Buying Cars Redo: Resale Value

No I am not trying to turn this into a blog on cars, how to buy and what type to buy.

However, new cars are an American obsession/passion.  It is one of the most common money mistakes-having too much of your net worth tied up in cars.  Having a large car payment even though you are having trouble paying your bills, is another common evil.

To be a millionaire nurse, you have to think like a millionaire.  And millionaires get to be millionaires by making smart money decisions, over, and over, and over, and over………

The Wall Street Journal article suggests that several American cars resale values are holding up better than ever.

Wait a minute, you might say.  That means Dr Dean is wrong-maybe new cars aren’t so bad after all.

“Not so fast my little pretty”-as the Wicked Witch of the West said.  The article states, quoting figures from Kelley Blue Book, the car value bible, that new cars sold in 2010 will be worth 32% of their original value in 5 years.  That means your $20,000 new dream car will be worth just $6,400.00 on average.  That means your new car investment is losing about $4,000 a year.

The article is saying that a few American models are doing better than in the past at holding resale value, better by a percentage point or two.

So to reiterate my prior posts on cars, don’t buy a new car.  If you are buying a car, buy a cheap one you can pay cash for while you are getting out of debt.  And if you have a need for a replacement vehicle in the future, start that savings account now to build up a fund to pay for it.

And in the future, when you are a Millionaire Nurse, then by all means-go buy the car of your dreams.  When your car represents only a small portion of your net worth, the depreciation will not matter as much.

If you need help maintaining your current vehicle, go pick up a copy of my FREE e-book at The Millionaire Nurse website.  It has several tips for keeping your current vehicle in good shape.  It is also packed full of other money-saving ideas and tips.

Tags: buying a new car or used, getting out of car debt, new cars, saving money on your car

This entry was posted on Thursday, December 3rd, 2009 at 6:34 pm and is filed under Planned spending aka budget, personal finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.