New cars and the true cost.

I am sure you have all heard of sticker shock in relationship to any given item. I experienced a bit of sticker shock today when I saw the statistic that Americans have over 1 Trillion dollars of car debt. You read that correctly, Trillion with a T. In a society where debt is passed out like candy, think about these two things before you take your next credit plunge: Face the reality of what we need vs what we want and face the truth of what will happen if you by a cheap used car and pay cash.

• To start with you need to face reality and consider the cost of buying things like a new car that will lose 11% of its value the moment you drive it off the lot. Ask yourself WHY, why do I really need a new car. The key word there is need, we have very few things in America that are truly a "need". We need food and water to live, we want a new car and nice things. So I ask again why do you NEED a new car and how much is it really going to cost you? 

• There are few things that depreciate faster than cars yet people continue to spend massive amounts of money on them. Now don't get me wrong, I like having a nice car as much as the next person and there is something to be said about reliable transportation. I have been there I paid $22,000 for my last car and sold it for $7,000 after I paid it off. It was the worst investment I have ever made. I now drive an 8 year old truck that I paid cash for, it is clean and reliable which is all anyone really needs in a vehicle. 

• There is a psychological side to having a nice car. Society has conditioned us that having a nice car is equated with success. Just stop and think about that for a second, you paid 20, 30 or 40 thousand dollars for a car. A car that you could not afford to buy so you financed it for five to seven years. This is a sign of a successful person in America today and one that millions of people buy into.  

Call a car what it is. Plain and simple, a car is a tool and like anything else it is there for a purpose. A car is nothing more than a method of getting us from point A to point B, nothing more nothing less. A car doesn’t better your quality of life, it doesn’t improve your health and it doesn’t make you more successful (no matter what society says). So break the cycle, if you have a car payment throw a little extra every month and pay it off. Drive it till it becomes more expensive to fix than to keep. When it does become more expensive to fix than to get rid of pay cash for your next car. It may not be the nicest car in your friend group but it will likely be one of the few paid for cars amongst you all.