Laura Rowley Money & Happiness

It's 8:30 a.m. I'm car pooling with five kids in my minivan. Six-year-old Alexis is in the last row.

Alexis: "Is this a bought car?"

Me: "A what?"

Alexis: "A bought car."

Me: "Oh, you mean, did we buy it? Yes. We bought the car."

Alexis: "Good, because if you had to return it, you'd be in big trouble for this crayon all over the back seat."

I was amazed that a six-year-old knew the difference between buying and leasing -- and the consequences of a three-year-old with a creative streak and an orange crayola. She also zeroed in on why I love used cars. I was indeed disconcerted when my middle daughter used the back of the second seat for her canvas. But it didn't prompt the you'll-never-watch-Spongebob-again reaction that would have resulted if the car was leased, or if I'd financed a new car and was still paying for it.

Paying Cash for a Car

When I recently mentioned that I buy cars for cash (see "Americans' Debt: Worse Than You Think?"), I got an e-mail from an outraged reader: "Your financial rule is to pay cash for a car? That would be nice but unrealistic. How can I pay cash for a car? A simple car costs around $20,000. With what I take home, it would take me another 10 to 20 years to save enough for that."

Actually, I bought my current car -- a '95 Mercury Villager with 60,000 miles on it -- for $5,000 four years ago. We asked a mechanic friend who frequents the Pennsylvania federal auto auction to keep his eye open for an affordable minivan on his next trip. He called from the auction with the description -- the mechanics checked out okay, no dings in the body, decent fuel economy, green with beige upholstery. I looked up the model on the Web, and told him to close the deal.

Obviously I'm not particular about the feel of the fabric, whether the driver's seat adjusts six ways, the position of the vanity mirrors, and other aesthetic details. Why? It's a car. It's not a fashion statement, despite the zillions spent by the auto industry to convince me otherwise. (And realistically, when you drive a minivan, you've already plummeted to zero on the cool-o-meter, no matter how spanking new the thing is.)

I lived auto-free for 15 years in Manhattan because the garage alone would have cost at least $300 a month, and I could walk to the car rental whenever I needed wheels. When we moved to the 'burbs, we specifically bought a home within walking distance of the train and downtown, so we could make do with one car.

The Gigantic Expense of Autos

It's not that I have anything against cars in general. Some of my best childhood memories involve cramming into my parents' green station wagon with nine of my siblings, singing campfire songs at the top of our lungs.

But transportation is a gigantic expense. Since 1984, Americans have spent more on transportation than any other category but housing, according to the Consumer Expenditure Survey conducted by the Bureau of Labor Statistics. In the 1960s, families spent $1 of every $10 on transportation -- today it's $1 in $5, according to a report by the Surface Transportation Policy Project.

Families that own two or more cars and are infrequent transit users spend 20 percent of their income on transportation, on average, compared to 10 percent for heavy transit users who own one or no vehicles, according to BLS statistics. We cut our costs further by skipping collision coverage in our insurance policy because the minivan wouldn't be worth fixing if we banged it into a tree.

I realize the New York metropolitan area is blessed with comprehensive public transit, and a single car doesn't work for everyone. But even my sister in suburban Cleveland gets by with one car: She gets out of bed at the crack of dawn to drive her spouse to work every day. We both agree that, lacking the wherewithal to finance all of our whims, why not eliminate an expensive, quickly depreciating asset that can be a time hassle to maintain?

Getting Vehicular Peace of Mind

According to the most recent Federal Reserve's Survey of Consumer Finances, more than 86 percent of Americans own vehicles -- 7.7 percent are provided with a car by their employers, and just 4 percent lease. From a purely financial perspective, there's no reason to buy a new car. Is there anything else you can purchase that loses 20 percent of its value the second you drive it off the lot?

According to an Intellichoice report on Cars.com, the ownership cost of a new Honda Odyssey EX (one of the most popular minivans) is $35,618 over five years -- including financing, depreciation, fuel, licensing fees, insurance, maintenance, and repairs. If our used Villager hangs in there for another year, our costs will be roughly a third of that.

Granted, not everyone has a mechanic friend who can pick up a used car for them at a federal auction. But you can get similar peace of mind by buying a certified pre-owned (CPO) vehicle. These are somewhat newer models (usually five years or less) that undergo a minimum 100-point inspection based on the manufacturer's certification standards.

If you go this route, look for a CPO vehicle that offers a warranty from the manufacturer as part of the purchase price, not an extended service contract issued by a third-party company. The Web makes it a snap to comparison shop in your area; check out the CPO Center at Yahoo! Autos.

The Financial Puzzle of Leasing

As for leasing, I can't figure that one out to save my life. The reasoning seems to be: I want a fancy car I can't afford, so I'll spend roughly what I would have to buy a car I could afford, and at the end of the lease end up with -- nothing. In the meantime, the leasee is locked into a fixed contract for 36 to 48 months, with a higher monthly payments and insurance costs than if he had purchased a vehicle he could afford.

Meanwhile, there's the potential penalties for driving more than 15,000 miles (typically 15 cents a mile), not to mention "excess wear and tear." Having recently seen our last child through potty training, I can attest to the fact that the wear and tear kids put on a car goes far beyond orange crayon.

Got advice on cutting transportation costs? E-mail me at laurarowley.column@yahoo.com.