Hacker News Reader

>I never carried collision or comprehensive insurance, having the opinion that dealing with insurance is always a pain in the ass. The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it.

so what do you do if you drive to work, and you total your car? do you have the cash on hand for a replacement car?

Considering the next "beater" is likely to be well under $5K, I'd wager they probably do.

He drives a beater, you can buy another one for around 10k.

If you dont have that kind of money in emergency fund, your playing it risky

I see "runners" on Craigslist all the time for around $1500, I'd say that's the bottom dollar for something that you can probably drive for a year without serious mechanical failures. However, used is always a gamble (at any cost) so if you're buying cheap, make sure parts are cheap too. Just because you can get a 2000s+ BMW for $3k doesn't mean you should!

He describes he piled it in to investing. Put the repairs on a credit card, and you've got thirty-ish days to liquidate, which is plenty of time.

Other people want or need vehicles that offer more than a conveyance of themselves: Kids, gear, livestock, boats, ATVs, lumber, etc.

It's easy to own a 'beater' if you only use it to drive from your house to your job, to the grocery story and back for 40 years.

The vast majority of people grossly overestimate their needs, though.

Rental vans/trucks exist.

Fair point, but renting a vehicle most weekends could easily make owning more cost effective.

If you truly need it every weekend, that's a very legitimate reason to buy such a vehicle, if you can't afford the money/room for a smaller commute-friendly vehicle, or similar reasons.

I'm talking about the people who maybe need it once or twice a year, or like to imagine themselves needing it, when in fact they really don't.

The vast majority of people are airily dismissive of the logistics of other peoples lives.

Some people do have a legimate need and reason for owning such an overly large vehicle. Most people dont.

They have a desire, not a need.

> livestock, lumber

The latter two sound like business uses. The article is about personal use of personal vehicles.

> Kids, gear

Even then, a sedan or utility/mini van can do the job at much lower costs.

> boats, ATVs

Boats and ATVs are also good examples of money pits that prevent people from saving for retirement.

(Especially boats. I looked into buy one, and quickly noticed that I'd have to be on the lake like half of in-season weekends and/or use all my vacation during the summer before ownership beat renting. But I'm only on the lake a few weekends a year, and even then only need/want something other than a kayak maybe every other visit.)

And again, the conclusion of the article is "But if you’re one of the many people who are woefully unprepared for retirement or any of your other saving goals, a good place to start would be cutting back on any unnecessary spending on transportation."

If you're on track to retire, go ahead and buy that nice car/boat/etc. But if not, maybe consider cheaper alternatives.

My kid is in 4-H, she shows goats and rides horses. Most folks have big trucks to pull their big trailers. Not all livestock and lumber is for business, rural communities still exist!

Lumber you might need if you're into DIY, I suppose, or you're collecting it for your fire. Livestock? - well, which person here has the unusual edge case, I wonder...

Leave the major metros on the coasts and you might be surprised at what you see being hauled around that isn't a backpack or grocery bags!

> The latter two sound like business uses. The article is about personal use of personal vehicles.

They are personal uses.

> Even then, a sedan or utility/mini van can do the job at much lower costs.

Sure, if your gear is a stroller and grocery bags. Sedans and utility/mini vans can't go offroad easily. I don't mean something like slopping through mud or a river - I mean traveling through mountain passes or campground roads can be a huge pain in the butt (if not impossible).

> Boats and ATVs are also good examples of money pits that prevent people from saving for retirement.

They definitely can be. Not all boats are massive ski boats - even towing 8ft john boats and kayaks (which can both be had for less than $1000) is easier on a trailer which can wreak havoc on sedan transmissions (if they even have a tow hitch at all). ATVs are super useful for maintaining property, animals, fences, etc, not just riding dirt trails.

> And again, the conclusion of the article is [snip]

And I totally agree with the article. I was providing real-world examples of things that folks use vehicles for that a sedan/beater/minivan would not be a great tool for for the original parent.

