Too much auto financing can lead to a tough retirement
Posted on Wednesday, January 9, 2013 at 4:19:12 PM
There are a number of financial missteps that make difficult to retire comfortably, and how you handle car ownership is one of them.
Owning an automobile is a major financial investment and should be treated as such, according to MSN Money. During the course of 2011, the average household spent more than $8,000, or 13 percent of the median household income, on their vehicles.
In addition to monthly payments for your auto financing, this includes the cost of insurance, gasoline and other miscellaneous expenses, such as repair bills. Because such a large share of incomes is being allocated toward vehicles, aging Americans have few funds left over to put toward retirement.
"When the dealer is hanging easy financing right in front of you for the car you want, it's easy to forget one basic rule of the financial world: Just because a lender will approve you, doesn't mean you can afford it," GetOutOfDebt.org founder Steve Rhode told the website.
One major practice that can make it difficult to save for life outside the workforce is purchasing a second or even third vehicle before you pay off the first one.