The Creator’s Path to Financial Independence: Part 3 'The Creator's Car'

Today we'll continue our Creator's Path to Financial Independence series by taking a look at transportation expenses.  One of the best places a creator can really separate themselves from a consumer is with their vehicle purchases.  The average new car / lease payment in America just broke $502 a month with an average payment term of 69 months(1).  Knowing that many families carry two car payments continuously, we’re talking about over $1,000 dollars a month.  Gracious America, you’re doing it wrong!

In this article we’ll talk about how a lean, responsible, and disciplined creator can get reliable transportation without sinking in debt.  We’ll also see that your choices in this area can single-handedly be your ticket to financial independence.  So, let’s dive in:

As usual, we’ll start with an example of the consumer family and the creator family.  Both families need two reliable cars.  Let’s take a look at the consumer family’s vehicle expenses first.  In the table below, I’ve let the consumer keep two average new car payments for midsized Fords.

Consumer Family Vehicle Expenses
Expense	Cost per month	Basis
Payment	$1004	Two average midsize Ford’s month payments (1)
Repairs / Maintenance	$0	Assume vehicles kept under warranty
Gas	$260	25 MPG average (2) 13,000 miles per year (3) $3.00 per gal
Total cost per year = $15,168

The total cost for transportation per year is $15,168.  Yikes! No wonder car dealers are the only businesses in town that can afford to remodel their entire facilities every couple of years. 

Now, let’s take a creator’s approach to car purchasing.  In the table below we let the creator family buy two 5-year-old midsized Hondas which they sell ever 4 years.  They also drive the same number of miles that consumer drives (13,000 miles per year per car).  No, these cars are not going to light up your Facebook “Look at my new car!” post or turn heads at the school dropoff, but they can seat two adults and three kids and are notorious for being able to go 200,000 miles with little maintenance.  Plus, there is almost nothing you can’t repair on these things in your own garage (this coming from experience as I currently drive an old soul that barely even asks for gas).  You can replace the Honda in this example with any other car in a similar class if you want.  Susan over at FI Ideas got over 567,000 miles on her 1988 Mercedes 240 Diesel (if you are counting, that’s more than a round trip to the Moon).  But, in case you aren’t as awesome as Susan (many of us aren’t) we keep our cars under 117,000 miles in this example.

Creator Family Vehicle Expenses
Expense	Cost Per Month	Basis
Used Car Purchase	$125	Purchase two midsize Hondas at 5 yo with 65,000 miles for $8,000 (4) Sell both at 9 yo with 117,000 miles for $5,000 (4) (7)
Repairs / Maintenance	$124	Average cost of maintenance for Honda (6)
Gas	$176	37 MPG average (5) 13,000 miles per year (3) $3.00 per gal
Total cost per year = $5,100

Comparing the consumer family to the creator family, we see that the creator comes out with over 

$10,000 in savings a year!  Sure, you could use this money to buy other toys or an upgraded house, but why?  If you remember from the "You're Earning Too Much!" post, these extra luxuries have been shown to not make you any happier. 

Instead, if you were to simply invest these savings into an index fund gaining a conservative 8% per year average, you can clearly see below that your vehicle choice is more than just a way to save cash; it’s an opportunity to buy your freedom.  In 20 years, this difference equals nearly half a million dollars and in 30 years, it’s 1.2 million in savings (Post that to your Facebook!).

What I’ve provided is an example that is far from optimized.  Think about the possibilities if you can find ways to flex your skilled trait by doing some of the maintenance yourself or with a knowledgeable creator friend.  For example, I save about $300 a year by just doing my own brakes. Or you could embrace your lean trait by finding ways to put a few less miles on your cars (apologies to LSU football coach).  

Chris Graythen/Getty Images

So, to wrap things up, many times we make big purchases because we want to keep up with our neighbors or coworkers.  We've just learned that keeping two new car payments is so illogical, that it can only be a result of cultural pressures.  There’s nothing wrong with having nice things, but at what point do we trade our things for our freedom?  For me, it’s never been about being frugal, but more about rejecting the pressure of a consumer society so that I am free to be creative.  Besides, who doesn’t look good in a 2001 Prelude?

Now it’s time to hear your creator vehicle wins!

(1) CreditDonkey 'Average Cost of a Car May Surprise You'

(2) 2018 Ford Edge Fuel Economy 

(3) Average Mileage ~13,000 per year

(4) All Kelly Blue Book private sale values based on 'good' condition Honda Civics with ages and miles as stated 

(5) 2018 Honda Civic Fuel Economy

(6) Based on Honda average maintenance cost per mile though 150,000 miles
(7) These results are for buying with cash, but keeping a small low interest payment doesn't change the results much.