The average new car according to KBB runs the American about $37,285 and over the last five years new-vehicle prices have risen by $4,000. I see some clients get frustrated when their 10 year old car with well over 120,000 miles has repair or major maintenance coming up. I understand. I've been there, but I personally rather repair the old car and spend my money on something else. I rather buy more experiences, save for the future and make the most of my time everyday than drive around in a new car (that will one day be an old car forcing the cycle to continue).
AAA just released a study the average annual cost of vehicle ownership is now $9,282 a year, but that includes the hike in financing costs and more expensive insurance. For my example I'm only going to focus on the $37,285 for a new car. Think about the extra money you're saving and add that to the kitty!
$37,285 divided by 5 (most people have a 5 year loan) divided by 12 months in a year = $621.41 a month. (No financing expense, no 6.25% sales tax, no fees, no insurance, no maintenance-but in five years you'll have some).
Make a list of activities which take up a significant amount of your time or you just plain don't enjoy doing them? For me it's cleaning, I don't particularly despise cleaning, but it does take a long time. How much would it run to have someone come to your house every other week to clean?
What are some activities you enjoy? Do you like dining out and have some restaurants in mind to try out? Do you like going to the ballet or opera? Do you like going to sporting events? What about concerts? How about a weekend trip to a State or National Park? Or what family activities you can do to build lasting memories?
Could you be contributing more to your 401k plan? Do you have a Roth account? What about a health savings account? If you do--great! Do you max them each year? What if you sent an additional $200.00 a month to your future?
Spoil yourself and make time for you. We make time for everyone else, but we don't celebrate the small wins we have everyday. Each day is full of them, not matter how bad it is going. We feel the financial pressure coming down and ignore our body, mind and soul.
So next time you're considering a new car, do you really need it? Or do you want it? If you want it, go for it. If it is your dream car, then definitely go for it! But go in eyes wide open. Understand the increase in maintenance cost, insurance and the financing fees. And just think about what you could do if you didn't buy the new car or if you purchased a used car.