Yes, I have owned a car for 20 years and I am quite proud of it. It’s a 1999.5 Nissan Pathfinder LE and I still drive the car to this day. As of today, the odometer reads 222,866.

At this point, the car has become an experiment for me. I’m curious to find out how long this car will last and the financial impact of owning the car. The car still drives amazingly well and most mechanics who have worked on the car gives compliments on how well the car has been maintained. I have plans to purchase another car but I may keep the car around for hauling things. Unless I am able to sell it at a decent price. 🤔

 

How Much Did the Car Cost?

The car was a gift from my parents back when I was 20 years old. My father had been operating a small business at the time and had to sell it due to financial difficulties. The buyer asked if he could use his new car as partial payment to acquire the business. At the time (year 2000), the car was valued to be around $36,000 to $38,000. That’s equivalent to about $53,000 to $56,000 in purchasing power today.

My father needed the cash, so he refused the car as payment until negotiations made the deal too good to refuse. The buyer of the business was short on cash. Long story short, negotiations brought down the car price to $12,000. His initial plan was to sell the car for cash, but he later decided to gift me the car. The odometer read about 8,000 miles when the keys were in my hands. It was practically new! I was extremely lucky and grateful to have been given a car with no monthly payment obligations.

My friends putting on chains while I wait inside. 😁

 

Maintenance

I am missing records of smog checks and DMV registration expenses from my earlier years of ownership. So, the data will not be 100%, but close enough. I began to track my expenses in more detail as time went on.

 

 

Car Insurance

I don’t have data from 2000 to 2007 but it’s about the same as 2008 give or take. You can see how my insurance costs have come down overtime as I got older. At the age of 29, my insurance dropped in half after switching to Geico.

 

Fuel

Unfortunately, fuel expenses were not recorded separately for each of my cars.

 

Summary

My average monthly cost for 20 years comes to $152.93. Not too bad compared to a 2017 study by AAA showing the average yearly cost for Americans to own a car was $706 per month. That is assuming a car being driven about 15,000 miles per year.

If I had paid the full price of the car’s value at $36,000. My costs would rise to $252.93. Which is still significantly low.

The chart below shows the average cost of ownership(COO) declining over the years. Total expense for the first two years (Year 2000: $13,062.55, Year 2001: $1,101.10) $13,062.55+$1,101.10=$14,163.65. Then you divide by 24 months which equals $590.15 (2001). The next year by 36 months and so on.

Chart shows average monthly cost of ownership by year.

• 2001-2009 average decline in COO/y: -15%
• 2010-2019 average decline in COO/y: -3%
• 2001-2019 average decline in COO/y: -9%
• 2001-2009 total cost of maintenance: $3,833.00
• 2010-2019 total cost of maintenance: $6,966.84 (+81.7% increase)

The longer I drove the car the lower my COO dropped. The first 10 years is when the costs declined fastest. Cost of rising maintenance in the back half is contributing to the flattening of the curve. It looks like I may potentially hit a floor soon.

 

What I Learned from Owning a Car for 20 Years

• Maintenance goes up dramatically once you hit the 80,000 to 100,000 miles on the odometer.
• Car parts degrade much more quickly depending on how you drive and treat your car. (Suspension, brakes, bushings, etc)
• More often than not, OEM parts last longer than aftermarket alternatives. Spend the extra cash on quality parts.
• Oil change at recommended schedule will reduce your chances of major transmission issues. Probably the single most important maintenance on a car you should never neglect.
• After 20 years, parts needed for repair are becoming harder to find. Repairs can take longer if parts are not widely available.

 

Conclusion and Thoughts

The car has been a workhorse. It has been used to haul and load thousands of pounds of building supplies during renovation projects. It was used as a daily commuter and also as a secondary car for business. It has not been used lightly to say the least. It even saved my life once. Yes, literally. 4 stray bullets from a drive-by hit my car but luckily didn’t penetrate the cabin. West Los Angeles back in the early 2000’s had major crime problems.

The car never gave me much headache. It was extremely reliable overall and safe to drive. I have come to really appreciate this car over the years.

When it comes to owning a car, it’s important to consider the car’s reputation and durability. Especially if you are working towards financial independence.

Cars are one of the biggest money pits many Americans fall into. Unreliable cars will dig a bigger pit so choose wisely.

I have few friends who drive luxury cars with a negative net worth. Luxury cars are great but they come with major drawbacks. Repair costs are often 2 to 3 times more expensive.

My decisions to hold back on new cars played an important role in my financial success. It was one variable that helped me reach FIRE. It provided the extra cash flow and savings needed for investments.

The game is to own more appreciating assets and less depreciating ones.

Cars depreciate so fast on the front end of the curve, it’s one of the biggest drags to building wealth. Today, my cars are less than 1% of my total net worth. They still depreciate every year but it’s such a small portion of my assets, it’s negligible. Just the way I like it.

Do you track your car/net worth ratio? My goal is to keep this below 2%. 😬 Which means if you have 1 million in net worth, you are able to afford 2% of your net worth which is $20,000. My goal of $10 million net worth would allow me to afford a $200,000 car! Too bad I’m not that crazy about cars. I would probably choose to do something else with the money. Thanks for reading!