For more nuanced personal finance content, join 100,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience. 

About The Author

83 thoughts on “Fix The Car Or Buy A New One?”

  1. Chris Pederson

    Wow, I never thought about checking if your income is 10x as much as the new car costs before buying it. Yeah, I don’t have that kind of money. I’ll just look into getting my old car repaired instead.

  2. Vivian Black

    My husband is an avid lover of foreign cars and recently bought a used Ferrari to celebrate a bonus at work. He loves your tip about knowing your car’s maintenance cycle and knowing when each interval is and what it means for your car. He will be sure to keep these tips in mind as he finds a professional who can help him in the near future.

  3. Skylar Williams

    It is a great idea that you suggested considering whether you can afford to buy a new car. My father has a Honda that needs a new engine. I think it would be smart of him to find an engine rebuild service to save himself some money.

  4. Zulma F Munoz

    I have a 2004 Mercedes Benz C320 with 214.735 miles. I need to have the shocks and struts replaced. I know it will be a hefty amount but I just can’t imagine making a car payment. I paid off this vehicle over 9 years ago. I am working on paying off my house so I can be debt free so a car payment is not part of the plan. I just spent $650 on new tires and aftre much thought I feel it is worth maintaining my vehicle in top shape by investing the money to get .

    1. Rebecca Hilliard

      I have a 2007 Mercedes Benz E550 with 156,700 miles on it. I just replaced one strut for $2400. Now I need engine mounts and cam magnets which is going to be another $2,700. I really love this car, but spending $6,000 this year on maintenance (just had service B for $645 and $228 for new headlight) makes me stop and think it’s time to let this car go. It has been paid off for years and really is a beautiful car that runs well.

  5. Cool- this thread has been going for 7 years. I bought one new vehicle (Toyota tundra) when I was 26. I drove it for 250,000 miles over the course of 16 years.

    $30,000. Msrp including the finance cost over 48 months.
    $800 for timing belt 1 and 2
    $3,600 for 6 sets of tires. Maybe more.
    $37,000 for about 14,500 gallons of 85 octane. Abysmal 17 mpg life avg
    $750 for three windshield replacements
    $350 for set of shocks
    $150 for pads and shoes
    $100 radio replacement
    $1700 for Mobil 1 oil changes self performed
    $10,000 for insurance
    $500 topper
    $100 tinted windows
    $80 bed liner
    $800 worth of quarters at the carwash
    $500 for whatever junk I bought at random gas stations
    $3000 vehicle registrations and taxes

    Total lifetime cost of about $90k less $7500 resale rolled into current used vehicle purchase. Essentially $500 per month for 192 months factoring ownership and maintenance costs, or $0.36 per mile driven.

    Now I could have ridden the bus at 192 months x 20 days x $7 per day = $26,880. That would have saved me $62k, or enough to buy an electric car from Mr. Musk and invest an additional $25k or so into my retirement funds or mortgage or family vacations or nicer haircuts. But I didn’t and now I’m in my 40’s but will never buy a brand new vehicle again. One and done. Regardless, vehicles are expensive and I guess they keep you working to pay for them to drive to work to…what?

    My preference would be to commute via bicycle but the route is interstate only and a dangerous section at that. Tried once and never again.

    1. I would not include fuel, car washes and stuff bought at gas stations. I am in the 8th year of my 2011 Nissan Sentra and spent 10k+ this year on repairs which included a new set of tires.
      I need to find a good place to take it.

  6. Hey FS!

    If someone was making over 200k and living in the economically feasible midwest (outside of Detroit) with no family and manages their finances well, what are your thoughts on the 10% rule becoming the 5% rule? :)

    I am on track to early retire at 40 (and still spending VERY nicely but saving a ton too; I don’t want to live my life without adventure in my 20’s and 30’s purely for the financial goal of hitting early retirement… then I would be missing out on so much!).

    I am in my late 20’s and just read your new post here (I know this post is a bit older from 2011, but still good info!) where you mention living a little and that you’re getting a new Mercedes:

    I can definitely abide by the 10% rule on a “yearly” basis by spreading out the car payment over a 8-10 year lifecycle of the vehicle, but abiding by the 10% rule all at once is def harder ($20-25k for a new car for salary over 200k).

    My current car is a 9 year old, 2010 Ford Taurus (155k miles and purrs like a little baby koala, just had brakes done too). I do drive a decent amount for work with customer visits (about 20-25k miles a year), but the good news is that my ALL of my gas is compensated and they actually throw in an extra $3600 bucks a year purely for my car expenses (repairs, etc.) that I can keep the cash if I don’t have a vehicle expense that year.

    What are your thoughts on this? I do want to splurge a little, but I have also looked at lease options too where I continue driving my current car (fingers crossed) until 200k or more and take the lease for a joyride on weekends, etc. Leases have problems of their own however, and they are technically a waste of money.

