CHARLES BARKLEY SAYS HE WAS AN ‘IDIOT’ WHEN HE FIRST GOT RICH, OWNED 3 OR 4 LUXURY CARS — THEN DR. J GAVE HIM A REALITY CHECK. HERE'S HOW AMERICA'S CAR OBSESSION IS DRIVING US BROKE

It’s not easy to resist temptations when you’re young and rich.

Former NBA star Charles Barkley attested to that in a recent interview with Shannon Sharpe on the Club Shay Shay podcast.

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“I first was an idiot when I got my money,” the 61-year-old said. “I had like three or four cars.”

Fortunately, he says, his mentor Julius Erving, better known as Dr.J, gave him a reality check.

“Dr. J says, ‘How many of those cars can you drive at the same time?’” Barkley recalls. “‘Why you got four? This money got to last you the rest of your life.’”

This shifted his perspective on money and cars forever. Here’s why abandoning the car obsession could change the lives of ordinary Americans, too.

National obsession with cars

It’s not just celebrities and professional athletes splurging on automobiles. The average American family owns more cars, spends more on them and drives further than their counterparts in the rest of the developed world.

There were 860 cars in America for every 1,000 people in 2020, compared to 707 in Canada and 627 in Germany, according to data from the International Organization of Motor Vehicle Manufacturers.

The average American driver commutes 41 miles a day compared to just 18 miles in the European Union, according to the Alliance for Innovation and Infrastructure. Meanwhile, the majority of households (59.1%) had at least two cars in 2022, according to the U.S. Census Bureau’s 5-Year American Community Survey.

By most measures, this is an expensive obsession to maintain. The average auto loan amount for a new car in the second quarter of 2024 was $40,927, according to Experian. Average interest rate was 6.84% during that period and monthly payments were an average of $734.

Simply put, most families can save a lot of money by simply picking cheaper cars, using public transport more or sharing cars with their partners. Although your commute might be longer or less comfortable, your path to financial freedom might be slightly easier.

That was Dr.J’s recommendation to Barkley as well. “He says, ‘Son, don’t waste your money on cars. Everyone knows who you are,’” he recounted. “‘You pull up in a Kia, they know that’s Charles Barkley…That $300,000 you spent on that Bentley, if you bought a car for $70,000 or $80,000, you would’ve had $200,000 more in the bank and it would have been growing and growing.’”

Here’s how you too can divert some of your car expenses to savings.

Read more: One dozen eggs in America now costs $4.15 — and $14.35 for a pound of sirloin steak. Both record highs. 3 simple ways to protect your wealth in 2025

Lower auto costs

Downgrading and trading in your car for something cheaper is usually the quickest way to lower your auto costs. Ideally, buying a used car for less than market price in cash allows you to avoid the auto loan and associated expenses.

However, if these options are unpalatable there are other ways to lower your vehicle expenses. Consider switching to an electric vehicle for the tax benefits and fuel savings. The average American driver can save roughly $1,100 a year in expenses by switching to an EV, according to nonprofit Coltura.

Keeping an eye on auto loan rates and refinancing when the rate drops could be another way to save money. The average finance rate on a new auto loan dropped from 6.98% in December 2023 to 6.11% in September 2024, according to the Federal Reserve.

You could also target the auto insurance for savings. Try to negotiate a better rate, switch to a pay-per-mile policy, or take a defensive driving course to lower your premiums.

A combination of these steps should lower the financial burden of your vehicles and leave you more room to save and invest for the future.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

2025-02-05T12:08:14Z