Slicing Through Money's Mysteries
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A recent experience made me realize the best time to own the nicest car you can afford is when you have children. The nicer the car, the safer the car usually is.
Although there’s a nice mental health benefit to driving an old beater, I’m willing to spend up as a father in my 40s with two young children.
For two months, I drove a rental car after my car got bashed while under valet care. The rental car was a 2020 Nissan Armada with 60,000 miles. I had hoped for a newer Chevy Tahoe, but this Armada was all the rental car company had at the time.
Although the Nissan Armada was roomy, it handled like a boat. The steering felt loose and it easily oversteered. The car looked fine, but the interior felt cheap. Whenever I played a podcast, I wasn’t able to pause it. Most importantly, the car didn’t feel as safe as my 2015 Range Rover due to poor handling.
But something interesting happens after you’ve driven any car after the fifth time. You get used to it. After two months, I no longer thought about the poor handling and lower quality. Then I switched back.
Two months and $14,600 in repair costs later, my car was ready for pick up in Lake Tahoe 3.5 hours away! The hotel car followed me to the nearest Enterprise in Truckee, where I dropped off the rental. Then the hotel car drove me to Incline Village, where my car was waiting at the autobody shop.
Although my car was five years older than my rental, it still smelled new with only 37,400 miles. As soon as I got into my car, I realized how much better it was.
The steering was tight. All four wheels gripped the road better. Instead of thin doors, my car had thicker doors that had a gratifying thump sound when closed. Finally, the interior was much higher quality with leather seats, a large moon roof, and nicer trim.
I felt more in control in my car, which meant it also felt safer.
As soon as I got back to the hotel, I began looking up the newly redesigned Range Rover big boy! Too bad the new Range Rover costs over $130,000.
On my way back from the autobody shop I must have somehow driven over a large nail. As it was 5 pm when I discovered the puncture, all the shops were closed and I had to wait overnight to fix it.
At 7:45 am the next Saturday morning, I carefully drove three miles to a Chevron station in Tahoe City to hopefully repair my tire. Unfortunately, my driving on the flat ruined the tire. As a result, I had the shop put on the spare.
Check out all the rubber that was found after the mechanic took off the tire! The side wall with the metal wiring was all shredded as well.
On my drive back to the hotel, I again began to think a lot about safety.
It was already jolting to see a huge gash in my car when supposedly a laundry truck rammed into it in the valet parking lot. It reminded me that car accidents do happen. But to then think about a tire blowout on the highway while driving my family made me shudder.
Having low-profile 22″ tires look good. But they may be more susceptible to damage. I’m never going to let my tire treads get as low as the safety bars again. Further, I will always inspect my tires before going on a drive.
The generally accepted recommendation for maximum safety is to drive no more than 50 miles per hour and 50 miles, or the 50/50 rule. Although, all the valets I surveyed said they’ve driven on spare tires for hundreds of miles at faster speeds with no problem.
A lot of the spare tire driving distance depends on the size of the spare tire, how new it is, and how hot the weather. If the spare wheel/tire is smaller than your normal wheel/tire, it will revolve much faster. If the spare tire is older, it will likely not have as much tread. And if the weather is scorching, the tire will heat up more and be more at risk of a blow out.
We came up with the solution of driving to America’s Tire in Roseville, a town 65 miles away from Lake Tahoe and on the way to San Francisco on Monday. We called on Saturday to get the tires delivered by Monday, when we needed to go home.
It was somewhat of a nerve-wracking experience since the tire store was 15 miles beyond the recommend driving distance. But I had faith. It was the only solution because the Truckee tire stores were closed on the weekend and wouldn’t be able to get the tires in until Monday afternoon.
The best time to own the nicest car you can afford is when you have kids due to the enhanced safety features. Ideally, you have the safest car once your first is born. Then you continue owning that car for 10 or more years until it’s time to upgrade to an even nicer and safer car.
If you get into an accident, you want the safest car you can afford protecting them. You could be the most careful driver on the road, but a reckless driver could easily make you and your passengers suffer.
In addition, the more people in your family, the more utility your car provides. Think how wasteful it is to drive a large vehicle as a single person versus having a family of five. With a family, you can spread the cost across more people.
