The Mistake Of Buying An Expensive Car

The Mistake Of Buying An Expensive Car

Over the years I’ve made my share of financial mistakes. There were minor splurges here and there, but I see my biggest financial mistake every time I leave my apartment. Sitting outside my rundown apartment is my Ford Mustang, the most expensive car in the parking lot.

While I do take pride in driving it and love getting the back-end to slide around corners, in the back of my mind I know I shouldn’t have spent so much cash on a car. What was I thinking?! Why did I ever want to drive something as expensive as this auto?!

Deciding To Splurge On My Car

When I first bought my car about 6 years ago, my affiliate websites were going through their first peak. I was getting my biggest commission checks and I was on top of the world. After years of working at entry level position, I was the definition of “new money.” I wanted to blow my money and show off my success.

So after wrecking my old Acura, I thought I deserved an upgrade. And why not get the car I’ve been wanting since it came out? I figured I was making enough money to have it paid off within 2 or 3 years.

My problem was that I was too set on a specific car and was paying for a rental until I bought something. The car salesman’s eyes must light up when they see someone pull up in a rental car. They know someone in that situation may be in a rush to make a purchase.

Because I had worked for several years marketing an online tire & wheel retailer, I felt a bit of pressure to buy a car that would impress my coworkers. My old roommate had also just purchased a big new truck. So I ended up giving into peer pressure and tried keeping up with the Joneses.

Why Buying An Expensive Car Was A Mistake

Later that year I was hit with a big income tax bill after doing so well with my affiliate websites. Somehow I had not been anticipating this and had blown most of my money on things like nice restaurants and renting a decent apartment across from the beach. This was my first financial wake up call. I didn’t get the hint though.

I paid off that big tax bill, but lost motivation with my websites. Things started to decline as I spent less time doing work on them. By the time I renewed my efforts, it was too late to stop the slide and I was starting to pay the price. Before I knew it, it was time to get a job. Yes, just like my current situation.

Even if I had been able to pay off my car within a few years, it still would’ve been a horrible financial decision. As soon as I drove my Mustang off the lot, it lost a large percentage of its resale value. Obviously it’s not the most fuel-efficient vehicle either and insurance is pricey. Since I’ve been unwilling to take the hit and sell it, I’m essentially tied to it.

Instead of wasting money on buying an expensive luxury car, I would’ve been much better off settling for a used Honda, Toyota or some other cheap car of good quality. If I had been smart enough to do that, I would have plenty of money in savings and would probably have committed to a mortgage by now.

Basically this unnecessary purchase cost me a lot as it set me back at least a few years with my financial life goals. If that hadn’t happened, I could have invested in Betterment mutual funds.

So what should I do now? I know some people would say to sell my car even if I only get back half of what I originally paid. That would mean fully accepting my mistake, but it would free my wallet of the very expensive monthly vehicle costs.

Jason Cabler from Celebrating Financial Freedom says “Learning discipline with money is not always easy, but it’s necessary if you want to get ahead financially. Many of these people tell me they don’t make enough money, but here’s the deal- If you have a lack of financial discipline you will always struggle with money whether you make $10,000 a year or $10 Million a year.”

Have any of you wasted money on cars that you really couldn’t afford?

Photo Source

Jeremy K. Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction. Also check out his contributions to and Benzinga.

154 thoughts on “The Mistake Of Buying An Expensive Car”

  1. Avatar for Ellisisascrub

    Great article. I wish charities like Vehicles for Change would really take off so I could get a decent car while earning 30k a year.

  2. Avatar for Deborah

    Hello a year ago I had been talked into a car purchase against my better judgement I relented and bought a car that was like the monthly payments I couldn’t. Afford even now I am running short on cash and just not earning enough for a 269.96 monthly. Payments including. The maintenance and upkeep of this car I’ve tried refinance. Nobody would talk to me actually I am on the verge of letting this car go volunteerly surrender the car any suggestions anyone?