    The best option I have come across is the certified pre-owned option where I can still hit the 25k mark but drive a nice luxury vehicle like an Audi that is only a few years old and still low in miles…

    I don’t plan on having a family until after I early retire, so I don’t have this big expense to account for in my calculations. This is certainly great for now and my current saving/spending strategy :)


  7. Ed. Longshanks from the north

    If you have a high mileage vehicle – focus on one calculation – the cost of repairs in a given year vs. cost of a new vehicle purchase (purchase finance/cash).

    In a given year, $2-3,000 ($Canadian) in repairs, is still going to be less expensive for me, than getting involved in a new vehicle purchase.

    For example, I had to replace the catalytic converter and power steering lines in 2018. (2007 Honda Accord). I also lost the air conditioning recently, yet I’ll be bumping that expense to 2nd quarter of 2019, so I’m good for awhile. (knock on wood).
    Yes it’s inconvenient to have these items fail, but with my climate extremes I’m not surprised.

    I would recommend getting a new vehicle if your current one is no longer reliable.
    Read: it’s in the shop every other week for one thing or another.
    Or, if money is no object and you can afford to buy new often, or lease in perpetuity, all the power to you.

    1. Totally agree if you maintain a vehicle they should last 200,000 miles I drive bmws , just my preference I have a 1998 528i with 208,000 km and a 2010 BMW X3 with 135,000 km both run fantastic . Most owners are afraid or won’t do there own maintenance…. the basics are not rocket silence . But I also think people find it easier to drive new and make one monthly payment. I tent to keep my vehicles for a long time …if it gets a dent in it have it repaired , if it has an oil leak repair it,
      I think most people don’t know how there car work or even care , me I can tell you if my car is or isn’t running right.
      Last nite and the most important keep your fluids changed!

  8. Should you judge the value of he car based on the trade in value or private sale? I strongly prefer trading in my cars to avoid the hassle of a private sale.

    1. Trade-in value if that’s the way you prefer to sell your car. I used to ALWAYS do private sale to get max money. But now that I’m in my 40s, trade-in value is probably the way to go for convenience sake.

  9. I absolutely love my 2012 Honda Civic but some douche hit me and he didn’t have insurance…the repairs are about $2500…I’m still paying her off…got about $8000 left and her value after the accident on KBB is about $5000…and my warranty expired…I’m tempted to just get a brand new Civic but my boyfriend thinks I should just fix her up and keep her. Any suggestions?

    1. Wonder if you bought that brand new Civic Queenie,they are great cars.
      Mine is a 12 year old with 154000 on the clock,still on original clutch and drives great.
      Only drive 5000 miles a year so my running costs just the basics,tyres ,pads,oil changes.
      Hoping to get 200000 miles out of her,nine years down the road!

  10. The reality is you can buy the most reliable car on the market and just luck of the draw yours is the one that breaks down within a year. They sell extended warranties for a reason at used car lots. I’m in a bit of a situation myself with my 1998 Ford Explorer Eddie Bauer Eddition. At 268,960 miles I did a 3 point turn and only got 2 points out of it LOL all of a sudden I heard a snap and it felt like I hit a car behind me, I had just snapped something in my transmission that shifts the car into reverse probably a shifting band. I’m pretty sure it’s smaller than most people are making it out to be, the car drives perfectly forward just now doesn’t have reverse… So I can literally just drive forward forever #ForwardThinking LOL but

    I have several mechanic options One is $1300 to place a used transmission in 50/50 chance it works (not a good bet) the second is $1800 Transmission rebuild only rebuilding the parts that need it with 6 month warranty the next is $2600 rebuild with 1 year warranty. Then another guy did a free inspection and at first made it sound like it might be small but after inspection said it’s not the small outer stuff it’s definitely inside the transmission and Quoted $3600 with Front Differential service added as they spotted what another mechanic also spotted months back that my bearings on my left front wheel need to be replaced and the front differential fixed.

    At that point it’s a good down payment on a New Used car. The problem is who knows if the used car will run better than my current car so I may buy a $10,000 to $22,000 car but it may still end up breaking down and costing me similar repair costs on top of a monthly payment which was the argument my wife gave me when I told her I think it’s time to buy a new used car when we had an earlier $700 repair.

    The car is basically worth nothing though we have a dealer in town that claims push pull or drag it in they will give you $3500 but I think they just mark all their cars up to make that up LOL. My car did make it 16 years and I bought it used at 54,000 miles at $15,000 so I definitely got my money’s worth out of the car. Just not sure what to do now. Do I get another car? Fix this one, or just drive it FORWARD only lol. I mean I would have a monthly payment but would spend less on gas it almost evens out. There is a fix it opr sell it calculator online that shows you the difference between buying another car or fixing your current car and breaks it down into cost per mile for each vehicle. According to the calculator sticking with the old car still saves about $1 per mile but that doesn’t take into account the possibility of another major break down. I have never been stranded with this car, always has been reliable always made it to the shop on it’s own power but who knows when that luck will run out.

