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Buying a Car: Asset or Liability?

Albeit, I am one of those people who dreamt of owning a car during childhood days – I fancy a two-door car, in red or yellow. And then, when I grew older – finished study, had my first job, had my first paycheck and after a while, buying or owning that dream car was not as easy as counting 1-2-3 because I had to consider a lot of things such as needs vs wants and the list goes on.

Buying a Car: Asset or Liability?
roadtrippin' in Siargao

In reality, adulting is challenging with too much decision making to make and it is fun because I am able to shape my future based on my preferences. Oh well, budgeting and computing how much money to spend and how much would be going for savings was somehow a challenge at first but setting aside a portion of my income into savings made a lot of difference on what my future will looks like. An asset is anything you own that can be worth something right now or at a later date. You or your household can own the asset, but it has to carry some monetary value. And so, here we go – that dream car, is it an asset or liability?

    Car: An Asset

    Living in the pandemic world where there is a limited option for public transportation and despite of gas price gas hike, I would say that a car is an asset. Why? To keep yourself safe and secured – you have to ride on your own car or family’s car if that would suffice. Weigh things up; compute your expenses versus the time you will spend on the road, the hassle, waking up early, commute time, among others. Covid-19 made us to considers that would make our mental and well-being healthy and at peace. If you still making up your mind if you are going to buy a car for important use, I would suggest then to write down all your expenses and income for you to gauge if buying a car would be feasible; don’t forget to also check the payment of the car that you consider to buy, check how lenient and convenient the car payment terms are. Most of the dealers can provide a sample computation and once you have it, it will be easy for you to do the math.

    Buying a Car: Asset or Liability?
    my 6-year old car; still functional and looks new.

    Oh, did I mentioned that companies are slowly embracing the return to office mandate and it would be an opportunity for you as well to offer carpooling with your colleagues. By then, you can also have an income or at least your daily gas expenses will be covered if you consider this. In the long term (if you’re thinking of doing it as a business or side hustle), it generates income that would cover your monthly car expenses. For me, time is money.

    Car: A Liability?

    Buying or owning a car would be consider as liability when it is being used as a leisure. For example, a weekend car or you are just using it for road trips and vacation. It becomes a liability because paying for car loan, insurance, maintenance, allotting fuel budget, or any money that spent for a car is considered as expense. Hence, you are just adding an additional expense to your monthly budget.

    Regardless of what is the purpose of buying a car, a vehicle is already an asset as it will take you from point A to point B. However, you just have to check the market value of the specific vehicle as car brands appreciates or depreciates its value depending on circumstance throughout the year. In addition, I also take inflation into consideration; the value of money you have right now will be different after a year or so.

    Invest your money and time wisely.

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