Before he became a judge on "Shark Tank," Kevin O'Leary founded and ran an educational software company. When Mattel acquired it in 1999, O'Leary became a multimillionaire (current estimated net worth: Roughly $400 million).
Until a couple of years ago, he drove a Mercedes SUV, as plenty of millionaires do. When the lease ran out, he not only refused to upgrade, but ditched car ownership/leasing altogether. "You're thinking about buying a car. Let me give you a new idea: Don't," O'Leary told CNBC Make It.
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"Cars cost a fortune in maintenance and insurance and just the amortization, which means as they go down in value, you're losing money," O'Leary explains. "Let's say I pay $25,000 for it. Two years later, it might be worth only 12 [thousand dollars]."
Instead, O'Leary uses mass transit and ridesharing services.
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"You don't need a car. You're working in a city where you can either take the subway or basically use a shared service. Try both.
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"I use my phone to call Uber or Lyft and they take me around the city. I save a fortune.
"Even if you use a car every day to get to work, it's still cheaper to use a shared ride service, because you can choose the level of luxury you want. You can share the ride with somebody else.
"But don't get stuck parking $25,000 into a car. I don't need it. Why should you?"
It's a little more complicated for my wife and I, living as we do in a rural area. Our farm is regularly circled by vultures and hawks, not Ubers and Lyfts. Her truck died a couple of months ago and now we're down to just my station wagon. This has led to some issues that I'll discuss in another post, but I thought you might like (or like to debate) O'Leary's points.
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I live in Suburbia and to take public transportation would take over an hour to get to work instead of 20 minutes. If I took and Uber back and forth to work everyday, it would cost me $45 per day x 20 days= $900/mo. I lease a Hyundai Elantra for $165/mo (granted I put down $2000). His thought on depreciation is correct but unrealistic for most areas.
Back home on his native Ferenginar Kevin O'Leary is ignored but here on Earth we pretend to care what he thinks or says or does in hopes that he will simply stop talking and go away.
Based on his argument won't buying a 2nd hand car be an option as well?
Both Kevin and Mark Cuban, on the Shark Tank, can be spot on about some things, and absolute morons about others.
He forgot he owns a boat
i wish i was incredibly wealthy so i too could become so out of touch with reality.
For the few parts on the US where public transportation is actually viable he's right. For everyone else, making a smart car choice can do a whole lot to reduce long term expenses and loss in value ie. don't buy a German luxury SUV.
I live in NYC where he's talking about doing this. Specifically, I live near Bushwick, Brooklyn.
I did the math just recently. My honda civic lease 3y/30k mi + insurance + gas + excess wear and rim and tire coverage was $401 a month. In the 3 years I never had to buy new tires I used roughly 23k miles so oil change every 7k miles that's like $200 in oil changes, so that's $5.50/Mo.
Total monthly calculated from 3 years backward over estimating was $406.50
My uber to and from work alone this month at off-peak times/ no surges only UberPool calculated underestimate (without any tips i gave calculated) is $500.
Now, I'm planning on offsetting this by using my motorcycle and public transit during nicer weather. But saying ridesharing can replace a car is just straight-up wrong. Its been only 2 months are already buying groceries is tougher, traveling out of state is tougher, getting to and from work is mindless and comfortable, but it's less reliable time-wise. When I want to go snowboarding in Vermont its gonna be a car rental.
All those difficulties im trading for "struggling to find street parking from 9pm-9am, driving through Manhatten.
Where it gets complicated is paying for parking, parking not available nearby- possibly at both home and work.
I have a horse. Hell they're edible for God's sake.
fighting climate change one equine at a time.
I get so sick of blithe "Everyone should do what I do" comments like that.
Sounds good if you live in New York City. Everywhere else in America... not so much.
I just read a report on transit in Montreal. There has been a significant decrease in commuters travelling downtown with their cars and an equal increase in those taking mass transit. I think a lot of people are already taking O'Leary's advice!
On the other hand, the report said that more and more people are commuting between suburbs rather than to downtown. These people, like Juan, have no good mass transit options. It's either drive a car 30 minutes or take 3 buses that take 1.5 hours (it was that way when I was commuting between suburbs).
I think we are facing a massive public policy problem as the growing suburbs are desperately needing better mass transit, but our suburban politicians only see the car as a realistic solution.
Corruption and propaganda brainwashed the "car culture" addiction into America for over a century, and it will be difficult for us to return to rational public interest in our transportation systems.
Let me kill myself then, life is just not worth living.