This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
Don’t be fooled by fancy metal
My friends and people around me make less than me but drive in a better style than me.
The CAR has become one of the primary ways to show off your wealth – especially if you don’t have it.
But how a person drives should not indicate how wealthy they are or how much value we should place on them.
First off, we should never place value on a person by the piece of machinery they drive.
Second off, 85% of Americans who have a car had to finance the vehicle, which likely means they couldn’t pay cash for it.
A few folks in the 85% category can afford to pay for their vehicles in cash but choose not to, but this is different from the standard practice.
Most people finance their new cars because they can’t afford NOT to.
Almost every other commercial is about a new car, and if you analyze the commercials, you will notice that they boast about driving in style, separating yourself from the rest, and looking your best.
In today’s society, financial health matters little compared to social value.
The only way to deviate from this trend is to be unwilling to follow it.
If you follow Financial Samurai’s 1/10 rule, you should not purchase a vehicle that costs more than 10% of your gross annual income.
“1/10 of my income? That’s crazy! That means I can only buy a $10,000 car if I earn $100,000 per year.”
This is correct.
What does this mean for you?
Well, this means that most people financing their cars are over budget by a long shot, which likely means you’re over budget, too.
The good news about buying vehicles that equal 1/10 of your annual gross income is you will never be worried, stressed, anxious, or financially strapped for a depreciating liability (because a car is a liability until it’s paid).
Just because you can afford the minimum payment on a car does not mean you can afford the car.
Never fall into the minimum payment trap.
“I can afford to buy x because I can afford the minimum payments.”
Wrong. You actually CAN’T afford x because you have to finance it.
The average price of a car these days is around 50k. The average car payment is $500 or more. According to Bankrate, the average monthly car payment for new cars is $716. The average monthly car payment for used cars is ~$530.
Do the math. If most people can’t afford to cover a $500 emergency, why are they driving cars that cost them this amount each month?
It doesn’t make sense.
Appearances are overrated.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.