Cars. Most of us need them to get around. When you think about it, the only thing a car does is get us from Point A to Point B. A car is basically four wheels and an engine. If the only thing a car does is get from from place to place, why are they so expensive? Why is it that vehicles expenses are usually the second largest expense in our budget? If cars are only meant for basic transportation, how is it that they have become such a status symbol?

Unfortunately, I got caught up in the car buying frenzy. It seemed like for a period of about 10-12 years, I was buying a new car every two years or so. Even though I had a car that was in perfect working order, I always had to have the newest model with the latest and greatest features.

In my senior year in one of my college business courses, I'll never forget the words of my college professor. Our professor told us that he'd taught us the essentials of business from the book but he also wanted to give us some real world advice. His tip was simply, “Don't buy the car”. He knew that once we got out of college and landed our first real job, the first thing we would want to do is go buy a flashy car. He provided us with detailed calculations of how much money we would throw away by buying a new car and how much money we would potentially end up with if we took the money we were paying each month to the finance company and invested that money in a good mutual fund.

He shared that he had been driving the same car for over 15 years. He knew the car looked bad and he could afford to buy a new car but he chose not to. The car still ran good but it was so old, you could see the ground from inside the car.

As a young 22 year old, I failed to listen to my professors advice. I'd just made a huge accomplishment (getting a college degree) and I was going to celebrate and reward myself. I had a car that was paid for; but it didn't look good. I was getting ready to move to the big city of Atlanta and my old Chevrolet Lumina was not the car for a young college graduate. I “needed” to have a new car. I went to the car dealership and with the help of my grandfather, I drove out in a nice new Nissan Altima.

What cars have I owned in the past?

  • 1st car – Nissan Stanza. This car was given to me when I was 16 by my grandfather. I think he paid about $500 for it. I kept this car for about 2 months until the engine blew. The cost to repair the car was much more than it was worth.
  • 2nd car – Chevy Cavalier. This car was given to me by my Mom. When she got another car, she gave this one to me. I kept this car for a couple of years until it was totaled in an accident.
  • 3rd car – Chevy Lumina. I bought this car after I was in an accident with the Cavalier. I was on a 2 lane road attempting to make a left turn. The car behind me decided to pass me on the left as I was making my left turn and t-boned the Cavalier knocking me into the ditch. My Cavalier was a total loss and with the proceeds from the insurance settlement, I bought the Chevy Lumina. I used the insurance settlement for the down payment and took out a loan. I kept this car for a couple of years and paid off the loan.
  • 4th car – Nissan Altima. This was my first new car. As mentioned earlier, I leased it shortly after college. My monthly lease payment was about $290. I gave the paid-off Chevy Lumina to a family member.
  • 5th car – Nissan Altima. This one was newer than my other Altima and I wanted to upgrade. I rolled in the negative equity from the first Altima and my monthly payment went up to $345.
  • 6th car – Jeep Grand Cherokee. One of my friends had one of these so I wanted one too. I traded in the Nissan Altima and rolled in the negative equity into the new Jeep Loan. My monthly payment went up to $422.
  • 7th car – Dodge Durango. – My cousin worked at a Dodge/Chrysler dealership. I went in to say hey to her and ended up driving out in a new Durango. I'd had a pretty major accident with the Jeep and I kept having problems with it so this helped influence my decision to get rid of it. I rolled in the negative equity from the Jeep and my payment jumped to $555.

Thankfully, I had a financial awakening and enough in savings to get rid of this car loan. It was the best feeling ever. I was no longer writing out a large check to the finance company each month and I had $555 to send to my savings account.

It's been over 2 years since I paid off that loan and I can't believe I kept buying new cars and putting myself further in debt with each purchase. I don't want another car loan. My next vehicle will be paid for in cash.

How many cars have you owned? Do you currently have a car loan?


  1. Yana // June 15, 2010 at 10:22 PM  

    1. Volkswagen Squareback '70 used
    2. Buick Skylark '70 used
    3. Ford Torino - can't recall year, used
    4. Toyota Camry '92 new
    5. Ford Escort 2000 used
    6. Subaru Forester '08 new

    Having lived in relative poverty for many years, the one thing that was the biggest obstacle was being able to get a car and keep it running. Without a car, you are not in the driver's seat of your life. The only car I made payments on was the VW, and that was to a private party through the classifieds who had mercy on a college student. I had the Ford Torino for a week, because I discovered it had bad rings and blew black smoke! I sold it for $50 more than I paid, to someone who liked buying junk cars.

