Tag: cars

Your doctor car is a luxury item

Your doctor car is a luxury item

Most people look at their vehicles as a necessary expense.  Most cities do not have robust options for public transit, and the rest of the country is too vast for any other form of common transportation to be useful.  In contrast, I’ve met a smattering of diehard bicyclist fanatics who swear that leg-powered, two-wheeled transport can suffice even if you’re hauling lumber or a two-year-old child in a snowstorm.  These are the same people who appear to have exquisitely muscular physique, and claim that biking everywhere contributed to their abs of steel and plaque-less arteries.

Which came first, the biking or the toned abs? Should you just keep an extra set of heels and outfits at the office? What about a vanity kit, hairdryers, irons, and extra shower room too?

The majority of people will unlikely go against the grain of owning a car, but it’s still critical to be aware that what starts as a necessity often transforms into a luxury.  Our cars likely account for the top two or three expenses in our budget.

Going the fancy car route

Doctors have to look the part, right?  It is important to look the part in the physician’s parking lot at the hospital, and frankly, the barrier to ownership of a luxury vehicle isn’t actually that high.  Many of my colleagues also opt to lease vehicles in order to maintain the flexibility of having access to a new car and not worrying about the maintenance. 

A lease on a $90,000 SUV may only set you back roughly $1200 a month, or $40 a day.  Gas might run you $250 a month ($8.33/day), and insurance perhaps $2000 for six months ($11.11/day).  In total, this might cost $60/day.  While this amount may not be a huge dent to a Hospitalist earning $120/hour, remember that these purchases are made using post-tax dollars.  At an effective income tax rate of 30-40%, that $60/day may be costing you closer to $90+ of pretax dollars.

Is ownership of a luxury vehicle worth 10% of your ten-hour shift? 

The amount of detail you can analyze this situation is endless—most shift worker physicians are only posting 15-18 shifts (often less) a month.  This lease might actually eat into more than 15% of your monthly gross income.  Two of these leased vehicles would consume 30% of your income, just to get from A to B.

Keeping a beater until it no longer starts

In contrast, there are plenty of physicians who purchase a vehicle outright, and drive it until the car no longer works.  This might translate to a decade of use for the average non-technical car driver to maybe 15-20 years for the car hacker.

Modern safety features are optional.

Ownership might still cost you $30/day if you amortize the cost of maintenance through the life of the vehicle.  If you are unfortunate enough to buy a lemon that dies after year 7, you’ve effectively increased your daily cost of car ownership.

For the high net worth individual who needs umbrella insurance, there is a trade-off with owning an old beater.  While umbrella insurance itself is relatively inexpensive, the policies often require a certain amount of pre-existing coverage of your home and vehicles in order to pass underwriting and avoid gaps.  This additional amount of auto insurance coverage might be more than what you’d like to pay for an old car, but you have no other choice.

The moral of car ownership

It’s unlikely that your life circumstances allow you to circumvent car ownership completely.  Even as a high-income earning professional, you are likely still giving up 10% of your earnings to this luxury.  With teenage children, you’ll easily double the expense.  If this amount has no impact on your well-being, then look no further.  You needn’t worry about it.

However, the most important aspect of car ownership is realizing that it can and will sting your wallet.  If that sting is sufficient to disrupt your financial plan, then and only then should you analyze what to do to reduce the financial burden.  

What is your stance on ownership of a luxury vehicle?

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Lifestyle creep and the 4% Rule

Lifestyle creep and the 4% Rule

If you’ve been keeping up with the online money blogging world, you’ve probably heard about the 4% Rule, or 3% (3.5%) rule for some. However flawed, it gives you a decent start on estimating how much to build up your nest egg before you start telling your managers at work how you really think about their Maserati while you’re stuck with a fifteen year-old Honda Civic.  Once you figure out how much you spend annually, you can estimate how long your money will last.

For instance if you spend roughly $50,000 in today’s dollars annually, you’d need $50,000/0.04 = $1.25 million in today’s dollars to last at least 25 years. This has to be invested in some manner too to stave off inflation, and gold bars under the mattress doesn’t count.  Fair enough, but what happens after 25 years? We don’t have much data in the ill-referenced Trinity Study to extend beyond that, so some just adjust the percentage withdrawal rate more conservatively. With a 3% withdrawal rate at $50,000 annual expenditure, you’d need $1.67 million invested.

Lifestyle creep

“Lifestyle creep’s a bitch” -says somebody. I will claim it as my own if no one else does.

