Don't Buy that New Car

In the last few decades, Americans have moved to a faster lifestyle. We're up and out more hours of the day, and there's always so much going on. Part of this movement toward a faster pace of life is making more extravagant purchases. We often buy new cars every two or three years in order to show how successful we are. Every year automobile manufacturers come out with new models, and there's bound to be something you are going to like. We just love our cars, and we like to get new ones on a regular basis, but is this always the best idea?

A lot of people are stuck in the idea that they will always have a car payment. People make statements such as, "I'm always going to have a car payment, so why not upgrade to a better car?" It's almost as if people believe that they have to owe money on a car, and if they didn't, they'd have no idea what to do with the money. People have seem to forgotten there is a way of life which does not involve a car payment at all. It can be done.

Most of the time it just does not make sense to purchase a new car, unless you are a millionaire. New cars, trucks, vans and other vehicles lose over half of their value in the first few years of ownership. Most people simply cannot afford to take this hit on a regular basis, especially if you purchase a new vehicle every two or three years. You are losing such a high percentage of your net worth, that you are severely injuring yourself financially.

Instead of getting stuck in a world of automobile payments, here's an idea. Sell your car that you owe money on. Buy a $1000 or $2000 car. Save up your $300 payment, and in 10 months, you could have a $5000 car that you owe free in clear. In another 16 months, you could own a $10,000 car free and clear. At this point you would have a very nice vehicle.

So you have a $10,000 car free and clear, and no car payment. You're doing pretty good. Just imagine what you could do with that car payment. It'd be pointless to go through all of the mathematics and show how much that money saved over a long period of time would be, but it is definitely a lot of money. You could do a lot with $300 a month, at least something better than paying it to the bank for an automobile loan.