Saving Millions By Rejecting That New Car Smell


Who doesn’t love that new car smell? You know the smell I’m talking about. The smell that they’ve perfected and packaged into a little tree ornament that graces all non-new cars to give them back their former glory. Interestingly, Mr. MMM and I have rejected new car ownership. I have never owned a new car and don’t ever plan on it. Mr. MMM, on the other hand, did make the mistake of buying one brand new car in his life. He bought it for himself after graduating college because…wait for it..he deserved it! Ha! Isn’t that always the case? Why do people reward themselves for hard work with debt? Since then, he’s become much more practical and buys his cars cash and effectively drives them into the ground. As do I. But, just for fun, let’s look at how we got here and examine what other people do. 

The Average Car Payment


Mr. MMM’s current paid off ride

According to, the average car payment in the U.S. is $479/mo. That is not a misprint. As if that wasn’t bad enough, let me point out that that is the average. That means there are plenty of people out there with car payments much higher than that.

Although, I have never purchased a brand new ride, I did make a ridiculous purchase after getting my first full-time job after high school. I was making about $9/hour and thought I’d spend $14,000 on a used sports car – A Mitsubishi Eclipse, to be exact. In my defense, it was loaded with leather, a spoiler, turbo, and a pretty slick blue pinstripe. Everything an 18-year old needed! Not only did I finance a car that was equal to almost an entire year’s salary, I also forgot to factor in the cost of insurance. It turned out, I was paying $330/mo for the car and an additional $130/mo for insurance. That obviously doesn’t account for maintenance or repairs, either. I also had a cell phone at the time. Between the car and the cell phone, I was working two weeks each month to pay for my expenses. Thankfully, I was using the other half of my income to pay for college – at least I was doing something right :)

Related: Why I Regret Buying My Inexpensive, Fuel-Efficient Car

A Lifetime Of Used Cars


Us not buying a car!

Now I must say, even though I spent way too much money on that Eclipse, I paid it off and drove it until the wheels fell off. I had it for almost 10 years and it had 200,000 miles on it when I sold it for $1,200! All in all, not too bad. After the Eclipse, I ended up with two cars for a period of about 9 years. After dumping the Eclipse, I wanted a car that could move in the snow. And, since I didn’t have far to drive to work, I bought a SUV – A Jeep Grand Cherokee, V8. Oh, yes. What I didn’t anticipate was being terminated from my job because the company was closing our plant. I immediately got a job in my field, but it was 55 miles away. Instead of selling my SUV and buying something more reasonable for the commute, I kept it and bought a second commuter car with my severance money. I paid $4,000 cash for my second car – A Chevy Malibu. And for the next 9 years, I mostly drove the Malibu while the Jeep was used for transporting my mountain bike and occasionally driving in snow.

Three years ago, I finally dumped the two cars and bought a reasonable used car. It doesn’t have 4-wheel drive, but who really needs that in Lancaster, PA? This is the last payment we have before we start aggressively going after the mortgage on our rental property. If we stay on course, it should be annihilated within a few months!

After having made the mistake of purchasing the new Honda after college graduation, Mr. MMM got his butt into high-gear. He has since sworn off new cars and we have both been brainstorming for over a year over the possibility of reducing down to a one-car family. We just can’t figure out how to make it happen with a 7-year old and two careers, even though he works mostly from home. We’re all ears if anyone has any suggestions!

Invest The Difference


No new cars in this backyard

“Yeah, yeah, yeah, that’s all fine and good, knowing the history of your vehicles, but how does this relate to personal finance and saving millions?” I’m glad you asked! Let’s go back to that average car payment. Do you realize that over a lifetime (let’s say 50 years), that average car payment, assuming you always have a car payment, will cost $287,400! And that’s just cash. Let’s say, you didn’t have a car payment AND you didn’t just squirrel the difference away under your mattress. Let’s say, instead, you invested that $479/mo in index funds with an average return of 7%/year. Do you know how much you would have at the end of 50 years?

Get ready. Take a deep breath. You might want to sit down for this. The answer = $2,500,000.