    My wife being involved in the purchase of the new car throws things into a spin as well as she doesn’t want another explorer or american car, but I need an SUV to lug DJ equipment around which automatically makes things more expensive and cuts down options. If I don’t buy American that cuts down more than half of the SUV’s as many are American made. She did let up on that but would still prefer a Toyota or Honda. I was actually looking at a sweet all white 2013 Landrover Sport HSE at only $26,000 with a clean carfax report and one owner at 90k miles but looking up reliability reports Landrover sounds like they break down a lot. It’s the only car I actually really fell for though LOL. But then upon further research found the cost of maintaining the Range Riover was actually pretty low. I can totally see myself in this vehicle but don’t want to end up in the same situation. And at that price it’s almost as much as a brand new car. I hate these types of decisions.

  11. Bit late to the party in terms of commenting (5 years), but I thought I’d add my two cents.

    After reading the article and comments I’m noticing two distinct things for people opting to spend more on cars and on repairs, while expecting so little time out of their car:

    A.) They are not inclined to do ANY mechanical maintenance themselves

    B.) They only expect a car to run ‘a few years’ while ignoring preventative maintenance

    C.) They don’t put any research into reliability, or rather; maintenance vs. miles

    Honestly, Americans could do with a bit of grease monkey work once in a while, it builds character.

    I’m following the 10% rule for my next car, but for that much I could put a new engine and repaint my current car, plus suspension, axles, and manual transmission conversion. Basically, I would have an entirely new car (minus frame and body) that would reliably give me another 200K miles of easy maintenance with a better engine and internals.

    However, I put a good amount of thought into my purchase (Japaneasy to repair) whereas many just seem to buy whatever without knowing if the model has certain costly issues hiding under the hood.

    No one will probably read this, but hey, you never know. I just think if people research investments they should research their cars as well.

  12. Hmmm…. that 1/10 guideline needs some clarification, I think! It may work for you, but certainly not most people outside of a big city :) Not all of us can rely on public transportation or taxis. I live in the countryside, so if I didn’t have a car to get to work, I’d have to call an Uber (which isn’t always available here) and pay a total of $60-180 a day! And that doesn’t include if I have to go to the grocery store, or want to go to the movies, or visit family. I guess I could always ride my horse 10 miles down the road ;)

    I’m facing this question right now… in the past 12 months, I’ve spent $997 in repairs for my car. If I keep the car, I need to put about $800 into it just to keep it safe to drive. As a trade in, I’d be lucky to get $3,000 for it, though buying a similar car (10+ years old, about 150k miles) would run me about $5,000 here. At least with my car, I know its entire service history and I know that it has been scrupulously maintained.

    Now, your 1/10 rule would say that even my current car is above my means if we just look at its value alone, since I make 45k a year. But what about safety? My car is a Toyota, so I figure it’ll probably last another 50k miles at least. The problem is that you never know when it’ll go, or if it will go, or so on. I learned that the hard way last year, when it broke down on a scary interstate in the middle of the night, far away from home, with 10% battery left on my phone. That’s not a safe situation for a young girl to be in! Luckily, I was with someone at the time…. but I can’t assume that’ll be the case next time. What if it had happened the month before, when I drove 300 miles away for a business trip by myself? Any car can break down, but it’s much more likely when parts have aged significantly and there’s been a lot of wear and tear.

    If I got a 3-year old CPO car, I’d be paying $200 a month or less, because I haven’t had enough time to build up a big savings nest where I can buy a new-to-me car in cash while still having enough in my emergency fund — I just haven’t been in the workforce long enough. That’s less per year than I’m paying in repairs now, yes, but peace of mind is worth something too. I think that the 1/10 guideline is a luxury for those who can afford a reliable car that’s only 10% of their income.

  13. Connor Oborn

    I am in a stupor of thought. there is nothing mechanically wrong with my car its the rust. Mercedes has this thing their cars rust around the door handles and i have a wagon and its full of rust as well. I don’t know if i should replace all the doors total of 5 and get the cosmetic stuff taken care of or buy a different wagon with less than 20k miles on it? i currently have 214K its my second wagon and they normally don’t break in until 225K miles but the rust is an issue with me and this car drives better than it did when i bought it in 2004 with 30K miles AZ car.
    I didn’t see anything covering my topic and i was wondering if anyone had a suggestion or two. to replace with a different car Im looking at 36-40K dollars to repair and replace around 15K dollars. I am not in a spot now to purchase a different car so should i save what i can and drive my rusted out car or bite the bullet and have it repaired. HELP Please

  14. Safety is also an issue. As I research newer vehicles I’m discovering just how statistically safer Newer Cars are than older vehicles. This is even more important if someone buys a smaller vehicle like the “Rhino” and are up against Folks in F350’s in a Road Warrior style Darwinian Stuggle for survival out amongst the mayhem & carnage that is the American Roadway.
    That said, I have a ’95 Toyota Land Cruiser & a ’95 Honda Accord. Sometimes when I get in the old Accord, I have a funny feeling that I need to have a shot of Sake, bow to the Emperor and don my headband: the one with the rising sun on it.

