Suze Oman says this is the biggest ‘need’ and people are wrong

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Overspending on this expense can lead to problems.

Most of us regularly pay for what we want, not need. These include streaming services, restaurant dining, vacations, and more.

Things that require money can’t function without it, so it’s a good idea to put them before the things you need. But financial guru Suze his Mr. Orman claims he has one need that many consumers misunderstand. And it’s a mistake that can prevent them from achieving their financial goals.

Are you spending too much money on your car?

Unless you live in a city with a good public transportation network, you’ll probably need a car to get to work, run errands, and do other normal things. However, you may not need a car as expensive as you think.

In a recent blog post, Orman said consumers tend to overspend on cars. She said, “The biggest need that people get wrong is their car. The average monthly loan for a new car is now over $650 a month … It’s a way to get yourself into a better car than you are.” You just smell the people who treat you.Need.”

She makes an important point. With car prices on the rise these days, taking an auto-her loan to finance a car purchase can result in higher monthly payments than it did a few years ago.

But that doesn’t mean you should sign up for a $650 monthly car loan. Also, you need to buy a less expensive car to get a small loan. It’s that simple.

You might argue that a car is worth the money you spend on it because you use it all the time. So if you’re looking at a $650 monthly auto loan payment but you can swing that payment all the way while continuing to add money to your savings and avoiding credit card debt, if it makes you happy, Definitely go for it. But if you can’t get that $650 payment into your IRA account, it’s worth considering buying a cheaper car.

Making mistakes on the side of being frugal pays off

Orman says it’s common for people to spend a lot of money on their cars, but it’s not just cars that people tend to overspend. The mindset of being okay can influence spending decisions big and small.

Orman gives an example of this on her blog. Truth be told, do you need it? $1 or $2 per item can add up to $20 or more per shopping trip. It saves you money and can lead to repayment of your debt. ”

She makes a really good point. If you’re going to splurge on something that makes you happy, limit it to one item. I have.

In fact, before you buy your next car, think about how reducing your monthly car loan payments might affect your finances. If his monthly payments were $450 instead of $650, he might tell himself that he would put $100 into his savings account and spend the remaining $100 on take-out meals at his favorite restaurant. Hmm.

And if you do decide to move forward with a more expensive car, commit to cutting back in another area.