What if Everything Depreciated Like New Cars?

What if Everything Depreciated Like New Cars?

What if everything depreciated like new cars

Out of all the things I’ve written about on M$M – cars are by far my favorite. Every time you mention a new car in the personal finance world, you get some really interesting discussion/commentary from readers that will defend their position harder than politics.

So far what I’ve noticed is that readers are divided into four groups:

  1. They really try to avoid driving new cars (and a lot of the De$troyers drive stuff that’s even older than my 04 Yukon!)
  2. They bought a new car and then realized they didn’t like the payment, and are now working on paying it off early.
  3. They like new cars and think I’m a jack@$$ for saying it’s not a good financial decision.
  4. They are legitimately “car people”, and are truly passionate about cars.

All four of those are fine, and I’ve really learned that people are going to do whatever they want anyways. I just try to provide my thoughts on cars, and hopefully people get value from it.

Related: I Deserve a New Car, Right? Wrong.

One thing we can all agree on is that cars lose value freakishly fast

When I was doing research for this post, it was a little tough to nail down the exact amount that a car depreciates when you drive it off the lot.

The amounts ranged from 10% – 20%, so I think it’s fair to say that there is a pretty significant drop in value right after you make the purchase.

So that actually got me thinking – what if EVERYTHING in life lost value almost instantly like new cars. Not only would it totally suck, but it also shows how ridiculous it really is that they depreciate so fast. 🙂

Here are some examples I came up with:


After months of searching, you and your spouse buy your first home for $200,000! Your realtor hands over the keys, and as soon as you unlock the door the house is worth $180,000.


You finally are able to make a big contribution to your 401k!!!!! You log in, type in $10,000 and click submit. The website asks you to confirm your $9,000 contribution as $10,000 comes out of your bank account.


The perfect doggie came across your news feed and you head to the shelter to adopt your new best friend. You sign the paperwork and your buddy instantly becomes 10% less friendly and develops a limp (I would have used cats but we already know that they’re a-holes).


At the alter, you both say “I Do” and simultaneously remember something you don’t like about each other.


You’re at the drive through and need to get a quick lunch. You order a #1 and pull up to the second window (because nobody uses the first one anymore). They open the window, sneeze directly on your fries with precision, and then hand it to you.


For all these months, you’ve been working so damn hard to impress your boss and over-perform. He finally calls you into his office and congratulates you – you’re getting that well deserved promotion. Your desk immediately gets moved to the basement and someone stole your red Swingline stapler.

*Bonus* Sports Game Tickets

My wife and I were brainstorming different things that would suck – and I thought this one was pretty good. You take someone out on a date to a sports game and have KILLER tickets. As soon as they scan your ticket at the front gate, your seat gets moved to ten rows higher than you thought it would be (with a crappier view).

Related: 10 Used Cars You Can Buy for Under $10,000

My thoughts on new cars…

To be clear – I don’t think that people who buy new cars are dumb or anything along those lines. But the reality is that it’s just not a great place to put your cash. They lose a lot of value quickly. Period. Unless it’s a collector car, you just won’t see that value back.

Do you need cars to get to work and carry out your life? In most cases, absolutely. But my fear is that a lot of car buyers associate them with a social identity that doesn’t actually matter to anyone. If you have a nice car, your friends will mention how great it is on Facebook or Snapchat once or twice, and then literally not ever care about it again.

If you take anything away from this post, it should be this:

Car companies spend billions of advertising dollars to convince people to purchase new cars. As a person who would LOVE to have something nicer than my $6,000 Yukon, I know that a nicer car only takes away from my goals of financial freedom rather than add to the quality of my life.

Don’t give in to the advertising, and avoid the ridiculous depreciation they bring if possible. If you do buy a new car, drive it into the ground and be proud of how long you keep it rather than how new it smells.