  15. I have 2 really old cars – 23 and 19 years old. One of them looks pretty good and the other is cosmetically imperfect. I do regular maintenance – oil changes, belts, hoses, filters, etc – on them and usually every 12 – 18 mos. they have a big repair. The last one was the older car’s water pump – went to a tune of $465.00 last July. Why am I keeping them? Well, the insurance is a lot lower (a LOT lower) and, frankly, they still run good. Also, it seems to me that the quality of the products produced today is way less than what I already have. My cars are basic – not much computerized electronics – which I am certain costs a small fortune to replace. One of the cars even has manual windows – imagine that! I may seem foolish spending the money periodically to repair what breaks, but, I just can’t bring myself to spend 20 – 30 thousand on what I see on the road today.

  16. Forrest Hartman

    Although the intention is good, the 10 percent rule does not make sense with things like automobiles … unless we are talking about people with very large incomes. It may make sense, for instance, for a person who makes $100,000 per year to spend no more than $10,000 on a car. Of course, one would have to factor a lot of outside things into that situation as well.

    When someone makes very little money, the advice becomes really sketchy. If someone makes only $30,000 per year but needs a reliable vehicle to get back and forth to work, it doesn’t make sense for that person to limit his/her vehicle purchase to $3,000. If they get lucky and find a great deal, then they should take it. If, however, the person can spend $2,000 to $4,000 more and purchase a much more reliable vehicle, it will probably serve them much better in the end.

    Where I am at, there is a massive difference in the quality of a vehicle one can purchase for $3,000 and $7,000. When you get into the $7,000 range, you might be able to find a nice commuter vehicle with low mileage and relatively good gas mileage. For $3,000 it’s tough to find anything with under 150,000 miles on it. Yes, you can gamble that the 150,000-mile vehicle will be one of the lucky ones that makes 300,000 without significant problems. My bet, however, is that you will easily spend the extra $4,000 grand in repairs within 3 years and that each repair will leave you with the dilemma you present in this story. “Man, they want $500 to replace my starter. Should I really sink that much into a car that’s worth $3,000.” Problems can occur with any car, but they are statistically less likely on newer cars with less mileage (all other things being equal).

    One must also include factors like fuel efficiency. Newer cars are getting better and better mileage, and gas is now more than $4 a gallon. My wife and I recently bought a new hybrid to replace a 10-year-old vehicle that got 17 miles per gallon. We got zero percent financing on the car and will save approximately $200 per month in gas. I shopped for some time, as we usually buy used cars. However, the only ones I could find that had similar gas mileage were either beat to death (100,000 miles or more) or selling for only about $5,000 less than new (yet they still had between 30,000 and 50,000 miles on them).

    The new car comes with an impressive factory warranty and all maintenance included for the first two years, meaning we can count on no out of pocket expenses other than our no-interest car payment for at least two years. With a $15,000 used hybrid, we would be taking the chance of a $500 to $1,000 repair the day we drove it off the lot. Granted, we would still be paying less than the new price. However, our new car gives us not only the security of knowing everything is covered but the likelihood of two to three years of extra use because of the lower mileage. Also, I meticulously maintain my vehicles. You can buy a used car from someone who has never changed the oil.

    There are so many factors to consider that a simple 10% rule doesn’t make sense. There are many costs associated with car ownership and the initial vehicle price is only one of them. If you aren’t factoring in fuel costs, the cost to insure the vehicle, average repairs and resale, you aren’t getting a complete picture.

  17. This is discouraging :( My car just got totaled, I’m retired with 30K a year. I had thought to buy a new car to last me the remainder of my years, had my eye on one with a ticket price of 14K. With 5K down (insurance money), that’s only 9K. But I need to make 90,000 a year…
    I do have a bicycle, but it makes the 60 mile ride to my grandson’s longer than I like. :(

  18. when factoring your costs, make sure to factor in the difference in insurance costs and any mpg differential. Also, basic maintenance and all – most folks forget that even a new car needs oil changes etc.

    Currently we have four cars — miata 99 (150K), Echo 00 (183K), subaru 96 (154K), CRV 00 (216K). Currently CRV needs a tranny swap (manual) for about $1k for the new one… we will likely do it ourselves (just like we did the engine swap 8 years ago). Saves a heck of a lot of money!