  3. Avatar for Mike

    At 18 I financed my first used car a 2006 Scion XA with 60k miles. The car ran great without issues but one day Toyota unleashed the newly designed 2014 Toyota Corolla. I loved the car and wanted to be one of the first to own it in 2013. After weeks of research and shopping online I stepped into the dealership and bought a brand new Corolla for $20 000. Did I need it ? No but I surely could’ve afforded it. I regretted this for 2 weeks . I suffered buyer’s remorse and started pumping more into my savings account for rainy days. I asked myself why I didn’t but a used older model but that would have defeated the purpose of getting the car. I loved the newly designed 2014. Today I am happily in love with the car and have no regrets and have a better paying job at 21. I am thinking about leasing an Infinity q50 or Mercedes CLA sedan and that’s why I am here. I Feel like I am highly responsible for my age financially and wanted to show it but now I’m having second thoughts. I can afford the car but I love my Corolla. One side of me is saying to have both cars.

    1. Avatar for john

      Don’t sell your Corolla. Infinity and Mercedes cars take a ton more maintenance in addition to their high price. New ones depreciate 50% in 3-4 years.

      1. Avatar for Gordon

        Do the research. Look at CPO’s and multiple dealers. Random example: A BMW 335i retailing at 54K loses estimate 40% in 2.5 yrs. Do the research. The best way to avoid a really bad decision is to be informed. Edmunds, Truecar, and KBB are good resource to use while shopping But as always, buyers own the final responsibility for a purchase.

  4. Avatar for Kris

    I purchased a Honda Fit in 2013
    A base model . Loved it . Except for the road noise . I was very happy with it . I heard about the 2015 Honda Fit how much they upgraded it
    & made it safer & cut down on the road noise in the cabin etc . Plus it has a back up camera etc .
    One day I went to my regular Honda dealership to get my car serviced & to kill time I was looking at the new Honda Fits & a salesmen asked me if I wanted to take one for a test drive , it was pretty different than the 2013 model & after the test drive the salesman said he could get a real good interest rate for me & I had my 2013 paid way down & of course didn’t get much for a trade in .
    I regret it so much now & miss my other car & regret it now that Zi have my new car with fancy wheels , a sunroof etc . I just wish I had my other car back now Im basically starting over & the other car would have lasted me years & still had low miles . I contacted the salesman the second day after the purchase & he said no “All sales final” so here I sit with a car I really don’t want I think Ill just sell it as a loss & get something else without all the fancy stuff that doesn’t even make me happy .
    I feel like I just burned thousands of dollars and worked for nothing now to start all over again .
    If you have a good car & you don’t have a ton of $ just keep your trusty car & be happy with it a brand new car won’t make you happier in most cases it’ll make you have regrets especially turning a perfectly good car on before u have it paid off .
    Please think carefully before taking the car buying plunge .
    Wish I did …….

  5. Avatar for Jennifer

    Hello! At least I am not the only one to admit I made a mistake! I traded in my perfectly fine 2010 Hyandai Elantra which I was paying $320/mth for a 2014 Jeep Compass for $600/mth. I was upside down in the Elantra because my interest was high but now I am drowning in my Jeep payment. Does anyone have any advise on how I can fix this. I could trade in the vehicle for a super cheap car but I am already so upside down in the Jeep that my payments will probably be so high in a crappy car! Any advise would be MUCH appreciated.

  6. Avatar for santanu

    Buying a car is a necessity for every family until they buy it. But gradually that turns into a passion and people started thinking to upgrade cars as per their financial condition.

  7. Avatar for Jeff

    A couple things here… If you love your car, don’t sell it unless you are desperate for quick cash. I bought a BMW M5 last spring and my car payment is ludicrously high ($900/mo) and most people think I am crazy. However, similar to one of the posters above, I am a massive gearhead and searched for this specific M5 for almost 18 months, so I am completely happy with my purchase. With the car being paid off in a couple months, I will have significant equity and resale value of M cars has always been good. If you know what to buy and take your time looking around the market, you don’t have to lose your ass on expensive luxury or sports cars.

