Your Car Or Your Life

Getting a car is a major expense in the average person’s budget so before getting a car, or getting a more expensive car, it is important to consider how your plans for financial independence will be affected. There are eco-warrior types who refuse to use any automobiles which can pollute the environment, there are also enthusiasts who associate cars with adulthood and freedom who refuse to consider not having a car. As I see it there are three choices: expensive car, cheap car, or no car. There is no ultimate answer to this question and as always you will need to make your own choices.

This may not be a question that affects you right now, but it probably will at some point. For instance, I have heard of certain medics who get to use a car that is given to them by the NHS for the purposes of doing their job, such as psychiatrists in rural Scotland. However, the majority of medics do not practise in rural areas and do not have access to cars provided for them by their employer. Moreover, medics need to go wherever their work leads them and may have little choice in terms of working in Leeds or Peebles.

The Expensive Car

For the purposes of this article I will define an expensive car as one which costs more than £10,000 (including insurance costs). Take, for example, a five-door Vauxhall Corsa Sri 1.4 from 2016 as sold everywhere in the UK which can be bought, second-hand, for about £10k. The immediate goodies that you can get from that car include high technology, comfy interiors and a relatively high speed. These include: Bluetooth, a trip computer, a leather wrapped steering wheel, a top speed of 101 mph, and the ability to reach 60 mph within 15.5 seconds. However, this particular car, and many others like it, travel an average of 41.5 miles per gallon of petrol when travelling through urban areas. The annual tax is estimated to be £30.

It is difficult to know exactly how much this car’s value will depreciate and when, if ever, you would want to sell it but the recommended retail price for the brand new version of that car was £13,150. That is a loss of over £3k in less than a year! The 2015 equivalent of that car is available from many second-hand sellers for about £8,000. In summary, this is a high-spending investment which should probably be seen as a long-term investment.

It is also worth asking your friends for advice about good used car dealerships. I have some inside knowledge from a friend in the industry; believe me, it is prudent to be cautious if you are the buyer!

The Cheap Car

In this case I will define a cheap car as being one that costs less than £5,000. You could do worse than a five-door 1.3L Fiat Panda from 2003 which is priced at £1,495. This car lacks the technological goodies and the interior of the more expensive cars; its top speed is 99mph and it takes 13 seconds to reach 60 mph. However, it is cheaper to run as it travels about 52.3 miles per gallon, of diesel, in urban areas. The tax is also estimated to be £30.

The brand new version of this model costs about £7k. Therefore the depreciation in value is less of a problem as the price was lower to begin with. However, it may be expected that there will be repair costs for a car that is thirteen-years-old. In my experience, the costs of repairs, especially for relatively simple cars, do not exceed the depreciation costs of the expensive cars. However, there is a trade off in this question between cost and reliability as the expensive cars are far less likely to break down on you.

These examples came from my research using Autotrader.

No car

The option of having no car depends on a number of factors such as how close you live to where you work, how much you need to carry to work and how good the public transport is in your area. These factors vary considerably depending on where you live and what work you do. You should definitely investigate your options.

For instance, I once had to make a tricky decision about getting the bus to work or paying for the car’s running costs. The cheapest ticket price available for the bus was £44 for four weeks of travel. That was less money than I was spending on petrol but not by a huge amount as I only lived ten minutes’ drive from my work. In retrospect it would have been a more economical choice to sell the car and travel by bus. However, that would then have made it more difficult for me to make essential trips into the Highlands on other business.

Another option is getting a bike so that you don’t spend so much money on fuel. Second-hand bikes are readily available from gumtree, commonwheel, bikestation and bikesoup. There is no reason why you should need to spend more than £1,000 on a bike and my own maximum would be £200.

So there you have it. Keep your eyes on your running costs for the car and always look into your alternative options.

P.S. I learned everything I know about finance from this book, this book and that oneamongst many others. For a more extensive list, don’t hesitate to drop me a line at rory@ukdoctoronfire.com. If you prefer learning through listening use this link to earn a free audiobook of your choice by signing up to their 30-day free trial. Simply cancel with the click of a button if you decide later on that the service isn’t for you, no questions asked.

Will

Hello. I am a teacher living in Scotland with interests in self-improvement and financial planning. My knowledge of doctors and their lives comes from conversations with friends, who are medics of various stripes, and acquaintances who work in the profession. I have found it surprising that doctors branch off into their own specialties and rarely talk about life to their colleagues from different specialties. This is a shame and something that I think could be changed. I’d like to view myself as a messenger between medics who can add in helpful information from the outside world.

I was brought onto the ‘ukdoctoronfire’ team by Rory, one of those medical friends, to give a generalist’s perspective on the life issues affecting doctors in the UK. These issues fall nicely into the motivation and finance categories. In my own life I’ve put a lot of effort into self-improvement and developing my financial situation with a view to retiring early. It is my pleasure to spread the word to others.