Question for you:

Can you think of any other depreciation examples? (I couldn’t haha)


Live differently. Your bank accounts will thank me later. ~M$M

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59 comments… add one
  • ahahah Feb 13, 2017, 7:45 am

    I’m on both sides–I drive an ’03 RS6 that I paid cash for, but I lease a new Ford for my wife. I’m sure the lease isn’t the slickes financial move but I figure the extra we pay on the car/insurance for that one buys her piece of mind and one last problem I inevitably have to solve…

    • Millennial Money Man Feb 13, 2017, 7:52 am

      I actually haven’t done a post on leasing, but it kinda falls in the middle of the spectrum for me. 03′ RS6 look like nice cars! I wonder if they have the timing belt issues you hear a lot about with Audis.

  • Allesan Feb 13, 2017, 7:55 am

    Happy owners of 2 paid off vehicles! A relative drives a car that cost more than half what we paid for our house (let that sink in!) and has the nerve to laugh at our beaters.

  • Mike B. Feb 13, 2017, 8:01 am

    Ouch, or tickets to a movie premiere where you get ushered into the very back row. Even though you bought them in advance, online! Great analogies, lol.

  • Mad Money Monster Feb 13, 2017, 8:04 am

    This is such a timely post. Cars are liabilities, not assets. Unless, like you said, you’re a collector and buying something that will retain or increase in value. Although I suspect anyone in that category isn’t reading personal finance blogs. Just a hunch.

    Sadly, I regret trading in my 1999 Chevy Malibu 3 years ago to buy a used Mazda 3. Granted, the Malibu had over 200k miles on it, so I definitely drove it into the ground – but it still had life left in it. Oh well. I made a non-ridiculous purchase with my Mazda and will subsequently drive IT into the ground. I hate it when my friends make ridiculous purchases and then complain about not being able to easily afford their rent. Ugh. Let’s hear it for 1999 Malibus and 2006 Yukons! …and the crowd goes W.I.L.D. 🙂

    BTW, I’m reading this in a car repair shop because I brought our car in for a leaking tire and am now replacing all 4 tires and rear brake pads. This will cost me about $600 today. Of course, I knew the tires were shot and believe the brake pads are as well. Our mechanic has a great reputation and I’ve been coming here for years. It just goes to show, on top of any payment, you also need to factor in repairs and regular maintenance. They can be a HUGE money suck if you don’t have extra cash.

    • Millennial Money Man Feb 13, 2017, 8:06 am

      Haha maybe car collectors are, who knows? I know this won’t help you but $600 for 4 tires and rear brake pads actually sounds like a decent deal to me. 🙂

  • Mrs. Picky Pincher Feb 13, 2017, 8:19 am

    Hahaha, these are some pretty good ones! It’s funny how fiercely people debate about the car payment issue. I fall into the “oh crap I bought a new car and realize it was a bad decision” category. Since I’ve been burned plenty of times by used cars, my focus will be on used cars that are 1 – 2 years old. You still never really know what you’re getting with a car, so why not save some money anyway?

    • Millennial Money Man Feb 13, 2017, 9:08 am

      Yeah people get pretty crazy about it sometimes – you should see some of the stuff on my Facebook posts about cars!

  • FinanceSuperhero Feb 13, 2017, 8:21 am

    This post came just in time to save countless poor souls from all of the President’s Day sale ads about to hit the airwaves today.

    Here’s another fun thought: imagine if advertisers had to disclose the rapid depreciation on new vehicles. “Check out this new Honda Fit! It’s fully loaded and ready to drop $1,900 of its value when you drive it off the lot.” That would be a game changer!

    • Millennial Money Man Feb 13, 2017, 9:09 am

      Haha I’ll be honest, I wasn’t even thinking about ads but that’s a good point. THAT would be awesome if they had to disclose it.

  • Kevin Feb 13, 2017, 8:24 am

    My wife and i have 3 cars all paid cash for. The newest is a 2005 F150. The oldest is a 2002. The lowest mileage one has 119,000. The highest mileage is our Subaru (aka dog car) that has 228,000. We plan to run everyone of them into the ground. I especially like to tell people how many miles we have on the Subaru. Our next goal is to hit 300,000 if the rust doesn’t take it first, Wisconsin winters can be hard on them.

