pro-ed tip

Trains, Planes & Automobiles

I never saw the movie, but the title is catchy. This tip is a biggie. So big that it can single handedly make you rich! I know, I know. There are bloggers that say you should never drive. Bike and walk everywhere. Awesome idea, but not for everyone. Your car can drain your finances more than any other purchase! It is a depreciating asset. The speed at which it travels to zero is determined by make, model and condition. But make no mistake; it will end up in the scrapyard like every other vehicle ever made. People all too often focus on the depreciation of an automobile. There is another vehicle cost that digs nearly as deep: transaction costs. I have only owned 3 cars in my life and I’m on the wrong side of 50. I tend to buy used vehicles and keep them for 20 years. (Most vehicles come to their natural life expectancy around 20 years.) Depreciation still hurts. Fortunately, I don’t have that accelerated depreciation newer vehicles suffer. The best news is that I have few transaction costs because I don’t do a lot of transacting. Every time you buy a car the state wants a piece of the action. With the exception of 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) you will also pay a sales tax. Used car prices are out of line as I write this. I probably would buy a new car if I was in the market at this time. Regardless, I buy a vehicle when my current vehicle is close to the grave and then keep it for a really long time. This one tip can save you enough to fund your retirement account if you funneled all those payments you didn’t have to make. And you would trade title, transfer and sales taxes for a tax deduction! Easy choice, I think.