Driving down car costs
When I was a cub reporter years ago on a newspaper in a provincial English town, I had the world’s worst car, a red Renault 5 which lost power whenever it rained hard.
How I hated that car. Repairs, petrol, insurance, registration.
It was a constant drain on my meagre income.
Then one day, driven by its failure to start on those icy British winter mornings, I sold it and bought a bike.
For the next two years, I zipped everywhere on that bike, parking it outside the town hall when covering council meetings, chaining it to the railings of the courthouse when I was on court duty.
If I had to go to one of the three neighbouring towns on my patch, I’d ride along the canal towpaths, startling the odd angler and kingfisher.
And I finally had a surplus at the end of each week, I was fitter than I had been since playing centre for my school’s city-cup winning rugby team at 15 and I was happier.
When I wanted a car for a weekend away, I hired one. It started a pattern in my life.
When I moved to Wellington after my English reportering was done, I did my commute from Wadestown to Courtenay Place on a bike. I had leg muscles like tree trunks.
Then there was another stint in the UK, living in Cambridge and whizzing to the station each day on my bike to commute into the city where I worked for an investment newspaper.
The same pattern held when we moved to Auckland a bit more than a decade ago.
Then the first baby came along and a second car became a must.
I credit all those years of biking for my health and also helping establish my financial foundation.
Which is why I begrudge every penny I spend on motoring and why I hope within the year to become a one-car household again and buy myself a new bike.
If I can get the goahead on that from the other half of the household executive, it’ll drop expenses by about $5000 a year.
Statistically speaking 15.12 per cent of household expenditure is on transport.
My advice to youngsters starting out in life is to seriously consider being car-free for as long as you can, or share one as my colleague Richard Meadows (author of Sunday News’ Budget Buster column) does with a flatmate.
You have to have a licence in this world but not a car. But if you must own a car, it is essential to keep costs down.
The following is a reallife example from last year of how not to buy a car with comments in brackets.
A man spent $13,750 on a 2000 Toyota Estima (he paid too much). He borrowed at 25 per cent (never arrange finance at a dealership). He paid $1000 for car insurance from the car dealer (a total no-no). He paid $1000 for a three-year warranty (not worth the money).
He paid $500 for gap insurance (if you are sold this it is because you have overpaid for the vehicle). He paid $2056 for loan protection insurance (way too much and the one-off premium was added to the loan so interest of 25 per cent has to be paid on it).
In all, over four years the cost of that car, excluding regos and petrol, was just shy of $30,000.
My rule of thumb: If you are spending more than 15 per cent of household income on transport, it’s time to have a serious rethink.