Which is better a nice new car or a happier life with less money trouble?  Unfortunately, too many people choose the car.  Advertising of all types constantly gives us the message that we are what we drive.  I find that annoying and prefer to be who I am.

The most recent BLS statistics tell us that the average US family in 2004 spent almost $8,000 per year on automobile related transportation expenses.  That is second only to housing ($13,000) and way more than food ($5,700).

There are two ways to save money on cars if you must have one.  First, buy a used car and second, buy a car that is less expensive to operate.  I’m going to talk about the first here and the second on this link where you can save even more money on cars.

It is far less expensive to buy a pre-owned car instead of a brand new car.  The primary reason is that cars depreciate in value immediately after purchase and continue to do so.  Cars depreciate at a rate of 15 to 20% per year.  That means that up to one fifth of what you paid is lost the instant you sign the papers.  The more you pay for a car, in general, the higher the insurance costs, the higher the taxes and fees, the higher the maintenance and usually the higher the operating costs.  Spend less to begin with and it will also cost less per year.  Try this car auction site and this auto auction site for huge savings on repossessed and seized vehicles.

Edmunds.com has a handy total cost of ownership calculator you can use to compare cars.  Here is one example they worked up for the five year ownership of a purchased new car, a used car and a leased car.

Cars are much better made these days than they were even 20 years ago.  They can be driven safely for well over 100,000 miles and some models can go a million miles with proper maintenance and repairs.

If you are worried about buying a pre-owed car spend some time at Consumer Reports reviewing their recommendations.  They gather data on tens of thousands of cars on an ongoing basis to establish reliability, economy and safety.   They can give you important information to make your used car purchase.

Services such as Carfax.com and AutoCheck.com can give you a vehicle history check on any used car that you might be interested in buying.  These services can tell you if the vehicle has been salvaged, stolen, flooded, been in an accident, had an odometer rollback or used as a rental taxi or police car.  This link goes to some tips from the FTC about buying a used car.

Buy a well rated used car from reputable dealers or from private owners you can at least verify an address for and then check the VIN through a vehicle history search firm.  Don’t assume anything and be willing to walk away from a deal or two if you don’t like what the VIN history shows you.  Count on spending a couple hundred dollars to check the histories and have your trusted mechanic check out a couple of cars before you buy one. Just consider your investigation costs to be part of the process.  It is money well spent to find the better car.

Check used car prices at sources such as Kelly Blue Book (kbb.com), NADA.com and Edmunds.com to make sure you are paying a fair price.  Try this car auction site and this auto auction site for huge savings on repossessed and seized vehicles.

We haven’t had car payments in over 15 years.  We drive a 1993 Nissan Maxima in cherry shape and a 1997 Saturn SL2 that looks great.  They get regular maintenance and continue to serve us very well.

If the people around you judge you by what you drive, associate with different people.  Buy smart and then smile and wave at all the people struggling to make ends meet and keep of their car payments each month.  Take a vacation break while they’re breaking their backs to keep up with the image.

Here are 35 more great ways to save money.