4 / 10 - Asset #3: The Automobile Closely related to real estate is the third asset: the automobile. In rural or suburban America, often where public transportation is non-existent, owning a car is less a choice than a necessity. Yet cars are not only costly to purchase, they are also expensive to maintain. Consider a family that buys a used car for $10,000, financed at 8% interest over 5 years. The total cost of that car, including principal and interest, approaches $12,000. Add to that insurance premiums of $1,500 per year, fuel and maintenance of roughly $2,500 annually, and registration fees of $200. An asset worth $10,000 at purchase actually costs the family over $5,000 per year to keep on the road. If that family's annual income is only $30,000, the car represents a staggering fraction of total disposable income. Now suppose that used car needs a major repair 2 years in - an engine replacement that costs $3,000, while the family still owes $6,000 on the loan. Facing the choice of paying $3,000 out of already slim savings or defaulting on the loan and losing the car and thus their only reliable way to work, many families have to choose short-term survival over long-term financial health. At best, they end up downgrading to an older clunker with even lower reliability. At worst, they surrender their car, lose their job because they can no longer commute, and slide further behind in rent, utilities, and other basic expenses. In many states where the juggle of household bills is already unforgiving, not owning a car can be a death sentence for a worker who must drive anywhere from 30 to 60 miles per day to earn that precarious $10 or $12 per hour. Yet for all the talk of livable cities and public transit, nothing replaces the autonomy provided by a personal vehicle in most of the United States. And so cars, ostensibly an asset, become the titanic weight that drowns many struggling families.