I drive a pretty old car by some people’s standards. While it’s no jalopy, it’s not exactly a Leno collectible. I drive a SAAB 900 S which was built in 1993. I’m sure I’ll wax poetic about the joys of SAABs (and mine, in particular) some day. For now, though, I’d like to go over the value of driving an old car — or more to the point — buying a used car.
We’ve all got a dream car or two. I don’t think pining over some barely attainable automobile is exclusively American, but it may turn out to be a very western mentality. It is so deeply ingrained in most of us, that it is sometimes hard to discern it for what it truly is: consumerism.
We want a car, because we’ve been told we want a car. Don’t feel badly: you’re not gullible. We’ve been pitched this component of the American dream for generations. Cars symbolize freedom and wealth. For most Americans, though, they also symbolize debt.
The average American car loan is $25,000*. The average salary is $26,000. It doesn’t take a genius to realize that our cars should not cost us a whole year’s gross income! Yet millions of us delude ourselves into accepting this trap and shoulder loans with monthly payments that, with the slightest misstep, could become totally impossible.
The Consumer Credit Counseling Service recommends that people keep their debt-to-income below 15%, which on a $26K salary equates to total monthly debt payments of $325. The average car-payment is over $375, leaving no room for a mortgage or other debt payments.
And don’t even get me started on the inanity of paying interest on a depreciating asset…
Buy used. Pay cash. Change your oil every 3,000 miles. If you get a smug look from the 19-year-old in a leased Lexus, just grin right back. You’re richer already.
*Stats per Edmunds and the Census Bureau.