Maya is the word for illusion in the Far East. In the West
it is called Consumerism. Back when my wife and I were
making decent salaries, it seemed like we were making more
than enough money on paper, but had little to show for it
at the end of the month. We simply spent too much, like the
good consumers we were. I felt as if I was the recipient of
a David Copperfield disappearing trick. "Where did it all
go?" I continually wondered. I never wanted something for
nothing, but was gradually becoming convinced that I was
getting nothing for something.
So I did some very thoughtful analysis of my financial
situation. I discovered that a major black hole in my
wallet was the money I poured into automobiles-money that I
would never recover.
I discovered, by default, that 90 percent of the money I
spent on cars evaporated in a haze of depreciation and
interest expenses. I paid about $250 per month for each of
our two cars, plus comprehensive insurance payments of
about $100 a month, costing a total of $7,200 per year. I
had to earn over $10,000 (before taxes) in salary to cover
those expenses. The AAA statistics indicate that the
average person pays $5,916 in car ownership cost per year,
so I was getting a good deal, comparatively. That cheered
me up about as much as when the doctor told me I didn't
have a fatal disease; I was just gradually wearing out.
Three years after my wife bought her car, we were tired of
it and ready to sell. The dealers and banker all let me
know that I could sell it for just about what we owed on
it. In other words, we were paying for merely the pleasure
of driving, not building any equity in the car at all. If I
could just manage to buy two $3,000 cars that would last
more than a year, I would begin to come out ahead. That is
what I was determined to do.
It's all too easy to suggest that buying used is always the
answer, and it was more than a little difficult for me for
three reasons: a) my ego, b) finding a good used car seemed
impossible, and c) I was afraid the repairs would offset
the monthly payments savings. So buying the right car was
essential to make the plan work. High maintenance costs
would eat up any savings in short order, so I did a good
deal of research. I read Consumer Reports, spoke
with mechanics, and read a lot of classified ads over the
course of a few years. I suggest you do the same to verify
my findings. Here is what I discovered.
What kind of used car to buy?
a. Toyota, Honda, or Mazda.
b. Dodge Minivan
c. Ford, Chewy, or Dodge pickup
d. Any sport utility vehicle (i.e.: Chewy Blazer, Isuzu
Trooper, Jeep Cherokee, etc.)
You probably could have guessed the first category. "Click"
and "Clack" worship at the used Toyota altar every weekend
on their National Public Radio call-in show, and I'm
surprised that everyone has not discovered this secret yet.
These cars are built to last at least 150,000 miles. I have
seen many of these with over 200,000 miles, running well
with the original engines and transmissions. They last if
the owners had followed the maintenance guidelines firmly,
especially in changing the oil religiously every 3,000
miles. The most common flaw in the cars that didn't make it
to 150,000 miles was that the radiator cooling fan switch
quit, causing the car to overheat, thereby blowing the head
A Dodge Minivan is one of the best designed and engineered
vehicles in the history of the universe. It replaced the
legendary Plymouth Valiant as the Mona Lisa of vehicles
because it is so purely good in design. The best one comes
with a four-cylinder engine and manual transmission. Good
gas mileage, great space, impressive maintenance record,
and good resale value make it a winner.
In the pickup category, your best bets are the Ford F150
extended cab with a straight six and manual overdrive
transmission and the Dodge with the diesel engine. Any
Chevy will do well because they have such incredible resale
If you are a typical North American consumer, you are
probably among the 47 percent of the car-buying public who
is considering a SUV (Sports Utility Vehicle) for your next
purchase. They are very much in favor at the moment and as
a result resell at impressive prices. Since they are
relatively new on the market, the jury is still out on
their enduring value. I will venture to guess that just
about any of them will pass the 150,000 mile mark easily
because most of them have four-wheel drive. Any vehicle
built to withstand even occasional off-road use is way
overbuilt for the typical commuting regime.
How old a car to buy?
Five to seven years old. The depreciation curve flattens
after five to seven years. Let's use a 1995 Toyota Tercel
for an example.
