Teenage drivers are murder - in terms of insurance costs, for starters.
A reader writes, asking what to do, now that his children are teenagers and starting to drive. He got the bill from his insurance company and it was an eye-opener! Even if your teenaged kids don't drive, many insurance companies will raise your rates, once you have a driving-age teen or 20-something in the house. They assume - rightly - that regardless of your protestations that the teen "isn't driving" that he or she will borrow the car on occasion.
Now, I am not an advice columnist, but I went through this when I was a teen - and my brother at the same time. Dad's insurance rates went through the roof! He was pissed! There was a brief period there, when my older brother and sister had moved away from home and my brother and I were too young to drive. Mom and Dad were older, so their insurance rates went down to nothing. It was pretty sweet while it lasted, maybe a year.
So, imagine his despair when his rates went from the lowest in the book (two late 40's married couple) to the highest (two hormonal male teenage drivers) overnight. How was he going to pay his mistress if all his money was spent on insurance? Modern problems!
But he did make some smart moves along the way. Today, a lot of parents believe that their children should be given cars - often brand-new cars - when they turn 16. And of course, they have an iPhone, often the latest generation, when they start elementary school. Remember when you weren't allowed to bring your "cell phone" to school? When did they change that rule? Today, a teacher is called a "Nazi" if they tell pupils to put away their phones in class.
I noted before that giving a 16-year-old a brand-new car is just idiotic. Even more idiotic is giving a 16-year-old a brand new high-performance car. When we lived in Northern Virginia - where people have more money than common sense - there were regular articles in the paper about tragic accidents involving novice drivers and fast cars. I recall one where a 16-year-old girl was given a new BMW M3 cabriolet and she was driving on Route 1, South of Alexandria, with three of her friends on board. She got one wheel off on the shoulder, over-corrected, and then swerved into oncoming traffic, hitting a mini-van full of kids, and then flipping over, ejecting her friends (no seatbelts!) and killing them all.
Some fun. A year later, almost the exact same story was told, only this time it was a young man and a Mustang. Same result. And parents wring their hands and say, "Oh woe is me! What could have been done?"
But that's the modern world we live in, where kids drive themselves to school as soon as they get their license, and before then, parents drive them to and from school. You may not believe this, but when I was a kid, the only time Mom drove you to school was when you missed the bus, and even then, you'd get a lecture the whole way about being punctual. When school let out, there was no line of idling SUVs waiting to pick up kids. Today? They have to have special pickup areas and waiting lines - and a Police Officer to direct all the traffic! Again, when did this happen and why is it now considered "normal?"
When I was 13 and my brother turned 16, my Dad decided to buy my Mother a Vega, as it was one of the cheapest cars you could buy at the time, stripped for about $2000. He knew that my brother would destroy it (and he did, by the time it hit 65,000 miles and he warped the head by overheating it, in classic Vega fashion). At least, I was able to learn how to fix things, as my Brother would regularly come home late at night, and wake me up and say, "You gotta help me, I dented the car again!" The rock panel in the front of the car got particular abuse as it was made of fiberglass. I would fiberglass it back together and paint it and it looked new. My parents never noticed it was missing for a week while I was sanding and painting it.
I never could get that damn thing to idle properly and only later on did I realize it was a "Hay baler" engine - long stroke and imbalanced - and would rock back and forth when idling. GM's fix to the problem was to put in softer engine mounts. The whole thing was a hot mess.
But Dad was smart - he knew that teenagers would wreck the car - quite literally - so there was no point in buying a "nice" car and then watching it get destroyed. My Dad told us that we could buy our own cars if we wanted to and he would "pay for the insurance" which in retrospect, was a raw deal as he had to pay for insurance anyway. Since we were broke teens, we went through a succession of $50 and $100 junkers, and we learned to appreciate a car that started on a regular basis.
Others felt more privileged. I've read online, stories about teens who intentionally break their smart phones so that Dad will buy them a new one, preferably the latest-and-greatest iPhone available. Talk about spoiled rich kids! But even middle-class people fall into this trap. I knew a guy at GMI who had a 1970's Pontiac - not a bad car - that he intentionally destroyed, with the logic that "Dad will buy me a new car." And Dad did - after my friend dropped out of school and no longer qualified for the Class-A employee discount. Of course, it was just a Monza - the reworked version of the Vega. And no, he never got ahead in life. Kind of sad, actually.
I think buying brand-new cars for teens is not only a stupid costly mistake, it teaches all the wrong things. For a middle-class kid, once they graduate from college and have to pay back all those student loans, "real life" becomes a real shock. The brand new car that "weekend Dad" gave to them and they destroyed in five years or so, is out of reach for them, on their current salary. It isn't fair! The system needs to be overthrown!
I think that is where a lot of this discontent among early 20-somethings comes from. They grow up in a mini-mansion in Foreclosure Mews Estates, get a new car when they turn 16, along with the latest cell phone. They go to Useless University and live in "Luxury Student Housing" and basically are spoiled rich kids - or at least spoiled upper-middle-class kids. When they graduate and find out the world is not their oyster and that working for a living sucks, they feel cheated somehow. Life in high school and college was sweet! Everything they owned was new! And now it is all worn out and they are broke all the time and "Sallie Mae" is at the door with a baseball bat, demanding to be repaid.
Say, there's an idea - instead of buying your kid a brand-new car, spend that money on college tuition so he doesn't have to pay back the money in student loans. And maybe last year's phone isn't all that much a burden? And maybe you don't need to spend thousands on an iMac? Nah, that's radical thinking!
