Life is good
The sun is streaming into the garden on the hottest day of the year. 32 degrees Celsius is unusually hot for England. I’m waiting for the kids to return from the tennis club and taking the opportunity to write this blog while I sip from a cool glass of white wine. I’d planned to take some time off while the kids are off school and have a fun summer together. After all, one day I’ll be dead. And when I’m on my deathbed I will not look back and regret taking this summer off. I’ve spent enough time in the office for one lifetime already.
I’ve not worked for over a month as we don’t have an au pair at the moment. Our new German au pair is arriving this afternoon. We’d have had childcare problems if I had returned to work.
And anyway, the Bullmeister realises he is an old dog that really needs to learn some new tricks. Brexit is making the IT contract market tricky for this old man and he needs to up-skill. What I need to do is take some time out and learn some new skills and go back to the contract market once things pick up in a few months. Maybe not until the new year. I certainly don’t want to take the first offer and go back at a reduced daily rate.
And besides, I want to go up to the Lake District and enjoy a canoeing trip with my Dad once the kids go back to school. He’s getting older and won’t be around forever. We share an interest in the great outdoors and both love the Lakes.
I can’t, of course, stay off work indefinitely. After a year I’d have to think about selling some investments. A few years further down the line without work and we’d have to sell one of our buy-to-let rental houses just to be able to reach retirement when the pensions kick in. That’s no good. And besides. I’m not ready to retire just yet.
Many people seem surprised by all this and wonder how it is we can afford to do this. We have always earned well but even for most people on good salaries, early retirement is not an option. Even for contractors on similar six-figure salaries like myself. So, how can this even be possible? They suspect we might have come into some money and inherited a large pot. Or won the lottery. Not so.
There are many reasons we have been able to do this. But one stands above all else.
The cars we have chosen to drive.
Let me explain.
The Sensible Car Buyer
When I first came down to London in 1999 I had a Fiat Panda I had owned since before I started my A-levels and university. I paid £250 for this as it was an accident damaged write off with only 29,000 miles on the clock. I learnt to weld and fixed this up myself. I ran it for 10 years. It was a great little car. It never let me down but did suffer a recurring problem with the clutch cable snapping. This happened three times. But it never once left me stranded by the side of the road and a snapped clutch cable could be replaced in less than an hour. The parts only cost about £30. I remember once the clutch cable snapped and I drove all the way from London to Manchester without a clutch, starting the car in first gear (no pesky safety cutoffs in those days) and matching the engine revs to change gear without a clutch. I managed to get all the way home without stopping a single time. 225 miles!
Next came a Vauxhall Corsa. £500 and in great condition. Cheap to insure it was again a great little car. Unfortunately, it only had 4 gears so wasn’t very economical on the motorway, which was pretty much the only time I used it. I sold it for the same price I paid.
By now life had become more complicated and I needed a car I could rely on and which could do lots of motorway miles cheaply. I bought a 5-year-old Toyota Yaris for £3,900. Silly money but it was immaculate and low mileage with full-service history and only one female owner from new. It had been stored in a garage for a few years but started and run regularly. You could not tell it from new and it was then still the current model. This car was a revelation. The fit and finish and overall quality simply amazed me. How could Toyota build a car this well for so little money? It made no sense. It was top-of-the-range and had a weird manual gearbox with automatic clutch and so had only two pedals. Like a Porsche Tiptronic gearbox, I told myself. I did a huge mileage in this car as family and business commitments meant I had to travel all over the country. It would easily do 45mpg around town and more on the motorway. The only things that ever needed replacing were a few light bulbs and a frayed sensor cable on the gearstick. The sensor cable cost £61 to repair. The alloy wheels corroded and caused a tyre to slowly loose pressure. The Bullmeister never compromises on safety so I had all the wheels refurbished for £50 each and they came back like new. Amazing. It was with great satisfaction that I just checked on the government website and saw this car is still taxed and MOT’d. Now nearly 19 years old and still giving someone great service.
