Driving a “cheap” car as a Professional

You are a dentist or a doctor. You need to drive in style right? You’ve earned it. You want everyone to know you’re financially well off. Except most of us are not financially well off. Most of us have a massive student loan debt, massive practice debt, massive mortgage etc. But we can make the minimum payments on those things and still make the minimum payment on a fancy car too right? I guess so if you want to HAVE TO work the rest of your life. Driving a “cheap” car as a professional may not be cool. However, it is smart. Especially for the first several years.

I have a friend who is a dentist about my age (30’s). And his dad is a dentist who is in his late 60’s. His father has no idea when or if he’ll ever be able to retire. Why? Because he never planned for it. He always thought that years of a good income would just equal being able to retire. That is not how it works. It is easy to spend all of that money. Heck, there are professional athletes that have earned 10’s or 100’s of millions of dollars that go broke. It’s not that hard. It begins by just continuing to buy things. And cars is one of the biggest culprits.

I’ll admit I’m lucky in this aspect. I’m not a car guy. I’ve never looked at a car more that just a way to get from point A to point B reliably. Driving a cheap car as a professional doesn’t bother me.

However I did have the itch to buy a new car. That is until I found the White Coat Investor. I have learned A LOT from his books, blog, podcast, etc. One of those things is that reliable transportation can be had for $5,000. And $10,000 can get you a pretty good car. It may not be the most fancy, but it is plenty good enough. $10,000 should be easy enough to save for and pay in cash. Then after you buy that car, you can put a little aside every month in a “car fund” ( See my budgeting post). That way when it comes time to buy the next car, you have the cash for it.

Yes you should pay cash for a car. “But…but at 2% interest I can take the money I would use to buy a car and invest it and make more than 2% interest on it”. Maybe so, but will you take that money and invest it? Probably not. Either way, behaviorally it is better for most of us to pay for cars in cash. Yes we should make sure we are putting at least 20% away for retirement first, but then we can also save a little on top of that to buy our cars in cash.

I’m not a car guy. Is this cool? Still not worth delaying financial independence

Buying a $60k car may make you feel good for a couple months. But then you realize you’re just driving to work in it. Spilling your coffee in it. Someone scratched it. And you could have taken that extra $50k and invested it, or paid off some loans with it, or you could have taken a few nice vacations with it (Not until you have paid off your student loans :)).

I get it, some of you are car people. However, if you must have that $60k or more car, please don’t do it too soon. When is too soon? It is not an age. It is when you have at least paid off your student loans, saved a good down payment for a house, and only if you still can pay 20% every month towards retirement financial independence. And even then I’d rather you pay for it in cash.

There are many ways to spend our money. Cars is a big one. Reach your financial goals sooner by driving a “cheap” car as a professional.

-Debt Free DDS

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*Nothing on my website is professional or legal advice. I am only sharing information that I have learned and it may or may not be accurate. I am not liable for any problems you may have by following this advice. Please do further research and get professional and/or legal advice about any of these topics. This post likely contains affiliate links. This site could be paid for clicks or purchases made through these links.

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