    • Millennial Money Man Feb 13, 2017, 9:09 am

      Dude nice on the three paid off cars! Smart call having a dog car – we just got a dog so it’s definitely been interesting to see how he messes up mine constantly. 🙂

      • Kevin Feb 13, 2017, 2:47 pm

        I’d prefer to only have two cars but since the Subaru has so many miles it isn’t worth anything to anyone but us and the dogs love going for rides in it so we keep it around. Thanks for your blog updates.

  • Megan Feb 13, 2017, 8:38 am

    I “drive” the bicycle I bought used in college (over 10 years ago) for about $200, and I have a kids’ bike trailer I was given for free that I can use to haul groceries and larger loads. I live within 5 miles of everywhere I have to go on a regular basis (work, church) and in the winter months I buy a monthly bus pass for $95 because I’m not quite brave enough yet to ride in the snow and wind (this is Cleveland after all). I love that I can walk, ride, or bus to work, the grocery store, almost everywhere I need to be. I realize this isn’t a reality for everyone, but I think we’ve become far too reliant on cars in America. I am putting some money aside to buy a car, because when I visit my family 6 hours away I rent, but I definitely won’t be buying new and having spent most of my adult life without a car, I still plan on walking, biking, or taking the bus as much as possible.

    • Millennial Money Man Feb 13, 2017, 9:11 am

      Jeez I know it’s not realistic like you mentioned, but how cool would it be to never need a car? I used to want to ride a bike to work when I was a teacher but I never pulled the trigger unfortunately.

  • Mountain Man Feb 13, 2017, 8:54 am

    Another example: what if this applied to diamond engagement rings/wedding bands? This is another highly marketed and advertised arena…and a focus of foolish rivalry in social circles. Imagine the excitement of finally finding the partner you wish to spend the rest of your life with, walking into the jewelry store to shop for a beautiful engagement ring for $$however many thousands of dollars$$ and then having it depreciate 10-20% as you exit! It would be even worse if it continued to depreciate like autos over the ensuing years.

    In my opinion, this is another milestone purchase where we as buyers (and wearers) lose perspective on why we’re there in the first place and what we as couples are working towards long term. I’m all for displays of romance and (bridled) grandeur, but perhaps an additional dash of prudence when making this decision could really set couples on a different financial course. Just by doing one’s homework and/or reducing the amount spent by a fraction could easily help with a down payment for a house, eradicating debt, etc.

    • Millennial Money Man Feb 13, 2017, 9:12 am

      Yeah it’s definitely a milestone purchase, and a LOT of people waste money on diamonds because they don’t understand that a .90 diamond can look the same as a 1 carat without the premium attached to it.

  • Financial Panther Feb 13, 2017, 9:53 am

    The car thing is just so interesting to me. I’ve always lived in cities and never owned a car. My parents didn’t get me one when I was a kid and I couldn’t afford it, plus I took the bus and train everywhere.

    I know some people just love their cars a ton, but I’ve never understood the appeal. Obviously, it depends on where you live, but I feel like most millennials live in places where cars aren’t even a necessity. Especially since you can bike, Uber, Car2Go, it’s pretty easy to get around without needing a car. But, I am in a bubble of city living, so maybe it’s not the same for other millennials.

    • Millennial Money Man Feb 13, 2017, 12:56 pm

      It’s interesting to me too – I just don’t have the bug for cars, but a lot of that is because the wealthy people I hang out with don’t care too much about them either. A lot of it has to do with your surroundings in my opinion. Living in the city does seem like it has perks!

      • Andrew Schwartzenberger Feb 13, 2017, 1:50 pm

        “A lot of it has to do with your surroundings …” You nailed it. I’m from Metro Detroit. You’re almost “into” cars just by growing up in the area. And cars aren’t always just a mode of transportation here — they are a part of the culture.

        I was flying home from San Fran a few years back, sitting next to a woman who worked for Google; she was flying to Michigan for the first time. As we chatted about our respective careers, she mentioned something like, “almost everyone in the bay area works in tech.” I said that in southeast Michigan almost everyone, in some way, works for one of the Big Three. She had NO IDEA who the “Big Three” were/what it meant. I thought that that was common knowledge.

