Too many people compound their vehicular overspending by trading in their cars for newer models too often. To illustrate how much of a difference it can make to trade in cars less frequently, let's use the example of twins Jordan and Morgan.
Jordan and Morgan each buy their first new car on their 25th birthday. Both borrow $20,000 for the purchase and pay off the loans over five years at 6% interest.
As soon as her car is paid for, Jordan buys another one—a pattern she continues throughout her life, until she buys her last car at age 75. We'll assume that each car is 15% more expensive than the last, reflecting average annual inflation of about 3%.
With those assumptions, Table 7.2 shows that Jordan pays nearly ...