There are a lot of things that society tends to dictate as being “normal” and “acceptable”, even if that is very far from reality. This applies socially, politically, religiously and financially.

Over time, our society has adopted certain modes of financial management that have become the normal way of life. The problem is that many of these financial practices are unscriptural and are based on greed, indulgence and laziness.

These misconceptions are why so many Americans are swamped with debt, live above their means, cannot be charitable and have little hope of preparing for the future.

One of these financial philosophies that so many of us tend to swallow hook, line and sinker is the belief that owing a car payment is just a way of life and because you will always owe a car payment you might as well owe it on the coolest, newest model.

This is simply not true… You do not have to always owe a car payment.

You can drive clean, reliable, attractive vehicles with absolutely no payment. You can even upgrade to another vehicle every four or five years and STILL not owe a car payment.

Sound impossible? Think again.

The Facts

According to financial hero Dave Ramsey, the average American whose pride insists they drive a brand new car every year or so is dragging around a debt of about $26,000 at a 9.6% interest rate. The “plan” in most cases is to never pay off these vehicles, but rather drive them until a newer, nicer model comes out and then trade in with the previous debt still hanging on.

This is financial insanity and is entirely based on pride. There is no other explanation for why an individual would choose that sort of debt when a used, clean, reliable car can accomplish the same task as a brand new one. The task of the car is to move you from one place to another in a reliable fashion. Let’s be honest, a five year old car can do that. A ten year old car that was well cared for can do that. So what would be the reason behind strapping yourself with almost $30,000 dollars of debt?  

The reason is the need to impress others with our possessions. An un-Christ like desire to draw the attention and envy of others.

The Alternative

The alternative to this prideful, financially destructive practice is to evaluate need first. Do you need a vehicle right now? If the answer is yes, I need to purchase a vehicle right now then you need to tap cash reserves and purchase the cheapest car you can trust and pay cash for it.

Let’s say you buy a $2,000 clunker. To begin with you may have to drive something less than attractive in order to get your vehicle plan on the road, so to speak. If you are a prideful person this will be a sacrifice and a healthy exercise in humility. Buy your clunker and drive. While you are driving begin plopping the amount you would normally spend on a car payment into a savings account.

By most standards the amount will be around $300 a month. You save this for twelve months. After twelve months sell your clunker maybe for $1,000. Add that cash to the savings and buy a nicer $4,600 vehicle. You continue to save your $300 a month you would spend on a car payment. Perhaps this nicer car will last you two years. After two years you’ve saved (before interest) $7,200. You sell your current car for $2,600. Add that cash to your savings and you now have almost $10,000 cash which will buy you just about any nice used vehicle you want.

This only took you three years! Less time than it would take to pay off a brand new car that is depreciating each month.

This vehicle will last you several years if you maintain it properly. And while you are driving this nice, used vehicle which you love and are not ashamed of, you will still be saving for your next vehicle. If you continue to save $300 a month and drive your car for five years then re-sell it you will have over $20,000 in your car fund!

If you increase your common sense and decrease your pride there is nothing you cannot accomplish financially. Don’t fall into the vehicle trap!