How Much Are You Spending On A Car?

If you’ve spent some time on Youtube in the personal finance space, you probably would have seen some of these videos pop up: “#1 Wealth Killer” with a shadow of a car in the background.

Just go look it up. I promise you’ll find some.

According to statistics, the average American household spends about $1000/month on transportation.

Transportation is the second highest household cost, after housing.

There are a few key reasons why we don’t want to spend that much on a vehicle:

1. It is a depreciating asset

2. It puts you in a perpetual spending cycle (because nobody wants to downgrade their car)

3. The true cost of car ownership is much higher than what is quoted to you at the dealership

4. The opportunity cost of each car payment costs you in the ability to grow your net worth

According to the Bureau of Transportation, high income households in America spend around 10% of their after-tax income on a car.

If you can aim for this, it means you will have 90% of your income left for other things.

Things that actually have the ability to make you money or appreciate in value.

In this video I go through a deep dive of car ownership.

Until next time,

Alice

P.S. Reply to this e-mail and let me know how much you’re spending on a vehicle and what your thoughts are on this topic.