so what do you do if you drive to work, and you total your car? do you have the cash on hand for a replacement car?
If you dont have that kind of money in emergency fund, your playing it risky
It's easy to own a 'beater' if you only use it to drive from your house to your job, to the grocery story and back for 40 years.
The latter two sound like business uses. The article is about personal use of personal vehicles.
> Kids, gear
Even then, a sedan or utility/mini van can do the job at much lower costs.
> boats, ATVs
Boats and ATVs are also good examples of money pits that prevent people from saving for retirement.
(Especially boats. I looked into buy one, and quickly noticed that I'd have to be on the lake like half of in-season weekends and/or use all my vacation during the summer before ownership beat renting. But I'm only on the lake a few weekends a year, and even then only need/want something other than a kayak maybe every other visit.)
And again, the conclusion of the article is "But if you’re one of the many people who are woefully unprepared for retirement or any of your other saving goals, a good place to start would be cutting back on any unnecessary spending on transportation."
If you're on track to retire, go ahead and buy that nice car/boat/etc. But if not, maybe consider cheaper alternatives.
They are personal uses.
> Even then, a sedan or utility/mini van can do the job at much lower costs.
Sure, if your gear is a stroller and grocery bags. Sedans and utility/mini vans can't go offroad easily. I don't mean something like slopping through mud or a river - I mean traveling through mountain passes or campground roads can be a huge pain in the butt (if not impossible).
> Boats and ATVs are also good examples of money pits that prevent people from saving for retirement.
They definitely can be. Not all boats are massive ski boats - even towing 8ft john boats and kayaks (which can both be had for less than $1000) is easier on a trailer which can wreak havoc on sedan transmissions (if they even have a tow hitch at all). ATVs are super useful for maintaining property, animals, fences, etc, not just riding dirt trails.
> And again, the conclusion of the article is [snip]
And I totally agree with the article. I was providing real-world examples of things that folks use vehicles for that a sedan/beater/minivan would not be a great tool for for the original parent.
Rental vans/trucks exist.
I'm talking about the people who maybe need it once or twice a year, or like to imagine themselves needing it, when in fact they really don't.
They have a desire, not a need.
1. Cannot afford the worst-case-scenario. (Example: replace your car if it were totaled)
2. You expect the return from claims will exceed the cost of premiums/deductibles. This should never happen if insurance companies are savvy and want to be profitable.
Large companies with a vehicle fleet often self-insure those vehicles (AT&T last I heard) because they can afford every vehicle worst-case-scenario (ignoring liability, which is a legal obligation).
Socially/emotionally, insurance is a peace of mind which is important and valuable to some people. Security and all that.
employer provided health insurance:
$50k salary
$5k health insurance
$50k taxable income
$50k salary
$5k in lieu of health insurance
$55k taxable incomeMy family's insurance healthcare isn't tax-free, which would mean saving $2k or $3k or whatever. It's over $10k of insurance a year that I pay less than $2k for.
To a lot of people, their cars and or other material belongings are outwardly visible extensions of their (imagined) personality, and signifiers of wealth to their peers. It's just a different set of values.
Personally I absolutely love cars. Not for any status or macho identity, but for the mechanical intricacies and neat design ideas. I am much more interested in a 1970s Opel Kadett than a big new Mercedes or something. I enjoy the act of driving, not the idea that "I am driving something expensive that other people desire".
Have you considered cycling instead of walking? It's cheap and there are so many opportunities to geek out over neat ideas.
Eh, I've seen people in construction/trades buying "utility blingmobiles". They need a big truck, but what they buy is bigger and nicer than what they really need. It's the equivalent of buying a $10,000 workstation to do web development (you can, surprisingly, run slack on a lesser machine).
Is that not true of all insurance? Does this mean you go through life with only whatever legal minimum of insurance is required in any given circumstance?
I never carried collision or comprehensive insurance, having the opinion that dealing with insurance is always a pain in the ass. The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it.
Because of this, my total cost of ownership of cars was really low. I piled all the money I saved into investing, and came out far ahead.
I sold my last car when I retired. Now, I walk everywhere: to the supermarket, to the park, to the gym, to restaurants, to the downtown bars. I'm so glad not to own a car.