Spending. Too. Much. On. A. Car.
That’s right. That brand new car you’ve been eyeing since graduation? Don’t buy it. One of, if not THE most common financial mistake a new college graduate can make is buying a brand new car. Especially one you can’t afford.
Like most college students, you’re probably driving around in your beat up 4 speed that barely gets you from point A to point B. You’ve just graduated and gotten your first real job, its time to upgrade right? WRONG.
Purchasing a brand new car is a depreciating asset meaning it goes down in value. Not up. Depreciation coupled with the average new car price being right around a hefty $36,000 will turn your already huge student loan debts into a suffocating debt mountain. You’re MUCH better off buying an older used car for cash and working yourself out of your student loan debt.
Trust that what I’m telling you is fact, I’ve made this exact mistake. I was hired full time during my last semester of college. Quite a feat actually, I’m not going to lie. But as conceited as that sounds, it is an important part to my story. I felt entitled that since I’d been offered my first full time job within my field, I needed to go out and buy my first car. Remember though, I was the genius college grad who knew what he was doing. So I didn’t go out right away and buy a car, I saved up a few thousand dollars for a down payment and searched around until I found the perfect car. Because you know, I’m now a responsible working-class adult. Have you caught my sarcasm yet?
What did I land on you might ask? Oh nothing too expensive, just a $23,000 Cadillac! Yes. A Cadillac. Who in their right mind buys a Cadillac as their first car? Me, apparently.
Long story short, here I am 2 years later regretting every second of that purchase. I’ve effectively doubled my student loan debt with an asset that is worth less and less every time I leave for work. Don’t make the same mistake that I made. As much as you want that new car to impress people you don’t even like, or because it’s what all your friends are doing, its not worth the financial burden. Take your time researching used cars and find something within your budget. Trust me, the new car can wait until you’re financially free. Until then, chug along with that 4 speed. It’s worth the rust.