Living your entire twenties holed up studying and drowning in debt while your friends in banking enjoy their youth is the prime way to fuel your desire for lifestyle creep.  That’s what doctors go through.  Sprinkle in a few of your classmates who overextend their future self or have family money, and you’ve got a good (false) sense of how doctors should live.

You might also like: How to make a doctor’s salary and still feel poor—and how to fix it

Financial discipline can be an acquired skill, but like many behaviors in life it is highly influenced by our childhood. Not everyone can be like Mr. Money Mustache who grew up in an average Canadian household with “normal” expenses and discover that there is an alternative financial blueprint to life.  The majority of people I know who are financially conscientious have had some foundation in their younger days.  It could be as simple as mowing the lawn for an allowance or just seeing someone in the family struggle financially.  There has to be an exchange of work for money.  The ultra-savers at a young age typically are a subset of this group who use these fundamental principles and kick into overdrive. The rest of us without the head start of financial intelligence simply learn it the hard way—through experience and time.  We get into credit card debt or some financial ruin that triggers our brain to fix the problem.

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Doctors, on the other hand, might have never witnessed financial responsibility in their childhood or gotten themselves into financial ruin. Many doctors that I’ve known come from middle class families who had food on the table every night and family vacations every year.  By the time they start earning some money in residency, they will have acquired substantial borrowing ability from banks or predatory lenders.  We are prime victims for lifestyle creep.

I’ll be first to admit that I’m guilty of lifestyle creep.  After all, why shouldn’t we own at least one nice pair of Louboutin’s if we’re curing cancer every day? That is exactly how lifestyle creep catches you.  When I was a resident, I earned around $40,000 a year and spent 60% of my earnings living in a HCOL area. There wasn’t much left to repay my loans and live lavishly.  There was a lot of pent-up consumerism in me.  Once I got a real job I was tempted to live in a larger place, buy a nicer car, and upgrade my wardrobe. The problem with increasing your living expenses proportionally with your income is that you never make any headway towards your financial goals.

The doctor who owns this car can actually afford it. Doesn’t mean you can though.

Over the years, I’ve been slowly tracking my lifestyle creep. The brunt of the lifestyle creep comes from our mortgage, which in a way is a necessary evil. If you are obligated in your profession to stick around and work a certain number of years before you make any career changing decisions, it might be worthwhile to own a piece of America in the meantime. The other contributions to lifestyle creep end up being discretionary.

You might also like:  How to burn through a $1 million salary

Between the end of fellowship to my first year of practice, I increased my living expenses by around $15,000 a year. This rate slowly crept up until it skyrocketed another $40,000 with mortgage expenses. Purchases like an overpriced refrigerator do not necessarily increase quality of life, but do dig into your savings rate. At some point, our earnings actually plateau and any lifestyle creep will start eating away at your magic number. If we hope to have any possibility of reaching our savings goals, we have to constantly reassess our expenses. If we can’t adjust down, then we’d better find a way to increase our earning potential

How often do you assess for lifestyle creep?

How to check the engine oil level on a Subaru Impreza

Checking the engine oil level on your car isn’t difficult, but it probably isn’t at the top of everyone’s list.  Most of us simply take our vehicles to the garage get the oil changed every 5,000 miles, or at whatever interval your mechanic has instructed you to follow.  I’ve had colleagues NEVER realize that they had to change the oil in their vehicles, and had gone 20,000 miles! Thanks to the marvel of modern manufacturing, their cars still run.

That’s not recommended, unless you’re the type to get a new car every five years anyway.  For most cars built within the last decade, you really just need to stick with the routine oil maintenance schedule.  There are some people who like to stretch out the oil change interval using fancy filters and synthetic oil, but a regular interval will keep you safe.

However, there are several makes of cars that consume large amounts of oil.  These are more common in flat engine vehicles like Subarus.  Other cars that are known to “burn” oil include Audis, Porsche’s, and some BMW’s.  I remember reading a report years ago that over half of the 2010 Audi A4’s required additional engine oil between oil changes!

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If you own any of these cars, you should learn to check the oil levels.  Don’t wait until the fancy Google-enabled computer system in your Audi A8 to kick on. Just check the oil levels routinely.

This is how I check the oil on my Subaru Impreza:

Pop the hood.

Don’t be scared!  The hood release is usually under the steering wheel close to the driver’s side door of your vehicle. Take a look at the engine:

This is what a 11 year-old engine looks like under the hood!