Now that my son goes to kindergarten full-time, I am tasked with driving him to and from school five days a week. About 80% of the time while I’m on the road, I see a car running a red light or stop sign, making an illegal turn, speeding, or cutting someone off. Driving is dangerous.
If anything were to happen to my kids in an accident, god forbid, I would not be able to forgive myself if I had opted for a cheaper car to save money. I loved my Honda Fit, but its paper-thin doors and small crumple zone had to go.
Having a nicer, larger, safer car reduces my driving anxiety and makes me a better driver as a result.
I have stuck to my 1/10th rule for car buying since 2005. A lot of car drivers don’t like the rule because they spent way more than 10% of their annual gross income on their existing car.
However, once you have kids, it’s worth violating the rule for your daily driver. Spend up to 30% of your annual gross income on a safer car. It can be new or preferably three-to-five years old to skip the steepest part of the depreciation curve. Then drive it for at least ten years to get your money’s worth.
In ten years, your income and net worth will most likely be higher. And the value of your car will most certainly decline to less than 10% of your annual household income. Therefore, your car will naturally become more affordable the longer you own it.
Let’s say you have a median household income of around $75,000 and a newborn. Instead of only spending $7,500 for a eight-year-old Honda Fit, spend $20,000 for a three-year-old Honda Accord. The larger Honda Accord will likely hold up better in a car accident.
In ten years, hopefully your household income will have grown to over $100,000. Meanwhile, your Honda Accord will probably have depreciated to only $8,000, or less than 8% of your annual household income.
At this point, if your kids still are minors, you can decide to spend up to $30,000 on a nicer car. Or you can keep driving your Accord if everything is mechanically sound.
Once the kids are adults, you should consider reverting back to the 1/10th car buying rule. Then again, you might be in your 50s or older and feel like you deserve a mid-life crisis car.
After all, what’s the point of working, saving, and investing for so long if you aren’t going to spend it on things you really enjoy? Your net worth is likely much higher than 10-20 years ago.
Buying a nice car in your 20s can be a serious drag on your path to financial freedom. Therefore, I don’t recommend it. But this is the age-range where most people want to splurge on the nicest cars possible for status and fun.
In your 20s, stick to the 1/10th car buying rule because you’re still trying to build a large capital nut for passive income. You’re also developing sound financial habits that will bring you more wealth as you get older.
Given the average age for new moms is about 30 and the average age for new dads is about 31, you may be forced to spend up on a nicer car in your 30s.
If you let your kids drive as teenagers, then having them drive the safest car possible is a good idea. I’ve been traumatized by too many accidents and deaths involving teenage drivers. So I’m unlikely going to let my kids start driving until they are closer to 21. If they want to buy a nice car, they are going to have to work and earn it!
Just remember to get umbrella insurance if you have teenager drivers in your household. Your teenagers could do some serious damage behind the wheel that could jeopardize your household finances.
If you are in decumulation mode, then by all means splurge on the nicest car you want. Dying with a lot of money when you could have spent it on a fun and amazing automobile would be a shame. If you commute a lot, then you will appreciate having a nicer car.
I’m no longer a car addict like I was in my 20s. However, I’ve come to appreciate nicer cars after driving a boat-like rental car for two months. My main focus is on driving a comfortable and safe car to transport my family.
If I decide to buy the newly redesigned Range Rover, I will have violated my 1/10th car buying rule. But by 2025, when I’ll be in the market to buy a new car, I’ll be 48 years old. My kids will still only be six and nine.
I could enjoy driving the car for the next 12 years until both kids are out of the house. By then, my duty to transport them safely will be over.
I highly doubt I’ll regret driving something sweet in my 50s. Instead, I’ll probably regret not driving something nice during one of my last remaining decades.
It’s already too uncomfortable getting in and out of sports cars due to my knees. Hence, going the utility vehicle route is likely my best bet!
Related: The Best Time To Own The Nicest House You Can Afford
Readers, when do you think is the best time to own the nicest car you can afford? If you drive a cheap compact car and have kids, how have you come to terms with not buying a more expensive, safer car?
