Paycheck Chronicles

Car Payments Are Not "Part of Life"

These last few weeks, I've been spending a ridiculous amount of time reading about the problems with the new vehicle shipping contractor.  In my reading, I have learned a lot about the different ways that people view their vehicles.  I have been very surprised at how many people are shipping "brand new" cars, very expensive cars, and even a "show car."  (I'm not even sure what "show car" means, but that is a whole different topic.)

If you've been reading The Paycheck Chronicles for any time, you've probably figured out that I'm not too interested in cars.  For me, a car is a tool to move my family, my stuff and me from one place to the other.  It gets extra points for being reliable, comfortable, and economical.  My perspective has made it all the more interesting to read about people who are passionate about their cars, or have stretched their financial limits on the purchase of, or financing for, a vehicle.

One comment, in particular, really jumped out at me.  Due to the possibilities of delay and/or damage, one reader was considering selling their vehicle and purchasing another vehicle upon arrival at their new duty station.  In one of the replies, the writer was talking about the financial aspect of selling and buying again, and said, "Car payments are just part of life."



I think this statement may sum up the crux of many people's financial problems.  If you believe that car payments are part of life, then you'll never take any action to put yourself in a position where you don't have a car payment.  And if you always have a car payment, siphoning hundreds of dollars out of your budget each month, you have less money to build savings, pay off debt, and pay bills.

The average US new loan payment grew to $474 in the first quarter of 2014.  That is a shockingly LOT of money, especially considering that the average length of loan also grew, up to 66 months.  That's a $500 commitment for five and a half years!  If you think this type of financial burden is normal, then the chances of you getting ahead go down dramatically.

As a country, we have got to stop looking at debt as normal, and auto loans are significant portion of the average American family's overall debt.  If you believe that car loans are part of life, I encourage you to reconsider.  Even a move from perpetual car payments to having a break between loans will improve your financial life considerably.  If you are able to jump to the great place where you only pay for your cars when you have the money available, then you'll probably have also broken the debt cycle in other places.  And that is a win, all the way around.

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