There is usually a cap that is labeled for engine oil, and a dipstick.

If you want a dipstick in your Audi A8, you’ll have to pay extra!

The dipstick allows you to check the oil levels in the reservoir.  Most dipsticks have a high and low level hatch mark. When you first take out the dipstick, be sure to wipe it dry, place it back into the engine, and then take it out to read. You will be able to get a more accurate reading.  If there is no oil on the dipstick, you are likely short at least 1 qt.

The dipstick on my car has two holes indicating both the low and high levels:

Snatch some hospital gloves if you don’t want to get your hands dirty!

If the engine oil level is low, simply visit your friendly auto store (or Walmart) and pick up a few quarts of engine oil rated for your vehicle.  Use a funnel to prevent spillage, and try to add the oil gradually while checking the dipstick in between.  If you overfill the engine, then you will have to take the car to a garage to have them drain some of it out.

I typically change my engine oil and filter once a year (yes, that is long interval), and I usually end up adding about 2 quarts of oil throughout the year!

Any questions on vehicle maintenance? Sound out below!

The Ultimate Buyer’s Guide to Consumer Car Batteries

Understanding your car battery is a topic I expect most practical people, including doctors to know about. It doesn’t matter if you’re some hotshot neurosurgeon in New York City or dermatologist in Abilene, TX, you will be considered a smarter person if you know something about your car battery. Period.

Since this is a website that discussed finance, you’d better believe that you can save a bit of money over the years by understanding the basics of your car. You’re not going to become a multi-millionaire by saving on your car battery, but there is also no reason why you should squander your earnings on one of the easiest parts of a car to understand.


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The fundamentals of car batteries for everyone 

If you know nothing about car maintenance or if you don’t care about car maintenance, then you should just read this section. The bottom line is that all batteries have a limited lifespan.  Unless you lease your vehicle, you will need to replace your car battery at some point during the life of the car. It could be one year. It could be five years. We just don’t know. Most car batteries will probably last at least three years.

Here are some conditions that will shorten the life of your battery:

  • Cold weather. If you live in the Northeast or in an environment that is cold most of the year, your car battery will not last as long as it would in warmer weather simply because batteries lose voltage in cold weather. Your battery also loses voltage as it ages, so your battery will be more susceptible to failure
  • Infrequent driving. This usually isn’t a problem in America—we drive too much. However, batteries naturally self-discharge over time. Every time you run your vehicle, the alternator will recharge the battery. While it is becoming more uncommon to permanently discharge a battery completely as technologies improve, your battery might not recharge if you allow it to discharge completely. The battery can be reconditioned back to life, but that is not anything I would expect common users to have to deal with.

How will I know if my car battery needs to be replaced?

  • If your car doesn’t start, the battery is the most common cause.
  • If your car has difficulty starting, the most common cause is the battery.
  • If your car is beginning to have more difficulty starting in cold weather, your battery might be getting weak.

If you take your car to the local dealership (or if the dealership picks your car up from your house for routine maintenance), rest assumed that they will let you know when you need to replace the battery. Otherwise, an auto parts store such as Autozone will test your battery at no charge.

If your car battery needs to be replaced, and you aren’t interested in price shopping or self-installation, go to Walmart, Sam’s Club, or Advanced Auto Parts. They will install the battery for you, and you’ve effectively saved at least $100.

You’re welcome.


Car battery factoids for intermediate folks.

Congratulations! You’ve decided to care about your car beyond taking the car to get serviced by the dealership. You’ve already taken the step to saving money on your vehicle, which is more than what most doctors will understand.

In the interest of avoid being stranded in the middle of nowhere due to a dead car battery, everyone should know how to jumpstart their car battery. Even if your car battery should have been junked years ago, you can still start your car’s [gas] engine if you can get enough juice through the car battery.

Better yet, get a car battery jumpstarter.

Keep one of these in your car, and you won’t ever have to call AAA or wait for a friendly stranger to help.  Even if your car battery is dead beyond repair, you can get your car back home with a battery starter.

In practice, a 12v battery probably only has a few useful hours of juice. However, as mentioned above, the battery will last several years. The reason is that the alternator in your vehicle kicks on and recharges the battery as you drive. If your alternator goes bad, your battery will also die.  Batteries ultimately stop working mainly due to sulfation of the electrodes and loss of water.


Real-world examples of car battery pricing.