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Filed Under: Automobiles
Author Bio: I started Financial Samurai in 2009 to help people achieve financial freedom sooner. Financial Samurai is now one of the largest independently run personal finance sites with about one million visitors a month.
I spent 13 years working at Goldman Sachs and Credit Suisse. In 1999, I earned my BA from William & Mary and in 2006, I received my MBA from UC Berkeley.
In 2012, I left banking after negotiating a severance package worth over five years of living expenses. Today, I enjoy being a stay-at-home dad to two young children, playing tennis, and writing.
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Perfect! I never like to buy the first year model, so 2025 may be the perfect time to get to second year edition. Gotta get out the kinks and bugs!
I disagree with several points raised in this post. Each time I had a new kid, I bought a car with top safety ratings but certainly not the most expensive car I could afford. I didn’t need “nice”; I needed functional and safe because kids ruin cars. They (and their friends) scratch them, they throw up in them, they pee in them, they trash them. One is also more prone to accidents when driving with kids due to the distraction. I wanted something where I wouldn’t feel too badly if the car got ruined.
I now believe the best time to own the nicest car you can afford is when you are young. When I was 22, I bought my dream sports car that cost more than one year’s starting salary (about $80K in today’s dollars). It was fast and flashy and proof that I had “made it” which is something I cared about when I was young but no longer care about. I had people to see and places to go (in the car); this is far less true today. This was a car I would not be able to fully enjoy once I had kids later on because of the limited space. I still own it nearly 30 years later, so I’m still enjoying it somewhat.
I’ve watched most of my friends live with their minivans, SUVS, and “sporty” sedans for the last 30 years and they never got to enjoy owing a fast car. A few, including myself, recently bought a mid-life crisis car. I purchased a convertible Corvette C8. It is just not the same as owning a sports car when one is young.
The new car may be faster, sleeker, more technologically advanced than my original sports car but I’m older. I drive slower than I used to. I don’t drive it much because I work from home AND own 4 vehicles. It can’t carry my two kids. I like the performance but don’t care for the flashiness so I picked a very boring color. Most importantly, I have no place to go. My friends are blown away by their “fast” new mid-life crisis cars. It makes them happy but there is no way to compare that to the joy of having a sports car when you are young (and stupid).
Makes sense! But how do you know your middle-age friends aren’t enjoying their nice cars as much as you were enjoying your nice car in your 20s?
For me, I work in New York City for the first two years, so buying a really nice car would’ve been a waste. I did drive a fun BMW M3 in my late 20s. But I bought it second hand.
I just didn’t want to work past 40, hence I felt bad buying a really nice car.
Good points Sam. But larger isn’t always better. Aside from Range Rovers and Porsche Cayennes, most SUVs as you pointed out, drive like boats and have sloppy handling. They also take longer to brake to a stop, which in an emergency can be life saving. Having a smaller car can avoid accidents, be easier to drive, maneuver, and stay in control.
99% of people driving SUVs would be safer in a Honda Civic or Toyota Corolla than in a SUV.
Hi Johnny, good to see you here. I will ask you to let me know your feelings about driving in a small car versus a large car once you have children. The cars are very large in America and the accidents are frequent.
I bet you will have a change of heart! Good point on stopping distance. Gotta drive slow!
For the benefit of local emissions, fossil fuel use and the climate your kids will inherit, please consider getting a zero emission EV as your next vehicle. There will be plenty of good options by then. Maybe a Cadillac Lyriq would fit your needs? Anything but another gas guzzler….
Cool. What vehicle do you drive? California banning gas vehicles by 2035.
I’ve considered this upcoming EV.
Got to go vegetarian too to save the world and avoid all leather goods.
Until they quickly shut down the power grid in Cali. It almost happened in ‘22 during the most recent heat wave when people were told by the governor to stop charging their vehicles and running their SC during peak periods while he sat in a room with a jacket on recording the message. Imagine adding millions more. That’s going to go well!
That’s a good rule of thumb. We got a new car when our son was born. Our previous car was a 2 seater so that didn’t work. Now the car is all banged up due to parking in the street. I’m not getting a new vehicle until we have a garage. Then I’ll probably get a fun midlife crisis car. Heh heh.