  19. I also factor in the cost of repair vs. the average monthly car payment. If I have a $1000 repair on a 10 year old car and the average monthly car payment is between $380 and $460 a month, if I fix the car, I’ve “paid” for the repair after a few months since I’ve avoided a car payment.

    Now if I’m saving up for a nused car, which is how I bought my last car, and I’ve got $18000 of $20,000 saved and my old car has a $1000 repair, I probably would go out and buy the nused car and put that $1000 repair cost towards the nused car. It depends on where I am in the car saving cycle.

  20. New cars provide a poor value compared to buying a used vehicle. I definitely would not buy new. Even a vehicle that is ten years old is an excellent value if you buy a reputable make, model, and year. I know some used cars are more reliable than some new cars currently made.

  21. World of Finance

    Glad to hear Moose is going strong again! I made the same decision to put a few repairs in my old car as well. She runs great ;)

  22. My truck is 13 years old and has nearly 300k miles on it. I know it’s not going to last much longer- but I’m going to keep it as long as possible. I’ll get a *new* vehicle when the average monthly/quarterly expenses (over at least 6 months or more) to keep it running are more than a car payment for something newer (2 or 3 year old pre-owned).

    So if I have to make a $500 repair in month #1, no repairs in months #2 & #3, a bigger $1000 repair in month #4 and no repairs in months #5 & 6 for a total of $1500 over 6 months, I’ll keep the truck because the averaged monthly expense is less than $300. However, if the average expense starts running more than $300 per month, I’ll probably start looking for something different.

  23. A car is like having a child. You must keep it and cherish it until it’s time they are old enough to move out. I am not a father, so I speak with inexperience with raising children, but I made this analogy because it would be too stupid to get rid of a car if it’s still functional. Maybe the maintenance costs are too high for its value but buying a new car may not always save money in the long haul because every vehicle has it’s fair share of problems that require expensive repairs.

  24. Sunil l Entrepreneurship & Personal Finance

    if we followed your 1/10th rule none of us would ever buy (or afford to buy) a new car even at a meager $30k price range lol

    1. Really? A $30,000 car is a big baller car man! That’s literally 7-8X more expensive than my car. The folks I know in SF who drive a $30,000 car earn at least $200,000 a year. I’m trying to encourage folks to go to 10X the amount, and I think it’s working.

      Slowly but surely!

      1. Sunil l Entrepreneurship & Personal Finance

        a standard cross over these days will cross over $30k. you need to have a chat with my wife about the 1/10th rule. she is currently “researching” (more like browsing) lexus RSX . . .

          1. Agree with above that this 10% rule really doesn’t seem well thought through, here in Australia at least.

            I can see where you’re coming from but if everyone was to follow this rule & run their cars into the ground, never upgrading unless absolutely necessary, there would be no used cars.
            People need to buy new cars so that they can become used cars & seeing as the average new car starts at maybe $40k dollars here anyone buying one would need to earn in excess of $400k! Not realistic…

            I know for myself comprehensive insurance on a new car worth $50k was quoted at $500 per year compared to third party, fire & theft on a 15 yr old car worth $3k being quoted at $430.
            This was due to safety, security, ease of sourcing parts, etc.
            Then there is also fuel consumption which was reduced by half in the new car.
            Obviously these things alone won’t pay for a brand new car but they need to be considered instead of completely ignored.
            You seem to think initial purchase price is the only factor?

  25. TheMonopolyGuy

    Sad you spent that much on brakes and rotors.

    Rear brakes – 18$
    Front brakes – 27$
    Front rotors – 64$ each

    173 dollars and about an hour and a half of work.

    1. Thanks. I hope your comment made you feel better about yourself.

      Didn’t realize there’s a one size fits all price for pads and rotors. Guess wages are the same too. What do you do in San Fran?

      Recommend me your mechanic and I’ll stop by and even give you a referral fee. Thx!

      1. TheMonopolyGuy

        Um… look on… those are the prices for a land rover 11 years old. Best estimate I could do, but your prices won’t vary much… dont blame me.

        1. TheMonopolyGuy

          I made the assumptions that you had a 2000 Range Rover 4.6L but the parts are probably the same for whatever you actually have.

          Brake pads:


          Even if you took these parts to your mechanic and still paid for labor you’d save a bunch… Mechanics charge a huge markup on parts themselves. It wouldn’t take much to do it yourself either and save on labor as well. It’d only take a jack, tire iron and a socket wrench with a few metric sizes… probably 8mm and 10mm.

          I just spent 700 on car repair this month (which brought me to this article) but I was able to rebuild my entire engine with that. 700 is extreme just for brakes.

          1. Thanks for this info. It’s much better than the first comment that digs and provides no solution.

            Guess I’m not that handy, and frankly I don’t know anybody who changes their brakes and rotors themselves. I’m happy to pay someone to do it right, and do it for me. It’s the opportunity cost of time.