Yep. You’d have 2.5M dollars! And that’s just for ONE car. Imagine if you did it for two cars? Granted, you likely can’t go completely vehicle free, unless you live in a major metropolis. However, aside from living in a big city, you certainly can minimize the financial impact a lifetime of car purchases/payments can have on your bottom line. This alone, can make you a millionaire!

Related: When Buying Stocks Is More Exciting Than Buying Shoes

How do you roll? Do you have multiple cars in your family? Do you finance, lease, or pay cash? What’s your family’s formula for getting around? We’d love to hear all about it in the comments.


Mad Money Cat doesn’t drive. No thumbs.

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24 thoughts on “Saving Millions By Rejecting That New Car Smell

  1. I bought a used 2014 Jetta last year through Enterprise (yes, the rental car place). I was a great deal, 13k for a 2 year old car with 35k miles on it. I ended up financing 8k of it because I didn’t want to use all my cash to pay for it… I ended up paying off the loans 4 months later anyway because small debts are annoying to my psyche!!

    I’m probably going to be driving this baby for at least 15 more years. I only put 4k miles in the past year… :)

    Liked by 1 person

    • Nice work! It’s amazing how much you can save over a lifetime by just making some fiscally responsible decisions when it comes to vehicles. They’re a huge money suck – after the mortgage. AND they’re liabilities! Blah. I don’t ever plan on having another car payment in my life.


  2. I purchased a 2015 Toyota Camry right out of college for $22,000 with a 0% interest loan and $0 down payment. I was lucky to get these loan terms because my credit was ridiculously high thanks to the credit card churning activities I did while in school.

    However, recently, I haven’t been using my car for the past year as I travel and use Uber for work a lot now. So it’s gone un-used and was recently stolen early January.

    If I were to do it all over again, I wouldn’t have purchased a new car and instead used one of my family’s existing cars or purchased an older used car. It’s always better to not be in debt than to be in debt.

    Liked by 1 person

    • Well, $22k at 0% isn’t the worst scenario out there. Any chance you could sell it and use an older/family car now, since you’re mostly using Uber? We thought the one way we could possibly go down to a one-car family would be to use Uber in the event of an emergency. It does open up possibilities.


  3. I’m ashamed to admit we bought a new car for reliability reasons. While the car has in fact been reliable, new cars comes with their own set of costs: Regular (perhaps excessive) maintenance to keep up the warranty, higher insurance. Even though our car was considered cheap, the biggest cost (to the tune of $5k) has been depreciation.

    On the other hand, I’m proud to say I donated my (other) car a few months ago, so we are down to one car (for two people). This was only made possible by moving to the city, though :)

    Liked by 1 person

    • Ooh, I’m jealous you’re down to one car! I just can’t seem to figure out how to do it with two careers and a little girl in the suburbs. And, kudos on donating your other car! I’m sure it feels good knowing you helped someone. As far as buying the new car for reliability – you’re not the first person to do so. And the fact that you only have 1 car definitely offsets the new car factor. I think you’re doing pretty well :)


  4. My worst car purchase was when I was in college, and before I learned to be smarter with money. I bought a…guess what? 1995 Mitsubishi Eclipse GSX…yep…it was brand new, and I loved it! It was the last new car I ever bought. I sold it shortly after graduating, and have been buying used ever since, with the exception of the killer deal I got on my current leased electric car.

    Liked by 1 person

    • Haha! I LOVE it! I think mine was a ’93, but it was used. But it certainly didn’t have a used price tag! Thinking back, I loved my Eclipse, too. But it was still an awful decision. Sometimes it’s fun to laugh at yourself. Sounds like you’re on the right track now, too! :)


  5. I made the same mistake as Mr. MMM and bought a new Honda right out of college. I justified the purchase by telling myself that I needed a reliable car for my first “Big Girl” job. Thankfully, it too would be my only new car purchase. I wised up years later and realized that it’s possible to buy a realiable used car for cash. I’ll take the satisfaction of a paid-off used car over the smell of a new one any day!

    As for being a single-car or two-car family, we were able to survive with just one car while living in the city (where public transportation was easily accessible) but had to transition to two cars as soon as we moved to the ‘burbs. Good luck on your quest to transition to one car! From what I’ve seen on your blog, you guys have been super resourceful in the past so I’ve no doubt that you guys can do it!

