Why are some people proud of going further into debt? It seems like every other week, someone I know is bragging about their new car on Facebook. Was I sleeping when borrowing money became some sort of accomplishment? “Look at me. I just restarted another six years of monthly payments!”

Pardon me if I don’t stand up and cheer.

Someone I know even took it as far as posting their new car payment along with their photo, with a claim that they actually saved money by buying new. “With zero percent interest,” she said, “it was a much better deal to just buy new,” adding that “it meant I could spend a lot more for the same payment!”

Pardon me while I vomit. I’m pretty sure I’ve got around $200,000 in open credit when you add up all of our personal and business credit card accounts, but it would be foolish for me to go on a shopping spree. Can you imagine if I went balls to the wall and spent it all? What if I bought a yacht? Took out an aircraft loan and bought a helicopter? Bought a private island? Would you pat me on the back?

“Hey, look at me, guys! I spent $200,000 and now I need to pay it back for like, the next hundred years. Hooray!”

Why Financing Stuff Obscures Reality

This, my friends, is why financing stuff is rarely a good idea. If you’ve got the money to pay cash for a car but opt to take advantage of a low APR offer, fine. I get it. But if you don’t have the money and need to borrow to make the purchase work, you’re not doing yourself any favors.

Because, when you focus on the monthly payment, and the monthly payment only, you’re losing track of how much money you’re actually spending on your car, your boat, or whatever else. Like my Facebook acquaintance said, she felt she could spend more because the monthly payment wouldn’t change that much.

And that’s where the danger lies. Financing stuff, whether we’re talking about cars, furniture, or that nose job you have always wanted, obscures the real cost. And when you focus on the monthly payment, it’s easy to justify spending a lot more than you planned.

And that’s how you end up with a $35,000 car that requires payments until your kid is ready for college.

Congratulations, You Got a New Car Payment

Personally, I think things like cars should be paid with cash – or at least only purchased if you have the cash in the bank. Like I said, I get it when people take advantage of 0% APR offers and stuff. Sometimes, it’s just a matter of doing the math.

But don’t fool yourself into thinking that car dealerships are offering awesome rates cause they like you; they’re banking on the fact that you’ll spend a lot more that way. And most of the time, they’re right.

Here’s the truth: When you finance a car, you don’t own it. The bank owns it, and you’ll own it after you make those 72 monthly payments whether you like it or not. You didn’t “get” a new car; all you got was a big, fat loan to service. That new car smell will be around for a few weeks, but that payment is going to last forever.

Do you think auto loans are a wise idea? Have you ever spent more on a car than you planned?