1) The next time you buy, get a less expensive car. That’s both in terms of the purchase price and expected maintenance. Do some research and buy one for about the same price that will cost less to take care of. You won’t feel like you sacrificed. You’ll feel like you did yourself a favor, year after year.

2) Wait. Hold on to your current car another few months, another year, another 2 years. Every month that you aren’t making car payments is a month during which you can save for the next one so that you don’t have to finance it.

3) Maintain your car properly. It’ll get better mileage, which will save you money. It’ll break down less often, or maybe not at all, which will save you money. It’ll last longer, which will save you money. And when you trade it in, sell it or give it to charity, it’ll be worth more.

4) Okay, you can’t pay cash for a car and you need one. Make a bigger downpayment and finance less. Pay it off quicker. Be careful. Some car loans apply extra payments to the end of the loan. To put it simply, the only way to pay off the loan early is to pay off the complete balance. That may be hard 6 months into the loan, but it should be much easier a few months from the end of the loan.

5) Plan your trips. Yesterday, I got haircuts for me and both of my kids in one trip. We picked up a gallon of milk on the way home too.

About a year later I finally did the math and realized I was paying $200 a month on insurance, $120 in car payments to my parents, $60 on gas and the occasional parking ticket. The only time I used it and really needed it was the once monthly trip to see the girlfriend. I sold the car back to my parents (who needed it since my sister had just gotten her license and one car wasn’t cutting it anymore), bought a $300 bike, and started paying $160 a month for a train ticket.

I consider myself pretty uninterested in material possessions and status symbols (I’m a grad student for crissakes), but even for me getting my own car was a symbol and a life event that totally blinded me to the real cost.

http://www.jongasm.com/car-guide.html

@LazyMan – LOL, good point, you got me on that, what can I say. Still, I suspect that many of the folks I see driving around in shiny new cars are spending sums that are quite material relative to their income or NW. In NYC there is little need to own a car, as I am a prime example. So, my point was that if I feel that a car is a luxury I cannot really afford (given that I am still aggressively saving for retirement and I think I’m further ahead than most in the saving dept), then how do other people (in NYC) get comfortable with the expenditure. FYI, in my area, insurance alone on a new luxury car is $3000/year, garaging a car is up to $350/month, and parking tickets (really just another NYC tax) will run you $150/month no matter how careful you are. You get to a cost of $10K per year for a car in NYC before you’ve even thought about the acquisition costs.

Secondly, I wouldn’t count fuel as a car expense. Well maybe I’d consider it half a car expense. For most people the fuel use is due to their work commute. If you can live close to your work, you’ll have very low fuel costs compared to those who live far. For this reason, I consider it largely a housing cost. I can easily just move within a mile of my work, but that means my home will cost me an extra $150,000. Miguel (see comments) seems to experience this New York. I’m guessing that he’s close enough to his work that he can take public transportation and keep his car costs down to next to nothing. However, I bet his housing is several times more than what the average households’ is.

Sometimes it’s a trade-off, like many things.

One thing I’ve noticed is that once people get in the habit of buying nicer cars, they never go back to _less_ nice cars. If somebody decides to go all out and get an entry level 3-series BMW (which isn’t _that_ expensive), their next car will undoubtedly be a sportier version, and the next time around they’ll move up to a 5-series.

It’s pretty certain that they’ll never go back to a Hyundai.

The other thing I’ve noticed (from personal experience) is that the rush of new car ownership lasts all of about a week. Then you’re just driving an old car again.

The problem is this sets a financial pattern that’s hard to break; if you bought an expensive car out of school, you’ll make big payments on it, which will hurt your ability to save money for other things. Also, you’ll get overly comfortable with the idea that you have ongoing consumer debt – how many people regard a car payment as a standard part of daily life? Most people, I’m afraid.

My strategy is pretty standard tightwad stuff, although I’m not so averse to buying new: we buy nearly new cars, pay cash for them, and drive them at least 150K miles (takes us about ten years) before considering the next car. We carry minimal insurance other than high liability, and drop to “liability only” after the car goes over 100K miles.