One of THE biggest money mistakes you can make is financing a new car.  Just who has tricked us into thinking that the standard way to live is to have one or two nice newer rigs with matching payments?  Now don’t get us wrong; there’s nothing necessarily faulty with buying a new vehicle - IF you can afford to pay cash for it.

So this is the simple rule for not squandering your future over vehicles along the way:  Only buy as much car as you have the cash to part with.  If that is a new car, great.  But if you can only afford to pay cash for a ten year old minivan, then be humble enough to accept that.

It’s all about living on way less than you make so you can save for your future.  Better to be teased over your faded minivan than keep giving a whole bunch of your money to the bank year after year for something that ends up in a junk yard.  Why let the bank take your future from you?
A few years ago, as my wife Deborah was driving home from work she got rear-ended on extremely icy roads just a few blocks from home.  Luckily she was not seriously injured.  But her loyal friend “Red” was totaled, though it didn’t necessary look like it should be.  Because the roof and rear side panels were all one section, the cost of repairing the damage exceeded the book value for the then nine year old car.

It was not a good time to lose Red.  We didn’t have the money to go buy another car.  Besides, she was paid for and in superb condition.  Deborah had bought it new and had taken excellent care of it.  Red still looked like new inside and out and had relatively low miles as well, so there was lots of life left.  We knew it would be difficult to go out and buy that much car for what we might get from the insurance.

But here’s the kicker.  The car was not damaged so terribly that our friend mechanic couldn’t bang out the rear corner and replace the tale light assembly for about $400.  The car was valued at about $4900 and after we bought it back from the insurance company for $500 and paid our mechanical friend, we had a perfectly functional car and $4000 in our pocket.  We just had to live with the big, crinkled, rusty pimple on the back of the car.

We drove that car for another five years.  First, it was part of our “get out of debt” plan, then our “pay off the house” plan.  After that, at forty miles per gallon we just loved it.  Good thing I have a wife who wasn’t too proud to keep driving banged up ol’ Red around.  What a good reliable friend she turned out to be.  Deborah is pretty good too.

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    Get out of debt, I dare ya!
    Boiled down money goo guru, Dan