When most people study their finances to try and decide how much money to set aside for retirement, when to save for their kid's college and whether or not to pay off their home early, a crucial part of the equation is usually left out. The missing step is vehicles.

What kind of vehicle should we be driving and how much should we spend on them? What makes sense in a solid financial plan?

Nothing screams status to most people more than an automobile. When your neighbor pulls up in a new car, isn't their usually a crowd of people secretly admiring it, saying, "Wow, George must really be making it!" Think about it, we usually assign wealth and status to the people who drive really nice cars.

The truth is, if George is like the majority of Americans, he is dragging around quite a bit of debt with that new car. Over 70% of cars on the road today are hauling either a lease or car payment in the trunk. And you've seen the statistics that say if you lighten the weight of your car you'll get better gas mileage, right?

The rule I use for automobiles, and anything with an engine really, is to add up all of their values. If the combined dollar amount is more than half of your annual household income, then you need to think about making a change.

Let me put this in perspective. I love nice things, and especially nice cars. I want to have those nice things, but I do not want those things to have me. See, if you have more than half of your income tied up in things that are going down in value ("like a rock' usually), then your financial plan simply does not make much sense.

There is certainly a time and a place to buy nice vehicles, but that time only comes as you get out of debt and have a fully-funded emergency fund of 3-6 months of living expenses in place. At that point you are free to purchase nicer things such as cars, but if you also want to save for retirement, put your kids through college and maybe even pay off your home early, make sure to live your financial life in the right order.

Can you delay your pleasure long enough to make it count? People all across the world are starting to, but you have to develop a plan and make it happen. To view the 7 Financial Freedom Steps, visit www.lukascoaching.com/resources.htm and download a copy for free.

Justin Lukasavige is a Personal & Business Coach and owner of Lukas Coaching. Visit www.lukascoaching.com/resources.htmhttp://www.lukascoaching.com/resources.htm">www.lukascoaching.com/resources.htm for a ton of free tools to help you improve your health, finances, business, career & life!

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