    I liked the Ford Escort a lot. It was pretty beat up when I got it by the previous owner, but she gave it to me because someone bought her a new car. It got 26 mpg in the city, the best I've ever gotten from any car.

    At the end of 2007, I bought the Forester outright. One of my primary goals in saving money is to always have enough to buy a new car, if I want a new one. I may well buy used if I need a car in the future, because I don't like the way the new ones are being made and styled. I love the Forester, though. I would never want to finance a car, or anything else. But because of personal experience, having a good car will always be a top priority with me.

  2. J // June 15, 2010 at 11:16 PM  

    1. 1983 Pontiac 6000 LE
    2. 1989 Oldsmobile Eighty-Eight
    3. 1996 Jaguar XJ6

    I paid $250 for the Pontiac and it wasn't worth that, but it was my first car and it got me where I needed to go (usually). I bought the Olds from my grandmother for $500 and it ran like a dream. I wish I still had it. The Jaguar was an impulse buy - I paid cash, but probably more than I should have. Everyone told me it would be a maintenance nightmare (and was it ever) but I didn't listen.

    I'm moving to the city soon, so I sold the Jag and am now car free! Whenever I do get a new car, I'll be paying cash as well.

  3. Parag // June 16, 2010 at 3:35 AM  

    Using so many cars is unbelievable. Its really putting Personal finance to test. With each new car, you put yourself in to more debt. Cars are useful but not that mush. I have been using a car since 4 years now and it still drives comfortable. Maintaining charges are not very high too.

  4. wyojeff // June 16, 2010 at 9:03 AM  

    1) 93 Ford Explorer (used)
    2) 85 Saab 900 (used)
    3) 2010 Ford Ranger (new)

    I definitely heard what Yana is saying about needing a well running car to get out of poverty. I was sinking so much money into the saab that I couldn't save for a new car. It was awful, and one morning when it wouldnt start, I decided that I just needed to bite the bullet and get a new one.
    Because of the repairs, I had to finance it, but it's been worth it so far. I'm overpaying on the loan every month and am well on my way to owning it. I also haven't had to spend a dime in repairs (except for oil changes)

  5. Anonymous // June 16, 2010 at 9:44 AM  

    In 34 years of driving:

    1. Ford Maverick, picked out by my mechanic grandfather (bought used)
    2. Yellow Renault (given to me by mom)
    3. Toyota wagon (bought used)
    4. Datsun pick-up (bought used)
    5. Honda Accord (bought used)
    6. Honda Civic LX (bought new)
    7. 99 Honda Civic HX (bought new)

    You're right. Cars, with their insurance, registration fees, taxes (in my state), gasoline and maintenance, are enormously expensive. I wrote in detail about 10-year expenses of my current Honda here:

  6. Simon // June 16, 2010 at 11:04 AM  

    1. 1988 Dodge Shadow, given to me by parents
    2. 1995 Pontiac Grand Am, used
    3. 1998 Ford Explorer, used
    4. 2002 Toyota Camry, new
    5. 2006 MINI Cooper, new
    6. 2008 MINI Cooper, new

    Sadly yes, I still have auto loan debt. I have learned the error of my ways and am working hard to pay off my loan now.

  7. Jerry // June 17, 2010 at 10:23 AM  

    I think buying the car is fine as long as you pay cash for it. We bought a late model Volvo wagon and paid cash for it and we were thrilled. The insurance is lower because it's not "new" and we got a quality car that we needed for our family. Paying in full up front definitely leads to the most savings. I won't do a car loan ever again.

  8. velvet jones // June 21, 2010 at 8:25 AM  

    I'm 37 and never owned a car. Thankfully, living in a major city with extensive public transportation and expensive parking made that an easy choice. However at some point I'll be moving to the burbs and will need to get a car. I'm saving up to by a hybrid to save on gas. What I've found out is that at this point in time, buying a used hybrid costs almost as much as a new one because there aren't many used ones out least in my area. But yeah, when I do buy a car, I'm looking to pay cash up front and keep it forever. :)