Why Car Payments Are Making You Broke
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- เผยแพร่เมื่อ 29 ส.ค. 2024
- I read this book along time ago, I cannot rememeber the name but It was written by Benjamin Franklin. IN the book he spoke about, how sometimes you buy things that end up costing you a lot more money than the inicial purchase price. When I heard that, it clicked for me.
Here a quick example, lets you say you want to buy an iphone, and it cost about $1000 brand new, Is that the only cost. The answer is no. You have the cell phone service, Icloud, apple music and a bunch of subcriptions; Before you know it, that one ppurchase cost you the same $1000 every year. And lets not even mention the time we spend on phones.
But for this video, we are talking about cars, so lets stick to the subject at hand. How does having a car make you broke.
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First of All we have to elimate the idea that cars are investments
They are not investments and we know they go down in value
But everything you buy, doesn’t have to be an investments
And buying a new car is not an investment either
What you have to do is, to try to get the best buy you can
Here is the problem and this might be you:
A lot of folks buy a car and they finance it for about 5 years or so
After 5 years they own the car
Some folks trade it in, sell it temselves and some folks keep it
This look normal and it is normal ( but normal sucks ) and here whats hiding between this one decision
First Problem
If you have to finance a car, then you cant afford it
Its not affording payments, its about affording the item you are buying
And if your response, I have the cash I just don’t want to spend it all in one place, that doesn’t mean you can afford it
It means look in to another car that you can buy and still keep money in your wallet
I can afford a Corolla for 10k but I cant afford to buy a fancy Mercedes for 80k
Second problem
Terrible buy, when you buy new, as the first buyer you take on all the risk and reality of deprecation
After your 5 years loan you have about half the car value
But whne you buy a used car, lets say 3-5 years old, the bulk of the losses have already bbeen taking, so the depression slows down
You still lose money but not at the same rate and you also buy for a discount
Third problem
You missed a massive opportunity to invest.
5 years ppaying nearly 500 dollars is a lot of money
If you had invested that at 10%, you would have nearly 40k
Forth problem
Lack of peace of mind having to worry about a car payment every month
I’ve bought in the past where the first few weeks are great but then it’s a headache because of those payments
The payments make it so you cant really enjoy it
Does that mean its never a Good idea to buy a new car ( how to buy a car the right way )
Simple rule is don’t spent more than half your annual income on a car or 10% of your networth
Pay in cash
That’s it
Now does that mean you should never buy new
The asnwer is no, you can buy new
Just make sure you can afford it
and by afford it, I mean you can afford to see the value go down by half and not be so worried about it
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What about buying a vehicle that would impress the 304s, while monetarily being broke?
Most people are upside down on their car loans
Anyone that doesn't put at least twenty percent down likely will be, as soon as they drive off the lot.
Great video! I had an ex literally begging me to get rid of my 2004 Honda Accord and get a new car because he got a Maserati Ghibli with a $600+/mo payment! However, I’m not getting rid of my baby until I stack enough money to feel comfortable with, and even still, I’m not in a rush to get a car payment to please anyone, lol. I’d rather purchase property and land…then get my Porsche 911 Carrera T.
Girl you are very wise and financially savy kudos to you!! Don't get rid of your reliable used car. You may want to get rid of that guy instead LOL. Down the road it will cause such friction and disagreements with opposing values with money. I am a therapist and see couples argue a lot on lack of similar values and money. You are right to rather invest in real estate instead of purchase a deprecating asset car that goes down in value.
@@anitaknight3915 Thank you so much! You are right on time with this comment, because I decided to sever ties with him after over 20 years of friendship. Turns out he wasn’t who I thought he was. However, I trust that I’ve made the right decision, and although I’m disappointed, my Honda and I will keep on moving, as my car is far more reliable than he will ever be, lol.
@@timekaschannel I am sooo proud of you for following what is for your highest good! My intuition nudged me that I needed to respond to your comment. Someone who truly cares and values you would want you to be fiscally responsible and to do what's in your best interests. He was a lesson and season for your growth and meant to exit right on divine time 😇.
