The average car payments made by Americans today is $484.00 per month. Is the "new car" smell really worth it?
Here are some statistics, courtesy of Dave Ramsey. Check out this short video about this topic.
If you did not have a monthly car payment of $484.00 and instead invested that money each month in a good mutual fund, here is what you would have:
- In 10 years, you would have $100,000
- In 20 years, you would have $470,000
- In 30 years, you would have $1.6 million
- In 40 years, you would have $5.6 million
This is information that kids just out of college have to have! Look at what they could retire with if they would only save up money for their cars and never buy a brand new car. I bought my first car before I even graduated from college. It is the only brand new vehicle I've ever owned. Even though I never again bought a brand new car, I got trapped into the philosophy that, "I'll always have a car payment." That is, until I ran the numbers and realized the craziness of car payments.
I can't tell you how many times I've heard people tell me they don't understand why I'm getting rid of all my debt. Above is the reason, my friends. The new car smell is not that worth it to me.
