Driving Over the Cliff

We can create a crisis in our lives when we elevate certain purchases to the level of a status symbol. We need to judge ourselves based on our character, our achievements, and our legacy, not which items we buy. You are not your purchases. If we’re going to create wealth, we must stop buying things we don’t need, with money we don’t have, to impress people who don’t care.

According to the American Automobile Dealer’s Association, the average car payment in the United States today is $503 over 84 months. This is a staggering number when you realize people are borrowing tens of thousands of dollars to buy something that is going down in value.

A recent nationwide survey revealed that 6.3 million Americans are at least three months late on their car payments. This is a bad sign for our economy and a worse sign for the families involved in these horrible transactions.

If you were to take the same $503 a month and invest it throughout your working life in an average growth stock mutual fund or index fund, you would be a millionaire many times over.
The true cost of borrowing money to buy an automobile can’t just be calculated in the cost of the car, but you must add in depreciation and the value of the investments or opportunities you could have taken advantage of with the same monthly payment.

I’m a multimillionaire today but spent the first decade of my adult life in poverty. I understand that, for many families today, buying an automobile is a daunting task; however, most car dealers, mechanics, and industry experts will tell you that you can buy a vehicle that will provide very reliable and dependable transportation for somewhere around 8 to 10 thousand dollars.

I’m generally not in favor of anyone borrowing money to buy a car, but if that is your reality, try to follow these guidelines. Find a car that you can purchase with no more than three years of payments. Plan to drive that car for at least six years so that during the first three years, you make payments on the car loan, and then the next three years, you make payments to yourself. This creates an amount of cash equal to the value of your car so you can consider buying your next automobile without a loan. I realize this is not popular among average consumers, but I can assure you it is popular among self-made millionaires.

Will Rogers may have said it best almost a century ago. “America will go down in history as the only nation on earth that will go to the poorhouse in an automobile.”

Cars are a tool to get us from one point to another. To the extent they do this reliably, dependably, and affordably, they are a valuable asset; but if you think a car is going to make people think you’re wealthy, the joke’s on you as the charade will keep you from accumulating true wealth and driving any car you want to in the future.

As you go through your day today, make your car a tool of your success, not a tool of your bank’s success.

Today’s the day!

 

 

Jim Stovall is the president of Narrative Television Network, as well as a published author of many books including The Ultimate Gift. He is also a columnist and motivational speaker. He may be reached by email at Jim@JimStovall.com; on Facebook at www.facebook.com/jimstovallauthor; or follow Jim on Twitter @StovallAuthor.

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