Utah, Cars, Debt, and Divorce

Utahns loves their cars.

We’re an Intermountain West state, which means everything is far from everything else. We drive our cars to get to all these far-flung places.

Turns out, Utahns love their cars a bit too much — at least I think that’s what the data say.

Utahns’ Average Yearly Spend on Cars

A new report from the Salt Lake City Council talk about housing in Salt Lake City. Like most bureaucracy reports, it talks a lot about problems that government cannot fix and will only make worse. (Sorry, you just got a glimpse of my view on government in general, and Salt Lake City government in particular.)

On page 14, though, it contains an interesting tidbit: Utahns spend, on average, more than $18,000 per year to maintain two cars per household.

(Note: That number seems high, but it includes all costs for owning a care, e.g., gas, payments, repairs, taxes, registration, etc. And, keep in mind, these numbers are average, so many people spend less and, amazingly, many spend higher.)

Utah’s Average Yearly Household Income

According to a 2014 Salt Lake Tribune article, the average income for Utah households is $59,770.

That number might seem okay (it ranks pretty high nationally), but it’s disturbing when you compare it to the amount Utahns spend on their cars.

Just north of $18,000 divided by $59,770 equals Utahns spending over 30% of their yearly household income on two cars.

30%?! WTH?!

When you figure a typical family spends around 25% to 40% of household income on housing, two cars families are spending up to between 55% to 70% on transportation and housing.

That is incredible. Two expenditures account for an amazing high percentage of total money spent by Utah families.

This isn’t good.

Here’s Why It’s not Good

Simply put, when you spend the bulk of household money on cars and housing, you don’t have money left over for other really important things.

For example, there’s little money left over for healthcare, education, charitable giving, vacations.

Despite this, we still spend money on these things, which means we go in to debt to pay for vacations and the like. (The average Utah household carries over $117,000 in debt.)

Implications for Utah Divorces

These numbers have a couple implications for Utah divorces.

First, personal debt is not good on a number of levels. It creates stress and increases fighting among married couples. Fights over money and debt are a contributor to divorce. (They contribute. They probably are not the cause but more of a symptom of other deeper problems. But still, they contribute and they surely don’t help.)

Second, when divorce happens, debt gets divided and straddles everyone with bills they couldn’t pay during the marriage and certainly can’t pay during divorce.

A big part of the debt-load problem is cars. When you have cars that eat up 30% of your yearly total household income and you divorce, the impact of that debt load becomes all the more unbearable.

If you can barely make it when times are good, you certainly can’t make it when times turn not-so-good.

Possible Solutions

As I see it, there are a few possible solutions to this debt/car problem:

1. Buy less car.

Yes, buy less car. No one needs a new car. No one needs a car that’s too big or too expensive. That’s status symbol stuff, and buying for status leads nowhere good.

Sell your car and buy a cheaper one. Trade in your car for something that works better and is cheaper.

2. Sell a car and drive one.

Heresy, I know. But if two cars cost $18,000 per year to use and maintain, then one car will cost somewhere in the neighborhood of $9000.

That one choice saves 15% of a family’s total household income.

3. Drive less.

Less driving means less spent on gas and repairs. You could bike to work or carpool instead.

4. Pay off your car loan and never finance a car again.

Cars are the single worst investment you can make (other than a nightclub or gold). They drop in value like a rock. Please, don’t finance an item that drops so precipitously.

(Note: all of our clients who come in and discuss their debts with us. So many are upside down on their cars and still have another three years of payments to make. These cars are like millstones around their necks. It’s bad. Those who don’t have car debt are much better able to handle their new post-divorce reality.)

One nice perk about saving up for a car: you’ll never overspend. Everyone has a tendency to buy too much car when they finance. If you pay cash, that won’t happen.

5. Pay off all debt.

The problem isn’t just with car debt; the problem is all debt. Paying off debt will alleviate so much stress and will cause you and your spouse to work together on a common cause. That bodes well for marriages.

(To start your debt-free journey, I recommend Dave Ramsey’s Total Money Makeover.)