Americans keep their cars for 6.5 years, on average. This is up from just 4.3 years, the average in 2006, so that is encouraging. But still, just 12.9% of Americans keep their vehicles for a decade or longer. (This data is from IHS Automotive and iseecars.com as reported by Forbes, by the way).

We currently own one car that is ten years old and one that is six years old. One is a Nissan and one is a Hyundai. They weren’t worth much when we bought them, and now they’re worth very little according to Kelly Blue Book. However, they are worth a lot to our monthly bottom line since they’re both paid off and cheap to insure and maintain! I’m sure someday we’ll need to trade up to newer used cars that can continue to be reliable and can better accommodate multiple car seats and junk on trips. But I’m very glad we have held onto our cars for now.

A few years ago we made a conscious to choice to buy a cabin instead of a car.

Wait, what? Doesn’t a cabin cost a whole lot more than a car — at least your standard family vehicle for around town?

Basic Cost Comparison

Well, it does and it doesn’t. The average new car these days costs around $35,000 according to Kelley Blue Book. The average car payment for a new car is $513 in the first quarter of 2017. That’s expensive! And what happens to the value of cars over time? They decline, of course, starting with a huge drop when you drive them off the lot, if they’re new anyway.

Well, our cabin down payment was less than paying cash for the average new car, the mortgage payment is less than the average American new car payment, and so far the value of our property has gone up instead of down. In sum:

New Car Cabin
Up Front Cost $35,000 $28,000
Ongoing Cost $513 $466
Assessed Value Decreasing Increasing

Clearly this is a rudimentary comparison, and there are some apples to oranges issues. Namely, I’m comparing the “up front” cost of a car as being paying in cash to the “up front” cost of a cabin being our down payment plus closing costs. Clearly you wouldn’t pay in cash for a car and pay a loan payment as well. But this was the mental math we were doing at the time. We could use our funds to buy a new (or more likely a newer used) car, we could pay to finance a car at roughly the same interest rates we’d pay on a mortgage, or we could put our money to better use and drive our cars into the ground.

Also, you’re probably correctly realizing that if our 20% down payment and closing costs were around $28k, we bout a very inexpensive cabin!! These things are all true. But I think it helps to play out these types of trade-offs before making any large purchase. For us, it helped us rationalize a small sacrifice–keeping old and crappy cars even knowing we were planning to start a family soon–in exchange for something that would bring us a lot more value.

Our Triple Bottom Line

In business, triple bottom line usually refers to taking financial, social, and environmental factors into the equation when making decisions. In our world, the cabin brought us our own sort of triple bottom line.

Financial – On the financial front, we didn’t put out a whole lot more money up front that we would have done if we had bought a newer used car. But we ended up with an asset that had the potential to pay for itself or generate a little revenue for us down the line. We knew going into our property search that we would rent the place out, and though we did as much market research as we could do as amateurs, it was still a financial risk. A few years later, the property certainly isn’t a cash cow for us, it handily pays for itself and we’re building equity in it. Financial bottom line–check.

Social – I was pregnant when we bought the place. By the way, that is not something I’d necessarily recommend, given the many hours spent in the car going back and forth from our home to Big Bear during the property search. But honestly, we never could have done it with an infant, so I’m glad we put the time in then. In any case, we knew we wanted a place where we could take our child, or children, and make many family vacation memories without having to take a lot of time off or spend a ton of money each time. We also wanted a place to be able to enjoy with friends and family. It’s on the small side for that, but we’ve made it work! Our oldest son loves going up there and asks for it all the time. We also donate free stays to local fundraisers, and enjoy providing a highly-rated, lower cost rental that is clean and cozy. Social bottom line–check.

Environmental – The Los Angeles metro area is huge. I could write ten posts about what that entails for trying to live a “simple” and fairly frugal life, and trying to get outdoors often. Basically, it’s not always easy to do here. LA can start to feel very claustrophobic, very image conscious, all about the latest restaurant or place to be seen. If we wanted to keep our jobs for the time being and keep saving for the long-haul, I needed a bit of an escape. It needed to be fairly nearby and have plenty of recreational opportunities (plus be a viable vacation rental market). We’ve done tons of hiking, a little snowshoeing and boating, and maybe when the boys are older, we’ll take them skiing. I love sitting on the little porch and looking up a the tall pines, no traffic noise or smog to speak of. Environmental bottom line–check.

So, next time you’re gearing up for a big purchase, make sure your money is going as far as it possibly can for you.

And of course, check out our little cabin if you need a place to stay in Big Bear Lake, CA.

 

 

6 replies on “Why We Bought a Cabin Instead of a Car

  1. I was just thinking about doing something like this! Great to see another FI blogger in Los Angeles as well.

    I like that your cost comparison includes the fact that the car is a liability and the cabin is an asset given that one depreciates and the other appreciates over time (most likely). Do you go to the cabin seasonally or is that something you do whenever you need to get out of the concrete jungle?

    Liked by 1 person

    1. We go up there whenever we want to escape the concrete jungle AND when we want to brave the traffic with our two young kiddos now. 🙂 Typically, we try to rent in peak rental seasons and enjoy it more ourselves in the off season when there it’s quieter up there anyway. Thanks for the comment and for introducing yourself as a fellow LA blogger!

      Liked by 1 person

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