I wrote before about a young man I met who wanted to go back to college to get a Master's degree. Bear in mind that back in the day, getting an advanced degree was a rare thing. Today, college is the new High School and a Master's degree is the new college. Everyone is going! The reason he wanted to go back, though, wasn't that he wanted to pursue an academic career or qualify for a better job, but because he missed college - it was so much fun. His parents had co-signed a loan for a new car and now it was five years old! If he went back to college, he could get a ton of student loan money and maybe the 'rents would co-sign on another new car. After all, you need a reliable car to get to class!
Right. That. When I was in High School, only Seniors were allowed to drive to school. When my Brother was at SU, Freshmen and Sophomores were not allowed to have cars on campus. Not only was there no place to park, it was thought that having a car on campus was a distraction from your studies. Well, all that changed! Everyone drives. Everyone texts. Often at the same time.
I don't think my young friend went back for his Master's but his experience illustrates what I am talking about. When you are "spoiled" in your High School and College years, well, your early 20's seem to suck really badly. Well, unless of course, your parents are really rich - then you can be depressed for life! I recounted before how one of my bosses kept his children - all in their 30's - as pampered pets. He paid their rent, he bought them brand-new cars. I sat in his office while he took a call from his "princess" daughter and he tried to explain to her that no, a two-year-old car is not "worn out" and she would just have to wait another year or two before he bought her a new one!
Me, sitting there, struggling with car payments, was not amused. But then again, I wasn't chronically depressed, either, and I didn't have to call my Dad for money every month. Freedom is worth paying for.
But getting back to topic - my brother seized the engine on the Vega because he had this weird belief that if a gauge or warning light showed low oil pressure or overheating, then the gauge must be broken. That was his go-to, to assume the instrument in question wasn't reading properly. Alas, his theory was never proven true in his lifetime. What's worse was that the Vega had an alarmingly small radiator and also a tendency to warp its heat if it ever overheated. So the motor seized and that was that.
Dad decided that maybe leasing the next car would be smart. His thinking was that the kids would wreck it, of course (and my brother indeed, did) but the leasing company would take the hit. Leasing companies aren't stupid and when the battered and beaten Dodge Aspen wagon was turned in at the end of the lease, well, there were more than a few "back-end charges" in addition to excess mileage. So I don't think that idea worked as well as the Vega plan.
I have heard from other parents who took a different approach. Three or four years before their next child reaches driving age, they buy a car for their own use - something boring and practical like a station wagon or a minivan - underpowered and fairly safe. By the time the child reaches driving age, well, it is a serviceable used car, suitable for carrying stuff to and from college. The only downside to this approach is that teens are tempted to put all their friends into a multi-passenger car, which can lead to trouble as well.
Mark's Dad refused to buy Mark as Honda Civic CRX when he went to college, as it was just a two-seater. He knew that someone would try to "ride" in the hatch (as they did in a friend's Escort EXP - remember those?). That sort of thing is indeed dangerous. I recounted before how a teenage friend was severely injured when she and a half-dozen friends piled into the back of a Vega wagon which their drunk friend ran into a tree. The driver was killed, but it was hours before the car was discovered and ambulances could take them all to the hospital. Of course, back then, no one wore seatbelts, anyway.
Another reader told me that "back in the day" (the early 2000's) he would buy his kids old 1990's GM A-body station wagons, which were mid-sized and had fake wood on the sides. Boring, cheap, fairly indestructible - and will hold a whole dorm room of furniture as well. And since they were "paid for" in cash, well, the insurance was limited to just liability, cutting insurance costs in half.
And right there is the key. Collision insurance for teenage drivers is murder, simply because the insurance companies realize they will pay out at least one collision claim, withing a few years of driving, on average. If you can avoid collision insurance and buy a cheaper "paid-for" car, well, you can really save a lot of dough. Of course, this was easier to do back when a reliable used car could be had for a few grand. Today, high-mileage junkers are selling for ten grand or more, which is ridiculous. The so-called "car shortage" is over! But the car-makers are addicted to it and want those salad days to go on forever.
Traffic tickets are another area where teenage driving costs can spiral out of control. I was blissfully unaware how much a simple traffic ticket can jack your rates - and how three of them make them astronomical. It got so bad that my Dad had me get a license in New Jersey, claiming that I was living at my Grandmother's house (that was about the time I went away to school, and shortly thereafter I got a Michigan driver's license). Of course, not having learned my lesson the first time, I got more tickets down the road and discovered firsthand, how expensive insurance can be.
Today, I drive the speed limit and have a "clean" license and pretty low insurance rates (I would hate to see high ones, today!). Maybe if Dad was more forthcoming about the actual dollar costs, I might have slowed down a bit. But of course, I learned to drive from my parents, who rolled stop signs, sped everywhere, never wore seatbelts, and tailgated like mad. Dad had his own share of traffic tickets and wrecks as well. Apple didn't fall far from the tree! If only I could go back in time - but you can't. And trying to advise a teenager is like talking to a wall. It was so great, being younger and blissfully thinking I knew everything! Today, I doubt everything.
The point is (getting back to topic) there are strategies to minimize the costs of teenage drivers. Sadly, these are strategies that will be met with fierce resistance by..... teenagers. However, I think if you have some sort of spoiled teen living in your house, demanding a new car and a new iPhone, that the cost of insurance may be the least of your problems. Some kids care more about what their friends think about them than the family finances. Sadly, this is often the result of parents not talking to their kids about money, from an early age - which I can tell you from experience, is doing them no favor!
So maybe you can kill two birds with one stone by buying your teen a "paid-for" workable used car - or having them pay for their own - but more importantly having a frank discussion about how insurance costs can be crippling for a young driver, particularly after a few tickets or an accident. You have to plan in advance, and have such a discussion long before that driver's test. If your kid is a spoiled brat, expecting the best of everything in the world, well, you might get push-back!
Which is why I'm glad I'm not a parent. Kids are so cute until they reach puberty - then all hell breaks loose!
