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BUY A CAR THAT FITS IN YOUR CURRENT BUDGET

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When you’re first starting out, it’s difficult to afford a brand new car. Yet, it’s the first thing most
young adults purchase when they start their careers. You are much better off purchasing a reliable
used car (for cash) and saving for a new car you will purchase later.
Continue the used-car-buying strategy until you can afford buying a new car with cash. You can
accomplish this by including in your monthly savings plan a “new car fund” (or “next car fund”). It
will take you a few years to build this up. In the meantime, continue driving your used car. Try not to
lease a car; it really becomes the most expensive way to operate a car. In addition, if you continue to
take out loans on cars, car payments will become a way of life.
Another good tip for buying new cars inexpensively is to purchase last year’s model (as long as the
exterior design hasn’t changed). If you wait a few months into the new model year, you will be
amazed at the new-car deals you can get on last year’s models. One year, I purchased a $75,000 car
for only $42,000, and it was brand, spanking new.
Once you can buy the new car for cash, you should be able to do so for life. You do this by taking the
following steps:
1. Keep contributing to your new car fund (every month without fail).
2. Drive your new car for several years (at least seven years).
3. Shop around for a new car that is last year’s model.
4. Repeat the process.
The key to the car-buying process is patience. Buy used cars until you can afford to purchase a new
car for cash. Keep with the principle of buying only what you can afford, and eventually you will be
surprised at how nice a car you will be buying.

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