Michael on December 3rd, 2008
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I realized something while eating too many sweet potatoes last week.

You:  That they need to be cooked first?

Something even more insightful:  cars are way underrated.

You: This coming from a man who in his entire life has only owned a Neon and a Saturn?  Don’t you mean that cars are overrated?

Nope. So when it occurred to me that cars were actually underrated, I was quite taken aback.

You:  Sure it’s not sweet potato # 12 talking?

Pretty sure.

You: Buy an expensive car last week and now have buyer’s remorse?


You: Then what’s going on here?

Cars are underrated in terms of their importance to your financial well-being.  Seriously.  I believe many folks have come to believe that cars do matter financially, but most don’t genuinely understand the size of their impact to your fiscal well-being.

And when I’m talking about cars, I am – at least for today – talking about:

The Cost of Your Car – Not only does the price of the car you use impact your monthly payment, but it also affects the cost of your auto insurance and maintenance expenses.

Leasing vs. Owning – Another post for another day, but suffice it to say that with leasing you guarantee yourself non-stop monthly payments.  You never get to the promised-land of looking in your driveway and seeing your car while looking at your bills and not seeing a car payment.  Guess when it’s easier to save?

Your Car Replacement Rate – Get a new car every three years?  That means, on average, you need to pay for a new car every three years. Guess what happens if you can hold on to your car for six years?

You: You need to pay for a new car every six years?


You: Meaning that you could expect payments to be half as much.

Or half as long, assuming you get the same car.

You: And that’s a big difference.

Even bigger than you think.  Next time you wonder why it is that someone else can afford something, look at the car they drive.  You just might be unimpressed.

You: By the car?

Yes, if you’re a car person. Of course, if you’re a car person, there’s nothing wrong with driving nicer, newer cars – provided you can afford it. But remember there are few people who can afford unlimited discretionary spending, and readers of Beyond Paycheck to Paycheck are not among them.

So maybe you should be impressed by the car; not for how it drives but for what it allows elsewhere in that person’s life: priorities.

Your thoughts on cars?  Underrated? Overrated?

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7 Comments to “Cars are Underrated”

  1. Slinky says:

    Both. Underrated by the personal finance community and overrated by people who buy expensive cars just to impress people. I just bought a new car….but I bought a CHEAP new car (Scion tC). Personal finance is all about priorities, compromise and balance. I spent some serious money on a car, but I also am on track to be debt free(except mortgage), have a very classy wedding paid for by me and him and purchase a home within 5-6 years. I do this by keeping expenses low and almost never impulse shopping.

  2. Michael says:

    @Slinky: Well put!

  3. TStrump says:

    I own a 1993 Ford Tempo and it suits me just fine.
    It has low mileage and is super cheap to run.
    I think having car payments is a waste of money.

  4. Scott says:

    I agree that most people don’t understand the true financial impact of car ownership. I’m lucky enough to live in a dense urban area with access to subway and bus. I ride my bicycle year-round and am a member of a car-sharing service, Zipcar. Not only do I drive smarter (and way less than when I owned), I’m saving a ton of cash. Car-free and saving money since 2004..

  5. Dan says:

    I am with you. I recently moved to a city and have decided to go “car-less”. With my wife, infant daughter, and I, it is sometimes challenging, but we own a car seat and rent a car when we need it. With new rental cars, we get a relatively new car every time with no maintenance issues. We also have been using the city’s “Car Share” service.

    I’m not sure how long we can make being “car-less” last, but it’s been 3 months so far!

  6. Michael says:

    These are all great financial – and environmentally friendly – examples. I’m liking both of those trends, though I doubt GM would agree.

  7. Roger says:

    I’ll be car free by the end of this year. My car will be paid off by November of this year, and I plan to even hasten that with double payments here and there. When I send in my last payment, I’ll be sending the car to my brother and his family. They need it more than I do. Frankly, I’m not sure why I purchased the darn thing. Though I live in a suburb of Miami, public transportation is relatively plentiful, and I can still walk to the grocery story, my barber shop, my dry cleaners and my friends’ and family’s homes. I also bought a wonderful bicycle two years ago that I use at least once a week for transport (as opposed to using it for leisure). So, I think cars — period — are, in fact, overrated. I think computers are underrated, but definitely not cars. Overall, they cause more damage to society when you think of it.

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