I Will Drive A Beater Forever

Unless you love driving down the highway and throwing $100 bills out of the window, a new car is not for you. I’m sure you have heard of this, but the biggest hit in the value of a new car is the moment you drive it off the lot. Nothing can be done to fix that. What’s done is done. However, I want you to think like the 1%. Don’t do what everyone else is doing. In this post, I’ll do a brief case study on a few different approaches to car ownership: The ones that cost the most money and eat into your budget, and the ones that allow you the most flexibility and freedom.

My first car was a 1998 Toyota Camry that I got when I turned 16 in 2011. My second car? A 2010 Toyota Camry when I graduated college in 2017. Am I extremely biased towards Toyota? Absolutely. I will be using their car models and prices as the baseline for this study. Deal with it.

To keep this relatively simple, I will just focus on the main component that makes up the cost of owning a car: Insurance. I would already assume your vehicle is reliable and doesn't need anything more than a couple oil changes every year. If your vehicle is constantly in the shop, it might be time for a Camry.

I have driven my 2010 Camry since I graduated college in 2017. I had full coverage through State Farm and even with multiple discounts (Safe Driver, Multi - Line, Drive Safe & Save, Good Student, No Accidents). I was paying about $60 per month ($720 per year) for full coverage. That might be high, that might be low, but I stopped paying that a couple years ago, and I have an 83 year old in a Jeep to thank for that.

A couple summers ago I would drive for Uber and Lyft to help me pay off my student loans. I was driving in the rain one day out of the blue I was T-Boned by a Jeep. The lady had pulled out without seeing me, and completely crumpled the back passenger door of my car. Ironically, this crash happened right in front of her insurance company’s building, so the logistics were actually fairly smooth. I ended up getting a couple quotes on the cost to fix the door, and they were going to cost more than the value of my car (around $5,000 at the time). I was given an ultimatum: get a $5,000 check from the insurance company, but they take the car and I have to deal with the hassle of buying a new car, OR get a $3,000 check and I get to keep the car (even though it was technically totaled). I was given a few days to make this decision, and after strolling through a few used car lots, nothing was catching my eye. I must thank those lots for not having any Toyota Camrys, otherwise I might have pulled the trigger.

At this time I was also in an intense mode of paying off my student loans as quickly as possible. After the car lots failed to peak my interest, I decided to take the $3,000 check, keep my car, and keep chugging along. I put every dollar of that check towards my loans, and seeing that number tick down further brought me some unexplainable satisfaction.

Because the car is now considered a salvage title (with 190,000 miles on it), I only put state minimum liability on my insurance bill. With State Farm this brought my cost down to $224 every six months, or $38 per month. After having this policy for a year and a half, I was given an amazing quote through Progressive that offered basically the same coverage for only $152 every six months! That works out to just over $25 per month and only $304 for an entire year! If I were interested in buying a “new” car, the full coverage insurance would have been close to that yearly rate every couple months!

Simply by spending some time researching insurance (about 20 - 30 minutes tops), I now save over $70 in insurance costs every 6 months. If I compare a full coverage policy through State Farm ($720 per year) vs my current Progressive policy (about $300 per year), that is a savings of over $400.

Just by contrasting the amount I pay to the North Dakota premiums average ($1,178), I am coming out ahead almost $800 per year. These may seem like little things that don’t matter too much, but when it comes to your financial freedom, these choices bear important consequences for your road ahead. It’s all about getting some space between your paycheck and the expected expenses. Long story short: drive a reliable beater, save all of the money.