So, you bought into the idea that the shiny new car in the driveway that’s supposed to make you feel successful and happy? Well, I’ve got news for you, amigo. That car payment you’re making every month? It’s keeping you stuck in the middle class and preventing you from building any real wealth.
Let’s face it, most folks can’t afford to pay cash for a car. So what do they do? They take out a loan, often at a pretty high interest rate, and then they’re stuck with years of monthly payments that eat away at their income like a parasite.
The auto industry spends billions every year on advertising to convince you that you need a fancy new ride to be content and successful. In 2014, they dropped a whopping $14.2 billion on ads. And you know what? It works. People line up to sign away their financial freedom for a depreciating asset.
So, you take out a $30,000 car loan, and your monthly payment is around $500. But here’s the kicker – after 4 years, that $30,000 car will only be worth about $11,000 thanks to depreciation. Yep, you just paid $30k for an $11k car. Smooth move.
And we haven’t even touched on the extra costs of insurance, maintenance, repairs, and all that jazz. Even if you get one of those prepaid maintenance plans, you’re still coughing up the cash upfront for something that is constantly losing value.
The average car payment in the US is $551 over 69 months. If you invested that $551 per month over that same time period with a 7% return, you’d end up with over $46,000, with $8,000 of that just from interest. If you kept investing that same amount for 20 years, you’d have nearly $280,000, with $147,000 of it from interest alone. But nah, you’d rather have a car that impresses people for a few months until the next model comes out.
Look, I’m not saying you should never own a car. But you need to be smart about it. Understand that a car is a depreciating liability, not an investment. Buy used, pay cash if you can. Don’t fall for the auto industry’s slick marketing.
If you want to be wealthy, you need to put your money into assets that grow in value, not some shiny metal box that loses worth faster than last season’s fashion trends. Your car payment isn’t a symbol of success, it’s a symbol of being stuck in the middle class.
Get it together. Ditch the payment. Invest the difference. Your future self will thank you while they’re relaxing on a beach somewhere, living off their investment returns. The choice is yours. Choose wisely.