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wealth kIller
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One of the largest expenses that most people have and it’s a wealth killer actually sits in plain sight, and no it is not your coffee habit every single day. In this post, we’re going to discuss exactly what that largest expense is as well as how you can save thousands of dollars per year by understanding the components of this cost. And also how you can actually make money with all of those savings that you have.

First, we got to understand that most households have the same major categories of expenses and that’s going to be housing, transportation, taxes, utilities, and household costs which I think I’m just going to lump that in with housing, and then food Etc.. If we can save big on these categories we’re going to save a lot of money.

The Wealth Killer

Now, can you guess here what the number one wealth killer is? Hint, it’s going to be the cost that actually varies the most from person to person here, and that’s why it sits in plain sight. It’s actually Transportation, cars are a huge wealth killer and the reason is that a lot of our society attributes success to having a really nice car or a nice ride. I think a lot of people buy nicer of a car than they can actually afford because of status.

One of the things that I discovered while researching for this post was that cars are taking away significantly from building wealth. People seem to give each other props whenever they get a new car. It’s always so nice to see your friends driving around in a nice ride however, we’re not really too aware of the financial impacts that it actually brings about because it’s sitting right under our noses and everyone does the same thing.

Where we Are

In 2023, used car prices are up again. They’re up 2.5% in January month over month, and 15.7% of people who finance a new car in quarter four of 2022 committed to a monthly payment of more than a thousand dollars a month which is the highest it’s ever been.

Crazily enough, in addition to that, we’re still seeing crazy dealer markups on many cars that are in demand. I saw a Porsche right that has a $250k, the markup which is basically almost the price of the car itself.

Lastly, the average cost of ownership to operate and own a car according to AAA in 2022 is $10,728 per year. Let that sink in a little bit, that’s a lot of money.

Recommended: How to Handle Your Finances Like a Pro

Case Study of Honda

Let’s actually outline some of the expenses of owning a car, and I’m going to tell you about how I would try to save money in every single one of these categories.

We’ll discuss about the 2018 Honda Civic, the true cost to own over five years is $43,993 which is just shy of $8,800 a year. I purposely chose a Honda Civic, it’s a pretty economic car it’s not crazy expensive, it’s also five years old, and it’s not like it’s some crazy flashy BMW that every person in their 20s really covets and really wants.

We can see that it’s still quite pricey to even own this economical car. I mean the average American salary is roughly $54K a year. Imagine owning a used car and then that cost of ownership every single year is taking up 16% of your gross salary. It’s going to be really hard to build wealth and compound our savings if we’re continually living outside of our means, especially when it comes to car ownership.

I’m not saying that having a Honda Civic should be considered as living outside of your means, in fact I think a Honda Civic is a pretty reasonable car. But I do want to draw attention to the fact that it could be costing you a lot more money than you might think.

The Actual Cost

Let’s actually break down the costs.

The biggest expense on a Honda Civic is depreciation. 99% of cars will depreciate or basically have a reduction in their asset value as wear and tear and time goes on. Car depreciation is one of the biggest reasons why I think investing your money in a car is a really bad idea, because as soon as you invest that money into a car the depreciating asset the value of that car goes down.

Essentially, you are putting your money in something that is bound to go down. If you want to save money on this category I would suggest not buying a new car. Infamously, if you’ve ever heard this, whenever you buy a new car and you drive it off of the lot, it then becomes a used car and immediately 10% to 15% is taken off due to depreciation.

If you look at car depreciation curves, you’ll see that different cars are going to have different curves. The sweet spot to buy a car is somewhere in the three to five-year used range. This is when most of the depreciation has been chipped off already but the car is still basically new enough so that it’s not going to run into a lot of problems with maintenance and repairs.

I think when it comes to cars, if you want to save a lot of money on depreciation, you want to buy a car that’s used about three to four years old, and maybe has between 30,000 and 40,000 miles. I’m always looking at that for a sweet spot and basically if you can get one of those cars you’re going to save a lot of money on depreciation.

Taxes and Fees

The next biggest category on the Honda Civic here is taxes and fees, you’re really not going to get around this one. Generally, every car that you get is going to have some sort of taxes and registration fees every single year.

If you’re a family with multiple cars, one way to reduce this cost is to just reduce the number of cars that you own. That’s a lot easier said than done. But I know some families that have three or four cars and there are only two or three people in that own household. That could save you a bunch of money because let’s say you had one more extra car than you actually need, that’s costing you fees every single year in registration.

In general, you can’t really avoid taxes and fees, so it’s pretty hard to save money here.


When it comes to financing, these are in reference to interest payments especially when you go and finance a car. Not many people will buy a car upfront with all the cash that they have, not many people have $30k, $40k, or $50k to drop on a car. What actually ends up happening is someone will put up $5,000 or maybe $7,00 down on a car and then Finance the rest with interest as well as the loan.

Interest fees are going to be super high these days because the interest rates keep on climbing and climbing. Right now I believe if you have good credit the interest rate on a car is between six and six point five percent, if you have bad credit that interest rate is going to be even higher. At this point I probably would suggest you not to even try to buy or finance a new car, perhaps go for something a little bit used or a little bit older.


Regardless if you finance, lease or you own the car outright, this is something that people always don’t really factor in. When it comes to their monthly payment they might say to themselves “yeah my monthly payment is $500 or $600 a month, but they are forgetting that gas costs them $200 a month.