  • Michael @MurphyOnMoney Feb 13, 2017, 11:18 am

    You ride with just one airline on all your business and personal trips for the year so you can get that premium status and those free upgrades! When you finally accumulated enough frequent flier miles you’re surprised to find that your upgraded status has you auto booked in a center seat all the way in the back by the bathrooms. What’s worse than the smell is they also allow (force) you to check your bag because your upgraded zone 3 boarding status left you with no available overhead space.

  • Andrew Schwartzenberger Feb 13, 2017, 11:19 am

    Just a thought — I’ve heard the “it loses value the minute you leave the lot” argument many times. But the value lost on a new car purchase only matters if you sell it right after drive it off the lot. Who does that?

    I bought a brand new Ford Focus in 2006 … and I still drive it. Did it lose value after I drove it off of the lot? For sure. Am I felling that hit? Nope, because I didn’t sell it right after I bought it. It’s got 130,000 miles on it and I plan on putting as many miles as it will take.

    For me, the new car was the way to go. I knew I was getting a vehicle that only I had driven, so I knew that the car would perform as long as I maintained it. I had the initial peace-of-mind of having a new car, and I am enjoying the long-term benefits of having a car that is paid off, well(ish) maintained and will (hopefully) give me a few more years of transportation.

    Now, imagine buying a used, two-year-old vehicle that the previous owner leased. That owner may have driven the car into the ground, rarely changed the oil or had regular maintenance schedule — because, who cares if you’re just going to turn it in and get a new car, right? Then, you go to the dealership, get a killer “deal” on a car that someone abused, and now you’re left with a vehicle that may be subpar, prematurely breakdown and cost a lot in maintenance and repairs, etc.

    Another thing to consider is the many safety upgrades that are becoming standard on new vehicles that didn’t exist in the early 2000s. Take stability control for example. Modern production vehicles must be equipped with stability control — and for most drivers, it’s a magical feature that can save you from spinning out. Rollover protection systems, stronger frames, better air bag systems, etc., etc. … all of which add peace of mind and could potentially save you from a wreck. Hard to put a specific number on, but a very-nice-to-have for many car shoppers.

    Just my two cents. I enjoy your posts, btw.


    • Millennial Money Man Feb 13, 2017, 12:54 pm

      Hey Andrew – thanks for sharing! Like I mentioned, I’ve just learned that everyone kinda falls into a different bracket with the car arguments. Always cool to hear other sides though. I agree that most people won’t see that drop immediately, but you do see it when you eventually sell the car. The depreciation is just realized later, but the money is still gone! 🙂

      And yes I hear the safety comments from time to time and largely agree. If I had kids, I’d consider something a few years newer than what I have now just for the side curtain airbags circa 2006ish. The reality though is that car deaths are starting to increase again even with the new safety features…because of cell phones. Most people would be better off to put their phone in their pocket rather than have the newest safety features available.

      • Andrew Schwartzenberger Feb 13, 2017, 1:26 pm

        Thanks for the quick response. I agree with the phone usage. Though I’ll say that stability control is one hell of a magical feature.

        I know many OEMs are trying to minimize phone-related distractions while driving (Apple CarPlay, Android Auto, Bluetooth connectivity, etc.), which, I’d say builds a case to buy a newer (or new) car, but as you point out, accidents and deaths have risen from 2015. (Enormous touchscreen displays probably don’t help either.) It will be interesting to see if, over time, hands-free technology helps reduce distraction or adds to it.

        Truth be told, the only vehicle feature I feel like I’m “missing out on” is Bluetooth (or Apple CarPlay … that system is pretty sweet), because I like to stream music and podcasts while I drive, and I can’t in my Focus (not even an aux jack! C’mon!) Although, I’m only an aftermarket radio away from that kind of connectivity.

        We lease our family car and, so far, I’m a fan of leasing. I know it’s not always the best financial long-term decision, but it works the best for us now. It’s a reasonable monthly payment and comes with peace of mind — something my Focus doesn’t always provide.

