04/23/2026
🚗 I have been looking for a new car for a while now, so this caught my attention. Especially since one of the reasons I haven't actually purchased a car yet is I have purchased assets instead. Investment property... To be exact.
I look at the price tag of new cars these days and cannot believe that they are almost the price I paid for my first house in 1999! 😱 I still own that house, the rent more than covers the expenses and the value has quadrupled, which according to historical data is normal ever 20 years.
In 2001 I was really stupid and bought a brand new car off the showroom floor for $35,000 . (That was expensive then by the way.) That was the biggest Financial mistake of my life at that point! After the financing special ended that enticed us to purchase that car the payments were more than our house payment! It almost killed us financially a couple times. But we ended up paying it off eventually . Unfortunately the repairs even on a brand new car also almost killed us. Even new cars aren't guaranteed to not have issues. Thankfully it was under warranty for a while but not forever. The car was eventually paid off and died fully in 2015.
It was replaced with a used Toyota corolla for $18k. That car will have 234567 miles on it this week! As a real estate agent and investor I drive a lot. In reading comments on this post it was suggested to use public transit, which is much cheaper, but not feasible for me. I will need to replace my car and have been looking at options. Brand new won't be happening! I will let someone else take that initial hit. It's always scary to get into something new! It will be around the $20k mark. The payment will be likely be what my first house payment was... It's not that any more even though it should be almost paid off. We did a cash out refinance a few years ago and used some of the equity to purchase another property. Which is also growing in value at the average of 4%/year with renters covering the expenses plus some. And a lot of the expenses are tax deductible! Plus... If it's your own residence there is a huge tax benefit when you sell... In fairness, there are tax benefits that come with a vehicle, if you own your own business which includes owning investment property.
By the way, every car and house will have expenses. So mitigating those is also key. Do your research, buy something that has a track record of not needing as many repairs. Get inspections prior to purchasing, and a home or auto warranty.
As a real estate agent I get told all the time that 'kids these days can't afford to buy a house' . Many of these 'kids' are often drinking $10 lattes, renting $2500/mo apartments in the newest buildings and driving $70,000 plus cars! It's not that they can't afford to buy a house it is that they choose different options including to afford to buy an expensive depreciating liability rather than an appreciating asset that gives them tax benefits and a roof over their heads because as long as you're alive you have to live somewhere. And hopefully it's not your parents basement until you're 50!
The $50,000 difference between those two cars isn't a purchase. It's a decision about what the next 10 years of your financial life look like.
Here's the math most people never run before they walk into a dealership.
The $70,000 car financed over 60 months at current rates runs roughly $1,300 a month.
Insurance on a vehicle at that price point in most markets adds another $250 to $300. You're at $1,600 a month minimum before you've put a drop of gas in it.
The $20,000 car financed over the same period runs about $380 a month. Insurance roughly $100 to $120. Call it $500 a month all in.
The difference is $1,100 a month.
$1,100 a month invested in a simple S&P 500 index fund for 10 years at historical average returns is approximately $225,000.
Both cars get you to work. One arrives at a retirement account with a quarter million dollars in it. One arrives at a lease renewal on something even newer.
I'm not saying drive a be**er forever. I'm saying the car decision is one of the highest leverage financial decisions most people make and almost nobody treats it that way.
The people I've watched build real wealth in their 30s and 40s almost universally drove something boring for longer than their income required.
Not because they couldn't afford better. Because they understood what the difference actually cost them.
The $70,000 car doesn't just cost $70,000. It costs whatever that money would have become.
