The second you drive a new car off the lot, it begins to depreciate in value. Typically, car depreciation occurs exponentially; new cars decrease in value much faster than older cars. You might have thought that buying that $31,000 car was an "investment," but in reality that "investment" is likely to lose somewhere around half of it's value in four years.

On average, that new car will lose about $15,000 over four years. After the loan is paid off in four years, you will be left with a car worth about $16,000. This ends up being less than half of the value of your invested savings on the purchase of the used car plus the depreciated value of that used car. Don't rationalize your expensive car habit by calling it an investment!

3. A Car is a Car

This might seem obvious, but it is worth mentioning. I have heard many people argue that a new car is somehow better than an older car. If you feel this way you are wrong. The reason that we own cars is not to show off how much money we make, it is actually to help us move from one place to another. A car is a mode of transport in it's most basic function; it is not an entertainment device, it is not a popularity producing device and it is not any of the other weird mushy feelings that we Americans seem to attach to cars. It is just a car.

And all cars being alike, we know that they are all capable of providing us with transportation. When you think of it like this, you come to realize that there is no reason to spend extra money on something that does the same thing as something else. A fully loaded BMW x5 will transport you just as well as a used 2005 Honda Civic; the only difference is that the first option will cost you 10 times more!

If you value your time, and the freedom that comes with having enough money to be able to make your own decisions in life, then buying a new car is probably not in the cards.