Cars Are Quietly Killing Wealth
Americans love cars and our society has normalized the payments too!
Nearly 1 in 5 drivers now pay over $1,000/month (19% to be exact).
And recent analysis found that 74% of auto loans over $1,000 are for non-luxury vehicles.
Take a guess what the top vehicle type was for these HUGE payments...
Trucks!
Ford F-150, Chevrolet Silverado 1500, and Ram 1500 are three of the top models responsible.
What could you do with an extra $1,000 per month?
Payments that high are causing Americans stress, and they also hurt long-term wealth building.
A simple rule to stay grounded is called the 20-4-10 Rule:
Put 20% down
Finance for 4 years or less
Keep total car costs under 10% of income
(Total car costs = car payment + insurance + gas + maintenance)
Say you want to buy a new car for $40,000 with the 20-4-10 Rule:
Car payment - $775
Insurance - $100
Maintenance - $100
Gas - $125
Total costs: $1,100/month
Household income needs to be around $130,000/year to comfortably afford the vehicle and fit the rule.
There are plenty of car options way under $40,000 as well, so consider this instead of a brand new car:
Buy a 4 to 5 year old used car
Find a reliable and affordable brand
Let someone else eat the depreciation (~60%)
Most people obsess over the car prices, but overlook an easy win like shopping for car insurance.
Rates quietly increase over time and new customers often get the best rates.
A quick check using the tool below can save hundreds 👇
🚗 Compare Car Insurance Rates
This only takes 2 minutes and can show if you’re overpaying.
Wallet Wisdom: Cars are a tool, not a status symbol. Spend less on the car so you can spend more on life and travel.
And if you want to read more about problems with car payments, then here’s a recent article from CNBC.