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How much is too much?

I have a 1995 Chevy Lumina with 130k miles on her & she drives great. No payments & cheap insurance are also a big plus. I’ve been told I need to replace the right inner tie rod for about $200. I’ve also spent about $2,000 over the past year on various repairs. At what point does it make sense to retire the old girl?

When you get tired of it. Generally, it makes more economic sense to keep repairing it. Some exceptions are:

  1. You need complete reliability, and it is breaking down on you.
  2. You want/need new safety or convenience features.
  3. The cost of repair exceeds the cost of replacing the car with an equal or better one.
  4. The amount of down (being repaired) time has become a problem.

At the point at which you’d rather spend that much money on another car. That point differs for everyone. If the Lumina drives safely and you like her, then it’s up to you to decide how much you’re willing to put in. There is the argument of “don’t put in more than the blue book value”, but that’s not really a strong argument. If you’re tired of the car, then retire it; if you still like driving the car, then keep driving it.

Any replacement is going to be a LOT more than $200 for a vehicle as good. You may well have to take on payments, your insurance could increase; trading up gets costly. In the end, it comes down to what you’re comfortable with.

See Tardis’ good comments. #3 often takes over when you need a new engine or transmission. Most other repairs are not enough $$ to justify selling.

The accounting approach is to do a proper cash flow and Net Present Value (NPV) Analysis. This method uses a yearly stream of costs associated with keeping the old car till it expires (usually 20 years or so) and compares that with the annual cost of buying & owning a new one.

This method almost always favors “driving it into the ground”; in other words, just keep replacing parts till either the car becomes unfixable, very unreliable or dangerous or it can no longer pass the emission tests. You will know when that time arrives. My sister, a retired cost accountant does exactly that; they scrapped a 1972 Ford Torino prematurely in 1980 because the frame rusted out; otherwise they would have driven it till the end of its natural life.

Spending $2000 in one year on a 1995 car is not unusual; you will not likely do that the next year, especially at such a low mileage. Rocketman just posted his 500,000 mile oil change on this site; his car still runs great!

Clic & Clac usually tell readers that the $500 per month ($6000 per year) payment on a new car with the higher insurance cost buys an awfull lot of repairs.

Cars have 3 lives; the design life, which the manufacturer uses to make sure you get a dependable car, the economic life, which uses the method I and my sister recommend, and the actual life, which has you rebuild the car completely to keep it running. The latter is used by car enthusiasts to keep classics and muscle cars on the road but is obscenely expensive.

Unless you or your wife hate the car, or you have just won the lottery, I would advise keeping it. The average American spends $1200 per year on maintenance, repairs and tires per year. The average US car is about 6.5 years old!

Hope this helps you decide.

Thank you, Docnick. Your response was more detailed than I was expecting but actually analyzes and answers my question perfectly. Much appreciated.