        2. TheMonopolyGuy

          Dont know anyone who doesnt do their own brakes? On a personal finance blog? Its only marginally harder than filling the gas tank… and at those prices… no wonder they need personal finance tips

          1. You might be mistaking this site for an auto blog? I understand if so, as there is a good diversity of topics here.

            I’m happy to pay someone like you to do my brakes if that’s what your time is worth. That’s the great thing about this country, we’re free to do what we want. If you want to make more money, you’ve got to improve your level of education though.

            Keep on commenting and sharing your thoughts though as it’s fun to see your perspective.

    2. Dude, are you like 26 years old who makes under $60,000 or something? Who has time to change their brake pads and rotors and buy all the parts? You’ve seriously got to do something better with your life.

      You sound like a complete loser. The reason why you are poor and going to forever be a loser and troll is because of your bitterness. Only you to blame for your sad state. It’s OK to clean toilets, just be proud that you do!

      1. @The Genius… LOL (I’m sorry, I have to laugh every time I see your “descriptive” name). Who are YOU to call him a loser? You think he’s a loser because he knows how to fix his car??? But you are a Genius because you don’t know how to? I have to admit, I know NOTHING about cars, but those whom I DO know who can fix cars are anything but losers. And Genius, I don’t care if you are 20, 40, 60, 80, or 100 years old and make $10 million a year.. you are still a loser in my book. And I know you are proud that you are!

        1. Wait, you don’t know how to do your brakes, and therefore don’t do your brakes yourself? Why are you even commenting? Add some value for once.

          The people who work on their own brakes and have the time are fine. It’s the people who call people out for spending money outsourcing their tasks, who are the true losers. There’s bitterness all over them, much like your own comments.

      2. @The “Genius” – Sam gives advice in this column: the 1/10 rule, which is fine for him. It’s what he believes, even if it may be impractical for those who don’t live right in a big city with good public transportation. Whatever, it’s what he knows and believes. He may “call others out” by telling people that they can’t afford the car they are driving, but it’s just a disagreement, nothing serious.

        TheMonopolyGuy was trying to demonstrate another way to save money – that if you buy your own parts and know someone handy, you might be able to save a good amount of money. He probably didn’t know (and why would he, based on this article in which Sam speaks of his old junker car…) that Sam can well afford to spend $700 on brakes, and it may not be worth his time to figure out what parts he needed and find someone who could do it cheaper…. (It wouldn’t be worth it for me to do that either, and I don’t make anywhere near what Sam makes.) HOWEVER, TheMonopolyGuy was not giving this advice in a mean-spirited way… certainly way less mean-spirited than anything I’ve ever seen YOU write. The MonopolyGuy DID add value for someone who might be able to use that advice.

        So what value did YOU add, “Genius”….. by calling this guy a loser?

        Why did YOU bother commenting, you might ask YOURself.

        I added value for myself. I don’t like to see bullies like you on the schoolyard, and it makes me feel better to say something, even if I can’t get through your thick “Genius” skull!

  26. I think buying used in this economy leads to saving the most money. You just don’t know what to expect and most people are knee deep in debt and getting a car loan just adds to it. We bought used and it was a good car and our insurance was lower because of it. It’s something to look at.

  27. Lol, the 1/10 rule is definitely controversial. I think Sam just puts it out there, food for thought. There are no hard and fast rules but it is definitely something to consider, it is a little foolish to spend excessively on cars, clothes, rent, etc as a percentage of your income. That is not how you get rich.

    On the other hand, I think comparing what Zuckerberg drives isn’t all that relevant either. Most things are easily affordable if you have a few thousand million dollars. I think Zuckerberg has an Acura and no wealthy car guy I know would own a boring car like that. Pincus used to have a black BMW X5 V8 but in the last year or so he picked up an M X5, it is the same color so most people probably don’t realize he even got a new car.

  28. Thanks for the mention! Glad you liked the article.

    As for your car, if the cost of the repair exceeds the value, time to scrap it and buy another. You can get some awesome car deals right now, so it may be worth getting a new car. I was recently looking at some of the incentives new car dealers were offering, and they had the prices inline with used cars 2 years old with 30k miles!

  29. I was dealing with this issue over a ten tear old car.
    If you average it out a car costs 2000 or more per year.
    Add another 1000 for insurance. I save 500 of that due to dropping
    Collision insurance. So after ten years you continue each
    Year 500 ahead. So 1000 per year of maintenance you
    Are still better off keeping old car.

  30. I am getting the itch because my cars are now 17 & 15 years old. They are still in good condition, but I want to change before I retire so there will be no debt. I am also concerned about added costs and both cars will need timing belts which is roughly $600 each. I would love to drive them into the ground, but that is not realistic.

