4 Concerning Personal Finance Charts – A Wealth of Common Sense

This is how Americans spend their money1 (according to a study by the Bureau of Labor Statistics):

Like most aggregates when you’re dealing with hundreds of millions of people, everyone’s spending is probably somewhat different than these averages.

But directionally these numbers look right to me from a big-picture perspective. The two biggest line items for the majority of households are housing and transportation.

These two categories make up half of the budget in the average American household.

If you want to get ahead financially you have to rightsize housing and transportation. If you spend too much money on your living situation or your vehicle or both you’re going to have a hard time building wealth.

I don’t like to spend shame people but I’ve been concerned for a number of years now about how much people are spending on trucks and SUVs.

It’s getting out of hand.

Look at this chart that shows the percentage of residents by state paying $1,000 a month or more for their auto payment:

One-quarter of people in Wyoming are spending more than $1,000/month! More than one-fifth of people in Texas are doing the same. It’s almost 1 in 5 in California.

This is personal finance insanity.

There are a number of economic reasons these payments have been rising in recent years. The supply chain shortages have driven up the cost of automobiles and that’s still not back to normal.

In the past 3 years alone the price of new cars is up more than 20%. Used car prices are up more than 45%:

Anyone who has had the misfortune of needing to buy a vehicle has been in a tough spot in recent years.

But that’s not the entire explanation. Look at the increase  in luxury vehicle purchases over the past 10 years:

It’s almost 20%.

I am an A to B guy when it comes to my vehicle. Some people enjoy driving a nice car, truck or SUV.

And that’s fine — assuming you have the rest of your finances in order and you’re saving money.

If you’re not saving enough, your ridiculously high SUV or truck monthly payment is the likely culprit holding back your wealth.

And if it’s not your vehicle choice, it could be housing that’s holding you back.

The New York Times made the case this …….

Source: https://news.google.com/__i/rss/rd/articles/CBMiQGh0dHBzOi8vYXdlYWx0aG9mY29tbW9uc2Vuc2UuY29tLzIwMjIvMTEvNHBlcnNvbmFsZmluYW5jZWNoYXJ0cy_SAQA?oc=5

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