“An investment in knowledge pays the best investment.”  ~ Benjamin Franklin

The basic math of a new car purchase can be a million dollar decision. For me, having money means freedom, and freedom means not having to kiss quite as many asses. In my opinion, buying that new car really slows me down. Here’s the way I see it. The assumption is $10,000 cash to work with and 25 years old when purchasing.

New car: Used car:

$50,000 purchase price $9,200 purchase price

  $6,000 down             $800 sales tax

  $4,000 sales tax =$10,000

$44,000 loan – 6.5 to 7 years

=$653.40 per month, multiplied by

12 months = $7,840.80 x 7 years

equals $54,885.60 principal and interest

Total new car cost, not counting

higher taxes and insurance: Total used car cost:

$64,885 $10,000

But that is not the end of the story as I see it. Assume you buy the used car and invest what the new car purchaser was paying monthly at an 8% return, then never invest any more after seven years.

$653.40 per month x 12 months = $7,840.80 x 7 years comes out to $54,885.60.

Assuming no additional payments were made the value at age 65 is $1,017,580.

Again, we can argue about the math, but we are talking principles. This is just one of many examples that demonstrates the power of compounding combined with good decisions, and a long run of time. That combination can give you a high lift towards “getting a life.”

*Point to ponder – compounding and bad decision making works in reverse, making it extremely hard to succeed. Recognize this and invest time along with effort in better decision making.

“Know that it’s your decisions and not your conditions that determine your destiny.”  ~ Anthony Robbins