Life had moved on and I had now met my wife to be and we started a family. We both needed a car but only one of us needed a large family-sized one. The Volkswagen Polo she owned had not been particularly reliable so that was the obvious candidate for replacement. While it had never left my wife stranded it had recurring failures of the individual coil packs to each spark plug. We’d replace these and then the replacement part would fail. Annoying. Volkswagen wasn’t interested in taking responsibility for this. The car had to go.
We were short of ready cash at this stage of our lives. My wife was on maternity leave and busy caring for our baby boy. The contract market had dipped following the recession and rates were down. We went budget and bought a 3-year-old Renault Laguna Estate with 56,000 miles for £4,439 at auction. This car was immaculate. Not a single scuff on any wheel or mark on the interior. Basically it looked like a new car and drove like one too. I couldn’t believe how much you got for your money. It was a posh car with electric everything including climate control and jazzy soft-touch dashboard. I soon came to realise why no-one wanted these cars once outside of warranty. I could have guessed as much and had my doubts before I had even driven the car – the keycards (it didn’t have ignition keys) looked like a freebie that might have fallen out of a cornflake packet. As an engineer, I’ve always been fascinated by design and remember examining these keycards at the auction while I was waiting for the car to become available for collection. I saw straight away all the modes of failure. 1) the cards made no pretence of being waterproof. Dropping this thing in a puddle would kill it. 2) The tiny battery was not very securely located and the clips holding it feeble. 3) It had a flexible plastic cover which the buttons formed part of. This plastic was hard and brittle and as such likely to split. 4) The key card contained a circuit board with surface.mounted components and yet was so thin it flexed under the slightest pressure. It would bend just a little every time this was placed in a back pocket. Those Keycards were bound to fail.
My first impressions were correct. I went through two keycards (£260 each) in the two years we had that car and they each failed in all the ways I’d predicted on first seeing them. It really is no mystery why Renaults are unreliable. The rest of the car was no better. So many components looked like they were designed to fail. No consideration seemed to have been given to longevity. The car was really lovely to drive and very fast but so many things went wrong I grew to hate it. While it never actually broke down it did on two occasions require about 12 attempts to get the car to register the key card and start the engine. I’d lost all confidence in it by this stage and we took to leaving a spare keycard in the glove box. If someone wanted to steal the car they could. With our blessing. It was such a pile of shit. Even the soft-touch coating on the dashboard that had given it an air of class was beginning to peel away. The final straw came when we took it for an MOT to be told it would need £2,600 in repairs in order to pass. How can a car only 5-years-old and with 80,000 miles on the clock require new suspension bushes all round? And rubber garters for the CV joints? And that was before even considering the failing turbo. We sold the car for £1,400 to We Buy Any Car rather than pay for the repairs. Good as their word they really will buy any car.
Once bitten twice shy I was not going to make the same mistake again. The replacement car was going to be Japanese. The family was growing and another baby had come along. A girl this time. This and other family commitments meant we needed a 7-seater so I picked up a 3-year-old Toyota Verso diesel with 70,000 miles on the clock. At £8,200 it was an outrageous price to pay for any car. Amazingly it actually did more mpg that the Yaris! It had come straight from John Lewis managers fleet. To say this car was immaculate would be not to give it its due. I have never seen a used car like it. The seats in the third row had never even been sat in. Not once. The remote control and headphones for the rear DVD’s were still unused and sealed in the original plastic wraps. The only single blemish on the whole car was a thumbnail-sized dent on the rear hatch, only visible with close inspection with a light. I concluded this manager must have been a person with no kids and who had done nothing apart from drive up and down the motorways visiting stores.
6 months after buying the Verso it occasionally seemed to lack power. Barely noticeable but something was clearly not right. At the next service, I checked with Toyota and they did a diagnostic test on the engine. It was prematurely worn due to an incompatibility between the piston rings and cylinders which had affected a small number of cars. It was outside the 3 year warranty period but only had 75,000 miles on the clock. The dealership were great and assured me there was no question of having to pay for this to be fixed. They fitted a new replacement engine and gave me a free replacement car for the 2 days it was off the road. The whole experience left me even more impressed by Toyota quality. Nobody expects perfection and a car is a complicated machine. Occasional problems are bound to happen and what matters is what manufacturers do to put them right. Unlike my experience with Renault and Volkswagen, Toyota held its hand up straight away and couldn’t do enough to fix the issue. Good for them.