    Lastly, if whatever you drive, whether it’s a Camry or a Ferrari, puts a giant smile on your face every time you drive it, you have done something right. I don’t really see this as a fiscal responsibility question, but more as a prioritization question. What is more important to you? Car people spend our money on what makes us happy.

    Just my $0.02

  8. Avatar for Shane

    Excellent article. I always buy Toyota or Honda vehicles with about 60,000-80,000 miles, and they last for a very long time.

  9. Avatar for Gordon

    I started reading this post and was like, what? Big money and you bought a Ford! LOL I have spent a lot of money over the last 3-4yrs swapping out cars to find one I really liked. And after a few misguided purchases I think I found a car that makes me happy. 27K total. Yes new. I am OCD when it come to high mileage cars. (Unless it is a classic like my 74 Vette or my 67 F100) My new car has already lost value. It is a good thing I waited until the dealer wanted to get rid of it. Inherently you lose money* on all cars, its part of the cycle. The major things you should look at in a purchase is the overall cost to maintain and how much you can comfortable afford. I hit the jack pot with my last purchase. Well under budget/5yr 100k warranty/0%-60/fun to drive! Not a KIA. LOL

  10. Avatar for Avin

    Hi All

    Had an old Opel that was literally over heating every couple of days, depending on how fast the water leaked out the radiator, sometimes its dry every 2 weeks, sometimes it can happen within an hour. Got rid of it, as it was literally giving me a heart attack every time the temp goes up. It was close to 17 yrs old so yeah its really time for a new car. Got a cheap new car and regretted it at first, but my monthly installments are low and the car is known for its reliability.

    The thing is i have seen people with low income and expensive cars and high equity people with cheap cars and i can tell you that when recession hits or you lose your job, i pretty much know who will be standing and who will not be standing…..its pretty self explanatory.

  11. Avatar for Abhishek

    Guys, I seriously need some advice from you’ll, I am from India and me and my family has a net worth of 3 million$, which is a looooooot in India. Inspite of all this I still roam in a Civic and was thinking of upgrading to a C Class or 5 series sedan, should I do it?

  12. Avatar for Jay

    im 23 years old and have no money saved up i was workin a job that paid me 13$ /hr +comission nd ended up bring a job that pays approx arnd 1600 , clean at rhe end of the month(mind yu i only work 24hrs a week) i decided to go iut and purchase a 2011 bmw328xi and spent including txes and interest 34000$. Not even a month in i regret it so much. i would do anything to have a do over. i wanted to go back to skool this january to get a bachelors but these overbearing monthly payments will not allow me. monthly including this car my expses are 1900. To top this all off they cut the commision structure off at my job. All goes to show to not rely on a job completley. suggest all you gsters out there, to wait a considerable amount of time after finishing your education, buying an appreciating asset , to splurge on a depreciating asset such as a car.

  13. Avatar for Chris M

    A car should cost no more than 25% of your annual income.

    A job or stream of money is not truly reliable, even more so in this unstable economy. If you spend more than 25% of your income on your car, then you have overspent period and made a bad financial decision.

    $10k a year, better to carpool, bus it or bike
    15$k a year, you can afford a $4k car
    $20k a year, you can afford a $5k car
    $30k a year, you can afford a $7.5k car
    $40k a year, you can afford a $10k car
    $50k a year, you can afford a $12.5k car
    $70k a year, you can afford a $17.5k car
    $100k a year, you can afford a $25k car

    So, as you can see, even someone who makes a $100,000 a year if they drive around in a $130,000 new car has made a very bad financial decision and setting them back financially, basically they might as well take 2 years of income or more and just throw it in a garbage can and burn it through depreciation, over inflated repair cost, insurance, and gas guzzling. In 5 years of ownership, that car will have cost around $200,000+ and if your drive it regularly it will have high mileage and get even more expensive to maintain.

    In general, the population have made very bad choices of how to spend their money on vehicles and manufacturers are over inflating the prices of their vehicles to take advantage of that fact. The fact that a $20k car is in a mindset that its just your basic ‘starter’ car is pretty ludicrous.