Plenty of 'beater' pickup trucks or even old minivans around.

Very good point. For some reason my brain equates a beater with an old or abused sedan. Seeing a beat up truck makes me think the truck was used well vs a beat up sedan that was not taken care of. My bias showing through, sorry!

What other types of insurance did your inner mathematician prevent you from getting? Did you also skip out on health insurance because the premiums are a markup on the expected value of your health care costs?

The difference is that health insurance has an enormous upper limit on what it can save you. You rarely want to spend money for insurance on things you can eat the cost of. You want to spend insurance money on things you can't afford, and health care often meets that criterion. Plus, if it's employer sponsored, you're getting it at a substantial discount.

it's not really applicable to health insurance case because getting it through your employer is tax free, effectively saving you 25% on the cost.

I believe it's not just tax free, right, it's just priced into your salary. They won't give you the employer contribution back as cash if you decline, will they?

The money that goes towards the health insurance isn't subject to income tax, so it's cheaper than taking the money and buying yourself.

employer provided health insurance:

    $50k salary
    $5k health insurance
    $50k taxable income

buy your own health insurance:

    $50k salary
    $5k in lieu of health insurance
    $55k taxable income

But it's better/worse than that. Because they won't pay you $55k if you decline healthcare. Instead, you get paid $50k with the option to get healthcare (take it or leave it).

My family's insurance healthcare isn't tax-free, which would mean saving $2k or $3k or whatever. It's over $10k of insurance a year that I pay less than $2k for.

And if you must go to the individual market, you can’t deduct it until it reaches 10% of your income. Not really fair.

Financially, insurance is only a smart purchase if you

1. Cannot afford the worst-case-scenario. (Example: replace your car if it were totaled)

2. You expect the return from claims will exceed the cost of premiums/deductibles. This should never happen if insurance companies are savvy and want to be profitable.

Large companies with a vehicle fleet often self-insure those vehicles (AT&T last I heard) because they can afford every vehicle worst-case-scenario (ignoring liability, which is a legal obligation).

Socially/emotionally, insurance is a peace of mind which is important and valuable to some people. Security and all that.

His car is less than 10k, its simply not worth the insurance on somethat that at best covers around 90% of the value. Other insurance covers hundred of thousands for not much more the price cost.

Some people obviously have a genuine need for a larger vehicle. Those people usually don't spring for the blingmobiles.

To a lot of people, their cars and or other material belongings are outwardly visible extensions of their (imagined) personality, and signifiers of wealth to their peers. It's just a different set of values.

Personally I absolutely love cars. Not for any status or macho identity, but for the mechanical intricacies and neat design ideas. I am much more interested in a 1970s Opel Kadett than a big new Mercedes or something. I enjoy the act of driving, not the idea that "I am driving something expensive that other people desire".

Have you considered cycling instead of walking? It's cheap and there are so many opportunities to geek out over neat ideas.

> Some people obviously have a genuine need for a larger vehicle. Those people usually don't spring for the blingmobiles.

Eh, I've seen people in construction/trades buying "utility blingmobiles". They need a big truck, but what they buy is bigger and nicer than what they really need. It's the equivalent of buying a $10,000 workstation to do web development (you can, surprisingly, run slack on a lesser machine).

Car ownership really is cheap in the states at the low end. Amazingly so from the perspective of the rest of the world.

The insurance premium is simply a markup on the expected value of what the insurance company would pay out. My "inner mathematician" couldn't permit it.

Is that not true of all insurance? Does this mean you go through life with only whatever legal minimum of insurance is required in any given circumstance?

That's how I do things. Insurance has generally proven not to be worth it, in my experience; they always find some way to not pay - so I only pay for the insurance I'm required to have. It's just another tax.

There are states (I don't know how common) that require a base amount of insurance, so perhaps you were "lucky" in this regard that you didn't have to carry that cost.