Car Costs Killing You?

Posted: March 5, 2007 in Consumerism

I stumbled across an article at MSM Money called “The Real Reason You’re Broke.” According to article, the answer is that people spend too much on cars. The tone and content of the article are clearly aimed at financial novices and avoids blaming the victim for poor choices. A few of the details are nonetheless surprising: Americans spend an average of $8000 per year on cars, which is 15% to 20% of take-home pay. And more than a few “middle-class families are struggling with two payments in the $400 to $500 range.” If that means total $400 to $500, I’m not too alarmed. But if that means two payments each in that range, well, what sorts of cars are these folks driving?

I’ve written before about the stupidity inadvisability of the SUV fetish. It’s not just the fuel efficiency but a complex of things. As time wears on, however, all vehicles have loaded on systems, options, and costs. Accordingly, people don’t think of cars as basic transportation anymore. Rather, they’re lifestyle statements. Modern vehicles fully equipped (mostly with excessive electronics — lojack, video, GPS, multizone stereos, iPod and computer docking stations, alarm systems that everyone now ignores, etc.) more closely resemble rolling business suites or living rooms than simple transportation.

Compared to housing, where it makes at least some sense to buy the most expensive place one can afford, an expensive car doesn’t hold its value. For instance, a friend of mine just bought a 1993 (I think) BMW 750iL for about $3,000 just so that he could drive a luxury car that cost $80,000 new. (I wonder how many different owners took a bath on this 14-year-old car.) He admitted it was irrational and bought it even knowing full well that the 750iL is legion for its costly repairs and general unreliability. Indeed, after having the car only one week, it already broke down unexpectedly and he had to have it towed. (I haven’t yet learned the full story.)

None of this addresses a host of other conflicts having to do with dependency on fossil fuels, urban planning and social organization, disappearance of community, and commodity fetishization. Nor does it address the clear advantages of increased safety, longer vehicle life, and improved reliability of today’s cars over those of, say, 15 years ago. My basic issue is simply this: how have we allowed ourselves to be suckered into paying such excessive costs for transportation (no longer even pretending to be basic) while earnings for the average household have either stagnated or lost ground during the past 5 years? Why is the threshold cost for a luxury car so high (starting at around $50k to $60k according to estimates I’ve seen), which pulls the costs of an average car well over $25,000? Don’t we have some market power? Couldn’t we all create a demand for smaller, more efficient vehicles that cost less to drive off the lot?

  1. grasshopper says:

    For fifteen years, when I lived in the suburbs, I developed the distinct impression my neighbors worshiped their cars. On the block where we lived, most families had once depended upon GM for their livelihood. But even after GM had left them staggering for other electrical, metal-pressing, or general factory work, they continued to spend every Sunday washing and vacuuming their GM vehicles, waxing the huge metal bodies in the sun and shining the hubcaps as well as the rubber tires. Their devotion stemmed back a few generations, at least.
    What an insult my family and I must have presented, driving our smashed-up Honda into the ground. By the time we moved, however, our neighbors were beginning to find other ways to spend Sundays, playing ball or gardening, and especially, hosting “garage sales.”

  2. Shelly Levene says:

    A clarification, it is in fact a 1991 750IL.

    The short story is that it was actually a faulty repair, not the car itself, that caused my trip to be cut short.

    I don’t doubt that I will have some headaches coming up that are the car’s fault though.

    The upside? I have no car payment and paid less than most folks down-payment on a Honda. Factor in nominal costs to fix the car and, in the end, I am still going to be able to drive a car way above my station on the cheap.

    Well, not too cheap…

    Have I mentioned the high rate of fuel comsumption yet?

  3. Brutus says:

    I stand corrected, partially. So from a certain perspective, it makes sense to foist the excessive cost of a luxury vehicle on the owners during the first 16 years of service only to pick it up after the vehicle has lost the bulks of its value, if not its prestige. Still, there is the mindset of conspicuous consumption that still informs the whole affair, with which I for one am pretty uncomfortable.

  4. greywhitie says:


    car drivers should not be blamed for having to rely on cars to get around. while some cities like boston and washington d.c. and others have excellent public transportation via subway and busses, it is impossible to get around many cities and rural areas without a car. but, like you said, many folks use their cars as status symbols rather than means of transportation, which is what they are.

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