"Why I Drive an Old Car" - Amy Drury | Stewardship Concepts Financial Advisors

As a financial advisor, I am often asked about the best strategies for saving money and building wealth. An effective way that my husband and I have managed to save money over the years is by driving old cars. This approach has significantly impacted our financial stability and has allowed us to make smarter, more impactful financial decisions. Here's why this strategy works and how you can benefit from it as well.

The Cost-Effective Choice: Driving an Older Car

One of the most reliable ways to save money on cars is to keep driving your old car until it genuinely can't be driven anymore. This mentality has served my family incredibly well. By avoiding car payments, we've managed to steer clear of unnecessary debt. Personally, I've owned my vehicle for 12 years and am approaching 197,000 miles. My husband bought a totaled car from my brother-in-law for a few hundred dollars, fixed the bumper (the only thing wrong with it), and has been driving it for six years. While in the banking industry, I saw many individuals with car payments larger than their mortgage, which caused them significant financial strain. Without the burden of car payments, we can allocate our funds more wisely.

Cars Are Depreciating Assets

It's important to remember that cars are depreciating assets. When you drive a new car off the lot, its value decreases. The depreciation is even more noticeable for parents like me with young children, who often smear food into the seats. Cars are not an investment; please don't treat them like one by spending a large portion of your budget on them. Doing so will ultimately detract from your financial goals. As a financial advisor, I align people's goals with their money. For instance, if someone says that they value retiring early over a new car but always buy a new vehicle, which doesn't allow them to save enough to retire early, there is something wrong. Either their goals need to change to align with their actions, or their actions need to align with their goals.

Maximizing Savings and Investments

By avoiding car payments, we have been able to sock away funds into more productive places. We've contributed significantly to our Roth IRAs and brokerage accounts, laying a solid foundation for our future. We have funded 529s for our children and made additional principal payments on our mortgage. Additionally, because we don't carry other debts, we were able to purchase an upgraded home, even in a market with higher rates. The freedom from car payments has allowed us to focus on investments that genuinely matter and grow our wealth over time.

When to Upgrade Your Car

Of course, there is a limit to how long you can drive your old car. When the cost of maintaining your vehicle exceeds a potential car payment, consider an upgrade. However, when buying a new car, aim to pay cash if possible. If that is not an option, secure a loan and pay it off quickly. Be sure to talk to your financial advisor about the best action for your purchase so your new car doesn't become a financial burden.

Breaking the Stereotype

People might assume that driving an old car means you lack wealth, but often the opposite is true. We have many wealthy clients that choose to drive older, more modest vehicles. This frugality and focus on value over appearance has contributed significantly to their financial success. By constantly avoiding societal pressure to upgrade, you can keep more of your hard-earned money working for you.

In Conclusion

Driving an old car can be a powerful strategy for saving money and achieving long-term wealth. By prioritizing appreciating investments over short-term gratification, you can build a more secure and prosperous future for yourself and your family. Remember, it's not about the car you drive but the financial freedom you achieve by making wise, informed decisions.

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