I priced out a standard 35N lead-acid battery with approximately 640 amps of cold cranking current for my 2006 Subaru Impreza. The local dealer quoted me a rate of $350 for the replacement job, with a standard warranty of 3 years.  By taking my vehicle to a local auto parts store, I’d save approximately $150. If I wanted to do the replacement myself, I’d probably save another $30.

The savings are even more dramatic if you drive a higher-end vehicle. The local Mercedes dealership quoted me a battery replacement fee of $650 for a 2014 SL AMG 63 (free car wash included with servicing). The equivalent battery costs around $160 elsewhere! The Hummer dealership charges $995 to replace an otherwise $160 battery on an H2 (free car wash also included). Sounds like an awfully expensive car wash to me.


How much financial gain will you truly get from understanding car batteries?

Any complex goal can be broken down into a series of discrete steps. Each individual step isn’t going to solve all of your problems, but will help you achieve your ultimate goal.  Likewise, saving money on a car battery alone isn’t the solution to reach financial freedom. However, it is a skill that builds upon your financial armamentarium.

You might also like: How to replace the cabin air filter of a Mazda 3.

Prudent selection of a car battery will probably save you $200 every three years. This is post-tax dollars. For many high-income folks this can mean $400 of pretax money. That’s like doing one extra appendectomy!

This isn’t big money, but practicing these good habits will help you save on other expense in the long term.

What examples have you taken in saving money?

Should I put nitrogen in my car’s tires?

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Have you ever noticed that some vehicles have a green valve cap on the tires? Is that some sort of special aftermarket modification? In general, the green caps indicate that the vehicle’s tires are filled with nitrogen instead of air.
Wait a second, doesn’t the bulk of atmospheric air consist of nitrogen? Yes.

[/vc_column_text][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”1/2″][pie_chart separator=”yes” percent=”78″ title=”Percentage of nitrogen in normal air-filled tires.”][/vc_column][vc_column width=”1/2″][pie_chart separator=”yes” percent=”95″ active_color=”#dd9933″ title=”Percentage of nitrogen in nitrogen-filled tires”][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_column_text]The last time I was shopping for a car at the dealer, the salesman was heralding nitrogen in the vehicle’s tires as a godsend. This godsend also came with a hefty price tag of $700! What advantages does increased nitrogen in the vehicles confer?

We all [hopefully] have been instructed to make sure our car’s tires are properly inflated. The proper tire pressure for your vehicle is usually indicated inside the driver side door.

Sometimes the numbers are identical for all four tires, but not always the case. My Subaru recommends maintain a pressure of 33psi in the front tires and 30psi in the rear tires. Keeping the the tires properly inflates confers two advantages:

  • Symmetrical wear on tires: Obviously if the tires are overinflated or under inflated for long periods of time, there will be uneven wear on the tires. This is most certainly reduce the longevity of your tires and can result in misalignment with drifting of the car when driving straight.
  • Optimal fuel economy: I remember reading an EPA study showing that there is a 0.3% decrease in fuel economy per 1psi decrease in a tire’s pressure. You can easy have a drop of 25% in tire pressure over a year’s time if you don’t check frequently. For most vehicles, you might lose 1-2 mpg depending on your driving habits.


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Nitrogen supposedly is able to remain in the tire more readily than room air because the molecule is larger. If nitrogen is less apt to escape, then the tire will maintain better wear and fuel economy. Does this work in practice? I certainly have not noticed a difference in the brief period that I’ve had nitrogen.

The third benefit of nitrogen in your tires is decreased wheel corrosion. Oxygen, as we know, is a key component in oxidation. After 8 years in the tough northeastern snowstorms, my alloy wheels became quite corroded and had constant rim leaks no matter how much I scrubbed the rims and put bead sealer to keep the air in. In practice, having oxygen in my tires may have helped delayed the corrosion, but with the amount of winter snow, road salt, and ice I went through, I’m not sure if it would have helped.

What situations will nitrogen help in tires?

I’d imagine that mission critical and high performance situations will require stable tire pressure the most. That would probably be for race cars, airplanes, and spaceships. These vehicles undergo significant temperature changes during operation.

Should I put nitrogen in my car’s tires?

If you’re read this far, you probably realize that I’m not too convinced about the benefits of nitrogen in tires, especially if you have to pay some $700 extra for a vehicle. That being, said, I actually have nitrogen in my car’s tires. It came free when I purchased new tires at Costco. You can always have the tire guys there check the pressure at any time.

