How Cars Keep You POOR!
Jul 27, 2023
How Cars Keep You POOR!
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Content
3.34 -> [BREATHES DEEP] Aaaaaah!
5.34 -> Don’t you just love that new car smell?
8.02 -> Smells like power and freedom!
9.99 -> Actually, it smells more like petroleum-based
solvents evaporating off vinyl and plastic.
14.85 -> Wow, buzzkill.
15.98 -> Let’s see if you still like that smell when
you find out what it's really costing you...
21.96 -> I’m locking the windows.
22.86 -> [SOUND OF WINDOWS ROLLING UP]
24.78 -> [MUSIC]
33.4 -> Since the auto boom of the 1950's, cars have
become an integral part of American society.
38.53 -> Car companies spent 14.2 BILLION dollars in
advertising alone in 2014 and that number
44.89 -> is only rising.
45.89 -> They convince us that once we’re behind
the wheel, our families will love us more,
50.64 -> our neighbors will envy us, and our freedom
to go anywhere is secure.
55.01 -> Unfortunately, they’re more likely to take
away your freedom and security.
59.679 -> New cars are a financial triple threat.
62.059 -> We borrow money at interest, to buy an asset
that we have to PAY to maintain and...here’s
67.39 -> the big kicker...that drastically depreciates
in value.
70.56 -> Wait… what IS depreciation, anyway?
73.02 -> Hey Julia, would you like to buy some ice
cream?
74.9 -> Uh, sure, I guess--
77.98 -> That’ll be four dollars.
79.8 -> I wouldn’t pay a nickel for that!
81.46 -> But I paid four dollars for it twenty minutes
ago!
84.61 -> That’s depreciation.
86.869 -> Go wash your hands.
88.72 -> Cars retain their value about as well as ice
cream on a hot day.
91.76 -> A new car will depreciate 63% in the first
five years.
97.259 -> 10% of that the MOMENT you drive it off the
lot!
101.77 -> Calling cars a “bad investment” is like
calling a honey badger a bad heart surgeon.
106.38 -> What?
107.38 -> I mean they’re not an investment at all!
110.68 -> Exactly.
111.68 -> I mean, can you think of anything else you’d
spend that much money on that loses value
116.579 -> that quickly?
117.579 -> Oh, I don’t know.
118.58 -> How about a garage full of beanie babies?
120.84 -> [HORROR MOVIE MUSIC]
126.1 -> Heh, I told you the 90’s are comin’ back.
129.08 -> Sure, hon.
129.82 -> And don't think you can get out of this by
leasing either!
134.2 -> Leasing companies set their prices so that
you pay for the depreciation of their vehicle,
139.14 -> and when it’s over they still have an asset
they can re-sell.
141.69 -> So let’s set a few simple ground rules that
will put you in the driver’s seat instead
146.819 -> of being taken for a ride:
148.75 -> Number One.
149.75 -> Buy a car that’s 5 years old.
152.26 -> Right away, you’re skipping the majority
of its depreciation.
156.25 -> Number Two.
157.25 -> Save up to buy a car in cash.
159.92 -> Paying interest on something that loses value
is like gaining weight from exercising.
164.81 -> All pain.
165.81 -> No gain.
166.81 -> Number Three.
167.81 -> If you can't comfortably afford to save an
amount equal to your car payment, you can't
172.68 -> afford it.
173.68 -> So if you're not saving $300 a month, you
shouldn’t take on a $300 car payment.
178.92 -> So how much money is actually at stake?
181.09 -> I think it’s time to....
182.98 -> RUN THE NUMBERS!
187.2 -> Let’s say I buy a new car for $20,000.
190.02 -> I put $4,000 down, and I finance the rest
over 60 months at 4.25%.
195.83 -> My monthly payment will be--
197.16 -> $295.42!
198.849 -> That sounds pretty normal.
200.989 -> But check this out.
202.18 -> What if you bought that same car, but a 5
year old model, which costs you 63% less -- or
207.439 -> $7,400.
208.439 -> Put your same $4,000 down, and with the same
loan arrangement, you’re looking at a payment
212.81 -> of just $62.78/mo.
215.02 -> That’s a monthly saving of--
217.38 -> $232.65!
221.26 -> I could get a massage every other week with
that!
223.93 -> You could.
224.98 -> Or, you could take those monthly savings and
put them into a growing asset, like a home
229.579 -> or a mutual fund.
230.59 -> And if you continued to do that EVERY time
you paid off the car, even at a very conservative
235.489 -> 7% per year return, in 35 years you’d have
over...
240.14 -> $421,459!
243.4 -> Really?
246.14 -> Wow.
247.37 -> Now...is that enough to retire on?
251.159 -> Probably not.
252.159 -> But that’s just one thing you can start
doing now to prepare for your future.
256.989 -> There are many, many more.
259.05 -> Y’know, as much I like that new car smell,
I don’t think I’d spend half a mil on it.
264.22 -> Let's try this instead.
266.18 -> Ooh, what’s that?
268.2 -> EARLY RETIREMENT, BABY! Bam!
271.36 -> And that’s our two cents!
274 -> [MUSIC]
Source: https://www.youtube.com/watch?v=TtJXl6pk0Z4
