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A Reddit user regrets wasting money on cars.
He realizes his vehicle purchases were wealth killers since he wasted money on car payments and expensive insurance.
Others can learn from the OP’s mistake and build wealth instead of wasting money on an asset that goes down in value.
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Many people have financial regrets, often from when they were younger and didn't really understand the long-term impact of their choices. One Reddit poster is dealing with this issue right now and shared some of the things he wishes he had done differently.
Specifically, the original poster (OP) said he really regrets spending so much money on new cars in his 30s.
Here's where the OP made his mistake, along with some tips on how to change course — and how others can avoid going down a similar path in  their own financial life.
The OP shared his story in a post about financial regrets, indicating that when he bought a brand new car, he took on huge costs, including not just the monthly payment with interest, but also expensive insurance costs and a big depreciation hit since he bought the vehicle new instead of used.
He also explained that the "dumbest thing I ever did" was to purchase a very nice car before talking to his insurance company, only to find he was stuck with huge monthly insurance premiums.
He's calculated how much this ended up costing him, not just in terms of the money spent, but also in terms of how much he could have made if he had invested those funds in an ETF instead. Unfortunately, he discovered his decisions were a real "wealth killer."
The good news is, the poster in this case appears to have learned his lesson. He said he bought his new car in cash, and chose a cheaper car so he has lower insurance payments. He's described the experience as being very freeing since he doesn't have a car payment.
Of course, if the poster really wants to recover from his mistakes and ensure he's building wealth in the future, he'll want to redirect the money he would have been spending on a car payment towards building his net worth. Depending on where he is financially, that money could be used to save up an emergency fund, invest in his 401(k) or other retirement account, save for short-term and long-term purchases to avoid having to borrow, or buy an S&P 500 fund in a taxable brokerage account if he's already maxing out his retirement and has other long-term goals to save for.
The OP should also continue the course, making sure that he's saving money for car repairs and for a future car purchase so he can continue to avoid car payments and the expenses that go along with them.
The good news is, by reading about this Reddit poster's mistakes and his regrets, others can hopefully find a way to avoid following a similar path.
Simply put, financing a car can be a huge waste of money, especially if it is brand new and you pay interest on a vehicle that immediately loses 1o% to 20% of its value the moment that it's driven off the lot. You also need to consider the true cost of ownership, as well as the opportunity costs as every dollar you're spending on auto loan interest or on expensive insurance for a new car is a dollar you don't have to invest.
If you do not have cash to pay for a car and there is any way to avoid buying one, you should do so. Consider using public transportation or the occasional ride-sharing service in emergencies, look for a walkable area to live, or try to arrange a carpool arrangement with coworkers while you save up for a car.
If this is impossible and you absolutely need a car to go to work or school, or to take care of your kids, then you should find the most affordable, reliable used car that you possibly can and make the largest down payment you can. Finance the vehicle for the shortest possible term that you can afford, even if that means making other budget cuts while you pay it off, and be sure to check with your insurance company before buying so you can understand the total cost of ownership, including what the premiums will cost you.
Once you pay down your affordable car loan, you should keep making the payments for a while into a special savings account that you can use for car maintenance or to buy a new vehicle. Do that until you have enough to pay for your next car in cash — but do NOT buy the car at that time. Drive your old one until the wheels fall off and it absolutely doesn't work anymore without expensive repairs. And, during this whole time, use the money you would have been spending on the car to save for your future instead.
If you do this, then you'll never have a car loan again, you can set yourself up to build real wealth, and you can avoid one day looking back with regrets as the Reddit poster is doing right now.
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The post I Wish I Hadn’t Spent So Much on New Cars – Here’s My Regretful Financial Journey appeared first on 24/7 Wall St..
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