I’m often asked on the Compass MoneyWise call-in radio program, should I lease a car instead of buying, because it seems like it’s the cheapest way to go.
My answer is always the same: Don’t even think about it! But a lot more people these days are doing more than just thinking about it.
The car pricing website www.edmunds.com reports that according to their surveys 27% of all cars in our country are now leased instead of purchased. And Millennials (ages 18-34) lease more than any other age category suggesting that unlike older adults they would rather sacrifice long-term financial benefits of owning an auto to get into a bigger or more luxurious vehicle.
Here are the 3 reasons I like to call it care fleecing instead of car leasing!
1st, in addition to the monthly lease payment, you’re wacked by mileage fees if you travel over a certain amount of miles. And most people who lease a car do. Guess what? The mileage fees are steep—normally about 12 cents a mile.
2nd, when you turn the leased car back in, if there are any bumps, bruises or scratches, you pay to repair them – big time!
3rd, when you turn the car back in, unlike buying a car, you have NOTHING to show for it.
Your best decision is to buy a car and pay if off. Then, continue making the car payments…….but to yourself. That way when you’re ready for a newer car, the trade-in plus the cash you saved should allow you to buy the car for cash and never use car debt again!
It’s stunning! According to a survey, millennial-aged college graduates are spending a whopping 18 percent of their salary on student loan payments and 60 percent of them expect to be making payments on their student loans into their 40s.
But it get’s worse! The survey also found that average student debt for millennials is more than $41,000, and a third reported being clueless as to their loans’ interest rate. Sadly, many millennials aren’t willing to adjust their lifestyle to pay if off more quickly. For example, less than half were willing to cut what they spend on eating out and entertainment.
The last big discovery of the survey: one-third of the grads said they would have skipped college altogether had they known how expensive it would be in the end.
Here are five ways to rescue millennials from drowning in student loans
- Start preparing early! Urge your high school age kids to take duel credit classes that will count as college credit. Dan and Cheri Schilling’s 17 year old son will graduate from high school having earned 90 college credit hours. When he enrolls in college he’ll have completed the first three years of college FREE!
- Another option is to enroll in a local community college the first two years to complete your general classes or to work full-time and take online college classes which are typically much less expensive.
- Secure as many grants and scholarships as possible by investing the time to research every possible opportunity.
- Encourage your children to work full-time during the summers, and part-time at college after their first semester. Apply what is earned toward college costs.
- Parents, start saving early to assist your kids, but don’t cosign for your children’s student loans or take out any loans yourselves.