    Liked by 1 person

    • Ha! It’s funny how we think we “need” or “deserve” a new car to reward ourselves. Really, the best reward would be to invest as much money as possible – not buying a new car. Oh well, you live and learn. It sounds like you definitely learned that new cars aren’t for you. That will serve you well, financially, over your lifetime!

      As far as one car goes, I just don’t see how it’s possible right now. We’ll keep brainstorming though :)


  6. I was part of that trap – I was buying new cars since I got out of college. The last one I bought was in 2009 (a Chevy Malibu) and, since then, is when I’ve had my wake-up call. I’m going to run this car into the ground and buy used from here on out.

    We do have a second car – my wife’s car is a 2011 Ford Escape and she’s going to run that one until it dies as well.

    Thinking about the money that we wasted over those years just makes me shake my head… we could already be done working! :-)

    — Jim

    Liked by 1 person

    • Awe…a Chevy Malibu! That was the car I bought for $4k with my severance pay years ago. It was a 1999 Malibu with 60k miles on it. I drove it until it had 210k miles on it! Like a rock, baby. Like a rock! I finally traded it in along with my Jeep to buy my current Mazda 3. You have a good car in that Malibu. I did once/year oil changes and it wouldn’t quit. :)

      Liked by 1 person

  7. My first car that I bought was used and I took a bad year for a mazda 3 and it rusted si fast that at my second car I bought new. I thought I would have less problem with a new but the car got two minor hit while it was parked and I would have to change the front bumper. I will not repair it, it just cost a lot of money for a minor problem that will not change hiw the car drive. Where it hurt is that it’s a 3 years car and I have a 7 years debt at 0% on it, so it have some problem before the car is paid. Next one, it will be be a used car so my payment will be lower and the value of the car will not drop because I drove it out of the dealer.

    Liked by 1 person

  8. The turning point for us was when we printed out a amortization chart on night on a used car we purchased when we first got married. We then realized how much of our money was going to interest and it made us sick. We sold that car 3 weeks later and From that point on and still to this day we drive only use cars we can pay cash for. We know that not buying several new cars played a part in helping us hit FI goal. Looking forward to reading more post like this!

    Liked by 1 person

  9. I’ve sworn off new cars like the plague! At 18, I purchased my first car with no credit and an $8 an hour income…worst decision ever! I was suckered into doing a trade in a few years later and I am still trying to pay off the car. I’m now at $7000 from a $25K loan, and once it’s paid off I plan on purchasing cash/used only!

    Liked by 1 person

  10. I also live in Lancaster, PA, and found out 4×4 is unnecessary as I bought a new Ford Ranger right out of college, I immediately hated the payments with a passion and paid it off early. Lesson learned! We still had it until 2 years ago when it was totaled, we used the insurance money and a bit of our cash to buy a used 2012 Focus. No payments and a big jump in fuel efficiency!

    Liked by 1 person

    • Yay for Lancaster! Have you ever heard of Two Cup House? They’re in the area, too! This seems to be a tiny haven for personal finance :) It’s funny you say that about the lack of need for a 4×4 here…I just said to my husband tonight that we didn’t need to shovel one time this winter. Haha. Nice work on the used Focus! You must feel like you got a huge pay raise :)


  11. I have three cars al of which were given to me by my siblings that didn’t need them. My kids and I drive them. One of which is a 1998 Toyota 4Runner that is now having transmission problems. The guy at the transmission place says I’m looking at $1800-$2400 in repairs. That’s more than the truck is worth. I don’t have any money to purchase anything and I’m not sure what to do. I need a vehicle. Public transportation is not an option. Any suggestions?

    Liked by 1 person

    • Hi Deanna, Thanks for your comment. Without knowing the whole picture, I would think about selling the truck you can’t afford to fix and figuring out how to get along with the other two cars for now. If you absolutely need the truck you might need to consider waiting until you have some money saved up to have it repaired. It also wouldn’t hurt to have a second mechanic give you an estimate. Expensive car repairs can often range quite a bit from one place to another. I wish you the best of luck with this situation!


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