If we look at the cost of fuel just for the Honda Civic, it’s $12,807 over five years, that’s an extra $2,561 per year, or about $200 a month. That’s assuming you drive it 15,000 miles a year and that can really add up, I mean there’s not really that much you can do when it comes to saving money on gas.

You could get a Costco membership and always fill up at Costco, it is a lot cheaper to fill up there so you could save between $5 and $8 every time you fill up, and that could add up over time if every single time you fill up your car you go to Costco.

You could also buy an electric car but that’s not always feasible and honestly electric cars are really expensive these days. I mean hopefully in 10 to 20 years everything is going to be moving towards electricity and more fuel efficiency however, right now, I don’t really see us like just stepping away from fossil fuels anytime in the next five years.

Assuming you have a car right now, you are probably going to be spending money on fuel for at least the next five years. Honestly, I think gas prices are just going to continue to go up over time.


Insurance for the Honda Civic is $6,949 for five years, or $115 extra per month. A good tip I got from someone while researching cars was that every single year, he marks down a certain date on the calendar, and right on that date he calls his insurance company and sees if he can get a better rate on his insurance. And if he can’t do that then he’s going to shop around for different rates at different insurance providers.

The thing with car insurance is that many places will offer you similar or even equal Insurance to your current provider, and every insurance company knows that if they get you as a long-term customer you’re worth a lot to them over time.

What you can do once a year is let’s say you have AAA Insurance, you can use that AAA insurance policy that you have, call around to different places call State Farm, call Progressive, call Geico, see if you can get a better rate for your exact same coverage.

Oftentimes these companies are going to try to undercut each other and often you will get a better deal saving you a lot of money in the short and the long run. This is something you can even do with utility bills. You can call utility bills and see if they’ll offer you a promotional rate.

Repairs and Maintenance

Repairs and maintenance are the final two parts and these are hard costs to really reduce unless you know what you’re doing around a car. With YouTube tutorials these days, you can actually learn how to do basic maintenance on your car if you’re willing to learn and put in the time and effort.

For example, changing your oil is not super difficult. You could watch few-minute tutorials for example from Chris fix, and you can learn how to change your oil. Then every subsequent time you change your oil, you’re probably going to save between about $100, $125, and $150 on labor.

If you think about how many times you’ll have to change your oil in your lifetime, that means watching that YouTube video on how to do it is going to save you a bunch of money in the long run. Cars are supposed to get their oil changed every 3,000 miles, so let’s say you drive 15,000 miles a year that’s five oil changes per year.

Imagine you’re the age of 30 right now, and you want to drive until you’re the age of 75, let’s pretend, 75 that’s the hard stop. That’s 45 years of oil or about 225 oil changes.

For simplicity’s sake, let’s say you only do 200 oil changes over your lifetime, not 225 because you know you miss things and you know maybe you want to go to Disneyland and just totally forget. Let’s just say 200 even every single time, that’s $20,000 over the course of your life that you could be saving if you just watched a 20-minute YouTube tutorial, and then just change the oil yourself every single time.


Another thing that you can do is whenever your check engine light comes on, you can go to a place like AutoZone and they have a free diagnostic tool. You just go there, they tell you what’s wrong with your car, and then you can decide what you want to do with it. What they’re actually doing is running an OBD2 scanner into your car and then telling you what’s wrong with the car.

This way, you’re not running to the dealership every single time that your check engine light comes on, and you can actually buy one of these scanners yourself online. Once you figure out the problem, you can then assess what you actually want to do.

Last Tip

My last tip here is that if you can go without a car, that actually might be the best ultimate solution that you can have. Let’s pretend you don’t have a car and let’s say you save $10,768 or the average cost per year of ownership, and instead, you take that money and you go invest it in yourself or you invest it in the stock market.

What if you took ten thousand dollars in Microsoft stock? Well, Microsoft stock has done really well for the past five years and it’s almost tripled in that time. That means your ten thousand dollar investment would be worth closer to thirty thousand, and who knows what it would be worth in another five or ten years.

That’s just one example, obviously, I chose a really good example where your money triples, and you could also lose your money. But the idea here is that the opportunity cost is so great because not only are you paying ten thousand dollars for the cost of ownership of the car, that means you’re not having that ten thousand dollar work for you elsewhere.

Living Close to Where You Work

Another thing that you can consider is just living closer to where you work. A lot of people commute to work in their cars and that creates a lot of wear and tear, depreciation, fuel costs, Etc. If you have the option to live closer to where you work but the rent was a little bit higher, let’s say it was $200 more per month, you actually have to do the work and figure out is that worth it to you in dollars and your time.

Definitely could be worth it, you could be paying $200 more per month for a place that’s closer to your work. But now you don’t have to drive as much, saving you fuel, depreciation, maintenance, wear and tear, and all that good stuff, it could actually amount to a lot more of savings.

People would drive 45 minutes regularly or even an hour just to get to work, these costs add up so fast. Consider where you live and where your workplace is, and you know when you are applying for a new job. That’s something you can consider as well.

With car prices still going up and trying to keep up with the Joneses these days, try not to succumb to owning a car that you can’t really afford.


To recap, number one, if you are trying to buy a car try to buy it in The Sweet Spot of the depreciation curve, usually three to five years used. Number two, shop around for insurance every single year. Number three, try reducing your fleet if you have multiple cars for the same household. Number four, try to consider living closer to work.

Alright guys, I hope that you had some value from this article, thank you for being here let me know what you guys think with your comments. Peace and Happy Hustling!

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