Many people know the deal with icebergs thanks to events such as the Titanic or even The Titanic (which no doubt informed a handful of movie-goers who had no clue it was real).
Many more people have probably seen a picture like this at some point in their life:
Icebergs are crazy cool and crazy big. They look innocent enough, but when you see the full picture, it’s far from innocent.
Cars are pretty similar.
You see a new car with a sticker that says $30,000 for example (that’s the average price of a new car). It’s a decent amount of money for sure, but there’s lots of things screaming in your face telling you not to worry. There’s the chance of negotiating on price, making car payments, warranties, and 0% interest.
Used cars are significantly cheaper than new cars, but they’re still no small chunk of change. The average price for a used car is $8,495 as of September 2012.
That’s all fine and good, but it’s not really the part that gets you.
From year-to-year, owning a car is expensive. According to this AAA report, the cost of owning an average sized sedan per year is about $9,000. SUVs top the price list, coming in at $11,360 while a small sedan does the best, costing $6,735 a year.
Likewise, buy a used car and the story is similar (albeit slightly cheaper on the front end):
In the end, all the costs under the surface add up to make a picture similar to that of the iceberg. Note that while some of these costs are strictly monetary (new tires, gas, oil change, registration, insurance), some have costs on our mind (more stuff to think about).
Make sure your car doesn’t sink your ship.