    I dont know about you, but I like working and aquiring things that increase my wealth, not decrease it and make me a slave to it. The real hardworking rich people of this world drive around in modest cars cause they know the true value of money and know that a car is simply a necessary ball and chain, but know that making the weight of the ball lighter makes it easier to keep on top. Word.

  14. Avatar for Alan

    If you have no pension pot or a low one, live with parents and don’t have a deposit for a house and you are just thinking of growing up a bit then keeping that cheap run around is a good idea.

    On the other hand if you have the extra cash and have the priorities sorted then spent as much money on cars as you want if it makes you happy.

    It’s all about priorities and thinking ahead which can be a very difficult to get right.

  15. Avatar for tchron

    Chris M makes a great point and it is very true, logical, prudent and …frankly cold and dull. Word, you say, as in His Word? Or yours. Yours means nothing to me BTW, because your opinion is based on your life circumstances, as it is with each of us. I’ve read many here with buyers remorse, certainly something for the potential buyer reading this to take note of. Think of your future self, not the NOW self, like a little baby crying for his nook nook. If you cannot afford it you will be slave to it – truly I pray for each of you to remain free. This world will sell you even what you do not want – a fool and his money shall soon be parted. Thisnis age old wisdom – meaning old guys for many generations ago. 25% of your income? Maybe for some. For me, 10% of my income and never finance. Have real pride in yourself, not in your material possessions the world tells you to have. Single guy? Want a cool ride? Why to score with a chick? Why? So you can have a a baby and move into a development? Why? So you can spend the next 20 years making ends meet? Why? Sometimes I think middle America, myself included are like insects that work to survive and procreate and die. Aid that is all you are doing, then realize that is the fact and do it with less stress and live frugally. There is great reward and freedom in pulling one over on “the normal” life. Break out of it! Don’t smoke! Don’t over eat! Don’t over spend! Never borrow! Ahhh, I love being truly free. I work hard, but when the people at the office become assuming, I leave. NOW THAT is fun, because I am NOT dependent to the pay check. Really, no Porsche, Vette, or other logo beats that feeling.

  16. Avatar for Kien Quoc

    Not really a mistake. Even though you might think it is overprice for a car, but as long as you enjoy it, it shouldn’t be a mistake. I own a BMW 5 series and would never downgrade to another car. Everything comes with a price tag to it. You get what you pay for.

  17. Avatar for Chris M

    tchron, what do you find about my advice “cold and dull” I am advising people on increasing their wealth and living happier and fuller lives, a car will not make you happy in the long run, its a very. temporary excitement. it seems like you are agreeing and disagreeing with me. My 25% of your income towards a car is not a law, but just advice bro. and you confusion with me saying, word, at the end of my post is like WTF. just my way of saying bye or peace out whatever. you dont have to take or care about my advice and thats fine, whatever makes you feel better, lol

  18. Avatar for Pops

    I am an older guy and have the cash or credit to buy the Mercedes but what allowed me to reach this point in life was denying my car lust for a long time. I currently own a Mustang and a Dodge ram which both need some work.

    While buying a cheap used car for my kid the other day I walked past a 2015 CLA45 AMG on the lot priced at 46k and almost fell for it. After careful review of everything I decided against the car as the money could be invested in so many other profit generating investments and the car is a depreciating expense.

    Invest the money in something that will create income instead of just be a drain and you will be happier 5 years down the road.

  19. Avatar for Mark Kowaleski

    These are all great experiences but you should not beat yourself up. I have bought many cars in my day and never regretted any of them. For my wife I always buy new entry Lexus (RX 350 AWD) and they run forvever and have great resale. For myself I am a huge fan of buying 2 – 3 year old Mercedes S550 via CPO. They depreciate 50% and you can get a $125K car with warranty and low miles for around $60K. Amazing car! Drive it for 3 years and get most of your money back. Everyone has a vice, and that is what makes life fun. You can’t take it with you when the lights go out. Be it cars, guns, boats, houses, vacations, restaurants, whatever – you can have anything you want just not everything you want! Keeping priorities in mind, after you cover expenses and retirement planning, buy what you can afford and enjoy it. No regrets!

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