      1. There are 2 things that stop me, 1 is payments and the other is capital better applied to something that grows. It is quite a conflict! Thanks for the links, I think I am obsessed!

  31. We don’t have a hard and fast rule. Usually if it cost over $1,000/year to maintain, then I start looking for a replacement. We got a new car last year and hopefully it’ll last at least 10 years. We drive around 7,000 miles/year too.

  32. Dead battery on Donner Pass in the winter is definitely something to be avoided!

    When we bought our last new car, one of our main considerations was how long it was going to last. We went with a diesel because the engines last 500k miles. C claims he wants to be buried in that car. (I am so not paying for that burial plot.) So we paid more for it than I’d ever expected to pay for a car (more like 25% of our income), but after 3 years, we had it paid off, and with good care, we expect to have it for 20+ years.

  33. Yep, come to think of it, why did labor cost me so much? Hmmm. Well, it’s $705 after tax, and we got 10% sales taxes here in CA. Hence, the pretax cost was more like $640, hence the labor cost was $240 since parts are parts.

    Does it take 3 hrs to do everything a $80 and hr? Maybe, I don’t know. All I know is that I thought I would have to spend $1,000, but didn’t. SF is expensive.

    If you only make $50,000 a year and have $100,000 in cash and spend $20,000 on a new car, yes, I think that is absolutely nuts! So much better use of your money. It takes $30,000 gross income to save $20,000.

    1. If you do your brake pads and rotors, You could do it for not much over $100 in parts per set, buying good name brand Wagner stuff online, and that is for a chevy pickup. Cars are cheaper because their smaller. Parts dont cost that much, shops just over charge. I call it a ripoff. If you don’t buy a $20000 car and trade often, You will be doing that routine maintenance on anything you buy and be paying big money for it. Maintenance is cheap if you do it yourself, otherwise buying a new car with cash might be smarter. Some of those shops charge 800 for cheap shock absorbers, and I bought expensive ones for 240 and have almost 100,000 miles on them already. But seriously that shop is making a killing on working on your car. They charge double for parts, that’s why you could save on parts and labor at an small independent shop.

  34. I totally don’t get the 1/10th rule? Does that mean that someone making $30,000 should spend only $3,000 on a car? What kind of car can they get for that? And beyond that, how long will a car that cost $3,000 last? Wouldn’t they just end up putting more money into maintenance, before having to replace it with another junker car after a few years, anyway. In the long term, this seems like an unrealistic plan. Besides, what if you only make $30,000, but you’ve saved and saved and saved to buy your nice, fancy car totally (or mostly) in cash. Should you not?

    I’d say a more realistic measure would be to make sure that your total car costs monthly don’t add up to more than your 10% of your NET monthly income.

    1. Correct. A $3,000 car or take the bus like I do 5 days a week. The reason why some people are broke is because they spend way more than 10% of their annual income on a car.

      And if you save and save to be able to spend $25,000 cash on a car and still only make $30,000, then I just don’t know what to say. Broke for life? But, it’s fun to spend, so go ahead, live it up!

      1. Billy Zelsnack

        Don’t you think it makes more sense to spread the cost of the car over its expected lifetime?

        Last year our family’s new car cost $13,500. I expect it to last at least 8 years. That works out to $1700 per year in direct cost. At what income level does it not make sense when framed like this?

        1. I was thinking along those same lines, Billy. A $3,000 car that only lasts a year or two (and likely with expensive repairs) may not be as good of a deal as a $18,000 car that lasts 10-12 years.

          This post is timely for me because I have also been thinking about getting a new car in the next 1-5 years. I put a lot of miles on my car and I know in time it will need costly repairs. Being a single woman (in a part of the country where public transportation isn’t really an option, having a safe and reliable car is important to me. For the time being I have decided to put off the new car purchase as long as possible as I really love the car I have now and know I should be able to get $50,000 more miles out of it before it starts getting really costly.

          By the way, how did your car gets its name? I like it.

          1. It’s a gamble at the end of the day. However, in the beginning, at least you know you are spending $18,000 vs $3,000. The $18,00 car could be a lemon and the $3,000 car could be a champ.

            The 1/10 rule is a guideline, and nobody except for their finances will get punished if they don’t follow!

            I chose Moose because he’s a rigid, mountain truck that’s old. Thought it fit well!

      2. OK, I mean, I get what you’re saying about balance and not spending more than you should relative to your income but like, you mean that if I want to spend $10,000 on a slightly used Volkswagen, and I make less than $100,000, I’m an idiot? Even if I get 15 years out of the car? Instead I should just buy a clunker that will likely cost me money in maintenance until it needs to be replaced after 3-5 years? (And I say this having driven many a junker car that my parents have bought over the years.) Like, again, I get what you’re saying, but it seems like your way would cost significantly more money in the long run.

