Hey you, happy Friday!
We made it through another week of our No-spend challenge. 🥳
We’ve heard from many of you that it’s not going perfectly and the good news is: perfect was never the goal!
We’re glad you’re still with us because we know incredible insight and next steps come out from BOTH doing things great AND making mistakes. 💪🏼
While we keep moving through this challenge, we want to continue our conversation about the BIG 3.
According to the U.S. Bureau of Labor Statistics, there are, not surprisingly, just 3 categories that make up 64% of total household spending:
Housing: 33% (we covered this last week)
Transportation: 17% (what we’re talking about today)
Food: 14% (that’s for next week 😉)
This means, when it comes to our transportation decisions, a little goes a long way!
One wise and informed car purchase decision could mean more for our finances than cutting out lattes every day for a year.
We know the average price of a car has risen significantly in the past 3 years, and we are not opposed to buying newer and prioritizing safety.
And we recognize that for many, a car loan is what allows us to afford these important features.
But let’s take a look at the math and know our game plan!
New Car 🚘
Avg. Loan Amount: $40k
Monthly payment: $729
Used Car 🚗
Avg. Loan Amount: $26k
Monthly payment: $528
NOTE on interest: even though used cars have a higher average interest rate than new ones, because the average used car price is so much lower, you still save!
NOTE on credit score: avg. monthly car payments by credit score showed that someone with a 300-500 credit score only paid $15 more per month on a used car loan than someone with an 800 credit score.
That 1 decision can save you $200 each month. That’s over 33 lattes a month. By buying a used car you can have a latte every day and still be saving money.
We agree that safety and newer features are important, but we also know that cars fall to around 40% of their original value after 5 years.
So here’s our checklist when making this very seldom, but very important transportation decision:
Anything between 3-5 years old
10k-14k miles per year
Consider resale value (even if you plan to own that thing forever, still look into what the vehicle might go for in 5-10 years). You can use a car depreciating calculator.
Check out CarComplaints.com to see the most common complaints for every make, model, and year. This helps cut through biases and brand loyalties and ensures you’re getting a good vehicle (or at least know the issues you may face!).
Be cautious of where you buy and aware of any hidden and unnecessary dealer fees. A similar vehicle may cost thousands less at a different dealer depending on their practices.
If you’re soon to be in the market for a new-to-you car, keep this checklist handy!
And remember this: 1 purchase decision is as important as you doing an entire month long No-spend challenge!!
Catch ya later,
⭐️⭐️ P.S. Want to share all this goodness with your friends AND earn cool Frugal Friends merch?
**Means this is a sponsored or affiliate section. We may earn a small fee or commission when you choose to try one of our sponsor or affiliate partners. But opinions are still 1000% our own.