Debt Mirage

 My 2008 Honda just "died". I could repair it, but there's no point anymore. Everything on it is rusted from winters and road salt. I did the total cost of ownership calculations on it a few months ago and it was pretty shocking. I spent an average of $300 per month since I bought it on gas, insurance, depreciation, etc... It's a "cheap" car too. I paid half the sticker price in cash, then financed the rest for two years, I think. I don't remember exactly since it was such a long time ago, but I haven't had a car payment since maybe 2010 or earlier.

Used car prices are quite high now. I planned to get a truck once the old car gave up the ghost, but a 10 year old truck with ~80k miles is about $15-20k depending on the model. Plus trucks take up a lot of space, and are expensive to operate. I also learned I don't really need one since I bought a farm truck a few years ago. I drive it so infrequently the tires get a flat spot and I need to recharge the battery prior to use. Almost anything I want to buy can be delivered for a modest fee, so there's no point in paying a premium for convenience of ownership.

Anyway, the tempting thing to do is get a car loan instead of paying in cash. It's kind of painful to take $20,000+ out of my savings account, because I know how long it takes to replace that money. Plus that $20k earns around $80 in interest per month in a FDIC insured bank account right now. Also with a car, unlike a productive asset, that $20k just starts burning up with each use of the car.

The loan gives a person the sensation that they still "have" $20,000 in the bank, even though there's typically fees and interest and over the life of the loan, they'll be out more like $25,000 or more. It makes them feel like they'd be able to cover an emergency more easily, etc... If the interest expense on the loan is $0, maybe it does make sense to keep the money in the bank instead, although, that's almost certainly an illusion because the interest will just be charged in the form of fees and markups... You really can't win with a car purchase. It's just a game of limiting losses.

Anyway, that's what I'm going to do now, just keep the expense as low as possible and pay in cash. I hardly drive anymore, now that I work remotely 100% of the time. I can't imagine getting a car loan for $50,000 or more like my peers do to get a Lexus, or a big fancy truck, or a Tesla, or a Bronco. It boggles my mind that so many people are willing to part with ~$1000 a month on car expenses. I don't even really know what the minimum is. Reliable sedans and small cars can be had for $10-15k. The monthly TCO is probably still roughly $200 due to insurance costs and gas and the like. Anyway, it'll be interesting to see how cheap I can go and still have a decent reliable vehicle.