According to a American Institute for Economic Research (AIER) study cited by Mototrend, the average American spends between $240,704 to $349,968 on automobile during their lifetime. This does not surprise me too much; after all, I spent a whole $7,504 last year to keep two cars and it represents 11.4% of my annual spending, compared to 29.1% on housing and 22.9% on food and groceries. Even as frugal as I can be when it comes to cars, it will take close to 200 grand to keep one car for 50 years' driving life according to my current setting.
According to Edmunds' True Cost to Own, there are seven types of cost to maintain a car:
- Tax and Fees
Now here is my advice to cut your auto spending: first, choose a car that fills your needs and bears a low True Cost to Own. Your decision on which car to own affects each and every of the seven cost categories. (In plain words, if you own a Ferrari, there is no way you can keep the cost down. That's why I choose Toyota Camry and Kia Optima.)
Second, consider to own a used car. Especially, I found 2-3 year old used car to be the best deal. To own a (new) used car, you can dramatically decrease your depreciation cost without bringing up your maintenance cost too much.
And if you have more time, read more and work on these cost categories one by one. Here are more advices from PFBlog archives:
- Insurance: choose the right coverage and do your comparison shopping.
- Financing: shop around, and if applicable, use your home equity loan or HELOC to fund your car payments.
- Fuel: Get a cashback credit card that rewards your gas purchases, and know where to get cheap gas from your neighborhood.
- Maintenance: treat your car nicely and avoid maintenance traps
- Repairs: be a bit knowledgeable about your car and, again, shop around