A Cheapskate's Top 10 Money-Saving Ideas for Car Owners

Don't laugh at the guy driving the 15-year-old beater: He might be on his way to becoming a millionaire. Many with modest incomes get rich solely by spending less than they earn and investing the proceeds wisely — call them cheapskate millionaires. Car owners can learn a lot from these modern-day Scrooges. They can lower car insurance costs, reduce — or eliminate — car payments and save money in a number of other ways. While cheapskates put the savings into boring things like Roth IRAs, car enthusiasts who employ these techniques may choose to invest in, say, a '92 Viper.

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   1. Drive, don't fly.

Rather than flying commercial to a destination less than 500 or so miles away, rent a car with unlimited mileage and drive. Since you were probably going to rent a car at your destination, the only additional cost is about $120 in fuel and a few hours of your time. Driving allows far more flexibility: Go sooner, stay longer, leave earlier or cancel entirely without penalty. Also, your luggage never gets lost, you can carry as much as you please and it never gets pawed through by strangers. And you don't have to disrobe involuntarily.

I regularly visit a city 530 miles away. The cheapest roundtrip airfare is rarely less than $450, including taxes and fees, and short-notice flights can top $1,000. Door-to-door time for the one-stop flight — including arriving at the airport an hour before departure, waiting (forever) for luggage and driving to my hotel — is almost six hours. (Gate-to-gate time is longer for the cheapest fares!) Meanwhile, since the speed limit on much of the route is 70 mph, I can drive there in less than eight hours: a lot less if I'm in a hurry. In exchange for four hours of my time, I save at least $300 — and maybe as much as $700 — by driving instead of flying. Cheapskate nirvana!

It's preferable to rent a car for your trek, rather than drive your own, for this reason: According to AAA, it costs the average American about 50 cents (plus or minus 10 cents) per mile to operate a vehicle. Weekend rentals can be had for less than $200.

There are a couple of caveats to keep in mind here. Note that some agencies prohibit traveling to certain states. Also, make sure your personal car insurance or credit card covers rental cars.

A new car loses roughly a quarter of its value the moment it leaves the dealer's lot. Cheapskates allow the first owner to take that shot to the wallet. After two or three years, most vehicles have lost between one-third and two-thirds of their value, but retain three quarters — or more — of their useful life. That's when cheapskates pounce.

Cheapskates drive their cars just about forever. Here is the first step to becoming a cheapskate millionaire: Buy a used car and drive it 10 years or more. I own two cars with more than 100,000 miles on their odometers. Unless my teenagers destroy them first, I'm counting on getting another 100,000 from each. One problem: Cheapskates have a hard time knowing when to shed their cars. Some say it's time to part when a single repair costs more than half the value of the car. At the least, sell it before its worth drops to scrap value. Note to fledgling cheapskates: Maintain your car as if it were new or you'll learn the difference between frugal and cheap.

Those who have the potential to become cheapskate millionaires write themselves a check each month for the equivalent of a car payment. An excellent choice is to put this money into no-load mutual funds — a third into a total-stock-market index, a third into a total-bond-market index and a third into a money-market fund. These act as both a repair reserve for the car and will allow the cheapskate to purchase his next (used) car for cash.

If to afford the monthly payments you must finance a new car for more than three years — or a used car for more than two years — it's an excellent sign that you have Domaine Chandon tastes and a Pabst Blue Ribbon budget. When buying a new car, look at the total price, not just the monthly payments. An example: You lust after a $30,000 car but have only $10,000 in cash. So you borrow $20,000 for six years at 9 percent interest. That means you'll wind up paying about $36,000 for that $30,000 car that'll be worth about $5,000 when it's paid off. And then you'll take out another loan.

Increase the deductible on your collision insurance (which pays to repair your car if you crash) to $1,000. This may slice your insurance bill by a third or more. Insurance is designed to protect you from catastrophes, not repair door dings. Those who file claims for parking-lot and driveway mishaps will find their rates increased and, possibly, policies cancelled. Instead of pocketing the savings, use it to increase liability (which pays if you hurt someone or their stuff) and uninsured motorist coverage. Most drivers are woefully under-covered in these areas.

Eliminate collision coverage on older, high-mileage, low-value cars. Look up your car's value: If you wreck it, the insurance company will offer no more than trade-in value. Then subtract your deductible. You may find that by eliminating collision (but not liability or uninsured motorist), you can quickly save the car's value, less the deductible.

Stretch oil changes to at least as long as your automaker recommends — that's 10,000 or more miles for some cars. If you regularly drive for about 20 minutes without stopping (which gets the oil hot enough to boil off moisture and combustion by-products), it's safe to go at least as long between oil changes as your automaker recommends.

Don't allow a dealer or salesman to push you into service contracts, extended warranties, credit life/disability insurance, undercoating or other special options. All are high-profit items for the dealer and low-benefit items to the consumer. And all are available from other sources for less.

Novice cheapskates are naturally attracted to products that offer the possibility of a free lunch. Veteran skinflints have learned no such thing exists in the automotive world. No pill can improve fuel mileage, mini-superchargers don't increase power and radar jammers don't jam radar. The difference between frugal and stupid is small. Know this: If it sounds too good to be true, it almost certainly is.

Mac Demere is a driving instructor, vehicle tester and race driver who has competed in the NASCAR Southwest Tour and Rolex 24 at Daytona.