My stepson was about to start learning to drive now and the Yaris was not suitable due to the semi-automatic gearbox. So, I bought another car. What else but another Toyota Yaris. This one the current model at 3-years-old. Bought at the BCA auctions for £5,700 this would do me for now and could serve as my stepson’s first car once he passed his test. It was a lot of money to pay for a car but again it was immaculate and low mileage current model. We bought it because it would be cheap to run and had 5-star safety – always a priority in our family. It was everything you’d expect from a Toyota. If cared for I have no doubt it will run for 20+ years, just like the previous Yaris. After he passed his driving test the car became my stepson’s.
But what to replace the Yaris with? Things had moved on in the car world. I had been studying the advances in electric and hybrid cars for years. Many hours reading forums and pouring over spreadsheet calculations led me to conclude it was finally time to move to a fully electric car. The leading candidate was the Nissan Leaf. We had the 7-seater Verso and only needed a second car for local journeys. If we bought an electric car second-hand and displaced the maximum number of miles from the diesel car with electric miles it might even pay for itself. Unusually for me I test drove a Leaf before buying one. Previously my rule had been to buy the car with the lowest total cost of ownership and adapt to it, not buy the car you think drives the best and pay whatever that costs. That would be a classic case of Small Difference Exaggeration Syndrome. But this was a big and unusual move so thought I’d better check I could get on with it.
I picked up a 2 1/2-year-old Nissan Leaf Tekna in gleaming white (safer due to better visibility). Crazy degree of luxury it had full leather seats, climate control, full electric everything, sat-nav, 360 parking cameras (very clever). It cost £11,684 – by some margin the most I’d ever spent on a car and without a doubt a ridiculously large sum of money. However, I could (just about) justify it because of the environmental considerations which were increasingly becoming foremost in our minds, and the incredibility low running costs. I expect to have this car 7 years and hand it over to my youngest son once he starts his driving career.
The Nissan Leaf has been a revelation. I will never buy another pure petrol or diesel car again. The Verso will last another 10 years, or become superseded by a fully electric long-range car once they become cheap enough – after all, the Verso only has 140,000 on the clock – nothing for a Toyota which should easily manage 250,000 miles. Why replace a cheap obsolete car with an expensive but still obsolete new car? All those new cars in showrooms are dinosaurs and many will be scrapped before the Verso is! Especially the expensive and unreliable ‘premium’ cars that will soon make no economic sense to own as the price of electric cars comes down rapidly. The Nissan Leaf covers 10,000 or about 75% of our day-to-day mileage for £800 a year including road tax (zero for electric cars), fuel, replacement tyres, insurance, servicing and MOT. While simultaneously being far nicer to drive and better for the environment. Beat that.
That is the complete history of our car purchases over the last 20 years. When I added up how much we had spent to run two cars, including fuel, servicing, repairs, MOT’s, insurance, road tax etc. and compounded those costs at 7% a year opportunity cost it came to a staggering £161,000. This was I thought the minimum it was possible to spend. I had always bought the smallest suitable cars, the cheapest insurance, the cars with the lowest total cost of ownership and still I managed to burn through the equivalent of £161,000 if I’d instead invested that money. How on earth did I get it so wrong? That is a shit lot of money to run two cars for 20 years. I felt sick.
But at least all these cars were reliable and they did get me and my family on some wonderful holidays. They enabled me to run my businesses, renovate some houses and had generally been brilliant workhorses. I’ve never been left stranded by the side of a road due to a breakdown. Possible because I’ve never compromised on safety or reliability. So, for example, I’ve always replaced a battery at the first sign of weakness. Even if I’m sure I could have gotten another year out of it. Likewise with tyres, I always buy the very best premium tyres. After all, I keep the cars and it is me that benefits from this cost effective purchase – it never seises to amaze me how many ‘posh’ cars are driven on poor value budget tyres! That is for cheapskate fools!
