Bill's flatmates both have cars. The city has reasonable public transport, but weekends are easier with a car, and there is a job site he visits occasionally that is not well connected. He has been thinking about it since November.
He does not want to make the same mistake he almost made with the gym. So he runs the numbers before he decides.
A used car in reasonable condition costs around 8,000 euro. He has 4,729 in cash and a deposit of 1,200 he cannot touch. But the purchase price is not the real question. The real question is what it costs to keep the car running every year after the purchase.
Asset depreciation analysis measures the reduction in an asset's value over its useful life. A car purchased at 8,000 euro with a useful life of five years depreciates at 1,600 euro per year under straight-line depreciation, approximately 133 euro per month. This is before insurance, fuel, and maintenance.
He adds the rest. Insurance: approximately 600 euro per year. Fuel and maintenance: approximately 600 euro per year. Total annual cost of ownership: approximately 2,800 euro.
The alternative, public transport plus occasional car rental for the job site visits, costs approximately 480 euro a year. The net cost of owning over not owning is approximately 2,320 euro a year.
His current monthly surplus is 185 euro, 2,220 euro a year. The car would absorb more than his entire annual savings capacity before the first unplanned repair. He does not buy the car.
The tip
Before any large asset purchase, calculate the total annual cost of ownership: depreciation, insurance, fuel, maintenance. Compare it to the cost of not owning, not to the purchase price alone. The gap between the two, measured against your surplus, is the real decision.
Asset depreciation analysis, February 2026: car at 8,000 euro, useful life 5 years, annual depreciation 1,600. Total annual cost of ownership: approximately 2,800. Alternative cost: approximately 480. Net cost of owning: approximately 2,320 a year, against a current annual surplus of 2,220. Decision: no purchase. Ledger unchanged.
Bill is 25. Every episode, we read his personal ledger through accounting eyes. / FY 2026 ledger