One Million and Beyond

The money spending machine – your car.

By Matt - Friday, September 22nd, 2006

Have you ever wondered just how much your car is costing you only to discover that it’s some completely outrageous amount? I have. I’ve come to the conclusion that owning a car is probably the biggest drain on my money after taxes. Now before anyone comes back to me saying what about food or rent? Well for me the difference is that food and rent (or mortgage) are essential for life. You need shelter and you need sustenance, but your car, often times its more of a luxury than anything else.

With the cost of gas as high as it is, and thankfully it’s gone down a bit in the last month or so, just drives home my opinion that if we were able to live without our cars it would save us thousands of dollars a year in expenses. Most people buy a nice car for which they pay say $400 a month for the payments or lease, then you start adding things like insurance and that will vary based on where you live but for me that’s a whopping $300 but lets use $150 as an average. So we’re already ay $550 a month, now lets bring in maintenance and gas. If you have a new car then your maintenance and gas costs are pretty low, especially if you don’t drive far to work. But lets again average this to be about $150 a month (I know this isn’t an exact science) but we’re up to $700 per month. Many people eat far less than that in a month even if you include money for entertainment. The car is a big money pit.

So what can you do about it? Well first off don’t drive to work if you don’t have to. I know this is often easier said than done but if you can pull it off you’ll use your car less which will mean fewer expenses in the gas and maintenance department (and potentially lower insurance). The second thing I would say is buy a car for cash if you can, the cost of interest on a car loan is quite hefty. Finally when you are buying a vehicle consider used, many people like the idea of a new car and they replace them every few years but buying a similar model that’s a couple years old will potentially save you thousands. For example I bought my Mazda tribute for $13,000, the car had less than 50000 miles (75000km), the car was a 3 year old model where the new models were going for close to $30,000. This is a pretty big difference.

Tags:Saving tips, Debt

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