  • Millionaire By Forty Feb 13, 2017, 11:38 am

    It’s not just the initial drop in value of cars that stinks, but the long-term maintenance can be killer, especially for German sports cars. I wrote about some mistakes I made when I bought a BMW — thought I made a good deal and bought the car outright. Little did I know that I would spend $4,018.51 (not including gas) in maintenance over the 6.5 months of ownership. NOPE! Got rid of it and got a Ford sedan instead. One of my worst financial mistakes.

    • Millennial Money Man Feb 13, 2017, 12:47 pm

      Yeah I definitely see mixed reviews from the German cars from readers – some swear by them for the longevity (especially the diesels), and some have stories pretty similar to yours. $4k in maintenance that quickly does suck though.

  • Dan Feb 13, 2017, 12:08 pm

    I would argue that a home does depreciate ~10% the minute you sign on the dotted line. It will cost you 7-10% to sell it the minute after you buy it due to realtor fees etc.

    Not being picky, just pointing it out. I remember when stamps would randomly “depreciate” in that a 34 cent stamp you bought last week now needs 3 cent stamp to be usable… thanks forever stamps.

    New to the site, looks good. Cheers.

    • Millennial Money Man Feb 13, 2017, 12:46 pm

      Hey that’s actually a good way to put it! I’ll keep that in mind the next time I’m writing about homes. Glad you found the site! 🙂

  • Ace Trainer Tojo Feb 13, 2017, 1:07 pm

    What about cell phones? I’ve had this one for almost four years since buying it the day it came out, and it has definitely lost value. I had a replacement refurb from the cell phone company thanks to my warranty and plan on using it until its final charge.

    • Millennial Money Man Feb 13, 2017, 1:55 pm

      That’s a good one! I hate talking about cell phones – I’ve dropped mine twice in the past month and destroyed the screen both times 🙁

  • Alex Feb 13, 2017, 4:08 pm

    Cars are a very interesting topic in the PF world. For me, they are a hobby and a passion, and when I feel comfortable I will buy one of my dream cars, the Subaru wrx/sti. This is a tuner/fanboy car if you will, and they are notorious for keeping their value. Brand new you can get them for about $27-28K the base model, and 5 years later you will easily get $20k for it with average miles and a clean title.

    Subaru’s as a whole do an amazing job of having a strong resale value, they always get the #1 spot by KBB, and they are just all around great cars.

    • Millennial Money Man Feb 13, 2017, 4:34 pm

      Haha that’s so weird – I literally just saw one of those cars two days ago. Always wanted one when I was in high school (right around when Fast and Furious movies started coming out). Also wanted a Supra!

  • Go Finance Yourself! Feb 13, 2017, 9:08 pm

    Here’s mine. You’re running a marathon and reach mile 25. Just over one more mile to go. You’re about to lose it mentally and physically, but you have enough to power through one more mile. You then get picked up by the race administrator saying your mileage is getting a 20% haircut, and they’re putting you back at mile 20.

    Like a lot of people with a good paying job right out of college, I bought a new car. Spent $27k on it. I don’t completely regret it, but I do realize there were definitely better ways to spend my money. I’m still driving that car today, 11 years and 145k miles later. My goal is to get at least 250k miles on it and see if I can get to 300k. If you keep it that long, then the cost of buying new doesn’t matter as much.

    • Millennial Money Man Feb 13, 2017, 9:39 pm

      Yeah I agree – keeping it for that long gives you better value for sure. Thank goodness I don’t run marathons haha

  • Peter Feb 14, 2017, 3:07 am

    Good points. Imagine this. You are in a restaurant. You order a steak. When the waiter put it in front of you on the table he cuts of 1/5 of it and brings it back to the kitchen… 🙂

    In my opinion the steps of buying a car the smart way are:
    1. Specify your “needs” about what a car should do for you (be honest, you don’t need 1000 horse power, and there is no good choice under 30MPG)
    2. Do your research for used and new car prices, the depreciation and the possible deals (car trade in, discounts)
    3. Run the numbers, do the math, bargain and pay the whole price in full if you can (hint: if you can’t maybe you cannot afford that specific car)
    4. Enjoy driving it and do the maintenance on a regular basis
    5. Drive it as long as possible (for a new car 7-10 years at minimum)
    6. When the life slowly vanishing from it use it to lower your price on a new/newer one

