Drive a Porsche instead of a Mustang?

Special Post from FrugaChris

One of the things that Dave Ramsey claims is that you cannot afford to buy a new car unless you have one million dollars net worth.  Yes, that is right, one million big ones in the bank account!  Is this just over the top or is there validity to this claim!?


To give you a little background, I bought my brand new 2000 Honda Accord for $21,500 after I accepted my first job out of college and before my first paycheck.  And if you are wondering, Yes, it was before I married FrugaRita!!  Eleven years later my Honda is still kicking but only worth $4,500 (a $17,000 loss not including interest payments).


I honestly believe that the car purchase is one of the most critical decisions that a middle class family or single makes with their money.  This dramatically affects your future and ability to give and save.


Here is a section of the Consumer Reports article in the link below: "According to the used car savings analysis, buying a 2005 Toyota Camry with a V6 engine, for example, could save you about $13,000 over five years compared with buying a new 2008 version. At $4 per gallon, you could pay for all of your gas during that period (based on driving 12,000 miles a year) and still be almost $2,500 ahead."

I know most people are not looking for one of these, but it gets the point across, "Our analysis also highlights another appealing option of buying used: the ability to get a more upscale model with more features for the same owner cost as a less expensive new car. Buying a new $28,000 Ford Mustang V6 convertible, for example, would cost you about $42,500 over five years. For about the same five-year cost, you could buy a three-year-old Porsche Boxster roadster, which is priced at almost $50,000 when new and is a more highly rated, fun-to-drive sports car."
 
The article does a great job of explaining the new versus used cost comparison.   Only a millionaire can afford a 34% loss over the first five years without being affected financially.  This is the reason that Dave Ramsey teaches to buy used.

Read the Consumer Reports Article for more details:

http://www.consumerreports.org/cro/cars/used-cars/buying-advice/used-car-savings/overview/used-cars-ov.htm