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How to change the cabin air filter in a Mazda 3

I recently took my Mazda 3 to the dealer for a routine oil change (more on this later), and the service attendant reminded me that my cabin air filter was due for replacement. The typical fee is $80+tax, but they have a 10% service discount for the month. I politely declined.

Most people aren’t even aware that their car has a cabin air filter (CAF). The CAF is different from the standard air filter (AF) under the hood. The CAF cycles air entering the passenger cabin. This includes the heat, air conditioning, or fan air that enters the through the car’s vents. The maintenance schedule for the CAF ranges anywhere from 12,000 miles up to 30,000 miles. A dirty CAF can mean more exposure to dust, pollen, and outside particulates every time you turn on your car’s fan.


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What most people don’t know about the CAF is that replacing it is a 5-10 minute job, even faster if you are a car mechanic working at the dealership. It took me less than 5 minutes to replace mine. You can order the filter for the Mazda 3 (2010 – 2013 models) on Amazon.com for less than $15. If it takes 10 minutes to replace the filter at a rate of $65 ($80 dealer charge – $15 retail cost of filter = $65), the labor cost of replacing the CAF is $390/hr! If you are a high income earner taxed at a federal marginal rate of 39.6%, you just saved $609/hr or $101.50 for a 10 minute job!!! I ordered a generic CAF on eBay for $9 and saved even more.

Here’s how to do it:

The CAF in the Mazda 3 (2010-2013 models) can be accessed from the front passenger’s side under the glove compartment. The only tool that you need is a Phillips screwdriver. The first step is to remove the plastic side panel of the center console. There is a gap where you can reach in and pull:


There is also a plastic cover that can be removed by pinching through the plastic pins:


There is a sensor cable connected to the air filter cover. It is held in place with a plastic snap. Depress the snap, and disconnect the cable first:


The cover can be removed by unscrewing TWO of the screws on the panel. You can remove the lower left two screws:


A Phillips head screwdriver is all that you will need. After the cover is removed, you now have access to the CAF . There are actually two filters that are stacked on top of one another. Reach in the pull out the bottom filter. Be sure to note the orientation of the filter as you are sliding the old one out. The longer plastic fin should be pointing to the left (toward the passenger).

The top filter can then be pulled down and taken out the same way. Note that the side with the foam edge should be on top. If you have a shop vacuum, you can remove any of the leaves and debris that have accumulated in the system. Place in a new filter, and reverse the steps! Voila!

Overall, it does not take long to do this replacement. The stakes are relatively low, and you can learn more about your car in the process!

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When does owning a fancy car no longer seem special?

when_does_owning_a_fancy_car_no_longer_feel_specialMost of us want to be different. Some like to have the latest fashion accessories or gadgets. Others want to have nice clothing, cars, and houses. Those of us who are financially aware will agree that material wealth does not represent actual wealth—many people who sport the latest Apple Watch may have a net worth substantially lower than what it should be for an Apple Watch owner. In fact, it’s the ones who practice stealth wealth who may actually have the greatest net worth to material wealth ratio.

While stuck in traffic on Highway 101 (“The 101”) last week, I tried to entertain myself by counting the number of luxury automobiles I could see in a ten-mile stretch of highway. It was frightening how many there were: over 50 Mercedes including at least 5 AMG’s, 11 Tesla Model S’s, one Tesla Model X, another dozen Maseratis, one Lamborghini, another 30+ BMW’s, and a similar number of Lexus and Infiniti’s priced over $50,000 MSRP.

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I think that there were more Mercedes than Honda Accords on the highway! In this case, does driving a luxury automobile actually distinguish you from the working masses? Does leasing a 5-series BMW or an AMG even show that you are a class above the rest? I don’t think so.

If you happen to live in a city or region with large numbers of wealthy residents, you might actually be fortunate that you might be priced out of wealth portrayal! If everyone around you drives a Mercedes, Hummer, Beamer, or Tesla, you don’t have many other options leftover to be unique. Maybe if you decide to splurge $2000 a month to lease a Bentley Continental GT, you can join the masses and still be stuck in traffic, but in style.

Likewise, if all of your coworkers wear Loubs, you might not feel unique if you wore them either. I find it to be an interesting phenomenon that the more blatant display of wealth that surrounds me, the less tempted I am to own expensive material.

Hey, it’s not all bad if everyone around you drives a Mercedes. You know that not everyone can really afford one, and you might not be as tempted to own one yourself.

Does this approach to wealth impact you in the same way?

(Photo courtesy of Flickr)