  • Hannah Feb 14, 2017, 10:48 am

    I have worked as both a loan officer and a collections officer at a small credit union, and my experiences in both jobs have really changed my perspective on new cars. I worked with so many folks who were terribly upside down in their auto loans from both the depreciation of the car itself, but also from the cycle of repeatedly trading in their car every few years and taking on that negative equity in their new auto loan. I also worked with many folks when I was a collector who had crashed their new cars,then their insurance company wouldn’t pay off their loan balance, due to depreciation, thus leaving many of them stuck making payments on the deficiency balance for a totaled vehicle. Seeing both the cycles that people get themselves into and how it can all go wrong has made me very skeptical of new cars!

    • Millennial Money Man Feb 14, 2017, 12:24 pm

      Thanks for sharing that Hannah – I think it would be cool to do an interview-type post on things that you noticed from those jobs! What do you think?

      • Hannah Feb 14, 2017, 1:08 pm

        I think that would be really neat! I would certainly be up for doing that!

  • Roadrunner Feb 14, 2017, 12:36 pm

    Haha, nice examples! How about these:
    1) You take a huge amount of student loan, study day and night to graduate as a lawyer from a top university and then find yourself making burgers at McDonald’s.
    2) You stop by an ice cream stand, ask for 3 scoops, pay, but before the guy hands it over to you, he deeply licks the top layer.
    3) You spend a lot of money and time on dating this nice Thai girl you met during your holiday and when she’s finally ready to take the relation to a new level, you realize she comes with a package.

  • Julie @ Millennial Boss Feb 14, 2017, 5:16 pm

    You’re totally right! I sold my car after buying it brand new a year and a half before and I lost $7k-9k in depreciation. Another example I can think of – you buy some new pants at the store but they only cover 60% of your legs, so you have to make capris? haha IDK

  • Ninja Budgeter Feb 14, 2017, 6:32 pm

    Lol what a great post! I’ve never thought about how ridiculous car depreciation is coated to other things. I have been down the new car road three times now and I’ve finally learned my lesson.

    I bought a vehicle last weekend – a 1991 Chevrolet Sprint. 50mpg and no shame; I’m officially in my 30s!

  • Adriana @MoneyJourney Feb 17, 2017, 2:32 pm

    Interesting way to look at things. I can even think of another example: electronic devices (laptops, computers, phones, etc.). I couldn’t afford the first laptop I purchased, so I got into debt. Big mistake! But a good and necessary financial lesson! If I were to sell it today, I doubt I’d get more than 25% its original value…

    I still wouldn’t purchase certain used electronics, but I sure learned to save money and pay cash instead of dealing with loans again.

    • Millennial Money Man Feb 17, 2017, 2:51 pm

      Yeah they definitely depreciate quickly! I’m not sure I would purchase a used laptop either honestly.

  • Crystal Feb 20, 2017, 10:40 am

    I buy new car to reduce any down time I may encounter with used ones…I am not a mechanic and every time the car breaks down, I have to take off from work, aka, $$ and nasty sideway glances from my co-workers, what have you. Having a new car makes it easy to continue life without too many disruptions especially for a working mom who cars her kids around, ALOT.

  • Amanda at Wealth Well Done Feb 20, 2017, 11:58 am

    Getting an education. You go to get your Bachelor’s degree and when you get up on the stage to receive your diploma, you were handed an Associates Degree instead. That would really suck in my opinion.

    These are some great examples and I know that if everything depreciated like cars do, the world would be a very different place. I know that I would think a lot harder on what it is that I am buying before I make a purchase.

    In all reality. Used is the way to go on most things. We save a lot of money shopping used.

    Thanks for sharing!

  • LadyFIRE Feb 20, 2017, 10:49 pm

    All new pants instantly get a hole in one of the pockets.

    Not a big enough hole to ruin your dignity, but one that means you occasionally lose small coins.

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