Borrowing money to buy a car is an amazingly effective four pronged strategy for burning all your money. Here’s how it works:
1. Spend money you don’t have
2. PAY MORE money just to borrow that money you don’t have
3. Buy more car than you otherwise would
4. The thing you buy plummets in value
Those four forces, combine like Voltron into one massive wealth-crushing force.
Ok, but you WANT a car and you don’t have any MONEY? What do you do? The average US new car payment is $554/month. Let’s say you’re broke and can only afford a $300/month payment. Here’s what you do:
• First four months: Don’t have a car. Bus, bike, borrow, barter, and beg your way to where you need to go. I know it sucks. But it’s only four months of your entire life and it means you get to be a millionaire later. Humans were around for 6 million years without cars. You can do four months. Put your $300/month in a savings account.
• Month five: Take the $1,200/month and find a deal on a clunker that runs. Boom. You have a car, and zero debt. Keep saving $30