Craig's Corvette Dilemma

Craig wants to buy a Corvette. He has the money saved, but he’s leery of spending the big chunk of cash. Dave explains that he may be tying too much of his household income in automobiles.

QUESTION: Craig in Michigan wants to buy a Corvette. He has the money saved, but he’s leery of spending the big chunk of cash. His current car is worth $15,000 to $16,000, and the new car is $35,000. He’s making $45,000 a year and about to get married. Dave explains that he may be tying too much of his household income in automobiles.

ANSWER: You’ve done a great job with your money. You’re way ahead of the game. A good rule of thumb is this: Cars go down in value pretty rapidly. The trick is you don’t want too much of your household situation tied up in automobiles that go down in value. If you’re talking about buying a $10,000 collectible and setting it in the garage, that’s a little different because that car may actually go up in value if you know what you’re doing buying it.

I can’t suggest to you making $45,000 a year and being newly married that you need to invest $35,000 in a car.

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