The Carr Report: Never spend more than half your salary on cars!

by Damon Carr, For New Pittsburgh Courier

Shannon Sharpe recently shared a story on his show “Undisputed” about the time he was earning $325,000 per year while playing in the NFL. During this time he purchased a $250,000 car. He admits that it wasn’t a sharp decision at the time to purchase a quarter of a million dollar, black on black Ferrari 512 TR – but he had to floss. He wanted to look sharp in those streets.  Shannon said he was looking like Batman when he pulled up in his decked out car.  Hindsight 2020, he posed the question to himself how big of a fool was he to purchase a car that cost him more than 75 percent off his salary.  Moral of the story. Don’t be out there flossing. 

I recently read an article on This article quoted reports from Kelley Bluebook and LendingTree revealing that the average cost of a car in the year 2021 was $42,258. The average car payment was $563 per month.  This article goes on to quote that according to the US Census Bureau, the median salary in the United States is $41,535. The article closes with this statement. “It’s easy to see why so many people are trapped in the cycle of consumer debt. Just because you can spend more than your annual salary on a car doesn’t mean that you should”.

That’s great advice! I concur. $563 per month is the average car payment. I’ve observed double that. I recall putting together a plan for a hair stylist who financed a luxury vehicle. This whip (car) was fire! Payments were $1,200 per month. I told her it was a nice car but I know that car payment produces tears in your eyes like onions! I asked, how many heads do you have to braid and perm to clear enough for that payment alone? I know which clients I can be direct with. I sometimes make provocative statements to ensure they’re paying attention and to ensure they understand my point. In the end, I gave her fair, honest advice.

I posted both the Shannon Sharp story and article on my Facebook page. Below are some comments: 

I can’t imagine. This is Exactly why I’ve NEVER had a car payment.

~ Lovely Breeze

No car payment – 1 year and counting

~ L. Martin

Yeah I hate car payments. I rather travel and do other things with my money.

~ Chauncey

I’m guilty of this. It’s not a good investment, but you can set it up in a corporation and use it as a tax and depreciation write off. Cars are my passion. It’s true, they can be a big liability. A $42,000 car demands way more than $563 monthly payment


Damon says: Bernard, they’re doing car notes out to 7 and 8 years these days. In an effort to keep car payments low, 70 percent of cars that move from the car lots are sold under Lease Agreements.

I haven’t had a car note in over a decade. I bought a get around car twice. I only spent an average of $1,000 per car. Before that, I had a car note for $142 a month. I always paid more and my last 1 or 2 months were free. I bought my current car with cash. There was a time I couldn’t afford a car. During this time, I used public transportation.

~ Irene

I’m going on year 5 with no car payment. My car has under 80k miles. I’m driving my car until the wheels fall off!

~ Alicia

Right now it’s a “Dealers Market”. They’re using the shortage in the supply chain as a way to hike up prices. Kelly Blue Book says profits in the Auto Industry are up 120 percent! They’re selling & leasing cars before they hit the parking lot, while using the strategy of “Just In Time Inventory”. They are not cutting any deals! They used to have “leftover inventory” they would negotiate with. Not any more.

Ford was supposed to bring back their workers in December, but they postponed it until March. They’re making record profits without personnel, with all these marked up prices. Right now “Used Cars” have an unbelievable mark up! Dealers are buying back used cars to sell them at record prices. For the first time in history, used cars are appreciating in value.

Dealers are making money hand over fist with no end in sight. It might take a year or two to even out the market.

Incidentally all I do is lease “base model” cars. I use my smartphone to give me all the useful bells & whistles. But even now that lease price is substantially higher than in the past.

~ Pastor Peter Joseph

I love cars and will probably always have a hefty note. Am I supposed to pay in full cash? No I’m going to put something on it!

~ Nicole

Damon says: Nicole, I have a couple of rules that I ascribed to and teach others to follow when it comes to buying cars

  • All cars, boats, motorcycles total value should not equal more than half your annual income.
  • Strive to put a minimum 20 percent down.
  • All car payments should not exceed more than 15 percent of your take home pay.
  • Terms on the car note should not exceed 3-years.
  • No car leases: Car leases = Forever Car Payment with no ownership

Violating these core tenants will put a person in a predicament where they have too much money tied up in cars – a depreciating asset. In other words, they purchased more cars, SUV’s trucks, motorcycles than they can realistically afford. They end up having negative equity. They take on huge car payments that hinder their ability to save for future goals and have a life without running up mountains of credit card debt.

To your point, 100 percent cash payment is the best route to go.  But I know most people don’t have the patience to take that route.

(Damon Carr, Money Coach can be reached at 412-216-1013 or visit his website at

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