        And besides, really, what does it even matter what the value of a car is? Isn’t the important consideration what it costs you on a monthly basis, relative to your income? I mean, if I buy a car that is valued at 5% of my income, but I still can’t afford to pay the insurance and gas on it, it’s an irresponsible purchase, regardless of what the value is.

        1. Up to you Melissa. I’m not calling anybody an idiot. I’m assuming you haven’t followed my 1/10th guideline hence the debate? Why not just make more if you want a fancier car? I dont know a single person offline who earns less than $100,000 a year and owns a $10,000 car, unless they are over 50 and have a tremendous amount of wealth accumulated. The people who I know who make $100,000 or less drive $8,00 or cheaper cars or just take the bus or muni.

          Since you feel so strongly about spending more than 10% of your income, how are your finances? Do you think perhaps your thinking might be incorrect in building wealth? Might be good to change your URL to from!

        2. My finances are just fine, thank you. :) I promise. And I don’t actually own a car, because while I could easily afford to buy one valued at 10% or even 20% or 30% of my income in cash, if I wanted to, because I’m good with my savings, I can’t afford the monthly costs of maintenance, gas, insurance and parking without affecting my savings goals and/or tying up more money than I’d like in essential (i.e., can’t get out of them) monthly bills. I take transit some of the time, but mostly, I walk where I need to go.

          I’m actually happy to spend 10% of my monthly income on a car. In fact, I wouldn’t like to see myself spending more than that. But my monthly expenditures have little to do with the value of the car. Because the reality is, that if I don’t make an upper-class income (I don’t, and probably never will, because of my field) and I want to drive something a little nicer, a little better on gas and a little more reliable than a 1993 Honda Civic, I have to save up for it, to either buy it in cash, or to put a hefty enough downpayment on it at decent financing that it would keep my monthly costs at a level that I can manage.

          At the point in which my income is a bit higher and I can absorb the *monthly* costs better (ideally, I’d prefer to spend no more than 10-15% of my take-home pay on transportation), I’ll buy the car. But I certainly won’t be buying a 15-year-old clunker, just because it’s valued at a certain percentage of my annual salary, simply because I don’t want to have to replace it in a few years when it dies. I’d rather buy something newer that will last, thus saving me money in the long run.

      3. Dang dude. There aren’t any buses where I live, and houses are like a half mile or a mile apart. Sounds like if you can take the bus, don’t even buy a car.

    2. The 1/10 rule is basically for “car people” who want to get new-to-them cars frequently. For us real people who use cars for simple transportation, amortizing the cost of the vehicle over a few years is quite reasonable. After amortizing like that, maybe spending 10% of your income on transportation is a bit much, but it really depends on your income – if you have low income, you may not be able to afford reliable transportation for 10% of your income, and as hinted in the article, high income people would be wasteful to spend so much (and very high income people couldn’t even find such a vehicle).

  35. I love the 1/10th rule. It’s so true about people spending way more than they should on a car. There are plenty of $5,000, reliable cars. And yours is only $4,000!

  36. I was scared that Moose went to the ‘farm’ when I saw your headline. Why am I so attached to Moose?

    Anyway, my number one consideration is safety. Probably sounds pathetic, but I get nervous when too many miles are on my vehicle given how far I drive, both alone and with kids. I so envy your 7000 miles a year. I have put 17,000 on the car I bought in March! (Al Gore hates me I am sure.)

    Given where I live and the fact that a large percentage of the business done where my husband works is with the big 3, American is the only product we will buy.

  37. We based our decision (about 18 moths ago) on the cost of maintaining our old car. It was over $2000 for the work we needed, and could have been up to $4000. Considering out car was only worth $3,500 and had a ton of cosmetic issues we opted to sell it.

    Or mechanic bought it for a decent price and we used that money to start a downpayment fund. We went without a second car for a few months to see if we could make it work, but in the end decided to buy a second car again-mostly due to the harsh winter weather we sometimes get (making it even more difficult to walk in our very sprawled out suburban community).

    It was a smart choice in the end for us, but not an easy one to swallow finance wise.

    We opted for a safe and fuel-efficient car for my husband-and we negotiated a good deal and got great financing (3%). My car remains the ‘family car’, and his is the perfect car for commuting (only 15-20 minutes away) and carting the kids around on occasion.

      1. I think our full price with all taxes and registration fees was just over $16k. The car was selling locally for anywhere from $17.5k to $18k so we got a good deal IMO. We bought new because we prefer to buy new and run them into the ground so to speak.

        1. That’s cool. I’ll probably run my Toyota to the ground and won’t bother
          repairing it. I hope you bought a car that lasts.

    1. Yeah, if I had to spend $2,000-$4,000 in repairs, when the car is only worth $3,500, I think i would go the new used car route too.

      Although, theoretically, after spending 2-4k, the car should be as good as new!

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