Hey folks, one thing I will tell you, as I’ve been saying in the Money Guy’s radio show, is the fact that as much as a new car looks nice and makes you feel good, the reality is that the new car purchase just simply does not make financial sense. You may want to feel good showing off your driving skills on GA 400 with your new ride, but ultimately it is one of the largest recurring financial decisions you will make in your life.

Since 1993, I have not bought a new car. The reason being is a new car is one of the worst investments that you can make in your overall portfolio. It may make you feel the best now, but it’ll make you feel the worst later when you look at the math of what happens. When you go into a new dealership, and I don’t care if you decide to lease a car or buy a car, as soon as you drive off a lot, the value of that car goes down. Fact of the matter is you pay retail value, and when you bring the car back, you ultimately will be able to bring it back at wholesale value so it immediately loses value.

On average, a car will lose about 20% of its value every year for the first 2.5 to 3 years. (According to Kelley Blue Book) so let me give you an example. You go into a Mercedes-Benz dealership, and by the way, Mercedes-Benz is a nice car. You go into the dealership and buy a 2008 Mercedes-Benz E class 4-door E320 Bluetec sedan. That’s going to run you around $50,000 on a standard package. That’s without the perks. That car, in a Kelly Blue Book value, one year later, in a Bluetec E320 Mercedes-Benz sedan will be a 2007 trade-in number of around $39,150. That means your 50,000 has lost just about $11,000 in the first year. You wouldn’t give your money to a financial advisor and expect that. If you look at an E320 two years later, a 2006 trade-in is about $32,100, so that represents about an $18,000 loss over two years. You certainly wouldn’t accept that from your advisor.

The moral of the story is this, folks, is that I’ve seen that when you look at the cars today, a two year old car almost has the same body style and has the same interior, just short a few gadgets from where your model is today. Can you deal with the fact that you drive down GA-400 or I-285, and you’ll look almost as cool as you were in having the new car. You can e-mail us by visit OxygenFinancial.net , or you can call us at 770-777-0427 to schedule an appointment with one of our private CFO’s.