Do you ever feel like you’re doing all the right things with your money—budgeting, cutting back on extras, trying to save—but your bank account still feels tight?

What if the biggest drain on your wallet isn’t your daily coffee or your grocery bill, but the shiny four-wheeled “friend” sitting in your driveway?

Here’s the truth: the average car payment in the U.S. is now over $700 a month. That’s not even counting insurance, gas, maintenance, registration, or the emotional toll of constantly worrying about whether your car is costing you more than it’s worth.

If you’ve ever wondered why you can’t seem to get ahead financially, your car might be the hidden culprit.

In this post, I’m going to break down:

• Why car payments are one of the biggest barriers to financial freedom

• The real costs of car ownership (beyond the sticker price)

• How my family learned this lesson the hard way

• Practical steps you can take to reduce car stress and redirect your money toward your goals

My Family’s Car Payment Story (and Why We Ditched Them for Good)

I grew up in a family where car payments weren’t a thing. My parents and grandparents always paid cash for cars—even brand new ones. They wrote a check, drove it off the lot, and that was that.

So imagine my surprise when my husband (then fiancé) and I decided to buy our first “grown-up” car together… and it turned into a financial disaster.

Here’s what happened:

• My husband worked at a car dealership and already had a car payment.

• My car was older but paid off, gifted to me by my parents.

• We thought, Hey, with his employee discount, we can “afford” a nicer car.

So we signed the dotted line and drove off in a luxury-ish car with leather seats and all the bells and whistles. It looked great from the outside… until it didn’t.

Not long after, the driver’s side window broke. We couldn’t afford to fix it because we were juggling the payment, insurance, gas, and taxes. That window stayed broken for the entire time we owned it. (Yes, even when we sold it!)

We were embarrassed. We avoided drive-thrus because I had to open the door to order. And the stress of wondering if a tow truck was coming to repossess it was very, very real.

That car taught us one of our hardest (and most expensive) money lessons: owning a car you can’t truly afford is a financial ball and chain.

The Real Costs of Car Ownership

When people think about buying a car, they usually focus on the monthly payment. If the dealer says, “It’s just $650 a month,” we think, Okay, that fits in the budget.

But here’s what most people miss:

1. Insurance

Newer cars almost always come with higher insurance premiums. You’re insuring a higher-value vehicle, and that cost adds up quickly.

2. Gas

Some vehicles are more fuel-hungry than others. A long commute or a bigger car can easily add hundreds of dollars a month to your budget.

3. Maintenance & Repairs

Luxury or specialty vehicles often require specialized parts or service that you can’t DIY. That means higher repair bills and more stress when things break.

4. Taxes & Registration

The more expensive the car, the higher the registration and annual taxes.

5. Emotional Cost

This is the sneaky one nobody talks about. Keeping up appearances with a car you can’t really afford creates stress and embarrassment. Trust me—rolling down a broken window by opening the whole door at Starbucks gets old fast.

Opportunity Cost: What That $700 Payment is Really Costing You

Let’s say your family has a $700/month car payment. That’s $8,400 a year.

Now ask yourself: what else could you be doing with that money?

• Build an emergency fund — $8,400 is a solid cushion.

• Pay off debt — imagine knocking out a credit card balance in a few months.

• Take a family vacation — you could pay cash for amazing trips annually.

• Invest for retirement — that $700 invested monthly could grow into hundreds of thousands of dollars over time.

Instead, most of that money is going straight to a bank to pay for a depreciating asset.

Breaking Free From the Car Payment Cycle

So how do you get out of this cycle without feeling stuck or ashamed? Here are some strategies that worked for us (and that I recommend to clients):

1. Ask: Do You Really Need Two Cars?

For a season, we went down to one car. My husband worked close to home and had access to public transportation. It wasn’t always convenient, but it gave our budget breathing room.

2. Sell the Car With the Payment

If you owe more than the car is worth (negative equity), work toward paying it down until you can sell it. That’s what we did—and once it was gone, the relief was massive.

3. Buy Used (With Cash)

The best car to drive is the one that’s paid off. Period. Cars depreciate the moment you drive them off the lot, so buying used can save you thousands.

4. Shop Around for Insurance

Older cars often mean lower insurance premiums. Don’t set-and-forget your policy—shop it annually to see if you can save.

5. Set Up a Car Repair Sinking Fund

Repairs will come. Batteries die, tires blow, alternators quit. Instead of swiping a credit card, create a dedicated savings account for car maintenance. Even $50–100/month adds up fast.

6. Do Your Research Before Buying

Love a particular make and model? Google common issues for that car year or ask ChatGPT. If you see “engine failure” or “transmission issues” pop up a lot—run.

Why Older, Paid-Off Cars Are Financial Superheroes

Our current car isn’t flashy, but it meets all our family’s needs. When the alternator recently died, we paid cash for the repair from our sinking fund. No stress, no debt, no panic.

Here’s why driving an older, paid-off car is powerful:

• Lower insurance premiums

• Lower taxes and registration fees

• More predictable repair costs (major recalls are usually already handled)

• No monthly payment sucking away your income

Most importantly, you own your car. Your car doesn’t own you.

Rethinking Success (Cars Don’t Define You)

Culturally, we’re told that success looks like a shiny new car in the driveway. For me, when I first started in real estate, I thought clients would judge me for not driving a luxury car. Instead of buying one, I got glasses and styled my hair differently to look more professional.

It worked—and it didn’t cost me $700 a month.

The truth? Your car is not your identity. It’s a tool. A way to get to work, take your kids to practice, or go on road trips. That’s it.

When you stop tying your self-worth to your vehicle, you gain the freedom to make smarter financial choices.

Final Thoughts: Is Your Car Keeping You From Financial Freedom?

If your car payment feels like a weight dragging down your budget, it might be time to make a change. Driving an older, paid-off car may not be glamorous, but the freedom it creates is worth it.

Remember:

• A $700 car payment could be your debt snowball, your emergency fund, or your next family adventure.

• Cars will always cost money—but they don’t have to cost you your peace of mind.

• Financial freedom isn’t about what’s in your driveway. It’s about what’s in your bank account and how aligned your money is with your values.

So here’s my challenge to you: take a hard look at your car situation this week. Ask yourself if it’s helping or hurting your financial goals. You might be surprised at what you discover.

Ready to Ditch the Debt and Build Financial Freedom?

If this post hit home, I’d love to personally invite you to join the Alliance Coaching Membership. Inside, we:

• Create personalized money plans that actually work

• Tackle debt 10x faster than going it alone

• Do monthly live budget sessions together

• Provide accountability so you don’t quit halfway through

Your next paycheck could be working for you—not for your car loan.

👉 Join here: https://www.jewlzthebudgetnerd.com/membership

You don’t have to keep living paycheck-to-paycheck. And you definitely don’t have to let a car keep you broke.