Originally, automobiles were created to be a more efficient means of transportation than the horse.  Over time though, this has changed into not so much a thought process of transportation but rather the image it will give a person.  If I drive a Porche, I’ll have this image.  If I drive a Volvo, I’ll have that image.  In addition, the amenities of the automobile have become a defining factor in one’s selection.  Are there televisions in the back of the headrests?  Are the wheels 25 inch chrome?  Are the seats leather upholstered?  Does the vehicle have a dual DVD and multidisc CD changer with surround sound?  But here’s the question?  Is it necessary to have all of these amenities in order to drive to the bank, the grocery school, or to pick up the children from school?  How much thought is put into the vehicle as a means of transportation and how much of a role does luxury and image play in one’s purchasing decision?

There is a great and often unforeseen opportunity cost when making a decision about one’s vehicle.  Opportunity cost means that for everything you choose, you give up selecting something else.  So if I eat tacos for lunch today then I forgo sushi, a chicken salad, soup, a calzone, and every other possible option on the planet.  When you choose one thing, you give up everything else.  So when you make a decision to buy a car based on all these things, you are spending a lot of money to get them.  This means that you are forgoing the opportunity to spend that money on something else.  

What if instead of buying a Mercedes, you bought a Honda.  Your ability to get from one place to another in a comfortable way would hardly be noticeable if even at all.  You may forgo the image a Mercedes has, but imagine how much money you would save in the process.  Take all of that saved money and put it in an interest bearing account.  Now use that money for luxury.  Luxury to buy nicer furniture at home, luxury to travel more often, the luxury of working 4 days a week instead of five.  This is possible because the luxury in the car was given up in order to enjoy luxury in other areas.

According to AAA, in 2012, the average cost per year of the average sedan driven 15,000 miles was $8,946 and for 4WD SUVs it was $11,360.  That is a significant amount of income.  Think about how much people are spending on vehicles today.  It’s outrageous.  If you made your purchase strictly on the most efficient and effective way to get from point A to Point B, I assure you that your annual vehicle costs would be a fraction of what they are today.

I got my first car when I was 16 years old and have had a car ever since.  But while living in Japan, I did not purchase a vehicle.  I rode my bike everywhere I went and if I did go somewhere farther away, I took a train or a bus.  I cannot even begin to tell you the amount of money I saved by not owning a vehicle. 

Consider what is truly necessary for your transportation needs and make a low priced purchase.  You’d be surprised how much money you can save and how this opens up the doors for you to do so many other great things in life.  Would you rather own a luxury yacht on wheels and be able to travel once a year or have a highly efficient vehicle without all the amenities and be able to travel multiple times per year?  The decision comes down to what you really value in life.  Is image and luxury really necessary when driving around town and what will that purchase be leading you to give up as a result!?