February 4th, 2013
Buying a new car is a wealth depleting move. Why? What alternatives do you have?
Buying a new car is a wealth depleting move. Why? What alternatives do you have?
A car is a depreciating asset. It will be worth 20% less than you bought it for as soon as you drive it off the lot. You should look into buying a used car at least 2 years old, preferably 3-4 years old. Always use cash to pay for car!
I would say that buying a car is a depleting move because it’s not an investment because it doesn’t earn money. It’s a luxury. Try riding your bike or walking to save money, even it it reduces gas and maintenance expenses.
Both answers are correct, but Abbey hit it on the nail when she discussed the issue of depreciation. Cars reduce your wealth because they are a depreciating asset. They lose value every year you own them and that does not include the ongoing costs which can be high, especially for the “luxury” models.
Just as Abbey stated, avoiding the new car can reduce just how bad you get “screwed” on the deal. New cars help you “look” successful, but they actually make you more poor. It is important to wrap your head around that point if you ever want to accumulate wealth.
Abbey is right again when she recommends a 3 or 4 year old vehicle (most of the depreciation has already taken place in the first 2 years) and she continues to be right when she tells us to pay cash (save on interest and avoid the monthly payment mentality). There is a smart way to buy a car and a whole lot of not so smart ways. Abbey just explained the smart way. Well done!
I’ll gear this review to 2 types of people: current Zune owners who are considering an upgrade, and people trying to decide between a Zune and an iPod. (There are other players worth considering out there, like the Sony Walkman X, but I hope this gives you enough info to make an informed decision of the Zune vs players other than the iPod line as well.)
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