The Eighteen Year Old Car

Last summer, I reported on a decision to put over $600 into the front end of our 2000 Nissan Altima GXE. At that time, I promised a future update, letting, you the reader, know how things worked out. Over the course of the last 13 months, I have also replaced the battery (less than $100) and the tires ($300). Today, the odometer reads 129,148.

To put things in perspective, I did a little research. The last time this car required maintenance beyond changing oil and filters occurred in September 2010. At that time the odometer read 92,852 miles. Back then, I replaced the brake pads, exhaust pipes, muffler, timing belt, transmission fluid, antifreeze, and probably some other items I don't remember, the typical 90,000 mile maintenance required by a modern Japanese car. In my mind, if I decide to keep it that long, our Nissan probably has 50,000 miles left in it.

Back in late September, we experienced a bit of a scare. At 5:45 on the morning before we were planning to leave for Florida, the car alarm went off while the unlocked car was sitting inside our garage. I could turn the alarm off with the key fob, but as soon as I turned it off, it would start up again. Finally, I solved the problem by disconnecting the car battery. I called my mechanic. He said the alarm was a part of the computer system and that he wouldn't touch it. He recommended a locksmith who specializes in car alarms. That gentleman sent me off on a series of phone calls that produced only two offers to look at my car at $70 per hour with no guarantee of anything, if and only I had it towed to their location. The Nissan dealer who helpfully told me that the events of the morning, as I reported them, were impossible, mentioned that sometimes the key fobs go bad. He suggested removing the battery from the key fob. This same advice was given by a locksmith who wouldn't go near my car. When I returned from Florida, I reconnected the car battery. Everything has worked perfectly ever since then. I don't know if doing away with the key fob solved the problem, or if disconnecting the car battery long enough for the capacitors to discharge, allowing the computer to reboot solved the problem, but the problem has been solved.

Of course, there is an emotional dimension to any money decision. Now that we are retired, I don't believe we need two cars. My wife is unwilling to become a one car family. That is fine by me. She is also attached to this particular car, feeling safe and comfortable behind the wheel. If the computer needed replacing, that would have been the end of our Nissan. I located a 2010 Acura TSX, the same car I drive, with half the miles for a reasonable price. I would have purchased that car to replace the Nissan, unless my wife wanted a new car. If she had wanted a new car, that would have not been a difficulty.

Today, everything on the Nissan works. It has a new battery and new tires. The body is in above average condition with only a few parking lot dings and a spot or two of rust down by the rocker panels. The interior has a few permanent stains, but all of the fabric is intact. I would expect to get $500 on trade in or maybe $1,000 to $1,500 in a private sale. The person who bought my car at that price would have a bargain that I expect would go at least two or three years without any major problems, but even though the mileage is low for an eighteen year old car, it is an eighteen year old car.

I bought our Altima new in November 1999. While not quite as good as my beloved 1996 Honda, it has proven a practical, reliable automobile for over eighteen years. I buy cars that are endorsed by publications like Consumer Report, believing that reliability is the most important factor when buying a car, assuming that its affordability allows you to pay cash.

Don't fall for the great middle class delusion. You don't have to carry a car note.

Here is how doing things differently, can help to change your life. Let's assume you keep one new car for twenty years or buy a couple of low mileage used cars over that same time period. Compare this to purchasing a new car every four or five years on credit. Given interest rates and the cost of depreciation, it would be easy to save $80,000 over twenty years. $80,000 divided by 20 years equals $4,000. That number, divided by 12 months in a year would allow you to put $333.33 a month into savings. For a reality check, note that the average monthly car payment is $479. Siegel's constant (6.5%-7.0% return on long term equity investments) tells us that if you placed $333.33 a month into a low cost index fund that returned 6.5%, compounded quarterly, that at the end of twenty years, you could expect to have an additional $163,999.83.

Now multiply that number by a second car.

Don't get me wrong, I love cars. Someday, when it is time to replace my Acura, I will be looking at cars like a Lexus GS 350 or a BMW 540i. It's your money. If you are taking care of your family and preparing for retirement, spend what remains on what gives you pleasure. As long as you are using cash, it is unlikely that the occasional splurge on luxury will cause you any problems. The danger is in using other people's money to indulge your appetite for consumables and depreciating assets.