So, we now have two super reliable cars that probably won’t need replacing for another 7 – 10 years at current rates of wear. Plus we have a covered trailer that gives the setup more versatility and similar carrying capacity to a Transit van when required. So, we never have to load our cars up with building materials or garden waste to take to the refuse dump.
Days off the road while in repair in 20 years – 4 (0.1 days per year per car)
Total number of roadside breakdowns – 0 (zero!)
Well, that is not quite true. The Bullmeister is an idiot and twice(!) misfuelled his Verso. Turns out diesel cars don’t run very well on petrol! A quick clean out of the tank and fuel lines on the side of the road by the AA fixed that (~£260 a pop – ouch!). I can’t blame the car for that.
How Most People Buy Their Cars
But now let us look at an alternative history in a parallel universe somewhere. Nothing else has changed apart from the cars we had bought. I have the same jobs for the same pay. I start my business at the same time. I will meet my future wife on the same day and have the same children we do now. I just made different choices about cars. Amazingly, this is the much more common real life scenario.
When I first came down to London I knew I’d need a reliable car and bought a Volkswagen Golf on a PCP contract. This made life easy as all the costs, apart from replacement tyres, were included in the monthly price. But with only 1.6 engine it wasn’t very exciting.
My career in London was taking off and I thought I should spend some of this on myself. After all, you only live once! I bought a Mini Cooper S. Crazy fast and fun to drive. The insurance was expensive but that’s London prices.
In quick succession came a BMW 3 series, then a BMW Z3. Both on PCP contracts. I signed up to a sensible 4-year contract to keep costs down and avoid too many heavy first-year depreciation periods. After all, I’m no fool. And neither is my wife. She has also bought cars on 4-year contracts but far more practical ones suitable for a growing family – Nissan Qashqai and Land Rover Freelander.
And finally, at the beginning of 2019, I bought the car I had always hankered after for myself. A Land Rover Discovery. It was only the base model with a few extras but still came to £55,404 (see https://build.landrover/15E6B4A5). A lot of money but over the 4-year contract it was only £922 a month. And what is the point of money unless you are prepared to spend it? It a great car but it’s not been without problems and it’s been back to the garage a few time with faults. But I love it and it definitely my type of car. I’ve always loved the outdoors and it means I can load it up with my canoe and pull my sailing dingy.
But on reflection maybe this year wasn’t the time to buy the Discovery. This thing is getting expensive. I decided to go back through all the bank records and calculate what we’ve spent on buying and running two cars for 20 years. It comes to an unbelievable £593,000 when compounded at 7%.
And these are, amazingly, the decision processes and the method most people use to buy their cars!
The Result Of These Clown Like Car Purchases
An EXTRA £425,000 in today’s money. That is how much extra money we have by simply avoiding these clown like car purchases. And that gap is growing at about £50,000 each year and increasing exponentially as the money saved was wisely invested. Never mind about the savings from being frugal in other areas, this is the single largest area of saving in my life. It won’t be many years before it reaches £1,000,000. Don’t you think that second car buyer wishes he could turn the clock back and give his future self the gift of financial independence?
And more modest cars only helps a little. Even buying the exact same cars we owned but rather than picking them up second-hand at 3-years-old, instead buying them new on 4-year PCP contracts would still have cost an extra £250,000. So, it is not just a matter of buying smaller and less expensive cars! It also matters how you buy them.
If we didn’t have this extra £425,000 I don’t think the wolves would be at the door but life would seem very different right now. I would be looking around desperately trying to find a new contract, even if I knew it made more financial sense to take stock and retrain. The drain of two PCP contract payments totalling £1,500 going out each month, instead of rental income from properties coming in, would soon eat into any rainy day fund. There would be no question of taking time out to spend it with the kids for the summer or canoeing trips with my Dad. I wouldn’t be free to stop worrying about work and earning money for a while. After all, what is money for if it’s not to buy your freedom and get a bit of your life back?
Just remember it is never too late to change.
So, next time you see that guy in his new (bank-owned) Land Rover Discovery tell yourself. Not only does he look like a wanker and complete consumer sucker. He is actually busy shafting his future self.
The Bullmeister