Taking On Too Much Debt? Average New Car Price For The Month Of June Was $33,340

Massive debt is a way of life for us North Americans. Well, north of the Mexican border, I mean.

With a US national debt that works out to about $57,139 for every man, woman, and child, plus a mortgage, plus line(s) of credit, plus credit cards, plus car payments... well, you get the picture.

I so agree and the more we make the more we tend to spend.

I am blessed to know the value of working hard to get my PhD so as to have a well-paying career only to have a totally different one fall in my lap (cars).

I can afford some pretty nice machinery and I have a wide variety of cars I can drive as my "company" car.

I drove a Kia K900 for a while. It's a brilliant car, but pricey even with its value pricing and deep discounting.

I can afford a Ghibli--which is a hoot of a car to drive--and I can drive one as a demonstrator for free if I want, but I chose to drive currently a Ford Fusion SE 2.5 base with retail price of a few dollars shy of $25K.

I typically have a company car about 6 months. I chose the Fusion because it is what a LOT of the customers at the Ford store buy and so I thought I would experience their experience.

I'm glad I did.

By the way, my first car was an avocado green 1973 Mustang Grande with 180K miles on it with a thrashed interior. A set of gold seats from a wrecked gold Grande in the junk yard made my ride even more grotesque. I drove the blue-smoke belcher for quite some time.

You see, I didn't always have money--in fact my childhood was VERY impoverished--so my frugal nature usually rises to the surface even now that I've "made it".

My wife--by contrast--is an old-money, daddy's-girl kind of woman. She grew up in very expensive cars.

Living below our means forced its way on us.

We had resigned ourselves to not having children, having the gorgeous house, and his and hers premium cars because she was infertile. It was impossible to conceive, so why use birth control? TMI maybe, but there is a point.

She got pregnant very unexpectedly and when our son was born she wanted a Mercedes GL mommy car. I suggested something far more pedestrian: Hyundai Santa Fe, but the girl who had everything was quickly turning into a mom.

But dang it if she didn't get pregnant with twins soon after giving birth to our first son. I think conception has something to go with our bedroom decor, but I'm not sure.

The idea of funding college for one boy daunted me, but then there were three.

Three pretty much infant boys in a Mercedes GL was doable, but--yup--we're expecting again and so the Mrs. decided to get real and trade "down" to a Ford Flex--granted fully optioned--but she likes it a lot.

She decided to get something "normal" people would drive. Granted, a fully optioned Flex is not "normal" in any way, but for her it is a massive leap toward frugality.

Every time I drive the Fusion, I am mindful of 4 mouths to feed and 4 kids to put through college.

I know what it's like to have nothing and I never want to be hubristic enough to think twists of fate couldn't make me a poor boy again.

On one hand I am thankful Americans buy much more car than they need because that is college fund money for my kids, but I really think we need to get a clue and be a lot more frugal.

And yes, I

This country doesn't learn, we are heading in the same direction that caused our economy to tank. They are building mini mansions around my neighborhood (not really sure who is buying them), every morning when I go running I see more 911s, M6s, M4s, AMGs and so on. My next door neighbor is doing a $80K remodel job to his pool. Its like we are back in 2007/2008.
@MDarringer good luck with your kids, four? Yikes! I am burning about $30K per year in college with one, thankfully I have the money and she doesn't need to take any loans. She should had done like me an attended the USNA, LoL!

The wife--very old school Italian--wants 6. The trade off for trying for child 5 is that she will allow me to put a deposit down on the new TVR. She thinks I have too many as is, but she knows how to make me a team player. LOL

I always believe living below one's mean is the key to financial stability and longevity. When I see young people (kids in their 20s) livings in apartments and driving 60-100k cars I sort of wonder what kind of job allow them such luxury.

@w222 I have many of those working for me in Field Services. We work in the Energy Sector, as a Field Project Manager I lead teams of technicians and mechanics (mostly kids in their 20s and 30s) most of them with no formal college education (but very skilled) and they are easily earning between $100k to $150k. Some of them are very smart about their money but it frustrates me to see some driving F350s/F250s/RAPTORS and so on; vehicles that cost at least $65K. They also have all the toys (fishing boats, RVs, Harleys, ATVs) but almost no savings. I try to educate them but you know how that works.

People my age (under 30) can be very narcissistic. Many think: "OK, I got my career, so now I need to get the Mercedes CLA AMG to show others that I am successful." rather than "OK, I got my career, so now I have to work hard to prove myself in my career."

I'm very much the latter.

I didn't earn my business holdings. They were handed to me.

Thus, I could say "I'm the one who owns this, dammit, do as I tell you." or--as I do--I say to myself: "Research and prepare for every meeting. Know who works in various levels of the business and know what their function is. Pay attention. Listen a lot. Sweat every detail." I speak with once I have a considered and informed perspective.

