Spending

Side-hustle pros with 8 income streams: This money move saved us nearly $20,000

Buying an expensive or new car is "one of the most common financial mistakes people make."

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When Craig Clickner left his job at GE in commercial finance and Carrie Bohlig left hers as a preschool teacher, the two weren't exactly sure how they would make ends meet. Now, Clickner, 43, and Bohlig, 38, have 8 income streams and a business that nets $3 million per year, and they've written the book "So You Want to Start a Side Hustle."

One way they reached financial stability was spending their money more intentionally. They cut back on little expenses, such as cable and drinking alcohol at a bar or restaurant. They also cut back on one big expense: transportation. "Despite making a healthy income, and stepping away from our traditional jobs in our 20s and 30s, we have never purchased a new car — nor will we ever," Clickner says.

In 2010, the couple bought a 2007 Lexus ES350 for $21,600. At the time of the purchase, the car had 20,000 miles on it. Today, they estimate that the vehicle, which has 190,000 miles on it, is worth $3,000. A comparable new car would have cost them $37,000 at the time. If they had put the same number of miles on it, the car would likely be worth $4,000 today, only $1,000 more.

Overall, they estimate they saved $18,229 by purchasing a used vehicle: $15,400 on the initial purchase, plus $880 in sales tax, $200 in closing and licensing fees, $2,249 in financing charges, and $1,500 in insurance.

Here's why the couple will never buy a new car, and how to shop for a used one.

Cars 'depreciate [in value] over time'

Buying an expensive or new car is "one of the most common financial mistakes people make," Clickner says.

For one, cars depreciate, or lose value, over time. "A new car you buy today for $30,000 will be worth maybe $3,000 10 years from now," he says. If you instead invested "that same $30,000 in the stock market, or even a home," you could grow your wealth, thanks to the power of compound interest.

Also, he notes, a car is much more expensive than the sticker price makes it seem. "The more expensive a vehicle is, the more you will pay in sales tax, car insurance, and interest if you are borrowing," he says. "So, if you buy a car for $30,000, you might actually be paying $40,000."

How to shop for a used car

The preowned car market has been hot this year, but prices are finally trending downward, according to automotive resource site Edmunds. The average price of a used vehicle was $26,308 in August — a 3.4% decrease from July when the average price was $27,245.

If you're shopping for a used car, there are some general rules you can follow to ensure you're not buying something that will break down or require a lot of maintenance, Scotty Reiss, founder of A Girls Guide to Cars, told Grow.

After all, there is no point in buying a used car if the cost to take care of it offsets any savings you might have netted. "If you're spending more than about $4,000 a year on maintenance, then you probably should look a little deeper and find something that's not going to need $4,000 a year in maintenance," Reiss says.

Despite making a healthy income, and stepping away from our traditional jobs in our 20s and 30s, we have never purchased a new car — nor will we ever.
Craig Clickner
Author

Don't go too old, Reiss says: "I think the sweet spot [for used cars] is 3 to 4 years old with 30,000 to 40,000 miles on it."

Generally, newer cars will have more features you want, she adds. "It hasn't had the wear and tear on the engine and interior," she says. "It also probably has newer technology. Things like Apple CarPlay and a rearview camera. It may have parking sensors. Some of those premium features, on a 10-year-old car, you might not find them."

Along with missing amenities, older cars might not have the safety features you want, Emilie Voss, a spokesperson for CARFAX, told Grow: "Airbags or antilock brakes, some of those things didn't become standard until the late 1990s or early 2000s."

For any car you buy, remember to check the vehicle history, get an independent inspection of the vehicle from a mechanic you trust, and take it for a test drive.

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