@@anitaknight3915 thank you!!
I get car fever when I see the new cadillac emblem....but I gotta resist. I could get financed for 2015 cadillac but got to resist
MODEL X as well. I test drove one and was about to get it i could have paid it off in about 24 months. But i got a $6k used car and decided ill just sace and buy it cash in two or three years.
If you have to get a car payment do a big down payment and pay less than 300 bucks if you make good money.
Although I don't consider my car an investment, when I buy it and fluctuate's in value, it is an investment because I make 65 cents a mile driving it. My $15,000 car has made me over $90,000 after the taxes in the last three years and that's not including my base salary. That is including maintenance, insurance and gas costs as well. But yes, a car in itself is not an investment. It's a depreciating liability.
Buy an old Honda Civic usually the engines last more than 250 thousand miles. My sister has a old Honda van 2001 with 220 thousand miles and still running smooth minimum maintenance check up on the van. Paid about 1,500 thousand dollars for the van about 8 years ago.
so true, my used honda accord has been the most reliable car I have ever had!! New cars depreciate so many thousands right off the lot and car payments keep you broke.
yup!!!!! I learned the hard way!
I financed 25,000. But i actually paid 33,000. I sold my good Honda accord 150,000 miles for a used Nissan pathfinder. 800 a month with insurance. And the dealer trick me because I want a 10,000 grand Cherokee 40,000 miles. I had 5000 dollars. He told me the owner won’t except my money for it. They wanted me to buy into a loan. For 25,000 on a newer vehicle. I was so mad to get into a loan that high. I wish I would’ve waited.
😢omg ouch😢
Looking good guy. 👍 I have heard you say these things before. Early morning reminder why I don't need a car note or newer vehicle. I got a 2008 cadillac cts bought 9k cash. I love my car....I want to keep it forever but need to save up incase I need newer car. My car is worth like 1500 or less....beautiful black car. I don't wanna get anything else just cadillac but don't wanna pay 100k
Someone in my family bought a 2007 merc (3 yr used) and drove it to 260K, he is selling it now for 2021 merc due to his good experience. But he is in a good monetary situation and paid in cash so win-win.
Thanks Tommy for advising people to not go into debt and at the same time providing some good strategies to help with making necessary purchases like a vehicle. 👍
I would choose a 2024 Honda Civic Type R
I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear that you saved me from huge financial debt with just a small Investment, thank you Citadel Moore you're such a life saver.
I'm surprised you know her. I've been making a lot of profits investing with her for a few months now
she often interacts on telegrams, using the user below
@ FX Moore10
Get you a reliable car maybe toyota or honda, if you need a larger car for groceries and transportation for a wife, kids ect . There are some honda pilots and toyota highlanders that do just fine.
My car if I was financially independent would be an Infinity Q50 RED its a wheel drive 400 horsepower
Im planning to get a highlander and hold it for 20 plus years and still save and invest while doing the payments. But Im putting a larg down payment from money I got from a car I sold.
toyota C-HR
One way or the other you gonna spend money on something else , get what you can afford and work hard for more.
What if you have a really great interest rate because was locked in 2020?
Car mechanics keep you broke.
Become one
Not a G wagon . Ppl selling a $120k g wagon for 150k/$180j
I would get a Porsche Cayman. lol
Where are you located?
Right now Dominican Republic
5K vehicle? Have you been living under a rock
Lol they exist, use Facebook, car guru and more
Love you Tommy 😅
I make money use n
my car
Figure out how to make more money.
Tommy, I enjoy your content. However you seem to focus on cars and cell phones a lot like it’s an obsession. There are other good financial topics to talk about besides those two things constantly.
He talks about it because there over 100 million people with car loans that is sitting around 1.5TRILLION DOLLARS so yes he should talk about it. Car payment are the biggest wealth killer especially when someone has a car loan that’s at over $500 a month.