Maybe it's because I grew up with nothing that I know that "nothing" happens to a lot of people and maybe the narcissistic people my age never really had to exert, so they have a feeling of entitlement i.e. that they deserve things because they THINK they deserve them.

I had fun ripping The Secret to shreds in my dissertation.

I was once one of those narcissists. I've been doing industrial construction for a decade now. At 27 I had a 2005 Mercedes CLK500 but I always saved 60-70% of what I made, and only ever bought used cars. The Merc was a steal at $28k, off lease. If it's lightly used, and I want it, I'm probably going to get it, but only one at a time.

USNA makes a great observation though. In construction, I don't get why these young guys buy $70k F350s. Possibly the stupidest investment ever. And when you call them on it, they'll argue how it was such a great idea because no interest for 80 months or they have to haul their boat and fifth wheel around.

My wife and I have a fun life with our one son without going crazy on stupid investments like cars we don't really need or unnecessarily high payments. Once it's locked into my index funds, my savings never leaves the account. I keep the play money on the side.

It's not that I don't ever spend money foolishly on cars. I own TVRs that can only be driven on a track and have spent money to shore them up and make them reliable. Not a difficult task, but it does require some cash. For example I have a Sagaris LS7, but I could sell it tomorrow to another track hound and make a small profit. A few years ago, I inherited a small collection (6) of nice cars, but Mr. Frugal in me immediately sold them to car collectors who would appreciate them. If someone came up to me and offered me the right price for the Sagaris, it would be gone.

I love cars, but not enough to think that the car "makes" me or enough to get into a stupidly long bank note.

OK...who hacked Darringer's account? It's so blatantly obvious that this is not him...

Good one. But I assure you it is.

There's nothing wrong with debt. It provides leverage. It keeps the economic cycle moving. Etc.

What's wrong is having debt you can't service in emergency circumstances. Unfortunately, many people don't learn about that in school, they experience it first... That's troubling.

BTW, average numbers don't mean much. It's a lot more important to understand the distribution of the load and the ability to service that debt. Otherwise, someone like Bill Gates alone could have a material impact on the 'average debt load' in the country...

The post is begging the question of dumb debt. For example, let's say a buyer can afford a Fusion SE on a 5 year loan, but they decide to get the fully loaded model and finance it over 7 years. That kind of debt make zero sense.

The house I live in was built in 1961 and the original owners had it until 2005 when they sold it for an ungodly price--because they could--the new buyers went belly up in the market crash and it got foreclosed because they were upside down as hell and couldn't make the payment. Dumb debt.

My wife and I bought it on a short sale, spent money to restore it--we like the midcentury modern look--and the value is almost back to the high point, but more importantly we're financed at the low buying price. Smart debt.

Matt, I always enjoy your posts, and these are terrific. A life as gold as the Grande's seats I imagine. You're a guy who has it all, and a great perspective. Thanks for your posts.

I don't know that I have it all. I am blessed and I mean that literally.

What I do have is vivid memories of having nothing and there is no purpose in elaborating on that except to say that my siblings and I were always on the verge of getting put into foster care. By hook and often by crook, I found ways to pull us back from the brink and stay one step head of the Child Protective Services Gestapo.

I busted my ass in school because I wanted out. I've never shirked from hard work.

These days, I am very appreciative of everything I have, but more importantly I know it could be fleeting.

I had the mixed fortune of crossing paths with with four wealthy, but elderly car nuts. One saw my reaction to his TVR Griffith and I gained a surrogate grandfather at that very moment. he had never met anyone--much less someone my age (14 at the time)--who could cite chapter and verse on a wide variety of cars.

Unfortunately two of my car nut friends died. Both included me in their wills. To some the inheritance would not seem massive, but for someone with my background it was game changing.

Another made me executor of his eventual estate and gave me power of attorney when he was first diagnosed with the beginning stages of Alzeheimer's. I was 21 then. I have learned a lot about elder care to the point that I have punched drywall when the old are treated with disrespect.

I've patched the wall in my shop a few times.

The fourth is 100% healthy, but just doesn't care for the grind. He can still drive, but is no longer safe to drive at the track. Every year, he sends me to driving school and he loves being hot lapped in his fast cars.

He and the guy with Alzeheimer's owned major stakes in a number of dealerships.

When I took over running the operation, I looked at everything in a cost/profit assessment and made some hard decisions.

I divested of everything Porsche, Audi, Volkswagen, and Jaguar. Jaguar was a money loser. Porsche makes money, Audi less so, but VW you break even and count on profits from Porsche/Audi for the bottom line and I am not OK with that model of business.

I've reduced the company's holdings as to the number of dealerships it partially owns and reduced the number of brands.

The guy who still has his wits about him always flipped cars as a hobby, so I bought and consolidated a few body shops and he oversees flips of American muscle cars and older pickups in one location. We've done some TVRs of course. We've had fun with a few Jensen Interceptors. We even found and redid an Iso Grifo...granted it was a FrankenGrifo rather than a 100 point concours queen.