Our car is an economy car, but we rarely drive so I think it’s safe enough. Local roads are slow.
I just bought a new car after waiting for so many years just to conform to your 1/10 rule. Last car was 1/14. And I waited even if I had young kids….Man, what a disappointment.
I still feel the burn from when you tricked me with an April fools post about buying a nice car.
What exactly was disappointing?
Sorry to hear about your truck troubles; not sure if you’re religious but we put prayers in our vehicles for safety from internal and external forces.
We have an SUV that we use as a family over 90% of the time. The other is a super old honda civic. I need to upgrade, hopefully in a year or two to a bigger sedan.
So true about the feeling of safety you get driving a more expensive car. They do just feel more solid, and safer. I will try to afford the safest car for my daughter, even one that is a ‘step up’. Perhaps she will be the one driving everyone around, which is what I prefer, if she has a stepped up car. Seems worth the investment!
Can you explain your rules while raising a young family in the event having to purchase 2 cars within a close timeframe?
“So I’m unlikely going to let my kids start driving until they are closer to 21.”
You are going to let an 18-20 year old do something? I can tell your kids are still really young. It’s a cute take from a parent with young children. Good luck with that. I recall saying things like my kids won’t have a cell phone until they are 16, so I can relate with ideas that aren’t very realistic. ; )
Btw, Roseville is a great town. A lot of Bay Area transplants there looking for a different way of life.
Of course! If they want a car that bad at that age, they will have to make money and work for it.
I will tell them how wasteful driving a car in a city is when there is cheap ride sharing and public transportation. In 11 years, there will be probably affordable self driving cars as well.
What a great personal finance teachable moment. Most of my kids on the high school tennis team did not drive either.
I hear you about the city. Personally, wouldn’t be a big fan of the idea of teenagers taking ride share or public transportation around a big city if safety is being factored into the equation with car choices, etc. That said, probably no reason to have a nice car either in a big city either if those alternatives are preferred options?
Can you elaborate on why taking the bus or an Uber is bad for teenagers? Did something happened to yours? This could be a great Blindspot of mine to find out.
How old are your kids now and when did they start to drive? Did you decide to pay up for a nicer car or did you just give them your old car to drive? Thx
Too many sketchy individuals on a city bus for a teen to be cruising around a city with IMHO. Uber is probably safer but they are still getting picked up and dropped off in potentially dangerous areas, around potentially dangerous people., etc. I know safety was a big part of the post. Mine both got their license at 16 (on their birthdays). They literally couldn’t wait. Didn’t give or pay up for either. One paid for one of the older cars and the other had enough saved to buy a lower mileage used.
Which city did you raise them in? As a big city dweller, we’re used to all sorts of people. Riding public transportation is just regular life. The real world.
I guess the “real world”looks quite a bit different outside of the big city. I would have no desire to ride public transit, so obviously wold feel the same about my teenagers. I enjoy driving and the last thing I want to do is be in a vehicle with a bunch of strangers. Nothing about that sounds appealing, hence the convo about purchasing expensive vehicles.
I don’t actually own a car. I just walk everywhere or else take public transportation. I am single without kids, so under these circumstances I really don’t see a need for a car right now.
If the situation changes someday and I have kids – then yes, I definitely see the need for a newer safer motor vehicle. Safety and reliability would take priority in the car search.
Thanks for the informative post! 🙂
Sam – not letting your kids drive until they are 21? 😀 Would your own parents have been able to accomplish that same feat? Good luck!
It’ll be interesting! Pearson L call you approached having your teenagers drive when it was time. Were there any compromises? What was your strategy for safety and flexibility?
My kids are just babies still, so I haven’t gotten to that scenario yet. I just know that there’s no way my parents could have kept me from driving. I grew up on a farm near a small town though, so my situation was a bit different(no public transportation). I believe that by the time my kids get old enough to drive, I will be worried about them on the road, but also happy/relieved I don’t have to drive them to all of their activities anymore! We shall see. I may change my mind in 13 years…
Good to keep an open mind! A lot in half and over the next 13 years. I really am looking forward to more public transportation and sell driving vehicles and affordable ride sharing options by experienced drivers.
