How much is the “right” amount to spend on BUYING or MAINTAINING a car?? A loaded question. For insight on the answer, know that experts in financial planning cite the “Big 2” expenses of life that must be addressed: Shelter and Transportation. These are the “Big 2” no matter a person’s economic situation. (Note that the experts also say that when analyzing monthly spending, to start with these “Big 2” items, then pay yourself savings monthly, then figure out the rest with Food another “big” and obvious item.)
Regarding personal transportation, consider the ever-changing world of cars. Cars remain a sizable chunk of our lives in terms of expense, enjoyment …and frustration! It occurred to me to talk a bit about this major expense item when a certain car’s (whose owner will remain nameless) odometer passed the 163,000 mile mark this past weekend. Continue reading “Cars: Costs & Decisions”
One topic that believe it or not comes up with nearly every client and prospective new client, no matter their age or level of wealth, is cars.
The conversation touches upon the following:
Buy or lease?
If buying, buy for cash or take out a car loan?
New or used? (I nearly always suggest used, a.k.a. “certified pre-owned”. Remember the book, The Millionaire Next Door?)
If buying, how often to replace?
If leasing* or taking out a car loan, what is a sensible payment amount? With a lease, buy at the end of the lease?
For younger people perhaps living in or near a city, is it possible to not even own a car? And take advantage of excellent (cheaper) alternatives as needed such as renting a car, Uber, or Zipcar?
* Leasing is not often my recommendation for first cars, mostly because I prefer not to add another sizable monthly outflow of cash early on in life. Early on, own a car you can afford for cash or a small loan. The future will look brighter.