Dear Chuck,

My wife and I are aggressively saving for a down payment on a house. We’ve toyed with the idea of selling one of our two cars. Is that too radical? 

First-Time Homebuyers 

Dear First-Time Homebuyers,

This is a great question. Because of the inflationary market we are in right now, it is somewhat risky to sell a car and buy a house. As opposed to telling you what to do, I think some context will help you make a wise decision. I also have some Bible verses for you to consider.

Sell The Car or Keep Two? 

One of my sons recently totaled his car after hitting black ice. By God’s grace, neither our son nor any of the other people in the six-car pileup were injured. He borrowed mine so he could get to work until insurance took care of his car. My wife and I were able to make do because we work remotely. When one of us needed a vehicle, we simply planned ahead and combined errands. Fortunately, our flexible schedules made it work. However, your question of what to do with the second car depends on three factors:

1. Is it paid for? Will you make enough money to help with your down payment?
2. Where do you live? Do you have public transportation options?
3. Does your lifestyle enable you to be flexible and patient if you are juggling one vehicle and two drivers?

Let’s take a quick look at each question. First, if the car is older, it likely has marginal value, and it may be best to hang on to it because used cars are very expensive to replace if you suddenly realize that you need a second vehicle.

Second, whether or not it is radical to sell one of the cars depends on where you live. Is it radical for someone living in New York City? No. What about for the Amish? No. How about for an American suburban family? Yes. But, hey, being radical does not mean it is bad. Many financial decisions require us to go against the flow of what everybody else is doing.

The third question about lifestyle is important because as a first-time homebuyer, you may have two incomes right now, but a family may be in your future that could change your transportation needs quickly.

The cost savings of going from two vehicles to one can quickly add up. Lizzie Nealon at Bankrate reports that the total cost of owning a new car last year was $9,666. A report in June 2021 revealed that American households spend an average of $5,435 a year just on auto loans and insurance. The costs add up quickly when owning a vehicle, yet most people are unaware of the total expense. Consider this in your equation apart from what you would get for the price of the used vehicle. You will save on:

• Depreciation
• Finance charges
• Insurance
• Registration and taxes
• Routine maintenance and repairs
• Fuel
• Parking fees
• Washing/detailing costs

Options besides owning a car can include public transportation, walking, biking, carpooling, or car sharing through companies like Enterprise or Zipcar. If needed, you can reserve an Uber or simply rent a car. We’ve done that for road trips on numerous occasions.

So there is some great upside to unloading an unnecessary car in the current seller’s market. Besides getting your equity together, you can use the savings for building an emergency fund, paying down debt, saving for a major purchase, going back to school, starting a business, etc. If you decide that going from two cars to one is just too difficult, consider ways to lower the cost of ownership. Minimize depreciation by finding a car that holds its value. Look for good fuel economy. Shop around to get a good rate for insurance. Try to drive less by planning ahead and combining errands. Then find a reputable mechanic who will perform routine maintenance and any necessary repairs.

First-Time Home Buying

Buying a home right now is risky, too, because it is so expensive. Yes, a home is a good hedge against inflation and is the number one source for wealth building in an average American household. However, the first-time buyers I have been counseling feel they are being forced to stretch $50,000 to $100,000 more than they are comfortable spending just to get a house in an area they want. On top of that, all of the costs of homeownership are rising, such as insurance, taxes, utilities, maintenance, and remodeling. Our oldest son recently told me that the decision to rent for 10 years helped them be ready for buying their first home. They bought a fixer-upper that had been foreclosed upon. It looked like a disaster to me. Yet their eye for design and sweat equity paid off in a handsome profit and led to a comfortable purchase of their future homes.

Here are my rules of thumb for first-time home buyers. Have a 20% down payment. Don’t pay Private Mortgage Insurance. Have at least $10,000 in emergency savings after you move in. Be sure you can live there 5–7 years. Do you meet that high bar? If so, go for it.

Reflect on These Proverbs 

“Better to be a nobody and yet have a servant than pretend to be somebody and have no food.” Proverbs 12:9 ESV

“One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.” Proverbs 13:7 ESV

The Bible supports the idea that we should avoid putting on appearances to impress others when, in reality, we are living foolishly. We often have to make sacrifices to get ahead. So if you decide to go “radical,” let me know how you get along.

In the meantime, if you need help navigating any current debt, Christian Credit Counselors is a trusted source of help.

This article was original published on The Christian Post on February 4, 2022.