This Thrifty Rule Number 4 is going to tell you how Martha advises her grandchildren to buy a car.
When buying your first car, save your money, and buy the best car that you can for that money. Do NOT take out a loan. While using that car, try to save, say, $200 per month, or what you would have spent on a car payment. If you can get that car to last for 24 or 36 months, you will now have $4800 to $7200 dollars to spend on a “new to you” used car, plus any monies you may get from the sale of your first car.
Do it again, and at the end of that second period, your second car may have given you a little more time, so you will have more money. Plus, you may get a bit more back for that car. So say your car lasts you 4 years, at $200 a month, you have now saved $9600, enough for a very nice used car. Go five years the next time, and you have $12000. If you start this at 18 or 19 years old, by the time you are 29 or 30, you can buy a very good used car or lower end new car for cash.
Now, let’s be clear here. Martha still does this, but since she uses her car for just getting around and not as a status symbol, she goes 6 or 7 years with the same car. She puts away $300 a month, so in 7 years she has $25,200. She bought the same Nissan Rogue I have, for cash, and immediately started saving for a new car.
If your car is your status symbol, this won’t work for you, so ignore all of Martha’s advice. But if you can see a car as simply a way to get around, as many people who have “old money” and are able to keep it see it, this will be a huge savings for you. You are the bank, so you don’t pay interest to anyone else.