If you think about it, having a 16 year old 17 year old or 18 year old driving a vehicle that could easily get into an accident or hurt someone or kill someone is kind of insane in my opinion. I’ve seen it all over the past 26 years of driving. And the pain of fixing a car nowadays is tremendous.
Just sold an 8 yr old RRover with 77k miles, not one issue with it other than a couple recalls and one air shock under warranty. Picked up the new one last week, dramatic improvements in handling, stability, comfort, tech, etc after two cycle/model updates between. We flip every 7+ years, 8 this time. Funny the new one at 4x the value of the old cost less in insurance which was a pleasant surprise. The whole tire thing is tough these days for larger sizes and suv, went through similar struggles to find replacement tires…suggest finding a great tire store and talking to them for help as I found some of the online didn’t have all options or brands. No, not in the tire biz! Back to reliability, a friend had one that self-destructed, was used and hadn’t been maintained as needed apparently and had engine failure, meaning new car time and some help from insurance but not much. If you plan to keep the car a long time, smart…buy now and get a ‘21 at a discount or ‘22 but don’t get sucked in by some of the dealers adding surcharges.
Safety is the exact reason that my wife and I have always bought new cars and then driven them for 7-10 years.
At some point the safety of the vehicle begins to diminish enough that it even if one of our cars is at 60K or 80K miles, it makes sense to upgrade to the latest model cars with improved safety requirements and features.
I agree that when you’ve got kids in the car their safety is EVEN more important than when you are driving yourself around. The potential impact of a bad car crash is 3-5x depending on how many kids you have. It is just not worth the risk of driving around in a shoddy car!
I started thinking about safety after I had the “big one” at age 24.
The newer the car, the safer it is. However, there have been leaps in vehicle safety over the years which occur after the IIHS introduces a new safety test. In my opinion, the greatest leap in modern vehicle safety occurred in 2012, when the IIHS introduced the Driver-side small overlap frontal test. Most cars failed this test when it came out, but manufacturers pivoted quickly to avoid the bad PR.
Get a used/CPO car from 2014 or newer, and you should be able to fulfill both the safety and price guidelines of this post. Larger, heavier vehicles are better at car vs. car collisions, no different than cars vs. stationary objects, but they do give up some advantage to smaller cars in accident avoidance (including rollovers).
One more thing to think about is that any car can be made unsafe by failing to maintain it, not wearing seatbelts, driving under the influence, distracted, or tired.
Oh man what a crazy ordeal you went through. To go through such a long wait for your car to get fixed and then to have a flat tire?! Ugh that must have been so defeating. But sounds like you learned a lot and glad everything is fixed now!
I had no idea about how spare tires work so thanks for teaching me something important too!
It’s fascinating how cars can handle so differently from one model to the next. It really takes time to adjust and even then some handling issues just are noticeable inferior in certain cars.
Safety and reliability are huge on my list for vehicles and also having good car insurance!
Great insights thanks!
So question for you- I can swing a Range Rover sport on the 1/10th policy, but can’t get over how unreliable they are (or so I read). Upfront car expense is one thing, but how do you handle the financial and time suck from a British car for 10 years? Seems tortuous to me, compared to a Lexus or some other Japanese luxury car (which granted, is no where near as fun to drive). Thanks!
Yeah, I understand your fear. But after owning a Land Rover since 2005, I haven’t experienced out of the ordinary maintenance issues. If I did, I wouldn’t have driven one for so long from 2005 until 2014. And I wouldn’t have bought another one in 2016.
I wonder if the negative reputation is mainly due to the cost of repair and parts? It’s kind of like the hate some people have for San Francisco and New York City. But businesswise, Land Rover wouldn’t be able to survive as a company if its reliability was that bad. Capitalism.
What car do you drive now? And when do you think is the best time to buy the nicest car?
Because he puts extremely low mileage on them. A ‘15 with 37K miles! I would hope there would no issues with a vehicle that’s barely driven. Most people that put on 12-15K per year on their vehicles may have a different take on the reliability and maintenance cost.
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