By Jeff Fort
America has long had a love affair with the automobile. There’s something about the appeal of the automobile that’s unlike anything else. Even people who don’t care about the technical specifications often love cars. Furthermore, we live in a large country with interstates that allow us to put these cars on the road and explore easily. Cars are impressive pieces of technology to say the least and there is a pride associated with riding around in a nice automobile. However, it is the love of the automobile that leaves us vulnerable to financial ruin.
If you have to even think about how you are going to afford necessities and you are making payments on a nice, shiny new(or fairly new) ride in the driveway, you have too much invested in car. No matter how nice your car is, it does two things-take you and bring you. A modest, inexpensive car can do those two things with ease.
The average used car payment is $397 a month and the average new car payment is more than $568 a month. Those amounts invested from age 25 to age 65 in the S&P 500 comes out to 4.6 million and 6.6 million dollars respectively. It is simply not worth putting that much into a car and not being able to save and invest. Beyond that, cars are the most expensive things we buy that go down in value which makes matters even worse.
Do not put your finances at risk just to look good going down the road. Anybody who is impressed with your car is someone you are unlikely to ever meet. You meet your rent/mortgage, electric bill, water bill, and grocery bill every month. Set a goal of paying for your cars in cash. This is not a common practice, but it’s worth it in the long run. You will be able to rest easier at night knowing that you don't have to worry about a car payment.
If you need a money coach to help you create a strategy to purchase a car, don’t hesitate to contact us.