The NADA blue book says this car will retail for: $8,375
after one year, $5,373 after two years, $4,375 after three
years, $3,450 after four years, $2,675 after five years,
$2,150 after six years, and $2,075 after seven years.
Verrry interesting, eh? (Car prices have increased each
year to keep up with inflation, so this is approximately
Buy a car with how many miles?
When a car goes over 100,000 miles, everyone assumes it's
roadkill; so the value plummets. This assumption was caused
by years of Detroit's planned-obsolescence
engineering-thankfully long since over—that caused
American cars to self-destruct at 70,000 miles. So snatch
them up when they hit the big one hundred.
When should I sell the car?
After years of learning the hard way, I arrived at the
150,000 mile mark as the safest time to sell. Of all the
vehicles I investigated, it seems Toyota four-wheel-drive
trucks are made to go the furthest. They are definitely
overbuilt. Their clutches, axles, brakes, transmissions,
wheel bearings, etc., are the same size as those of a
one-ton F-350 truck. The bad news is they cost more. The
other good news though is that they depreciate less:
250,000 miles is just middle age for a Toyota 4x4. This is
amazing to me, and to Milton. Milton is my favorite car
parts store worker. At age 75 he has seen lots of cars come
How much should I pay for the car?
Three thousand to four thousand dollars (1995 dollars) seems to be the
magic number for cars and small pickups. Add an extra grand
for minivans and two more on top of that for SUVs. Many
Toyotas, Hondas, and Mazdas fall into the $3,000 range when
they get five to seven years old. You need not limit
yourself exclusively to that price range, though, as almost
all cars seem to level out their depreciation decline at
five to seven years, and hold steady until 10 years or
In year one I bought a Toyota Corolla with about 75,000
miles on it and a Mazda 626 with 100,000 miles on it for
about $3,000 each, so my costs in year one were about the
same as if I had kept my new car payments. For the
following four years, the Toyota and Mazda cost me nothing,
not a single $250 per-month installment went down the
drain. Thus ...a savings of $24,000! At 155,000 miles, I
sold the Toyota for $1,650. When the 626 hit 170,000 miles
during the same year, I sold it for $1,850 to a mechanic
who's also a Mazda fan.
If I subtract the sale price from the purchase prices of
$3,000 each, the Mazda cost me $24 per month to own, the
Toyota a whopping $28. In addition, I saved significantly
on insurance because liability insurance costs half of what
the comprehensive coverage (which my former lender
required) removed from my pocket.
Since then I've done the same process over and over, with
two Accords, two Civics, four Toyota pickups, and a Toyota
Tercel. Some cost a little more, some a little less, but
the constant, interest burdened payments have ceased, never
That started a whole new life adventure.
My Favorite Used Car Lot
If you are anything like me, your head turns and your neck
cranes with every passing grand emporium of used wheels.
You scour used car ads and public auctions in search of the
hidden jewel. If all that fails, take a vacation to Paris
...Arkansas. There, Shannon Wilkerson runs perhaps the best
lot in the country if some of your passions are used
Toyotas, Hondas, or Mazdas. I found him two years ago after
doing a national survey of who sells what, for how much,
and with what kind of profit margin.
I bought a 1987 Toyota 44 SR5 extended-cab pickup from him
for $4,400. It made my day because it was $1,500 under the
blue book wholesale price and $3,000 under the retail
price. My few hours on the phone and trip to Arkansas saved
me more than $2,000 in expenses before I even got out of
Shannon is a big, good-natured guy, and with his brother
Gerald, owns a salvage yard and repair shop. He almost
never fails to have cars that perfectly fit my criteria,
and if he doesn't have them, he'll find them ...and sell
them below wholesale.
When I got to know Shannon, I told him about my vision of
getting out of debt-a vision that motivated me to do all
this research. I tried to impress him with my biblical
knowledge by quoting some scripture to back me up: "Where
there is no vision, the people perish." Proverbs 29:18, I
"Good try," he replied. "Around here, we
interpret that quote a little differently. Where there is
no fishin', the people perish."
I stand corrected.